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2002-10-28B
PLEASE TURN OFF ALL CELL PHONES & PAGERS IN COUNCIL CHAMBERS. cITy OF MO~D MiSSION STATEMENT: The City of Mound, through teamwork and cooperation, provides at a reasonable cost, qualitY services that respond to the needs of all citizens, fostering a safe, attractive and flourishing community. AGENDA MOUND CITY COUNCIL SPECIAL MEETING MONDAY, OCTOBER 28, 2002 - 7:30 PM MOUND CITY COUNCIL CHAMBERS *Consent Agenda: Items listed under the Consent Agenda are considered routine in nature and will be enacted by a single roll call vote. There will be no separate discussion of these items unless a Council Member or Citizen so requests. In that event the item will be removed from the Consent Agenda and considered in normal sequence. o OPEN MEETING CONSIDERATION/ACTION ON PROPOSED TEMPORARY LEASE FOR THE FIRE DEPARTMENT. CONSIDERATION/ACTION ON REDUCTION OF LETTER OF CREDIT FROM R.H. DEVELOPMENT (FOR WESTEDGE ASSESSMENTS) ADJOURN This is a preliminary agenda and subject to change. The Council will set a final agenda at the meeting. More current meeting agendas may be viewed at City Hall or at the City of Mound web site: www. citvofinound, com. OFFICE/WAREHOUSE LEASE THIS INDENTURE of lease, entered into as of the __ day of October, 2002, by and between BALBOA CENTER LIMITED PARTNERSHIP, a Texas limited partnership, hereinafter referred to as "Lessor," and CITY OF MOUND, a Minnesota municipal corporation, hereinafter referred to as "Lessee". DEFINITIONS: "Building" - That certain office/warehouse building containing approximately 340,364 square feet located upon the Premises and commonly described 5300-5900 Shoreline Drive, Mound, Minnesota. "Common Areas" - The term "common area" means the entire areas to be used for the non-exclusive use by Lessee and other lessees in the Building, including, but not limited to, corridors, lavatories, driveways, truck docks, parking lots and landscaped areas. Subject to reasonable rules and regulations promulgated by Lessor, the common areas are hereby made available to Lessee and its employees, agents, customers, and invitees for reasonable use in common with other lessees, their employees, agents, customers and invitees. Lessor shall utilize its best efforts to keep driveway areas providing access to the Demised Premises free of all obstructions that would prevent ingress and egress to and from the Demised Premises; however, Lessor shall not be required to tow cars or impose sanctions or default other tenants as part of such best efforts. "Demised Premises" - That certain portion of the Building located at 5300 Shoreline Drive, Mound, Minnesota (this address is temporary at this time and Lessee will obtain a permanent address from the city upon occupancy) and designated by horizontal lines (when the page is in a landscape orientation) on Exhibit "B" and diagonal lines on Exhibit "B-I", consisting of approximately 10,663 square feet (663 square feet office space as shown on Exhibit "B-I" and 10,000 square feet of warehouse space as shown on Exhibit "B"), as measured from the outside walls of the Demised Premises to the center of the partition wall, as shown on the floor plan attached hereto as Exhibits "B" and "B-I" and made a part hereof. The Demised Premises include a non-exclusive easement for access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises. "Premises" - That cedain real property located in the City of Mound, County of Hennepin and State of Minnesota, and legally described on Exhibit "A" attached hereto and made a part hereof, including all buildings and site improvements located thereon. , "Substitute Demised Premises" - That certain portion of the Building designated by diagonal lines on Exhibits "B" and 'B-I", consisting of approximately 9,663 square feet (663 square feet office space and 9,000 square feet of warehouse space), as measured from the outside wall,s, of the Demised Premises to the center of the partition wall as shown on the floor plan attached hereto as Exhibits "B" and 'B-I" and made apart hereof. The Substitute Demised Premises include a non- exclusive easement for access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises. The office portion of the Substitute Demised Premises is the same as the office portion of the Demised Premises. A portion of the warehouse porti,o,,n, of the Substitute Demised Premises over-laps and is the same as a portion of the Demised Premises, as shown on Exhibit B" WITNESSETH: TERM: 1. For and in consideration of the rents, additional rents, terms, provisions and covenants herein contained, Lessor hereby lets, leases and demises to Lessee the Demised Premises for the term commencing on the 1s~ day of February, 2003 (sometimes called "the Commencement Date") and expiring January 31 2004 (sometimes called "Expiration Date"), unless ,,s, ooner terminated as hereinafter provided, subject to the right of Lessee to two one month extensions by giving notice (the Extension Notice") of exercise of such extensions to Lessor not later than October 31, 2003. All the provisions of this Lease, including the rentals, will apply during any such extension periods. The Extension Notice shall indicate whether Lessee is extending this Lease andthe Expiration Date to either February 29, 2004 or March 31,2004. BASE RENT: 2. Lessor reserves and Lessee shall pay Lessor a total rental of See Rider payable in advance, in equal monthly installments of See Rider commencing on the Commencement Date and continuing on the first day of each and every month thereafter for the next succeeding months duringthe balance of the term. In the event the Commencement Date falls on a date other than the first of a month the rental for that month shall be prorated and adjusted accordingly. ADDITIONAL RENT: 3. (Intentionally Omitted) COVENANT TO PAY RENT: 4. The covenants of Lessee to pay the Base Rent and the Additional Rent are each independent of any other covenant, condition, provision or agreement contained in this Lease. All rents are payable to Lessor c/o United Properties, NW-9044, P.O. Box 1450, Minneapolis, MN 55485-9044 or at such other address Lessor shall notify Lessee from time to time. DOC~ 1620257~7 UTILITIES: 5. Lessor shall provide mains and conduits to supply water, gas, electricity and sanitary sewage to the Premises, all of which shall be supplied at Lessor's expense. Lessee shall pay, when due all charges for all other ut t es. CARE AND REPAIR OF DEMISED PREMISES: 6. Lessee shall, at all times throughout the term of this Lease, including renewals and extensions, and at its sole expense, keep and maintain the Demised Premises OFFICE/VVAREHOUSE LEASE in a dean, safe, sanitary and firs[ class cond[[[or~ and [r~ compliance with all applicable laws, codes, ordinances, rules and regulations. Lessee's obligations hereunder shall include but not be limited to the maintenance, repair and replacement, if necessary, of heating, air conditioning fixtures, equipment, and systems, all lighting and plumbing fixtures and equipment, fixtures, motors and machinery, all interior wails, partitions, doors and windows, including the regular painting thereof, all exterior entrances, windows, doors and docks and the replacement of all broken glass. When used in this provision, the term "repairs" shall include replacements or renewals when necessary, and all such repairs made by the Lessee shall be equal in quality and class to the quality and class that existed as of the date of this Lease. In the event any single of the foregoing items for which Lessee is responsible, requires replacement, due to normal wear and tear (and not if due to the neglige?t use or abuse by Lessee) and the cost thereof exceeds $1,500, then Lessee shall notify Lessor and Lessor shall arrange for such replacement (herein referred to as a "Capital Replacement"). The cost of any such Capital Replacement will initially be borne by Lessor, albeit Lessor shall amortize such costs (together with an interest rate at the prime or reference rate of interest as then existing at US Bank National Association) in equal monthly installments over the useful life of the Capital Replacement (the "Amortization Period") and Lessee's rental payments shall be increased by the amount of such amortized payments during the remaining balance of the Term and any extended or renewal term of the Lease (but not for a period longer than the Amortization Period). The Lessee shall keep and maintain all portions of the Demised Premises and the sidewalk and areas adjoining the same in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice. 6.1 If Lessee fails, refuses or neglects to maintain or repair the Demised Premises as required in this Lease after 30 day notice shall have been given Lessee, in accordance with Article 33 of this Lease, Lessor may make such repairs without liability to Lessee for any loss or damage that may accrue to Lessee's merchandise, fixtures or other property or to Lessee's business by reason thereof, and upon completion thereof, Lessee shall pay to Lessor all costs plus 15% for overhead incurred by Lessor in making such repairs upon presentation to Lessee of bill therefor. 6.2 Lessor shall repair, at its expense, the structural portions of the Building, provided however where structural repairs are requ~redto be made by reason of the acts of Lessee, the costs thereof shall be borne by Lessee and payable by Lessee to Lessor upon demand. 6.3 The Lessor shall be responsible for all outside maintenance of the Demised Premises, including grounds and parking areas. All such maintenance which is the responsibility of the Lessor shall be provided as reasonably necessary to the comfortable use and occupancy of Demised Premises during business hours, exce~.t Saturdays, Sundays and holidays upon the cond~t on that the Lessor shall not be liable for damages for failure to do so due to causes beyond its control. Notwithstanding the foregoing, the Lessee shall have the right, at its sole cost and expense to plow and otherwise maintain the driveway and parking areas as necessary to assure continuous access to the Demised Premises. SIGNS: 7. Any sign, lettering, picture, notice or advertisement installed on or in any part of the Premises and visible from the exterior of the Building, or visible from exterior of the Demised Premises, shall be approved and installed by Lessor at Lessee's expense. In the event of a Doc~ 1620257~7 violation of the foregoing by Lessee, Lessor m8¥ remove the same without any liability and may charge the expense incurred by such removal to Lessee. Notwithstanding the foregoing, the Lessee shall be entitled, at its sole cost and expense, to install, at locations on the property agreed to by the Lessor, informational and d~rectional signs identifying the Lessee's fire department operations. Lessor will promptly review the proposed location of such signs. ALTERATIONS, INSTALLATION, FIXTURES: 8. Except as hereinafter provided, Lessee shall not make any alteration, additions, or improvements in or to the Demised Premises or add, disturb or in any way change any plumbing or wiring therein without the prior written consent of the Lessor. In the event alterations are required by any governmental agency by reason of the use and occupancy of the Demised Premises by Lessee, Lessee shall make such alterations at its own cost and expense after first obtaining Lessor's approval of plans and specifications therefor and furnishing such indemnification as Lessor may reasonably require against liens, costs, damages and expenses arising out of such alterat!ons. Alterations or additions by Lessee must be built ~n compliance with all laws, ordinances and povernmental regulations affecting the Premises and essee shall warrant to Lessor that all such alterations, additions, or improvements shall be in strict compliance with all relevant laws, ordinances, governmental regulations, and insurance requirements. Construction of such alterations or additions shall commence only upon Lessee obtaining and exhibiting to Lessor the requisite approvals, licenses and permits and indemnification against liens. All alterations, installations, physical additions or improvements to the Demised Premises made by Lessee shall at once become the property of Lessor and shall be surrendered to Lessor upon the termination of this Lease; provided, however, this clause shall not apply to movable equipment or furniture owned by Lessee which may be removed by Lessee at the end of the term of this Lease if Lessee is not then in default. Lessee shall be resp. onsible for all costs related to improvements or modifications to the Demised Premises required or necessary to comply with the Americans With Disabilities Act of 1990 (ADA), or similar statutes or law. Lessee has informed Lessor of Lessee's need to construct an entrance ramp to access the portion of the Substitute Demised Premises where fire vehicles will be kept. Lessor consents to the construction of the ramp and hereby, grants Lessee access to the Demised Premises prior to the Commencement Date of this Lease for the limited purpose of constructing said ramp which access prior to the Commencement Date of this Lease shall be subject to all of the terms, covenants and provisions of this Lease save and except no rent shall be payable. Lessee agrees to construct said ramp prior to the Commencement Date of this Lease, at Lessee's sole cost and expense, so that if Lessor exercises its right to substitute the Substitute Demised Premises for the Demised Premises pursuant to Article 42 of the Rider to this Lease, said space shall be useable by Lessee. Lessor further acknowledges that Lessee shall have no obligation to remove such ramp upon the expiration of this lease; provided Lessee has complied with the other provisions of this Section. "AS IS;" POSSESSION: 9. Lessee acknowledges and agrees that it shall be leasing the Demised Premises in their existing "as is" condition without any obligation on the part of Lessor to make any alterations, modifications or improvements thereto or provide any allowances therefor. Except as hereinafter provided Lessor shall deliver possession of OFFICE/WAREHOUSE LEASE the Demised Premises to Lessee in the condition required by this Lease on or before the Commencement Date, but delivery of possession prior to or later than such Commencement Date shall not affect the expiration date of this Lease. The rentals herein reserved shall commence on the Commencement Date, provided if the Demised Premises are not ready for occupancy by Commencement Date and possession is later than Commencement Date, rent shall begin on date of possession, or the date the Demised Premises are ready for occupancy whichever occurs first. Any occupancy by Lessee prior to the beginning of the term shall in all respects be the same as that of a Lessee under this Lease. Lessor shall have no responsibility or liability for loss or damage to fixtures, facilities or equipment installed or left on the Demised Premises. Notwithstanding the foregoing, Lessor agrees to replace the existing overhead garage door in the Demised Premises prior to the Commencement Date of this Lease. As Lessee's share of the cost of such replacement, Lessee shall pay Lessor $5,500.00 within ten (10) days following written notice by Lessor that such replacement of the overhead garage door has been completed. SECURITY AND DAMAGE DEPOSIT: 10. (Intentionally Omitted) USE: 11. The Demised Premises shall be used and occupied by Lessee solely as a temporary fire station facility. The Mound Fire Department will perform all normal fire department operations including: apparatus and equipment storage, emergency responses and training activities within or on the Demised Premises. The Demised Premises shall not be used in such manner that, in accordance with any requirement of law or of any public authority, Lessor shallbe obligated on account of the purpose or manner of said use to make any addition or alteration to or in the Building. The Demised Premises shall not be used in any manner which will increase the rates required to be paid for public liability or for fire and extended coverage ~nsurance covering the Premises, unless the Lessee agrees to be responsible for such increased rates. Subject to permitting the Lessee to conduct normal fire department operabons on the Demised Premises, Lessee shall occupy the Demised Premises, conduct its business and control its agents, employees, invitees and visitors in such a way as is lawfu. I, and repu.table and will not permit or create any nuisance, no~se, odor or otherwise interfere with, annoy or disturb any other tenant in the Building in its normal business operations or Lessor in its management of the Building. Subject to Lessee's right to conduct normal fire department operations on the Demised Premises, Lessee's use of the Demised Premises shall conform to all the Lessor's rules and regulations relating to use of the Premises. Outside storage on the Premises of any type of equipment, property or materials owned or used on the Premises by Lessee or its customers and suppliers shall not be permitted without the consent of Lessor. ACCESS TO DEMISED PREMISES: 12. The Lessee agrees to permit the Lessor and the authorized representatives of the Lessor to enter the Demised Premises at all times during usual business hours for the purpose of inspecting the same and making any necessary repairs to the Demised Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or Doc~ 1620257~7 requirements of any 9ub(ic author(t¥ or of the Board of Fire Underwriters or any similar body or that the Lessor may deem necessary to prevent waste or deterioration in connection with the Demised Premises. Nothing herein shall imply any duty upon the part of the Lessor to do any such work which, under any provision of this Lease, the Lessee may be required to perform and the performance thereof by the Lessor shall not constitute a waiver of the Lessee's default in failing to perform the same. The Lessor may, during the progress of any work in the Demised Premises, keep and store upon the Demised Premises all necessary materials, tools and equipment. The Lessor shall not in any event be liable for inconvenience, annoyance, disturbance, loss of business, or other damage of the Lessee by reason of making repairs or the performance of any work in the Demised Premises, or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof and the obligations of the Lessee under this Lease shall not thereby be affected in any manner whatsoever. Notwithstanding the foregoing, Lessee may refuse to allow entry to make repairs and perform work in instances where the Lessee reasonably believes that such entry will likely interfere with the normal fire department operations; and the entry is not upon the order of any public authority. If the Lessee refuses entry it will be liable for any waste, damages or deterioration to the Premises resulting from such refusal. 