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4. Old Public Works Building/Outbuilding Lease0 CITY OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 7901 Park Place Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site www.ci.chanhassen.mn.us MEMORANDUM TO: Todd Gerhardt, City Manager FROM: Laurie Hokkanen, Assistant City Manager DATE: October 4, 2011 6 SUBJ: Old Public Works /Outbuilding Lease 4 PROPOSED MOTION The City Council approves the attached lease with Beniek Property Services, to commence on October 15, 2011. BACKGROUND As discussed at work session on September 26, Beniek Property Services would like to lease the outbuilding and the salt storage area at the old Public Works facility. Highlights of the lease agreement are as follows: • Lease the outbuilding and the salt area for $1,763 per month. • Utilities are paid by Beniek • Facility maintenance is paid for by the City, including lawn and snow and building repairs if needed. • Beniek has use of the parking lot approximately 50 feet to the south of the outbuilding from the east property line to the west property line. • Start date is October 15, 2011 with a 1 year term. • Require one month rent for security deposit. • Payment of %2 one month's rent in commission to Marathon Real Estate. ATTACHMENT 1. Location Map 2. Lease G:\Admin \LH \old PW Building, 1591 Park Rd \Beniek Lease Approval Staff Report.doc Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow LEASE AGREEMENT th THIS LEASE AGREEMENT (“Lease”) is entered into and made as of this 10 day of CITY OF CHANHASSEN October 2011 by and between the , a Minnesota municipal corporation, BENIEK PROPERTY SERVICES,INC., (”Landlord"), and a Minnesota corporation ("Tenant"). The parties mutually agree as follows: 1. LEASED PREMISES. Subject to the terms and conditions of this Lease, Landlord leases to Tenant and Tenant rents from Landlord, the premises comprising approximately 4,700 square feet of net rentable space (the “Rentable Area”) in the outbuilding (“Building”) located at 1591 Park Road, Chanhassen, MN 55317 (“Property”) together with salt building (“Salt Shed”) located on the Property (which square footage is not included in the Base Rent calculation), hereinafter referred to as the “Leased Premises.” In addition to the Leased Premises, Tenants will have the use of the parking lot located approximately 50 feet to the south of the Building from the east and west lines of the Property, which shall also be considered as part of the Leased Premises. Descriptions of the Rentable Area and the Leased Premises are attached hereto as Exhibits “A” and “B”, respectively. 2. TERM. The term of this Lease (the "Term") shall be for a period of one year, commencing October 15, 2011 (the "Commencement Date"), and ending midnight on October 14, 2011 (the "Expiration Date") subject to adjustment as provided in Paragraph 6 hereof, unless this Lease shall be sooner terminated as hereinafter provided. 3. RENT (a) Base Rent. During the first year of the Lease, Tenant shall pay to Landlord during the Lease Term rent at the annual rate of Four and 50/100 Dollars ($4.50) per rentable square foot per annum for a total of Twenty-One Thousand One Hundred Fifty and No/100 Dollars ($21,150.00) per annum, hereinafter referred to as the “Base Rent.” The Base Rent is payable in equal monthly installments of Seventeen Hundred Sixty-Two and 50/100 Dollars ($1,762.50) in advance, on or before the fifteenth day of each and every month throughout the Term. (d) Service Charge. Tenant's failure to make any monetary payment required of Tenant hereunder within five (5) days of the due date therefore shall result in the imposition of a service charge for such late payment in the amount of ten percent (10%) of the amount due. In addition, any sum not paid within thirty (30) days of the due date therefore shall bear interest at a rate equal to the greater of eighteen percent (18%) or the prime rate plus two percent (2%) per annum (or such lesser percentage as may be the maximum amount permitted by law) from the date due until paid. 4. SECURITY DEPOSIT (a)Tenant has deposited with Landlord the sum of $1,762 and 50/100 Dollars ($1762.50) as security (“Security Deposit”) for the full and faithful performance of every provision of this Lease to be performed by Tenant. If Tenant defaults with respect to any provision of this Lease, including, without limitation, the provisions relating to the payment of Base Rent, Operating Expenses, or restoring the Leased Premises upon termination of this Lease, Landlord may use, apply or retain all or any part of this security deposit for the payment of any Base Rent, Operating Expenses, or other sum in default and any amounts which Landlord may spend or become obligated to spend by reason of Tenant's default to the full extent permitted by law. If Tenant shall fully and faithfully perform every 137501.04 provision of this Lease to be performed by it, the security deposit or any balance thereof