12.1 Lessor reserves the right to enter upon the Demised Premises at any time in the event of an emergency and at reasonable hours upon reasonable verbal notice to exhibit the Demised Premises to ~)rospective purchasers or others; and to exhibit the emised Premises to prospective Lessees and to the display "For Lease" or similar signs on windows or doors in the Demised Premises during the last 120 days of the term of this Lease, all without hindrance or molestation by Lessee. EMINENT DOMAIN: 13. In the event of any eminent domain or condemnation proceeding or private sale in lieu thereof in respect to the Premises during the term thereof, the following provisions shall apply: a. If the whole of the Premises shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the term of this Lease shall cease and terminate as of the date possession shall be taken in such proceeding and all rentals shall be paid up to that date. b. If any part constituting less than the whole of the Premises shall be acquired or condemned as aforesaid, and in the event that such partial taking or condemnation shall materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Lessee, in the reasonable opinion of Lessor, then the term of this Lease shall cease and terminate as of the date possession shall be taken by the condemning authority and rent shall be paid to the date of such termrnation. c. In the event of a partial taking or condemnation of the Premises which shall not materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Lessee, in the reasonable opinion of the Lessor this Lease shall continue in full force and effect but with a proportionate abatement of the Base Rent and Additiona/Rent based on the portion, if any, of the Demised Premises taken. Lessor reserves the right, at its option, to restore the Building and the Demised Premises to substantially the same condition as they were prior to such condemnation. OFFICE/WAREHOUSE LEASE in such event, Lessor shall give written notice to Lessee, within 30 days following the date possession shall be taken by the condemning authority, of Lessor's intention to restore. Upon Lessor's notice of election to restore, Lessor shall commence restoration and shall restore the Building and the Demised Premises with reasonable promptness, subject to delays beyond Lessor's control and delays in the making of condemnation or sale proceeds adjustments by Lessor; and Lessee shall have no right to terminate this Lease except as herein provided. Upon completion of such restoration, the rent shall be adjusted based upon the portion, if any, of the Demised Premises restored. d. In the event of any condemnation or taking as aforesaid, whether whole or partial, the Lessee shall not be entitled to any part of the award paid for such condemnation and Lessor ~s to receive the full amount of such award, the Lessee hereby expressly waiving any right to claim to any part thereof. e. Although all damages in the event of any condemnation shall belong to the Lessor whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Demised Premises, Lessee shall have the ri~iht to claim and recover from the condemning authority, but not from Lessor, such compensation as may be separately awarded or recoverable by Lessee in Lessee's own right on account of any and al/damage to Lessee's business by reason of the condemnation and for or on account, of any cost or loss to which Lessee might be put in remowng Lessee's merchandise, furniture, fixtures, leasehold improvements and equipment. However, Lessee shall have no claim againstLessor or make any claim with the condemning authority for the loss of its leasehold estate, any unexpired term or loss of any possible renewal or extension of said lease or loss of any possible value of said lease, any unexpired term renewal or extension of said Lease. DAMAGE OR DESTRUCTION: 14. In the event of any damage or destruction to the Premises by fire or other cause during the term hereof, the following provisions shall apply: a. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Lessor, will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of foundabons) just prior to the occurrence of the damage, then Lessor may, no later than the sixtieth (60th) day following the damage, give Lessee written notice of Lessor's election to terminate this Lease. b. If the cost of restoration as estimated by Lessor will equal or exceed 50% of said replacement value of the Building and if the Demised Premises are not suitable as a result of said damage for the purposes for which they are demised hereunder, in the reasonable opinion of Lessee, then Lessee may, no later than the 60th day following the damage, give Lessor a written notice of election to terminate this Lease. c. If the cost of restoration as estimated by Lessor shall amount to less than 30% of said replacement value of the Building, or if, despite the cost, Lessor does not elect to terminate this Lease, Lessor shall restore the Building and the Demised Premises with reasonable promptness, subject to delays beyond Lessor's control and delays in the making of insurance adjustments by Lessor; and Lessee shall not be responsible for restoring or repairing leasehold improvements of the Lessee. d. In the event of either of the elections to terminate, this Lease shall be deemed to terminate on the DOC~ 1620257~7 date of the receipt of the notice of e~ection and a~ rents shall be paid up to that date. Lessee shall have no claim against Lessor for the value of any unexpired term of this Lease. e. In any case where damage to the Building shall materially affect the Demised Premises so as to render them unsuitable in whole or in part for the purposes for which they are demised hereunder, then, unless such destruction was wholly or partially caused by the negligence or breach of the [erms of th~s Lease by Lessee, its employees, contractors or licensees, a portion of the rent based upon the amount of the extent which the Demised Premises are rendered unsuitable shall be abated until repaired or restored. If the destruction or damage was wholly or partially caused by negligence or breach of the terms of this Lease by Lessee as aforesaid and if Lessor shall elect to rebuild, the rent shall not abate and the Lessee shall remain liable for the same. CASUALTY INSURANCE: 15. Lessor shall at all times during the term of this Lease, at its expense, maintain apolicy or policies of insurance with premiums paid in advance issued by an insurance company licensed to do business in the State of Minnesota insuring the Building against loss or damage by fire, explosion or other insurance hazards and contingencies for the full replacement value, provided that Lessor shall not be obligated to insure any furniture, equipment, machinery, goods or supplies not covered by th~s Lease which Lessee may bring upon the Demised Premises or any additional improvements which Lessee may construct or install on the Demised Premises. 15.1 Lessee shall not carry any stock of goods or do anything in or about the Demised Premises which will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Lease. 15.2 Lessor hereby waives and releases all claims, liability and causes of action against Lessee and its agents, servants and employees for loss or damage to, or destruction of, the Premises or any portion thereof, including the buildings and other improvements situated thereon, resulting from fire, explosion and other perils included in standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise. Likewise, Lessee hereby waives and releases all claims, liabilities and causes of action against Lessor and its agents, servants and employees for loss or damage to, or destruction of, any of the improvements, fixtures, equipment, supplies, merchandise and other property, whether that of Lessee or of others in, upon or about the Premises resulting from fire, explosion or the other perils included in standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise. The waiver shall remain in force whether or not the Lessee's insurer shall consent thereto. 15.3 In the event that the use of the Demised Premises by Lessee increases the premium rate for insurance carried by Lessor on the improvements of which the Demised Premises are a part, Lessee shall pay Lessor, upon demand, the amount of such premium increase. If Lessee installs any electrical equipment that overloads the power lines to the Building or its wiring, Lessee shall, at its own expense, make whatever changes are necessary to comply with the requirements of the insurance underwriter, insurance rating bureau and governmental authorities having jurisdiction. PUBLIC LIABILITY INSURANCE: 16. Lessee shall during the term hereof, keep in full OFFICE/WAREHOUSE LEASE force and effect at its expense a policy or policies of public liability insurance with respect to the Demised Premises and the business of Lessee in which both Lessee and Lessor shall be covered by being named as insured parties under reasonable limits of liability not less than: $1,000,000.00 per occurrence, $1,000,000.00 aggregate u..sin.g cu.r. rent ISO,Gener,al ,,Liability, forms or equIvalent. bucn podcy or podcies sna, prowae that ten (10) days written notice must be given to Lessor prior to cancellation thereof. Lessee shall furnish evidence satisfactory to Lessor at the time this Lease is executed that such coverage is in full force and effect. DEFAULT OFLESSEE: 17. In the event of any failure of Lessee to pay any rental due hereunder within 10 days after the same shall be due, or any failure to perform any other of the terms, conditions or covenants of this Lease to be observed or performed by Lessee for more than 30 days after written notice of such failure shall have been given to Lessee, or if Lessee or an agent of Lessee shall falsify any report required to be furnished to Lessor pursuant to the terms ofthis Lease, or if Lessee or any guarantor of this Lease shall become bankrupt or insolvent, or file any debtor Droceedings or any person shall take or have against essee or any guarantor of this Lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a podion of Lessee's or any such guarantor's property, or if Lessee or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement, or if Lessee shall abandon the Demised Premises or suffer this Lease to be taken under any writ of execution, then in any such event Lessee shall be in default hereunder, and Lessor, in addition to their rights of remedies it may have, shall have the immediate right of re-entry and may remove all persons and property from the Demised Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Lessee, all without service of notice or resort to legal process and without being guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. 17.1 Should Lessor elect to re-enter the Demises Premises, as herein provided, or should it take possession of the Demised Premises pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time, without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Demised Premises, and relet the Demised Premises or any part thereof upon such term or terms (which may be for a term extending beyond the term of this lease) and at such rental or rentals and upon such other terms and conditions as Lessor in its sole discretion may deem advisable. Upon each such subletting all rentals received by the Lessor from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Lessee to Lessor; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney's fees and costs of such alterations and repairs; third, to the payment of the rent due and unpaid payment of future rent as the same may become due and payable hereunder. If such rentals received from such reletting during any month be less than that to be paid during that month by Lessee hereunder, Lessee, upon demand, shall pay any such deficiency to Lessor. No such re-entry or taking possession of the Demised Premises by Lessor shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Doc~ 1620257~7 Lessee or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Lessor may at any time after such re-entry and reletting elect to terminate this Lease for any such breach, in addition to any other remedies it may have, it may recover from Lessee all damages it may incur by reason of such breach, including the cost of recovering the Demised Premises, reasonable attorney's fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term over the then reasonable rental value of the Demised Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Lessee to Lessor. 17.2 Lessor may, at its option, instead of exercising any other rights or remedies available to it in this Lease or otherwise by law, statute or equity, spend such money as is reasonably necessary to cure any default of Lessee herein and the amount so spent, and costs incurred, including attorney's fees in curing such default, shall be paid byLessee, as additional rent, upon demand. 17.3 In the event suit shall be brought for recovery of possession of the Demised Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or because of the breach of any other covenant herein contained on the part of Lessee to be kept or performed, and a breach shall be established, Lessee shall pay to Lessor all expenses incurred therefor, including a reasonable attorney's fee, together with interest on all such expenses at the rate of 12% per annum from the date of such breach of the covenants of this Lease. 17.4 Lessee hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Lessee being evicted or dispossessed for any cause, or in the event of Lessor obtaining possession of the Demised Premises, by reason of the violation by Lessee of any of the covenants or conditions of this I_ease, or otherwise. Lessee also waives any demand for possession of the Demised Premises, and any demand for payment of rent and any notice of intent to re-enter the Demised Premises, or of intent to terminate this Lease, other than the notices above provided in this Article, and waives any and every other notice or demand prescribed by any applicable statutes or laws. 17.5 No remedy herein or elsewhere in this Lease or otherwise by law, statute or equity, conferred upon or reserved to Lessor or Lessee shall be exclusive of any other remedy, but shall be cumulative, and may be exercised from time to time and as often as the occasion may arise. COVENANTS TO HOLD HARMLESS: 18. Unless the liability for damage or loss is caused by the negligence of Lessor, its agents or employees, Lessee shall hold harmless Lessor from any liability for damages to any person or property in or upon the Demised Premises and the Premises, including the person and the property of Lessee and its employees and allpersons in the Building at its or their invitation or sufferance, and from all damages resulting from Lessee's failure to perform the covenants of this Lease. All property kept, maintained or stored on the Demised Premises shall be so kept, maintained or stored at the sole risk of Lessee. Lessee agrees to pay all sums of money in respect of any labor, service, materials supplies or equ pment furnishedor alleged to have been furnished to Lessee in or about the Premises, and not furnished on order of Lessor, which may be secured by any OFFICE/WAREHOUSE LEASE Mechanic's, Materialmen's or other lien to be discharged at the time performance of any obligation secured thereby ..matures provided that Le.sse.e. re. ay contest, such, li.en, bu.t ir such lien is reauced to dna~ ju(]gmen[ an(] ir sucn judgment or process thereon is not stayed, or if stayed and said stay expires, then and in each such event, Lessee shall forthwith pay and discharge said judgment. Lessor shall have the right to post and maintain on the Demised Premises, notices of non-responsibility under the I~w~ of the State of Minnesota. NON-LIABILITY: 19. Subject to the terms and conditions of Article 14 hereof, Lessor shall not be liable for damage to any property of Lessee or of others located on thePremises, nor for the loss of or damage to any property of Lessee or of others by theft or otherwise. Lessor shall not be liable for any injury or damage to persons or property resulting from fire, explosion, any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Premises or from the pipes, appliances, or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any such damage caused by other Lessees or persons in the Premises, occupants of adjacent property, of the buildings, or the public or caused by operations in construction of any private, public or quasi-public work. Lessor shall not be liable for any latent defect in the Demised Premises. All property of Lessee kept or stored on the Demised Premises shall be so kept or stored at the risk of Lessee only and Lessee shall hold Lessor harmless from any claims arising out of damage to the sam. e, including subrogation claims by Lessee's insurance carrier. SUBORDINATION: 20. This Lease shall be subordinated to any mortgages that may not exist or that may hereafter be placed upon the Demised Premises and to any and all advances made thereunder, and to the interest upon the indebtedness evidenced by such mortgages, and to all renewals, replacements and extensions thereof. In the event of execution by Lessor after the date of this Lease of any such mortgage, renewal, replacement or extension, Lessee agrees to execute a subordination agreement with the holder thereof which agreement shall provide that: a. Such holder shall not disturb the possession and other rights of Lessee under this Lease so long as Lessee is notin default hereunder, b. In the event of acquisition of title to the Demised Premises by such holder, such holder shall accept the Lessee as Lessee of the Demised Premises under the terms and conditions of this Lease and shall perform all the obligations of Lessor hereunder, and c. The Lessee shall recognize such holder as Lessor hereunder. 20.1 Lessee shall, upon receipt of a request from Lessor therefor, execute and deliver to Lessor or to any proposed holder of a mortgage or trust deed or to any proposed purchaser of the Premises, a certificate in recordable form, certifying that this Lease is in full force and effect, and that there are no offsets against rent nor defenses to Lessee's performance under this Lease, or setting forth any such offsets or defenses claimed by Lessee as the case may be. ASSIGNMENT OR SUBLETTING: 21. Lessee agrees to use and occupy the Demised Doc~ 1620257~7 Premises throughout the entire term hereof for the purpose of purposes herein specified and for no other purposes, in the manner and to substantially the extent now intended, and not to transfer or assign this Lease or sublet said Demised Premises, or any part thereof, whether by voluntary act, operation of law, or otherwise, without obtaining the prior written consent of Lessor in each instance. Lessee shall seek such consent of Lessor by a written request therefor, setting forth such informntion n~ Le~or tony deem necessary. Le~or agrees not to withhold consent unreasonably. Consent by Lessor to any assignment of this Lease or to any subletting of the Demised Premises shall not be a waiver of Lessor's rights under this Article as to any subsequent assignment or subletting. Lessor°s rights to assign this Lease are and shall remain unqualified. No such assignment or subleasing shall relieve the Lessee from any of Lessee's obligations in this Lease contained, nor shall any assignmentor sublease or other transfer of this Lease be effective unless the assignee, sublessee or transferee shall at the time of such assignment, sublease or transfer, assume in writing for the benefit of Lessor, its successors or assigns, all of the terms, covenants and conditions of this Lease thereafter to be performed by Lessee and shall agree in writing to be bound thereby. Should Lessee sublease in accordance with the terms of this Lease, 100% of any increase in rental received by Lessee over the per square foot rental rate which is being paid by Lessee shall be forwarded to and retained by Lessor, which increase shall be in addition to the Base Rent and Additional Rent due Lessor under this Lease. ATTORNMENT: 22. In the event of a sale or assignment of Lessor's interest, in the Premises, or the Building in which the Demised Premises are located, or this Lease, or if the Premises come into custody or possession of a mortgagee or any other party whether because of a mortgage foreclosure, or otherwise, Lessee shall attorn to such assignee or other party and recognize such party as Lessor hereunder; provided, however, Lessee's peaceable possession will not be disturbed so long as Lessee faithfully performs its obligations under this Lease. Lessee shall execute, on demand, any attornment agreement required by any such party to be executed, containing such provisions and such other provisions as such party may require. NOVATION IN THE EVENT OF SALE: 23. In the event of the sale of the Demised Premises, Lessor shall be and hereby is relieved of all of the covenants and obligations created hereby accruing from and after the date of sale, and such sale shall result automatically in the purchaser assuming and agreeing to carry out all the covenants and obligations of Lessor herein. Notwithstanding the foregoing provisions of this Article, Lessor, in the event of a sale of the Demised Premises, shall cause to be included in this agreement of sale and purchase a covenant whereby the purchase of the Demised Premises assumes and agrees to carry out all of the covenants and obligations of Lessor herein. 23.1 The Lessee agrees at any time and from time to time upon not less than 10 days prior written request by the Lessor to execute, acknowledge and deliver to the Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect as modified and stating the modifications, and the dates to which the basic rent and other charges have been paid in advance if any it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of the Demised OFFICE/WAREHOUSE LEASE Premises. SUCCESSORS AND ASSIGNS: 24. The terms, covenants and conditions hereof shall be binding upon and inure to the successors and assigns of the parties hereto. REMOVAL OF FIXTURES: shall indem,nif~ Lessor,ag,ainst loss or liab, ility, .claims, without limi[a[~on, maoe Dy any succee(]ing Lessee founded on such delay. Lessee shall promptly surrender all keys for the Demised Premises to Lessor at the place then fixed for payment of rent and shall inform Lessor of combinations of any locks and safes on the Demised Premises. HOLDING OVER: 25. Notwithstanding anything contained in Article 8, 29 or elsewhere in this Lease, if Lessor requests then Lessee will promptly remove at the sole cost and expense of Lessee all fixtures, equipment and alterations made by Lessee simultaneously with vacating the Demised Premises and Lessee will promptly restore said Demised Premises to the condition that existed immediately prior to said fixtures, equipment and alterations having been made all at the sole cost and expense of Lessee. QUIET ENJOYMENT: 26. Lessor warrants that it has full right to execute and to perform this Lease and to grant the estate demised, and that Lessee, upon payment of the rents and other amounts due and the performance of all the terms, conditions, covenant and agreements on Lessee's part to be observed and performed under this Lease, may peaceably and quietly enjoy the Demised Premises for the bus~ness uses permitted hereunder, subject, nevertheless, to the terms and conditions of this Lease. RECORDING: 27. Lessee shall not record this Lease without the written consent of Lessor. However, upon the request of either party hereto, the other party shall join in the execution of the Memorandum lease for the purposes of recordation. Said Memorandum lease shall describe the parties, the Demised Premises and the term of the Lease and shall incorporate this Lease by reference. This Article 27 shall not be construed to limit Lessor's right to file this Lease under Article 22 of this Lease. OVERDUE PAYMENTS: 28. All monies due under this Lease from Lessee to Lessor shall be due on demand, unless otherwise specified and if not paid when due, shall result in the imposition of a service charge for such late payment in the amount of 12% of the amount due. SURRENDER: 29. On the Expiration Date or upon the termination hereof upon a day other than the Expiration Date, Lessee shall peaceably surrender the Demised Premises broom- clean in good order, condition and repair, reasonable wear and tear only excepted. On or before the Expiration Date or upon termination of this Lease on a day other than the Expiration Date, Lessee shall, at its expense, remove all trade fixtures, personal property and equipment and signs from the Demised Premises and any property not removed shall be deemed to have been abandoned. Any damage caused in the removal of such items shall be repairedby Lessee and at its expense. All alterations, additions, improvements and fixtures (other than trade fixtures) which shall have been made or installed by Lessor or Lessee upon the Demised Premises and all floor covering so installed shall remain upon and be surrendered with the Demised Premises as a part thereof, without disturbance, molestation or injury, and without charge, at the expiration of termination of th~s Lease. If the Demised Premises are not surrendered on the Expiration Date or the date of termination, Lessee Doc~ 1820257~7 30. In the event of a holding over by Lessee after expiration or termination of this Lease without the consent in writing of Lessor, Lessee shall be deemed a lessee at sufferance and shall pay rent for such occupancy at the rate of twice the last-current aggregate Base and Additional Rent, prorated for the enbreholdover period, plus all attorney's fees and expenses incurred by Lessor ~n enforcing its rights hereunder, plus any other damages occasioned by such holding over. Except as otherwise agreed, any holding over with the written consent of Lessor shall constitute Lessee a month-to-month lessee. ABANDONMENT: 31. In the event Lessee shall remove its fixtures, equipment or machinery or shall vacate the Demised Premises or any part thereof prior to the Expiration Date of this Lease, or shall discontinue or suspend the operation of its business conducted on the Demised Premises for a period of more than 90 consecutive days bexcept during any time when the Demised Premises may e rendered untenantable by reason of fire or other casualty), then in any such event Lessee shall be deemed to have abandoned the Demised Premises and Lessee shall be in default under the terms of this Lease. CONSENTS BY LESSOR: 32. Whenever provision is made under this Lease for Lessee securing the consent or approval by Lessor, such consent or approval shall only be in writing. NOTICES: 33. Any notice required or permitted under this Lease shall be deemed sufficiently given or secured if sent by registered or certified return receipt mail to Lessee at 5300 Shoreline Drive, Mound, Minnesota and to Lessor c/o United Properties, 3500 West 80th Street, Suite 200, Bloomington, MN 55431 attn: Vice President of Property Management and either party may by like written notice at any time designate a different address to which notices shall subsequently be sent or rent to be paid. RULES AND REGULATIONS: 34. Lessee, its employees and all person visiting or doing business with Lessee in the Demised Premises shall be bound by and shall observe the reasonable rules and regulations made by Lessor relating to the Demised Premises or the Building or the Premises of which notice in writing shall be given to the Lessee, and all such rules and regulations shall be deemed to be incorporated into and form a part of this Lease. INTENT OF PARTIES: 35. Except as otherwise provided herein, the Lessee covenants and agrees that if it shall any time fail to pay any such cost or expense, or fail to take out pay for maintain or deliver any of the insurance policies above required, or fail to make any other payment or perform any other act on its part to be made or performed as in this Lease provided, then the Lessor may, but shall not be OFFICE/WAREHOUSE LEASE obligated so to do, and upon 30 days prior written notice to or demand upon the Lessee and without waiving or releasing the Lessee from any obligations of the Lessee in this Lease contained, pay any such cost or expe. nse, effect any such insurance coverage and pay premiums therefor, and may make any other payment or perform any other act on the part of the Lessee to be made and performed as in this Lease provided, in such manner and to such extent as the Lessor may deem desirable, and in exercising any such right, to also pay all necessary and incidenta/costs and expenses, employ counsel and incur and pay reasonable attorneys' fees. All sums so paid by Lessor and all necessary and incidental costs and expenses in connection with the performance of any such act by the Lessor, together with interest thereon at the rate of 12% per annum from the date of making of such expenditure, by Lessor, shall be deemed addibonal rent hereunder, and shall be payable to Lessor on demand. Lessee covenants to pay any such sum or sums with interest as aforesaid and the Lessor shall have the same rights and remedies in the event of the nonpayment thereof by Lessee as in the case of default by Lessee in the payment of the Base Rent payable under this Lease. GENERAL: 36. The Lease does not create the relationship of principal agent or of partnership or of joint venture or of any association between Lessor and Lessee, the sole relationship between the parties hereto being that of Lessor and Lessee. 