shall be returned to Tenant or to the last assignee of Tenant's interest hereunder at the expiration of the Term. (b) In the event of a sale, assignment or any other transfer of the Leased Premises, Landlord shall have the right to transfer the Security Deposit to its purchaser or assignee and Landlord shall thereupon be released by Tenant from all responsibility for the return of such deposit. (c)5. LEASEHOLD IMPROVEMENTS. Tenant shall be solely and exclusively responsible for the cost of any leasehold improvements that Tenant may choose to make. No improvements shall be made by Tenant or Tenant’s agents or contractors without Landlord’s written consent. Tenant shall have no right of reimbursement from Landlord for any improvements constructed by or caused to be constructed by Tenant. Tenant, or his contractors or agents, shall complete construction of any and all improvements in a good and workmanlike manner, utilizing new and first grade material, in conformity with all applicable federal, state, and local laws, ordinances, rules, regulations, building codes, fire regulations, and applicable insurance requirements. 6. DELIVERY OF POSSESSION. Upon delivery of possession of the Leased Premises to Tenant as hereinbefore provided, Tenant shall (but only upon Landlord’s request) provide Landlord with an Estoppel Letter, in the form attached to this Lease, made a part hereof and marked Exhibit "C", signed by an officer or principal of Tenant acknowledging (i) the original or revised Commencement Date and Expiration Date of this Lease, and (ii) that Tenant has accepted the Leased Premises for occupancy and that the condition of the Leased Premises and that the Building was at the time satisfactory and in conformity with the provisions of this Lease in all respects, except for any defects as to which Tenant shall give written notice to Landlord within thirty (30) days after Landlord has delivered possession of the Leased Premises. Landlord shall as promptly thereafter as is reasonably possible correct all such defects. Tenant's Estoppel Letter, fully executed, shall be attached to and made a part of this executed Lease. 7. USE OF THE LEASED PREMISES (a)Specific Use / “As is” Basis. The Leased Premises shall be occupied and used exclusively for Landscaping/Snow Removal business and storage and related services incidental thereto, and shall not be used for any other purpose. Tenant hereby accepts the Leased Premises on an “as is” “where is” basis without any representations or warranties as to its fitness for a particular purpose. (b)Covenants Regarding Use. In connection with its use of the Leased Premises, Tenant agrees to do the following: (i)Tenant shall use the Leased Premises and conduct its business thereon in a safe, careful, reputable and lawful manner; shall keep and maintain the Leased Premises in as good a condition as they were when Tenant first took possession thereof and shall make all necessary repairs to the Leased Premises other than those which Landlord is obligated to make as provided elsewhere herein. (ii)Tenant shall not commit, nor allow to be committed, in, on or about the Leased Premises any act of waste, or use or permit to be used on the Leased Premises any hazardous substance, equipment or other thing which might cause injury to person or property or increase the danger of fire or other casualty in, on or about the Leased Premises; permit any objectionable or offensive noise or odors to be emitted from the Leased Premises; or do 2 anything, or permit anything to be done, which would, in Landlord's opinion, disturb or tend to disturb the owners or tenants of any adjacent buildings. (iii)Tenant shall not overload the floors, ceilings, or walls of the Leased Premises beyond their designed weight-bearing capacity. Landlord reserves the right to direct the positioning of all heavy equipment, furniture and fixtures which Tenant desires to place in the Leased Premises so as to distribute properly the weight thereof, and to require the removal of any equipment or furniture which exceeds the weight limit specified herein. (iv)Tenant shall not use the Leased Premises, nor allow the Leased Premises to be used, for any purpose or in any manner which would, in Landlord's opinion, invalidate any policy of insurance now or hereafter carried on the Leased Premises or increase the rate of premiums payable on any such insurance policy. Should Tenant fail to comply with this covenant, Landlord may, at its option, require Tenant to stop engaging in such activity or to reimburse Landlord for any increase in premiums charged during the term of this Lease on the insurance carried by Landlord on the Leased Premises and attributable to the use being made of the Leased Premises by Tenant. (c)Compliance with Laws. Tenant shall not use or permit the use of any part of the Leased Premises for any purpose prohibited by law. 8. UTILITIES AND OTHER BUILDING SERVICES (a)Tenant shall be solely and exclusively responsible for