36.1 No waiver of any default of Lessee hereunder shall be implied from any omission by Lessor to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Lessor shall not then be construed as a waiver of a subsequent breach of the same covenant, term or condition. The consent to or approval by Lessor of any act by Lessee requiring Lessor's consent or approval shall not waive or render unnecessary Lessor's consent to or approval of any subsequent similar act by Lessee shall be construed to be both a covenant and a condition. No action required or Deermitted to be taken by or on behalf of Lessor under the rms or provisions of this Lease shall be deemed to constitute an eviction or disturbance of Lessee's possession of the Demised Premises. All preliminary negotiations are merged into and incorporated in this Lease. The laws of the State of Minnesota shall govern the validity, performance and enforcement of this Lease. a. This Lease and the exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Lessor and Lessee affecting the Demised Premises and there are no other agreements, subsequent alteration, amendment, change or addition to this Lease shall be binding upon Lessor or Lessee unless reduced to writing and executed in the same form and manner in which this Lease is executed. b. If any agreement, covenant or condition 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 agreement, covenant or condition to persons or circumstances other than those as to which it ~s held invalid or unenforceable, shall not be affected thereby and each agreement, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law. HAZARDOUS MATERIAL: Doc~ 162025'~7 37. The Demised Premises hereby leased shall be used by and/or at the sufferance of Lessee only for the purpose set forth in Article 11 above and for no other i~urposes. Lessee shall not use or permit the use of the emised Premises in any manner that will tend to create waste or a nuisance, or will tend to unreasonably disturb other Lessees in the Building or the Premises. 37.1 Lessee covenants through the Lease Term, at Lessee's sole cost and expense, promptly to comply with all laws and ordinances and the orders, rules and regulations and requirements of all federal, state and municipal governments and appropriate departments, commission, boards, and officers thereof, and the orders, rules and regulations of the Board of Fire Underwriters where the Demised Premises are situated, or any other body now or hereafter as well as extraordinary, and whether or not the same require structural repairs or alterations, which may be applicable to the Demised Premises, or the use or manner of use of the Demised Premises. Lessee will likewise observe and comply with the requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the Building and improvements on the Demised Premises and the equipment thereof. 37.2 In the event any Hazardous Material (hereinafter defined) is brought or caused to be brought into or onto the Demised Premises, the Building or the Premises by Lessee, Lessee shall handle any such material in compliance with all applicable federal, state and/or local regulations. For purposes of this Article, "Hazardous Material" means and includes any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation, and Liability Act, any so-called "Superfund" or "Superlien" law, or any federal, state or local statute, law, ordinance, code, rule, regulation, order decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or materials, as now or at any time hereafter in effect. Lessee shall submit to Lessor on an annual basis copies of its approved hazardous materials communication plan, OSHA monitoring plan, and permits required by the Resource Recovery and Conservation Act of 1976, if Lessee is required to prepare, file or obtain any such plans or permits. Lessee will indemnify and hold harmless Lessor from any losses, liabilities, damages, costs or expenses (including reasonable attorneys' fees) which Lessor may suffer or incur as a result of Lessee's introduction into or onto the Demised Premises, Building or Premises of any Hazardous Material. This Article shall survive the expiration or sooner termination of this Lease. CAPTIONS: 38. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease nor the intent or any provision thereof. ATTACHMENTS: 39. See also rider attached hereto and made a part hereof as well as Exhibits A through B-l, inclusive, which Exhibits are attached hereto and made a part hereof. Exhibit Description Exhibit A Legal Description Exhibit B Warehouse Demised Premises Horizontal Lines) and Substitute emised Premises (Diagonal Lines) Exhibit B-1 Office Demised Premises and Substitute Demised Premises OFFICE/WAREHOUSE LEASE SUBMISSION: 40. Submission of this instrument to Lessee or proposed Lessee or his agents or attorneys for examination, review, consideration or signature does not constitute or imply an offer to lease reservation of space, or option to lease, and this instrument shall have no binding legal effect until execution hereof by both Lessor/Owner and Lessee or its agents. REPRESENTATION: It is agreed and understood that Chris Hickok and Mark Sims, agents or brokers with United Properties Brokerage, LLC are representing Lessor, and that Lessor shall be solely responsible for the payment to them of any agency or brokerage fee in connection with this transaction. Lessee is not represented by any agent or broker in connection with this transaction. IN WITNESS WHEREOF, the Lessor and the Lessee have caused these presents to be executed in form and manner sufficient to bind them at law, as of the day and year first above written. Lessee: CITY OF MOUND, a Minnesota municipal corporation By: Kandis M. Hanson Its: City Manager STATE OF MINNESOTA /ss: COUNTY OF HENNEPIN Lessor: BALBOA CENTER LIMITED PARTNERSHIP, a Texas limited partnership By: Shoreline Boulevard LLC Its: General Partner By: Kid C. Woodhouse Its: Manager On this day of October, 2002, personally came before me, a Notary Public within and for said County, Kirt C. Woodhouse, manager of Shoreline Boulevard LLC general partner of Balboa Center Limited Partnership, a Texas limited partnership, on behalf of the partnership. STATE OF MINNESOTA /ss: COUNTY OF HENNEPIN Notary Public On this ~ day of October, 2002, personallycame before me, a Notary Public within and for said County, Kandis M. Hanson the City Manager of the City of Mound, a Minnesota municipal corporation, on behalf of the corporation. Notary Public Doc# 1620257~7 OFFICE/WAREHOUSE LEASE RllbER TO LEAgE bETWEEN I~AL~OA CENTER UM~TED PARNTERSH~P AND QTY OF MOUND Base Rent is payable pursuant to Article 2 as follows: LEASE YEAR ANNUAL BASE RENT MONTHLY BASE RENT ANNUAL BASE RENT PER SQ. FT. Office Space $7,293.00 $607.75 $11.00 (663 square feet) Warehouse Space $50,000.00 $4,166.67 $5.00 (10,000 square feet/ TOTAL $4,774.42 MONTHLY PAYMENT ARTICLE 42: RIGHT OF SUBSTITUTION Lessor reserves the right on thirty (30) days notice to Lessee, to substitute the Substitute Demised Premises for the Demised Premises hereunder. The warehouse portion of the Substitute Demised Premises shall be as set forth by diagonal lines on Exhibit "B." The office portion of the Substitute Demised Premises shall be the same as the office portion of the Demised Premises, or at Lessor's option, shall be other office space which contain substantially the same square footage as the office portion of the Demised Premises contains at the time Lessor exercises such right and shall contain comparable improvements. The base rent for the Substitute Demised Premises shall not exceed the Base Rent per square foot specified in Article 2 hereof and shall equal $4,357.75 per month. If the Lessor exercises its right to substitute the Substitute Demised Premises for the Demised Premises, the parties acknowledge that the overhead door servicing the Substitute Demised Premises requires replacement and the parties agree that the cost thereof (estimated to be approximately $11,000) shall be split equally between the parties. Lessor shall arrange to have such door replaced prior to the expiration of said thirty (30) day notice period and Lessee shall reimburse Lessor, Lessee's share of such replacement costs, within ten (10) days of submission by Lessor to Lessee of the invoices substantiating said costs, as additional rent hereunder. ARTICLE 43: RIGHT OF PARTIAL GIVE-BACK OF OFFICE SPACE The parties acknowledge that the office portion of the Demised Premises consist of two separate areas, one containing approximately 442 square feet (the "Large Office") and a second containing approximately 221 square feet (the "Small Office"). Lessor acknowledges and agrees that Lessee shall have the right and option to reduce the office portion of the Demised Premises by deleting and removing the Small Office therefrom (the "Reduction Option") by giving not less than 45 days written notice to Lessor ("Reduction Notice") of the date Lessee shall return possession to the Small Office (the Reduction Date"). The parties agree the Reduction Date shall be the last day of the month and shall not be prior to July 31,2003. Lessor agrees that the Reduction Option shall apply, if Lessor exercises its right to substitute the Substitute Demised Premises, but only if the Substitute Demised Premises consists of the Large Office and the Small Office as defined above. Notwithstanding anything else contained herein to the contrary, if Lessee gives a Reduction Notice in compliance with this Article, then Lessee shall surrender possession to the Small Office pursuant to the provisions of Article 29 of this Lease on or before midnight on the Reduction Date. Lessee acknowledges that if it fails to so surrender possession of the Small Office on or before the Confinement Date pursuant to Article 17 of this Lease Agreement it shall be an Event of Default without any notice required to be given to Lessee, and Lessor shall be entitled to all the remedies afforded it for any Event of Default, except that Lessor may commence an action to obtain possession of the Small Office, with or without obtaining possession of the balance of the Premises. If Lessee does surrender possession of the Small Office on or before the Reduction Date pursuant to Article 17 of this Lease, then on the day after the Reduction Date the Base Rent payable pursuant to Article 2 of this Lease shall be reduced in the amount of $202.58 per month. As of the end of the Reduction Date, Lessee shall and hereby does transfer, convey, quitclaim and assign to Lessor all of its rights and interests in and to the Small Office and all improvements located therein; provided the foregoing does not in any way relieve Lessee from its obligations under Article 29 hereof, with respect to the Small Office or Lessee's obligation to pay the Base Rental on the Small Office for periods up to and including the Reduction Date. EXHIBIT A Lots 19 to 21 inclusive Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnetonka." That part of Lots 22 and 23, Block 11, lying south of a line drawn from the most westerly corner of Block 9 to the point of intersection of the southeasterly line of Block 11 with a line drawn parallel to and 40 feet northerly, measured at right angles, from the southerly line of Block 11 and its extension, all in "Abraham Lincoln Addition to Lakeside Park, Mound-Minnetonka." Lots 1 to 5 inclusive, Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnetonka", according to the duly recorded plat thereof. The northerly, westerly and southerly boundary lines of said Lot 1, the northerly and southerly boundary lines of said Lots 2, 3 and 4, and the, and the northerly, easterly and southerly boundary lines of said Lot 5 are marked by judicial landmarks set at the northwest and southwest corners of said Lot 1, at the southeast corner of said Lot 5 and at a point on the Easterly line of said Lot 5 distant 4 feet Southeasterly from the northeast corner of said Lot 5, pursuant to Torrens Case No. 15803. Lots 23 to 28 inclusive, "Koehler's Addition to Mound", Lake Minnetonka, according to the recorded plat thereof. The north, east and southerly boundary lines of said Lot 23, the north and south boundary lines of said Lots 24, 25, 26 and 27, the north, west and southerly boundary lines of said Lot 28 are marked by judicial landmarks set at the northwest and southwest corners of said Lot 28 at the northeast and southwest corners of said Lot 28 at the northeast and southeast corners of said Lot 23, pursuant to Torrens Case No. 15804. Lots 6 to 12 inclusive, Block 11 "Abraham Lincoln Addition to Lakeside Park, Mound, Minnesota", according to the duly recorded plat thereof. Lots 13 to 18 inclusive, Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnesota", according to the duly recorded plat thereof. The easterly line of Lot 18, Block 11, said subdivision is marked by judicial landmarks set pursuant to Case No. 15803. That part of Lot 36, Auditor's Subdivision No. 170, Hennepin County, Minnesota, and that part of the southwest 1/4 of the southwest 1/4 of Section 13, Township 117, Range 24, all described as beginning at a point on the north line of said Lot 36, distant 25 feet west from the northeast corner thereof, which point is marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence east to the northeast corner of said Lot 36, which point is marked by judicial landmark set pursuant to Torrens Case No. 16002; thence south along the east line of said Lot 36 and its extension to an intersection with a line drawn parallel to and 33 feet southerly from the southerly line of said Lot 36; thence westerly along the last described parallel line to its intersection with a line drawn south, parallel to the east line of said Lot 36 and its extension from the point of beginning; thence north along said last described parallel line 34.15 feet to a point marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence continuing north along said last described line 121.9 feet to the point of beginning. That part of Lot 8, Block 5, Sylvan Heights Addition to Mound-Minnetrista Township, Hennepin County, Minnesota, described as follows: beginning at the northwest corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 16002, thence east along the north line of said Lot 8, 358.35 feet to a point which is 134.4 feet westerly from the northeast corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 15805; thence south parallel to the east line of said Lot 8, 287.3 feet to the south line of said Lot 8, which Doc~ 1520257~7 point is marked by a judicial landmark set pursuant to Torrens Case No. 15805, thence westerly and northwesterly along the south line of said Lot 8,207.77 feet to a point which is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence continuing northwesterly along said south line 162.58 feet to a point which is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence continuing northwesterly along said south line to the west line of said Lot 8; thence northerly along the west line of said Lot 8 to a point which is 40.14 feet south of the northwest corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence according to the recorded plat thereof. That part of the southwest 1/4 of the southwest 1/4, Section 13, Township 117, Range 24 described as beginning at the northeast corner of Lot 36, Auditor's Subdivision No. 170. Hennepin County, Minnesota, said point being marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence westerly, along the north line of said Lot 36 a distance of 25 feet to a point marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence north parallel with the east line of said southwest 1/4 of the southwest 1/4, to the point of intersection with a line 40 feet northerly of measured at a right angle to and parallel with the northerly line of said Lot 36 said point of intersection being marked by a judicial landmark set pursuant to Torrens Case No. 17105 thence easterly, along the last described parallel line a distance of 25 feet to the point of intersection with the east line of said southwest 1/4 of the southwest 1/4, said point of intersection being marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence south, along said east line, to the point of beginning, according to the Government Survey thereof. Lots 10 to 14 inclusive, and that part of Lot 15, lying north of the south 8 feet thereof, all in Block 2, L.P. Crevier's Subdivision of part of Lot 36 Lafayette Park. Lots 1 to 11 inclusive, Block 5; Lots 1 to 7 inclusive, and that part of Lot 8 lying easterly of a line drawn south, parallel to the east line of Lot 8, from a point on the northerly line thereof distant 134.4 feet westerly from the northeast corner of Lot 8, Block 6; All of Yost Street, vacated, lying between the extension across said street of the northerly lines of Lots 1 to 6 inclusive, Block 6, and a line drawn from the southwest corner of Lot 1, Block 6, to the southeast corner of Lot 11, Block 5; All in Sylvan Heights Addition to Mound-Minnetrista Township, Hennepin County, Minnesota, according to the recorded plat thereof. The boundary lines of the above tract have been judicially determined and marked by judicial landmarks as shown by Torrens Case No. 15805. Lot 1, Block 1 and Lot 1, Block 2, Balboa Addition, Hennepin County, Minnesota. DOC~ 1620257~7 EXHIBIT B Exhibit B · DOC# 1620257~7 EXHIBIT B-1 Exhibit B-I DOC~ 1620257~? OFFICE/WARE~OLISE LEASE THIS INDENTURE of lease, entered into as of the 30th. day of Aug~tOctober~. 2002, by and between BALBOA CENTER LIMITED PARTNERSHIP, a Texas limited partnership, hereinafter referred to as "Lessor," and CITY OF MOUND, a Minnesota municipal corporation, hereinafter referred to as "Lessee". DEFINITIONS: "Building" - That certain office/warehouse building containing approximately 340,364 square feet located upon the Premises and commonly described 5300-5900 ShorelineDrive, Mound, Minnesota. "Common Areas" - The term "common area" means the entire areas to be used for the non-exclusive use by Lessee and other lessees in the Building, including, but not limited to, corridors, lavatories, driveways, truck docks, parking lots and landscaped areas. Subject to reasonable rules and regulations promulgated by Lessor, the common areas are hereby made available to Lessee and its employees, agents, customers, and mvitees for reasonable use in common with other lessees, their employees, agents, customers and invitees. Lessor shall utilize its best efforts to keep driveway areas providing access to the Demised Premises free of all obstructions that would prevent ingress and egress to and from the Demised Premises; however, Lessor shall not be required to tow cars or impose sanctions or default other tenants as part of such best efforts. "Demised Premises" - That certain portion of the Building located at 5300 Shoreline Drive, Mound, Minnesota (this address is temporary at this time and Lessee will obtain a permanent address from the city upon occupancy) and designated by horizontal lines (when the page is in a landscape orientation) on Exhibit "B" and diagonal lines on Exhibit "B-I", consisting of approximately 10,663 square feet/,6,63 square feet office space as shown on Exhibit "B-I" and 10,000 square feet of warehouse space as shown on Exhibit B"), as measured from the outside walls of the Demised Premises to the center of the partition wall, as shown on the floor plan attached hereto as Exhibits "B" and "B-I" and made a part hereof. The Demised Premises include a non-exclusive easement for access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises. "Premises" - That certain real property located in the City of Mound, County of Hennepin and State of Minnesota, and legally described on Exhibit "A" attached hereto and made a part hereof, including all buildings and site improvements located thereon. "Substitute Demised Premises" - That certain portion of the Building designated by diagonal lines on Exhibits "B" and "B-I", consisting of approximately 9,663 square feet (663 sguare feet office space and 9,000 square feet of warehouse space), as measured from the outside walls of the Demised Premises to the center of the partition wall, as shown on the floor plan attached hereto as Exhibits "B" and "B-I" and made a part hereof. The Substitute Demised Premises include a non-exclusive easement for access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises. The office portion of the Substitute Demised Premises is the same as the office portion of the Demised Premises. A portion of the warehouse portion of the Substitute Demised Premises over- laps and is the same as a portion of the Demised Premises, as shown on Exhibit "B" WlTNESSETH: TERM: 1. For and in consideration of the rents, additional rents, terms, provisions and covenants herein contained, Lessor hereby lets, leases and demises to Lessee the. Demised Premises for t,h,.e term commencing on the 1s, day of SeptemberFebruary, 2.0022003 (sometimes called the Commencement Date ) and expiring July January 31,200~2004 (sometimes called "Expiration Date"), unless sooner terminated as hereinafter provided, subject to the right of Lessee-~-[6 two one month extensions by giving notice (the "Extension Notice") of exercise of such extensions to Lessor not later than ,April~ 30~31. .2, 0,0. 3. A, II the p,rov!sion,s of this, Lease, inclu, din~ the ren!als, will apply during any such extension periods. ~ne bx[ension No[ice snail indica[e whether Lessee is extending this Lease and the Expiration Date to either Augus~February 29; 2004 or March 31,2003~r-SeCembe~.-3O,-2003.2004. BASE RENT: 2. Lessor reserves and Lessee shall pay Lessor, a total rental of See Rider payable in advance, in equal monthly installments of See Rider commencing on the Commencement Date and continuing on the first day of each and every month thereafter for the next succeeding months during the balance of the term. In the event the Commencement Date falls on a date other than the first of a month the rental for that month shall be prorated and adjusted accordingly. ADDITIONAL RENT: 3. (Intentionally Omitted) COVENANT TO PAY RENT: 4. The covenants of Lessee to pay the Base Rent and the Additional Rent are each independent of any other covenant, condition, provision or agreement contained in this Lease. All rents are payable to Lessor c/o United Properties, NW-9044, P.O. Box 1450, Doc# 162025TTredline of 6 to 7 Minneapolis, MN 55485-9044 or at such other address Lessor shall notify Lessee from time to time. UTILITIES: 5. Lessor shall provide mains and conduits to supply water, gas, electricity and sanitary sewage to the Premises: all of which shall be suDnh'ed at Eessor's expense. Lessee shall pay, when dde, all charges for · seweF--u sage.-..~.e~..-....re~tal~--gar4~age~- -~tisposa~.~--~efuse telepheV'"~'~"e~a~-~:~t~all oth~'~"'~'~2~u~t~c.~--~- ..en'~ ~ seur6e-~nished ~ the Demised-l~cem4ses.-~.iRg--~he OFFICE/WAREHOUSE LEASE te~m-.ef- th, is !=ea se~.. or~-..any...¢e~ewal-e¢ exter+sion..4h ereef-;. lf-4_-esser-ele6ts-~e-fu.mish-..ar¥/-ef-the-.forege~ng--~til-i~t.y ,service8 - -cra et he~sepci6e s- -f:u,~c, ished- ap. -6aM~,ed.....te-. be f~n.i~hed-.te~-essee~.-.thef~-f~~edd~y-Ee~e~ ~h Ar~: CARE AND REPAIR OF DE~ISED PREMISES: 8. Lessee shall, ~t 811 times lhreughout lhe form of this Lesse, including renewals 8nd extensions, 8nd 8t its sole expense, keep 8nd m~inlsin the Demised Premises in 8 clesn, ssfe, ssnifsry 8nd firsl clsss condition 8nd in complisnce with dl 8pplicsble 18ws, codes, erdinsnces, rules ~nd regulstions. Lessee"s obligslions hereunder shall include but not be limited lo the mdntensnce, repsir 8nd re~lscement, if necesssry, of hosting, 8ir conditioning fixtures, equipment, 8nd systems, 811 lighting 8nd plumbing fixtures 8nd equipment, fixtures, meters 8nd mschinery, 811 interior wsIIs, ps~ilions, doers 8nd windows, including the regulsr psinting thereof, 811 exterior enfrsnces, windows, doors 8nd docks 8nd the replscement of dl broken glsss. When used in this provision, lhe term "repsirs" shall include replscemenls or renewals when necesssry, 8nd dl such repsirs msde b~ the Lessee shall be equal in qualify 8nd clsss to the quslity ~nd clsss thsl existed 8s of the dsle of this Ee~se. In the event 8ny single of the foregoing items for which Lessee is responsible, requires red, cement, due to normal we~r 8nd tear [~nd not if due lo the negligent ~se or 8buse b~ Lessee) ~nd the cost thereof exceeds ~1,500, lhen Lessee shsIl notify Lessor 8nd Lessor shsII ~rr~n~e for such replscemenl (herein referred fo "C~pii~l Repl~cem~nl"). The cost of ~ny such ~eplscemenf will initially be borne by Lessor, albeit Lesser shall 8mo~ize such costs (together with ~n inleresl rsle 8l the prime or reference rsfe of interest 8s then existing 8t U8 Bsnk NsliensI Associstion) in equal monthly insisIImenfs ever the useful life ef the CspitsI ~eplscemenl (lhe "~mo~iz~tion Period") ~nd Lessee's rental ps~menls shsII be incressed by the 8mount of such 8mertized psyments during the remdning bsIsnce of the Term ~nd 8ny extended er renewal term of the Lesse (but nol for 8 period longer thsn the Amo~izstien Period). The Lessee sh~ll keep 8nd msintsin 811 potions af the Demised Premises 8nd lhe sidewalk 8nd 8ross 8djoining the s~me in 8 clesn 8nd erderl~ condilion, free of ~ccumul~tion of dirt, rubbish, snow 8nd ice. 8.1 If Lessee fsils, refuses or neglects ta msinldn er repdr the Demised Premises 8s required in this Lesse 8fter 3~ dsy notice shsII hsve been given Lessee, in 8ccordsnce with A~icle 33 of this Lesse, Lessor m~y mske such repsirs without lisbilit~ fe Lessee for 8ny loss ar dsmsge lhst rosy 8ccrue to Lessee"s merchandise, fixtures or other prope~y or lo Lessee's business b~ robson lhereef, 8nd upon completion lhereof, Lessee shsII ps~ lo Lessor dl casts plus 15% for overhesd incurred by Lessor in tasking such repsirs upon presentslion lo Lessee of bill therefor. 8.2 Lessor shsII repsir, 8t its expense, the structural potions of lhe Building, provided however where struclursI repsirs 8re required lo be msde by robson of lhe 8cls of Eessee, the costs thereof shall be borne by Lessee 8nd ps~sble by Lessee te Lessor upon demsnd. 8.3 The Lessor shall be responsible for dl outside msintensnce of the Demised Premises, including grounds ~nd psrking 8ross. All such mdnlen~nce which is the responsibility of the Lessor shsII be provided 8s ressonsbly necesssw to the comfo~sble use 8nd occupsncy of Demised Premises during business hours, excep, t Saturdays, Sundays and holidays, upon the condition that the Lessor shall not be liable for damages for failure to do so due to causes beyond its control. Notwithstanding the foregoing, the Lessee shall have the right, at its sole cost and expense to plow and otherwise maintain the driveway and parking areas as necessary to assure continuous access to the Demised Premises. SIGNS: 7. Any sign, lettering, picture, notice or advertisement installed on or in any part of the Premises and visible from the exterior of the Building, or visible from exterior of the Demised Premises, shall be approved and installed by Lessor at Lessee's expense. In the event of a violation of the foregoing by Lessee, Lessor may remove the same without any liability and may charge the expense incurred by such removal to Lessee. Notwithstanding the foregoing, the Lessee shall be entitled, at its sole cost and expense, to install, at locations on the property agreed to by the Lessor, informational and directional signs identifying the Lessee's fire department operations. Lessor will promptly review the proposed location of such signs. ALTERATIONS, INSTALLATION, FIXTURES: 8. Except as hereinafter provided, Lessee shall not make any alteration, additions, or improvements in or to the Demised Premises or add, disturb or in any way change any plumbing or wiring therein without the prior written consent of the Lessor. In the event alterations are required by any governmental agency by reason of the use and occupancy of the Demised Premises by Lessee, Lessee shall make such alterations at its own cost and expense after first obtaining Lessor's approval of plans and specifications therefor and furnishing such indemnification as Lessor may reasonably require against liens, costs, damages and expenses arising out of such alterations. Alterations or additions by Lessee must be built in compliance with all laws, ordinances and governmental regulations affecting the Premises and Lessee shall warrant to Lessor that all such alterations, additions, or improvements shall be in strict compliance with all relevant laws, ordinances, governmental regulations, and insurance requirements. Construction of such alterations or additions shall commence only upon Lessee obtaining and exhibiting to Lessor the requisite approvals, licenses and permits and indemnification against liens. All alterations installations, physical additions or improvements to the Demised Premises made by Lessee shall at once become the property of Lessor and shall be surrendered to Lessor upon the termination of this Lease; provided, however, this clause shall not apply to movable equipment or furniture owned by Lessee which may be removed by Lessee at the end of the term of this Lease if Lessee is not then in default. Lessee shall be responsible for all costs related to improvements or modifications to the Demised Premises required or necessary to comply with the Americans With Disabilities Act of 1990 (ADA), or similar statutes or law. Lessee has informed Lessor of Lessee's need to construct an entrance ramp to access the portion of the Substitute Demised Premises where fire vehicles will be kept. Lessor consents to the construction of the ramp and hereby orants Lessee access to the Demised PremiSes-prior to the Commencement Date of this Lease for 'the limited Duroose of constructino said ramp. which access i3ri(~r to the Commenc~ment Dat~ 'of this Lease shall be subiect to all of the terms, covenants and provisions (~f this Lease save and e~(ceDt no rent shall be Davable, Lessee agrees t° constrL~ct said ramp prior 'to'©6tel~e~--l~-..-..2.002~the Commencement Date of this Lease,. OFFICE/WAREHOUSE LEASE lesseeLessee's sole cost and expense, so that if Lessor exercises--~-it~-right to substitute the Substitute Demised Premises for the Demised Premises pursuant to Article 42 of the Rider to this Lease, said space shall be useable by Lessee. Lessor further acknowledges that Lessee shall have no obligation to remove such ramp upon the expiration of this lease; provided Lessee has complied with the other provisions of this Section. "AS IS;" POSSESSION: 9. Lessee acknowledges and agrees that it shall be leasing the Demised Premises in their existing "as is" condition without any obligation on the part of Lessor to make any alterations, modifications or improvements thereto or provide any allowances therefor. Except as hereinafter provided Lessor shall deliver possession of the Demised Premises to Lessee in the condition required by this Lease on or before the Commencement Date, but delivery of possession prior to or later than such Commencement Date shall not affect the expiration date of this Lease. The rentals herein reserved shall commence on the Commencement Date, provided if the Demised Premises are not ready for occupancy by Commencement Date and possession is later than Commencement Date, rent shall begin on date of oOSSession, or the date the Demised Premises are ready r occupancy whichever occurs first. Any occupancy by Lessee prior to the beginning of the term shall in all respects be the same as that of a Lessee under this Lease. Lessor shall have no responsibility or liability for loss or damage to fixtures, facilities or equipment installed or left on the Demised Premises. Notwithstandino the foreooino. Lessor aorees to replace the exi-stino over~ead-'oaraoe dodr in the D~mised Premises ~rior to the C~)mn~encement Date of this Lease. As L~ssee's share of the cost of such replacement. Lessee shall Dav Lessor $5.500.00 wi'thin ten t10) davs followin(J written notrice bv Lessor that' s'uch 'reDlacemer~t of the overhea~t garage door has been (~ompleted. SECURITY AND DAMAGE DEPOSIT: 10. (Intentionally Omitted) USE: 11. The Demised Premises shall be used and occupied by Lessee solely as a temporary fire station facility. The Mound Fire Department will perform all normal fire department operations including: apparatus and equipment storage, emergency responses and training activities within or on the Demised Premises. The Demised Premises shall not be used in such manner that, in accordance with any requirement of law or of any public authority, Lessor shallbe obligated on account of the purpose or manner of said use to make any addition or alteration to or in the Building. The Demised Premises shall not be used in any manner which will increase the rates required to be paid for public liability or for fire and extended coverage ~nsurance covering the Premises, unless the Lessee agrees to be responsible for such increased rates. Subject to permitting the Lessee to conduct normal fire department operations on the Demised Premises Lessee shall occupy the Demised Premises, conduct its business and control its agents, employees invitees and visitors in such a way as is lawful, and reputable and will not permit or create any nuisance, noise, odor or otherwise interfere with, annoy or disturb any other tenant in the Building in its normal business operations or Lessor in its management of the Building. Subject to Lessee's right to conduct normal fire department operations on the Demised Premises, Lessee's use of the Demised Premises shall conform to all the Lessor's rules and regulations relating to use of the Premises. Outside storage on the Premises of any type of equipment, property or materials owned or used on the Premises by Lessee or its customers and suppliers shall not be permitted without the consent of Lessor. ACCESS TO DEMISED PREMISES: 12. The Lessee agrees to permit the Lessor and the authorized representatives of the Lessor to enter the Demised Premises at all times during usual business hours for the purpose of inspecting the same and making any necessary repairs to the Demised Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority or of theBoard of Fire Underwriters or any similar body or that the Lessor may deem necessary to prevent waste or deterioration in connection with the Demised Premises. Nothing herein shall imply any duty upon the part of the Lessor to do any such work which, under any provision of this Lease, the Lessee may be required to perform and the performance thereof by the Lessor shall not constitute a waiver of the Lessee's default in failing to perform the same. The Lessor may, during the progress of any work in the Demised Premises, keep and store upon the Demised Premises all necessary materials, tools and equipment. The Lessor shall not in any event be liable for inconvenience, annoyance, disturbance, loss of business, or other damage of the Lessee by reason of making repairs or the performance of any work in the Demised Premises, or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof and the obligations of the Lessee under this Lease shall not thereby be affected in any manner whatsoever. Notwithstanding the foregoing, Lessee may refuse to allow entry to make repairs and perform work in instances where the Lessee reasonably believes that such entry will likely interfere with the normal fire department operations; and the entry is not upon the order of'any public authority. If the Lessee refuses entry it will be liable for any waste, damages or deterioration to the Premises resulting from such refusal. 12.1 Lessor reserves the right to enter upon the Demised Premises at any time in the event of an emergency and at reasonable hours upon reasonable verbal notice to exhibit the Demised Premises to ~)rospective purchasers or others; and to exhibit the emised Premises to prospective Lessees and to the display "For Lease" or similar signs on windows or doors in the Demised Premises duringthe last 120 days of the term of this Lease, all without hindrance or molestation by Lessee. EMINENT DOMAIN: 13. In the event of any eminent domain or condemnation proceeding or private sale in lieu thereof in respect to the Premises during the term thereof, the following provisions shall apply: a. If the whole of the Premises shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the term of this Lease shall cease and terminate as of the date possession shall be taken in such proceeding and all rentals shall be paid up to that date. b. If any part constituting less than the whole of the Premises shall be acquired or condemned as aforesaid, and in the event that such partial taking or OFFICE/WAREHOUSE LEASE eonclernnation hall materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Lessee, in the reasonable opinion of Lessor, then the term of this Lease shall cease and terminate as of the date possession shall be taken by the condemning authority and rent shall be paid to the date of such termination. c. In the event of a partial taking or condemnation of the Premises which shall not materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Lessee, in the reasonable opinion of the Lessor, this Lease shall continue in full force and effect but with a PAroportionate abatement of the Base Rent and dditional Rent based on the portion, if any, of the Demised Premises taken. Lessor reserves the right, at its option, to restore the Building and the Demised Premises to substantially the same condition as they were prior to such condemnation. In such event, Lessor shall give written notice to Lessee, within 30 days following the date possession shall be taken by the condemning authority, of Lessor's intention to restore. Upon Lessor's notice of election to restore, Lessor shall commence restoration and shall restore the Building and the Demised Premises with reasonable promptness, subject to delays beyond Lessor's control and delays in the making of condemnation or sale proceeds adjustments by Lessor; and Lessee shall have no right to terminate this Lease except as herein provided. Upon completion of such restoration, the rent shall be adjusted based upon the portion, if any, of the Demised Premises restored. d. In the event of any condemnation or taking as aforesaid, whether whole or partial, the Lessee shall not be entitled to any part of the award paid for such condemnation and Lessor is to receive the full amount of such award, the Lessee hereby expressly waiving any right to claim to any part thereof. e. Although all damages in the event of any condemnation shall belong to the Lessor whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Demised Premises, Lessee shall have the right to claim and recover from the condemning authority, but not from Lessor, such compensation as may be separately awarded or recoverable by Lessee in Lessee's own right on account of any and all damage to Lessee's business by reason of the condemnation and for or on account of any cost or loss to which Lessee might be put in removing Lessee's merchandise furniture, fixtures, leasehold improvements and equipment. However, Lessee shall have no claim against Lessor or make any claim with the condemning authority for the loss of its leasehold estate, any unexpired term or loss of any possible renewal or extension of said lease or loss of any possible value of said lease, any unexpired term renewal or extension of said Lease. DAMAGE OR DESTRUCTION: 14. In the event of any damage or destruction to the Premises by fire or other cause during the term hereof the fo ow ng prov s OhS shall apply: a. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Lessor, will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of foundations) just prior to the occurrence of the damage, then Lessor may, no later than the sixtieth (60th) day following the damage, give Lessee written notice of Lessor's election to terminate this Lease. DOC# '1620257~7 b. If the co t of re toration e tirnated by Lessor will equal or exceed 50% of said replacement value of the Building and if the Demised Premises are not suitable as a result of said damage for the purposes for which they are demised hereunder, in the reasonable opinion of Lessee, then Lessee may, no later than the 60th day following the damage, give Lessor a written notice of election to terminate this Lease. c. If the cost of restoration as estimated by Lessor shall amount to less than 30% of said replacement value of the Building, or if, despite the cost, Lessor does not elect to terminate this Lease, Lessor shall restore the Building and the Demised Premises with reasonable promptness, subject to delays beyond Lessor's control and delays in the making of insurance adjustments by Lessor; and Lessee shall not be responsible for restoring or repairing leasehold improvements of the Lessee. d. In the event of either of the elections to terminate, this Lease shall be deemed to terminate on the date of the receipt of the notice of election and all rents shall be paid up to that date. Lessee shall have no claim against Lessor for the value of any unexpired term of this Lease. e. In any case where damage to the Building shall materially affect the Demised Premises so as to render them unsuitable in whole or in part for the purposes for which they are demised hereunder, then unless such destruction was wholly or partially caused by the negligence or breach of the terms of this Lease by Lessee, its employees, contractors or licensees, a portion of the rent based u. pon the amount of the extent which the Demised Premises are rendered unsuitable shall be abated until repaired or restored. If the destruction or damage was wholly or partially caused by negligence or breach of the terms of this Lease by Lessee as aforesaid and if Lessor shall elect to rebuild, the rent shall not abate and the Lessee shall remain liable for the same. CASUALTY INSURANCE: 15. Lessor shall at all times during the term of this Lease, at its expense maintain apolicy or policies of insurance with premiums paid in advance issued by an insurance company licensed to do business in the State of Minnesota insuring the Building against loss or damage by fire, explosion or other insurance hazards and contingencies for the full replacement value provided that Lessor shall not be obligated to insure any furniture, equipment, machinery, goods or supplies not covered bythis Lease which Lessee may bring upon the Demised Premises or any additional improvements which Lessee may construct or install on the Demised Premises. 15.1 Lessee shall not carry any stock of goods or do anything in or about the Demised Premises which will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Lease. 15.2 Lessor hereby waives and releases all claims, liability and causes of action against Lessee and its agents, servants and employees for loss or damage to, or destruction of, the Premises or any portion thereof, including the buildings and other improvements situated thereon, resulting from fire explosion and other perils included in standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise. Likewise, Lessee hereby waives and releases all claims, liabilities and causes of action against Lessor and its agents servants and employees for loss or damage to, or destruction of, any of the OFFICE/WAREHOUSE LEASE improvements, fixtures, equipment, supplies, merchandise and other property, whether that of Lessee or of others in, upon or about the Premises resulting from fire, explosion or the other perils included in standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise. The waiver shall remain in force whether or not the Lessee's insurer shall consent thereto. 15.3 In the event that the use of the Demised Premises by Lessee increases the premium rate for insurance carried by Lessor on the improvements of which the Demised Premises are a part, Lessee shall pay Lessor, upon demand, the amount of such premium ~ncrease. If Lessee installs any electrical equipment that overloads the power lines to the Building or its wiring, Lessee shall, at its own expense, make whatever changes are necessary to comply with the requirements of the insurance underwriter, insurance rating bureau and governmental authorities having jurisdiction. PUBLIC LIABILITY INSURANCE: 16. Lessee shall during the term hereof, keep in full force and effect at its expense a policy or policies of public liability insurance with respect to the Demised Premises and the business of Lessee in which both Lessee and Lessor shall be covered by being named as insured parties under reasonable limits of liability not less than: $1,000,000.00 per occurrence, $1,000,000.00 aggregate using current ISO General Liability forms or equivalent. Such policy or policies shall provide that ten (10) days written notice must be given to Lessor prior to cancellation thereof. Lessee shall furnish evidence satisfactory to Lessor at the time this Lease is executed that such coverage is in full force and effect. DEFAULT OF LESSEE: 17. In the event of any failure of Lessee to pay any rental due hereunder within 10 days after the same shall be due, or any failure to perform any other of the terms, conditions or covenants of this Lease to be observed or performed by Lessee for more than 30 days after written notice of such failure shall have been given to Lessee, or if Lessee or an agent of Lessee shall falsify any report required to be furnished to Lessor pursuant to the terms ofthis Lease, or if Lessee or any guarantor of this Lease shall become bankrupt or insolvent, or file any debtor proceedings or any person shall take or have against Lessee or any guarantor of this Lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee's or any such guarantor's property, or if Lessee or any such guarantor makes an assignment for the benefit of creditors or petitions for or enters into an arrangement, or if Lessee shall abandon the Demised Premises or suffer this Lease to be taken under any writ of execution, then in any such event Lessee shall be in default hereunder, and Lessor, in addition to their rights of remedies it may have, shall have the immediate right of re-entry and may remove all persons and property from the Demised Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Lessee, all without service of notice or resort to legal process and without being guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. 17.1 Should Lessor elect to re-enter the Demises Premises, as herein provided, or should it take possession of the Demised Premises pursuant to legal proceedings or pursuant to any notice provided forby law, it may either terminate this Lease or it may from Doc~ 1620257~.67 time to time, without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Demised Premises, and relet the Demised Premises or any part thereof upon such term or terms (which may be for a term extending beyond the term of this lease) and at such rental or rentals and upon such other terms and conditions as Lessor in its sole discretion may deem advisable. Upon each such subletting all rentals received by the Lessor from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Lessee to Lessor; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney's fees and costs of such alterations and repairs; third, to the payment of the rent due and unpaid payment of future rent as the same may become due and payable hereunder. If such rentals received from such reletting during any month be less than that to be paid during that month by Lessee hereunder, Lessee, upon demand, shall pay any such deficiency to Lessor. No such re-entry or taking possession of the Demised Premises by Lessor shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Lessee or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Lessor may at any time after such re-entry and reletting elect to terminate this Lease for any such breach, in addition to any other remedies it may have, it may recover from Lessee all damages it may incur by reason of such breach, including the cost of recovering the Demised Premises, reasonable attorney's fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term over the then reasonable rental value of the Demised Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Lessee to Lessor. 17.2 Lessor may, at its option, instead of exercising any other rights or remedies available to it in this Lease or otherwise by law, statute or equity, spend such money as is reasonably necessary to cure any default of Lessee herein and the amount so sp. ent, and costs incurred, including attorney's fees in curing such default, shall be paid byLessee, as additional rent, upon demand. 17.3 In the event suit shall be brought for recovery of possession of the Demised Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or because of the breach of any other covenant herein contained on the part of Lessee to be kept or performed, and a breach shall be established, Lessee shall pay to Lessor all expenses incurred therefor, including a reasonable attorney's fee, together with interest on all such expenses at the rate of 12% per annum from the date of such breach of the covenants of this Lease. 17.4 Lessee hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Lessee being evicted or dispossessed for any cause, or in the event of Lessor obtaining possession of the Demised Premises, by reason of the violation by Lessee of any of the covenants or conditions of this Lease, or otherwise. Lessee also waives any demand for possession of the Demised Premises, and-any demand for payment of rent and any notice of intent to re-enter the Demised Premises, or of intent to terminate this Lease, other than the notices above provided in this Article, and waives any and every other notice or demand prescribed by any applicable statutes or laws. 17.5 No remedy herein or elsewhere in this Lease or OFFICE/WAREHOUSE LEASE othe~ise by taw, statute or equity, conferred upon or reserved to Lessor or Lessee shall be exclusive of any other remedy, but shall be cumulative, and may be exercised from time to time and as often as the occasion may arise. COVENANTS TO HOLD HARMLESS: 18. Unless the liability for damage or loss is caused by th~ n~glioene~ of Le~or, it~ ~cl~nt~ or ~mployee~, Lessee shall hold harmless Lessor from any liability for damages to any person or property in or upon the Demised Premises and the Premises, including the person and the property of Lessee and its employees and all persons in the Building at its or their invitation or sufferance, and from all damages resulting from Lessee's failure to perform the covenants of this Lease. All property kept, maintained or stored on the Demised Premises shall be so kept, maintained or stored at the sole risk of Lessee. Lessee agrees to pay all sums of money in respect of any labor, service, materials supplies or equipment furnished or alleged to have been furnished to Lessee in or about the Premises, and not furnished on order of Lessor, which may be secured by any Mechanic's, Materialmen's or other lien to be discharged at the time performance of any obligation secured thereby matures, provided that Lessee may contest such lien, but if such lien is reduced to final judgment and if such judgment or process thereon is not stayed, or if stayed and said stay expires, then and in each such event, Lessee shall forthwith pay and discharge said judgment. Lessor shall have the right to post and maintain on the Demised Premises, notices of non-responsibility under the laws of the State of Minnesota. NON-LIABILITY: 19. Subject to the terms and conditions of Article 14 hereof, Lessor shall not be liable for damage to any property of Lessee or of others located on thePremises, nor for the loss of or damage to any property of Lessee or of others by. .theft or otherwise. Lessor shall not be liable for any ~njury or damage to persons or property resulting from fire, explosion, any injury or damage to persons or property resulting from fire explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Premises or from the pipes, appliances, or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any such damage caused by other Lessees or persons in the Premises, occupants of adjacent property, of the buildings, or the public or caused by operations in construction of any private, public or quas~- public work. Lessor shall not be liable for any latent defect in the Demised Premises. All property of Lessee kept or stored on the Demised Premises shall be so kept or stored at the risk of Lessee only and Lessee shall hold Lessor harmless from any claims arising out of damage to the same, including subrogation claims by Lessee's insurance carrier. SUBORDINATION: 20. This Lease shall be subordinated to any mortgages that may not exist or that may hereafter be placed upon the Demised Premises and to any and all advances made thereunder, and to the interest upon the indebtedness evidenced by such mortgages, and to all renewals, replacements and extensions thereof. In the event of execution by Lessor after the date of this Lease ef ~ny ~uch mortgage, renewal, replacement or extension, Lessee agrees to execute a subordination agreement with the holder thereof which agreement shall provide that: a. Such holder shall not disturb the possession and other rights of Lessee under this Lease so long as Lessee is not in default hereunder, b. In the event of acquisition of title to the Demised Premises by such holder, such holder shall accept the Lessee as Lessee of the Demised Premises under the terms and conditions of this Lease and shall perform all the obligations of Lessor hereunder, and c. The Lessee shall recognize such holder as Lessor hereunder. 20.1 Lessee shall, upon receipt of a request from Lessor therefor, execute and deliver to Lessor or to any proposed holder of a mortgage or trust deed or to any proposed purchaser of the Premises, a certificate in recordable form, certifying that this Lease is in full force and effect, and that there are no offsets against rent nor defenses to Lessee's performance under this Lease or setting forth any such offsets or defenses claimed by Lessee as the case may be. ASSIGNMENT OR SUBLETTING: 21. Lessee agrees to use and occupy the Demised Premises throughout the entire term hereof for the purpose of purposes herein specified and for no other purposes, in the manner and to substantially the extent now intended, and not to transfer or assign this Lease or sublet said Demised Premises, or any part thereof, whether by voluntary act, operation of law or otherwise, without obtaining the prior written consent of Lessor in each instance. Lessee shall seek such consent of Lessor by a written request therefor setting forth such information as Lessor may deem necessary. Lessor agrees not to withhold consent unreasonably. Consent by Lessor to any assignment of this Lease or to any subletting of the Demised Premises shall not be a waiver of Lessor's rights under this Article as to any subsequent assignment or subletting. Lessor's rights [o assign this Lease are and shall remain unqualified. No such assignment or subleasing shall relieve the Lessee from any of Lessee's obligations in this Lease contained, nor shall any assignmen[or sublease or other transfer of this Lease be effective unless the assignee, sublessee or transferee shall at the time of such assignment sub ease or transfer, assume in writing for the benefit of Lessor, its successors or assigns all of the terms covenants and cond tons of th s Lease thereafter to be lerformed by Lessee and shall agree in writing to be ound thereby. Should Lessee sublease in accordance with the terms of this Lease, 100% of any increase in rental received by Lessee over the per square foot rental rate which is being paid by Lessee shallbe forwarded to and retained by Lessor, which increase shall be in addition to the Base Rent and Additional Rent due Lessor under this Lease. ATTORN M ENT: 22. In the event of a sale or assignment of Lessor's Doc# 1620257~67 OFFICE/WAREHOUSE LEASE interest, in the Premises, or the Building in which the Demised Premises are located, or this Lease, or if the Premises come into custody or possession of a mortgagee or any other party whether because of a mortgage foreclosure, or otherwise, Lessee shall attorn to such assignee or other party and recognize such party as Lessor hereunder; prowded, however, Lessee's peaceable possession will not be disturbed so long as Lessee faithfully performs its obligations under this Lease. Lessee shall execute, on demand, any attornment agreement required by any such party to be exequ!ed, containing such provisions and such other prows~ons as such party may require. NOVATION IN THE EVENT OF SALE: 23. In the event of the sale of the Demised Premises, Lessor shall be and hereby is relieved of all of the covenants and obligations created hereby accruing from and after the date of sale, and such sale shall result automatically in the purchaser assuming and agreeing to carry out all the covenants and obligations of Lessor herein. Notwithstanding the foregoing provisions of this Article, Lessor, in the event of a sale of the Demised Premises, shall cause to be included in this agreement of sale and purchase a covenant whereby the purchase of the Demised Premises assumes and agrees to carry out all of the covenants and obligations of Lessor herein. 23.1 The Lessee agrees at any time and from time to time upon not less than 10 days prior written request by the Lessor to execute, acknowledge and deliver to the Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect as modified and stating the modifications, and the dates to which the basic rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of the Demised Premises. SUCCESSORS AND ASSIGNS: 24. The terms, covenants and conditions hereof shall be binding upon and inure to the successors and assigns of the parties hereto. REMOVAL OF FIXTURES: 25. Notwithstanding anything contained in Article 8, 29 or elsewhere in this Lease, ~f Lessor requests then Lessee will promptly remove at the sole cost and expense of Lessee all fixtures, equipment and alterations made by Lessee simultaneously with vacating the Demised Premises and Lessee will promptly restore said Demised Premises to the condition tha(existed immediately prior to said fixtures, equipment and alterations having been made all at the sole cost and expense of Lessee. QUIET ENJOYMENT: 26. Lessor warrants that it has full right to execute and to perform this Lease and to grant the estate demised, and that Lessee, upon payment of the rents and other amounts due and the performance of all the terms, conditions, covenant and agreements on Lessee's part to be observed and performed under this Lease, may peaceably and quietly enjoy the Demised Premises for the business uses permitted hereunder, subject, nevertheless, to the terms and conditions of this Lease. DOC~162025~§7 RECORDING: 27. Lessee shall not record this Lease without the written consent of Lessor. However, upon the request of either party hereto, the other party shall join in the execution of the Memorandum lease for the purposes of recordation. Said Memorandum lease shall describe the Darties, the Demised Premises and the term of the ease and shall incorporate this Lease by reference. This Article 27 shall not be construed to limit Lessor's right to file this Lease under Article 22 of this Lease. OVERDUE PAYMENTS: 28. All monies due under this Lease from Lessee to Lessor shall be due on demand, unless otherwise .specified and if not paid when due, shall result in the ~mposition of a service charge for such late payment in the amount of 12% of the amount due. SURRENDER: 29. On the Expiration Date or upon the termination hereof upon a day other than the Expiration Date, Lessee shall peaceably surrender the Demised Premises broom-clean in good order, condition and repair, reasonable wear and tear only excepted. On or before the Expiration Date or upon termination of this Lease on a day other than the Expiration Date, Lessee shall, at its expense, remove all trade fixtures, personal property and equipment and signs from the Demised Premises and any property not removed shall be deemed to have been abandoned. Any damage caused in the removal of such items shall be repaired by Lessee and at its expense. All alterations, additions, improvements and fixtures (other than trade fixtures) which shall have been made or installed by Lessor or Lessee upon the Demised Premises and all floor covering so installed shall remain upon and be surrendered with the Demised Premises as a part thereof, without disturbance, molestation or injury, and without charge, at the expiration of termination of this Lease. If the Demised Premises are not surrendered on the Expiration Date or the date of termination, Lessee shall indemnify Lessor against loss or liability, claims, without limitation, made by any succeeding Lessee founded on such delay. Lessee shall promptly surrender all keys for the Demised Premises to Lessor at the place then fixed for payment of rent and shall inform Lessor of combinations of any locks and safes on the Demised Premises. HOLDING OVER: 30. In the event of a holding over by Lessee after expiration or termination of this Lease without the consent in writing of Lessor, Lessee shall be deemed a lessee at sufferance and shall pay rent for such occupancy at the rate of twice the last-current aggregate Base and Additional Rent, prorated for the entire holdover period, plus all attorney's fees and expenses incurred by Lessor in enforcing its rights hereunder, plus any other damages occasioned by such holding over. Except as otherwise agreed, any holding over with the written consent of Lessor shall constitute Lessee a month-to-month lessee. ABANDONMENT: 31. In the event Lessee shall remove its fixtures, equipment or machinery or shall vacate the Demised Premises or any part thereof prior to the Expiration Date of this Lease, or shall discontinue or suspend the operation of its business conducted on the Demised Premises for a period of more than 90 consecutive days OFFICE/VVAREHOUSE LEASE (except during any time when the Demised Premises may be rendered untenantable by reason of fire or other casualty), then in any such event Lessee shall be deemed to have abandoned the Demised Premises and Lessee shall be in default under the terms of this Lease. CONSENTS BY LESSOR: 32. Whenever provision is made under this Lease for Lessee securing the consent or approval by Lessor, such consent or approval shall only be in writing. NOTICES: 33. Any notice required or permitted under this Lease shall be deemed sufficiently given or secured if sent by registered or certified return receipt mail to Lessee at 5300 Shoreline Drive, Mound, Minnesota and to Lessor c/o United Properties, 3500 West 80th Street, Suite 200, Bloomington, MN 55431 attn: Vice President of Property Management and either party may by like written not~ce at any time designate a different address to which notices shall subsequently be sent or rent to be paid. RULES AND REGULATIONS: 34. Lessee, its employees and all person visiting or doing business with Lessee in the Demised Premises shall be bound by and shall observe the reasonable rules and regulations made by Lessor relating to the Demised Premises or the Building or the Premises of which notice in writing shall be given to the Lessee, and all such rules and regulations shall be deemed to be incorporated into and form a part of this Lease. INTENT OF PARTIES: 35. Except as otherwiseprovided herein, the Lessee covenants and agrees that if it shall any time fail to pay any such cost or expense, or fail to take out pay for maintain or deliver any of the insurance policies above required, or fail to make any other payment or perform any other act on its part to be made or performed as in this Lease provided, then the Lessor may, but shall not be obligated so to do, and upon 30 days prior written notice to or demand upon the Lessee and without waiving or releasing the Lessee from any obligations of the Lessee in this Lease contained, pay any such cost or expense, effect any such insurance coverage and pay premiums therefor, and may make any other payment or perform any other act on the part of the Lessee to be made and performed as in this Lease provided, in such manner and to such extent as the Lessor may deem desirable, and in exercising any such right to also pay all necessary and incidental costs and expenses, employ counsel and incur and pay reasonable attorneys' fees. All sums so paid by Lessor and all necessary and incidental costs and expenses in connection with the performance of any such act by the Lessor, together with interest thereon at the rate of 12% per annum from the date of making of such expenditure, by Lessor, shall be deemed additional rent hereunder, and shall be payable to Lessor on demand. Lessee covenants to pa~yd any such sum or sums with interest as aforesaid the Lessor shall have the same rights and remedies in the event of the nonpayment thereof by Lessee as in the case of default by Lessee in the payment of the Base Rent payable under this Lease. GENERAL: 36. The Lease does not create the relationship of principal agent or of partnership or of joint venture or of Doc~ 1620257~7 any association between Lessor and Lessee, the sole relationship between the parties hereto being that of Lessor and Lessee. 36.1 No waiver of any default of Lessee hereunder shall be implied from any omission by Lessor to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the bme and to the extent therein stated. One or more waivers by Lessor shall not then be construed as a waiver of a subsequent breach of the same covenant, term or condition. The consent to or approval by Lessor of any act by Lessee requiring Lessor's consent or approval shall not waive or render unnecessary Lessor's consent to or approval of any subsequent similar act by Lessee shall be construed to be both a covenant and a condition. No action required or permitted to be taken by or on behalf of Lessor under the terms or provisions of this Lease shall be deemed to constitute an eviction or disturbance of Lessee's possession of the Demised Premises. All preliminary negotiations are merged into and incorporated in this Lease. The laws of the State of Minnesota shall govern the validity, performance and enforcement of this Lease. a. This Lease and the exhibits, if any, attached hereto and forminga part hereof, constitute the entire agreement between Lessor and Lessee affecting the Demised Premises and there are no other agreements, subsequent alteration, amendment, change or addition to this Lease shall be binding upon Lessor or Lessee unless reduced to writing and executed in the same form and manner in which this Lease is executed. b. If any agreement, covenant or condition 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 agreement, covenant or condition to persons or circumstances other than those as to which it ~s held invalid or unenforceable, shall not be affected thereby and each agreement, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law. HAZARDOUS MATERIAL: 37. The Demised Premises hereby leased shall be used by and/or at the sufferance of Lessee only for the purpose set forth in Article 11 above and for no other ~Durposes. Lessee shall not use or permit the use of the emised Premises in any manner that will tend to create waste or a nuisance, or will tend to unreasonably disturb other Lessees in the Building or the Premises. 37.1 Lessee covenants through the Lease Term, at Lessee's sole cost and expense, promptly to comply with all laws and ordinances and the orders, rules and regulations and requirements of all federal, state and municipal governments and appropriate departments commission, boards, and officers thereof, and the orders, rules and regulations of the Board of Fire Underwriters where the Demised Premises are situated, or any other body now or hereafter as well as extraordinary, and whether or not the same require structural repairs or alterations, which may be applicable to the Demised Premises, or the use or manner of use of the Demised Premises. Lessee will likewise observe and comply with the requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the Building and improvements on the Demised Premises and the equipment thereof. 37.2 In the eventany Hazardous Material (hereinafter defined) is brought or caused to be brought into or onto OFFICE/WAREHOUSE LEASE the Demised Premises, the Building or the Premises by Lessee, Lessee shall handle any such material in compliance with all applicable federal, state and/or local regulations. For purposes of this Article, "Hazardous Material" means and includes any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Comprehensive Environmental Response,,, Compensation, and bability' Act, any so- called Superfund" or "Superlien" law, or any federal, state or local statute, law, ordinance, code, rule, regulation, order decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or materials, as now or at any time hereafter in effect. Lessee shall submit to Lessor on an annual basis copies of its approved hazardous materials communication plan, OSHA monitoring plan, and permits required by the Resource Recovery and Conservation Act of 1976, if Lessee is required to prepare, file or obtain any such plans or permits. Lessee will indemnify and hold harmless Lessor from any losses, liabilities, damages, costs or expenses (including reasonable attorneys' fees) which Lessor may suffer or incur as a result of Lessee's introduction into or onto the Demised Premises, Building or Premises of any Hazardous Material. This Article shall survive the expiration or sooner termination of this Lease. CAPTIONS: 38. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease nor the intent or any provision thereof. ATTACHMENTS: 39. See also rider attached hereto and made a part hereof as well as Exhibits A through B-l, inclusive, which Exhibits are attached hereto and made a part hereof. Exhibit Description Exhibit A Exhibit B Exhibit B-1 Legal Description Warehouse Demised Premises Horizontal Lines) and Substitute emised Premises (Diagonal Lines) Office Demised Premises and Substitute Demised Premises SUBMISSION: 40. Submission of this instrument to Lessee or proposed Lessee or his a.gents or attorneys for examination, review, considerabon or signature does not constitute or imply an offer to lease reservation of space, or option to lease, and this instrument shall have no binding legal effect until execution hereof by both Lessor/Owner and Lessee or its agents. REPRESENTATION: It is agreed and understood that Chris Hickok and Mark Sims, agents or brokers with United Properties Brokerage, LLC are representing Lessor, and that Lessor shall be solely responsible for the payment to them of any agency or brokerage fee in connection with this transaction. Lessee is not represented by any agent or broker in connection with this transaction. IN WITNESS WHEREOF, the Lessor and the Lessee have caused these presents to be executed in form and manner sufficient to bind them at law, as of the day and year first above written. Lessee: Lessor: CITY OF MOUND, a Minnesota municipal corporation By: Kandis M. Hanson Its: City Manager STATE OF MINNESOTA /ss: COUNTY OF HENNEPIN BALBOA CENTER LIMITED PARTNERSHIP, a Texas limited partnership By: Shoreline Boulevard LLC Its: General Partner By: Kirt C. Woodhouse Its: Manager On this __ day of AugustO_c. tob~, 2002, personally came before me, a Notary Public within and for said County, Kirt C. Woodhouse, manager oT"Sh--~ne Boulevard LLC general partner of Balboa Center Limited Partnership, a Texas limited partnership, on behalf of the partnership. STATE OF MINNESOTA /ss: COUNTY OF HENNEPIN Notary Public On this day of A_ug. ustOctober, 2002, personallycame before me, a Notary Public within and for said County, Kandis M. Hanson the C~ty an~' of the City of Mound, a Minnesota municipal corporation, on behalf of the corporation. Notary Public DOC~ 1620257~67 OFFiCE/WAREHOUSE LEASE RIDER TO LEASE BETWEEN BALBOA CENTER LIMITED PARNTERSHIP AND CITY OF MOUND Base Rent is payable pursuant to Article 2 as follows: LEASE YEAR ANNUAL BASE RENT MONTHLY BASE RENT ANNUAL BASE RENT PER SQ. FT. Office Space $7,293.00 $607.75 $11.00 (663 square feet) Warehouse Space $50,000.00 $4,166.67 $5.00 (10,000 square feet) TOTAL $4,774.42 MONTHLY PAYMENT ARTICLE 42: RIGHT OF SUBSTITUTION Lessor reserves the right on thirty (30) days notice to Lessee, to substitute the Substitute Demised Premises for the Demised Premises hereunder. The warehouse portion of the Substitute Demised Premises shall be as set forth by diagonal lines on Exhibit "B." The office portion of the Substitute Demised Premises shall be the same as the office portion of the Demised Premises, or at Lessor's option, shall be other office space which contain substantially the same square footage as the office portion of the Demised Premises contains at the time Lessor exercises such right and shall contain comparable improvements. The base rent for the Substitute Demised Premises shall not exceed the Base Rent per square foot specified in Article 2 hereof and shall equal $4,357.75 per month. If the Lessor exercises its right to substitute the Substitute Demised Premises for the Demised Premises, the parties acknowledge that the overhead door servicing the Substitute Demised Premises requires replacement and the parties agree that the cost thereof (estimated to be approximately $11,000) shall be split equally between the parties. Lessor shall arrange to have such door replaced prior to the expiration of said thirty (30) day notice period and Lessee shall reimburse Lessor, Lessee's share of such replacement costs, within ten (10) days of submission by Lessor to Lessee of the invoices substantiating said costs, as additional rent hereunder. ARTICLE 43: RIGHT OF PARTIAL GIVE-BACK OF OFFICE SPACE The parties acknowledge that the office portion of the Demised Premises consist of two separate areas, one containing approximately 442 square feet (the "Large Office") and a second containing approximately 221 square feet (the "Small Office"). Lessor acknowledges and agrees that Lessee shall have the right and option to reduce the office portion of the Demised Premises by deleting and removing the Small Office therefrom (the "Reduction Option") by giving not less than 45 days written notice to Lessor ("Reduction Notice") of the date Lessee shall return possession to the Small Office (the Reduction Date"). The parties agree the Reduction Date shall be the last day of the month and shall not be prior to Feb~u.ar-y-2~,.July 31~ 2003. Lessor agrees that the Reduction Option shall apply, if Lessor exercises its right to substitute the Substitute Demised Premises, but only if the Substitute Demised Premises consists of the Large Office and the Small Office as defined above. Notwithstanding anything else contained herein to the contrary, if Lessee gives a Reduction Notice in compliance with this Article, then Lessee shall surrender possession to the Small Office pursuant to the provisions of Article 29 of this Lease on or before midnight on the Reduction Date. Lessee acknowledges that if it fails to so surrender possession of the Small Office on or before the Confinement Date pursuant to Article 17 of this Lease Agreement it shall be an Event of Default without any notice required to be given to Lessee, and Lessor shall be entitled to all the remedies afforded it for any Event of Default, except that Lessor may commence an action to obtain possession of the Small Office, with or without obtaining possession of the balance of the Premises. If Lessee does surrender possession of the Small Office on or before the Reduction Date pursuant to Article 17 of this Lease, then on the day after the Reduction Date the Base Rent payable pursuant to Article 2 of this Lease shall be reduced in the amount of $202.58 per month. As of the end of the Reduction Date, Lessee shall and hereby does transfer, convey, quitclaim and assign to Lessor all of its rights and interests in and to the Small Office and all improvements located therein; provided the foregoing does not in any way relieve Lessee from its obligations under Article 29 hereof, with respect to the Small Office or Lessee's obligation to pay the Base Rental on the Small Office for periods up to and including the Reduction Date. DOC# 1620257~7 EXHIBIT A Lots 19 to 21 inclusive Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnetonka." That part of Lots 22 and 23, Block 11, lying south of a line drawn from the most westerly corner of Block 9 to the point of intersection of the southeasterly line of Block 11 with a line drawn parallel to and 40 feet northerly, measured at right angles, from the southerly line of Block 11 and its extension, all in "Abraham Lincoln Addition to Lakeside Park, Mound-Minnetonka." Lots 1 to 5 inclusive, Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnetonka", according to the duly recorded plat thereof. The northerly, westerly and southerly boundary lines of said Lot 1, the northerly and southerly boundary lines of said Lots 2, 3 and 4, and the, and the northerly, easterly and southerly boundary lines of said Lot 5 are marked by judicial landmarks set at the northwest and southwest corners of said Lot 1, at the southeast corner of said Lot 5 and at a point on the Easterly line of said Lot 5 distant 4 feet Southeasterly from the northeast corner of said Lot 5, pursuant to Torrens Case No. 15803. Lots 23 to 28 inclusive, "Koehler's Addition to Mound", Lake Minnetonka, according to the recorded plat thereof. The north, east and southerly boundary lines of said Lot 23, the north and south boundary lines of said Lots 24, 25, 26 and 27, the north, west and southerly boundary lines of said Lot 28 are marked by judicial landmarks set at the northwest and southwest corners of said Lot 28 at the northeast and southwest corners of said Lot 28 at the northeast and southeast corners of said Lot 23, pursuant to Torrens Case No. 15804. Lots 6 to 12 inclusive, Block 11 "Abraham Lincoln Addition to Lakeside Park, Mound, Minnesota", according to the duly recorded plat thereof. Lots 13 to 18 inclusive, Block 11, "Abraham Lincoln Addition to Lakeside Park, Mound, Minnesota", according to the duly recorded plat thereof. The easterly line of Lot 18, Block 11, said subdivision is marked by judicial landmarks set pursuant to Case No. 15803. That part of Lot 36, Auditor's Subdivision No. 170, Hennepin County, Minnesota, and that part of the southwest 1/4 of the southwest 1/4 of Section 13, Township 117, Range 24, all described as beginning at a point on the north line of said Lot 36, distant 25 feet west from the northeast corner thereof, which point is marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence east to the northeast corner of said Lot 36, which point is marked by judicial landmark set pursuant to Torrens Case No. 16002; thence south along the east line of said Lot 36 and its extension to an intersection with a line drawn parallel to and 33 feet southerly from the southerly line of said Lot 36; thence westerly along the last described parallel line to its intersection with a line drawn south, parallel to the east line of said Lot 36 and its extension from the point of beginning; thence north along said last described parallel line 34.15 feet to a point marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence continuing north along said last described line 121.9 feet to the point of beginning. That part of Lot 8, Block 5, Sylvan Heights Addition to Mound-Minnetrista Township, Hennepin County, Minnesota, described as follows: beginning at the northwest corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 16002, thence east along the north line of said Lot 8,358.35 feet to a point which is 134.4 feet westerly from the northeast corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 15805; thence south parallel to the east line of said Lot 8,287.3 feet to the south line of said Lot 8, which Doc~ 1620257~§7 point is marked by a judicial landmark set pursuant to Torrens Case No. 15805, thence westerly and northwesterly along the south line of said Lot 8,207.77 feet to a point which is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence continuing northwesterly along said south line 162.58 feet to a point which is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence continuing northwesterly along said south line to the west line of said Lot 8; thence northerly along the west line of said Lot 8 to a point which is 40.14 feet south of the northwest corner of said Lot 8, which point is marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence according to the recorded plat thereof. That part of the southwest 1/4 of the southwest 1/4, Section 13, Township 117, Range 24 described as beginning at the northeast corner of Lot 36, Auditor's Subdivision No. 170. Hennepin County, Minnesota, said point being marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence westerly, along the north line of said Lot 36 a distance of 25 feet to a point marked by a judicial landmark set pursuant to Torrens Case No. 15078; thence north parallel with the east line of said southwest 1/4 of the southwest 1/4, to the point of intersection with a line 40 feet northerly of measured at a right angle to and parallel with the northerly line of said Lot 36 said point of intersection being marked by a judicial landmark set pursuant to Torrens Case No. 17105 thence easterly, along the last described parallel line a distance of 25 feet to the point of intersection with the east line of said southwest 1/4 of the southwest 1/4, said point of intersection being marked by a judicial landmark set pursuant to Torrens Case No. 16002; thence south, along said east line, to the point of beginning, according to the Government Survey thereof. Lots 10 to 14 inclusive, and that part of Lot 15, lying north of the south 8 feet thereof, all in Block 2, L.P. Crevier's Subdivision of part of Lot 36 Lafayette Park. Lots 1 to 11 inclusive, Block 5; Lots 1 to 7 inclusive, and that part of Lot 8 lying easterly of a line drawn south, parallel to the east line of Lot 8, from a point on the northerly line thereof distant 134.4 feet westerly from the northeast corner of Lot 8, Block 6; All of Yost Street, vacated, lying between the extension across said street of the northerly lines of Lots 1 to 6 inclusive, Block 6, and a line drawn from the southwest corner of Lot 1, Block 6, to the southeast corner of Lot 11, Block 5; All in Sylvan Heights Addition to Mound-Minnetrista Township, Hennepin County, Minnesota, according to the recorded plat thereof. The boundary lines of the above tract have been judicially determined and marked by judicial landmarks as shown by Torrens Case No. 15805. Lot 1, Block 1 and Lot 1, Block 2, Balboa Addition, Hennepin County, Minnesota. DOC# 1620257~7 EXHIBIT B Exhibit B ' Doc~162025~67 EXHIBIT B-1 Exhibit B-1 DOC# 1620257~7 Document com done b DeltaView on Frida' October 25, 2002 09:56:10 Document 1 ~cdocs://docs/1620257/6 Document 2 >cdocs://docs/1020257/7 Rendedn[I set Standard Insertion Format chaa~;¢ Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Count Insertions 21 Deletions 21 Moved from 0 Moved to 0 Format changed 0 Total chanties 42