making arrangements for, and solely and exclusively responsible for, the cost of the following utilities and any other building services necessary for Tenant's comfortable use and occupancy of the Leased Premises for Landscaping/Snow Removal business and storage use or as may be required by law or directed by governmental authority: (i)Heating, ventilation and air conditioning; (ii)Electricity for lighting and operating business machines and equipment in the Leased Premises and the common areas and facilities of the Building; (iii)Gas service(s); (iv)Water for lavatory and drinking purposes; (v)Cleaning and janitorial service; (vi)Replacement of all lamps, bulbs, starters and ballasts used on the Leased Premises; and (b) Additional Services. If Tenant requests any other utilities or building services in addition to those identified above the cost thereof shall be borne by Tenant, who shall reimburse Landlord monthly for the same as provided in Paragraph 8(d) hereof. (c) Interruption of Services. Tenant understands, acknowledges and agrees that any one or more of the utilities or other building services identified above may be interrupted by reason of accident, emergency or other causes beyond Landlord's control, or may be discontinued or diminished temporarily by Landlord or other persons until certain repairs, alterations or improvements can be made; that Landlord does not represent or warrant the uninterrupted availability of such utilities or 3 building services; and that any such interruption shall not be deemed an eviction or disturbance of Tenant's right to possession, occupancy and use of the Leased Premises or any part thereof, or render Landlord liable to Tenant in damages by abatement of rent or otherwise, or relieve Tenant from the obligation to perform its covenants under this Lease. 9. SIGNS. Tenant shall not inscribe, paint, affix or display any signs, advertisements or notices on the Leased Premises or in the Leased Premises and visible from outside the Leased Premises, except for such signage, advertisements or notices as Landlord at Landlord’s discretion specifically permits. 10. REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES. (a) Repairs and Maintenance. Landlord shall be responsible for the maintenance and repair and good working order and condition of the Leased Premises, and the walks, driveways, parking lots and landscaped areas adjacent to the Leased Premises including mowing and the removal of snow. (a)Tenant shall, at Tenant’s expense, promptly repair all damage to the Leased Premises and replace or repair all damaged or broken fixtures, equipment and appurtenances with materials equal in quality and class to the original materials, under the supervision and subject to the approval of Landlord, and within any reasonable period of time specified by Landlord. If Tenant fails to do so, Landlord may, but need not make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including Landlord's Costs, forthwith upon being billed for same. As used in this Lease, the term "Landlord's Costs" shall mean fifteen percent (15%) of any costs or expenses paid by Landlord, in order to reimburse Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord's actions or involvement. (b)Alteration or Improvements. Tenant shall not make, nor permit to be made, alterations or improvements to the Leased Premises unless Tenant obtains the prior written consent of Landlord thereto. (c)Trade Fixtures. Any trade fixtures installed on the Leased Premises by Tenant at its own expense, including but not limited to movable partitions, counters, shelving, showcases, mirrors and the like may, and at the request of Landlord, shall be removed on the Expiration Date or upon earlier termination of this Lease provided that Tenant is not then in default. Tenant agrees that Tenant will bear the cost of such removal, and further that Tenant will repair at its own expense any and all damage to the Leased Premises resulting from the original installation of and subsequent removal of such trade fixtures. If Tenant fails so to remove any and all such trade fixtures from the Leased Premises on the Expiration Date or upon earlier termination of this Lease, all such trade fixtures shall become the property of Landlord unless Landlord elects to require their removal, in which case Tenant shall promptly remove same and restore the Leased Premises to their prior condition. In the event Tenant so fails to remove same, Landlord may have same removed and the Leased Premises repaired to their prior condition, all at Tenant's expense. (d)Wiring and Cabling. Any wiring or cabling installed by Tenant in the Leased Premises or in shafts or ducts shall, at Landlord’s request, be removed by Tenant at Tenant's expense on or before the Expiration Date or earlier termination of this Lease. If Tenant fails to remove any such wiring or cabling, Landlord may have the same removed at Tenant's expense. (e)Reserved Rights. Landlord reserves the right to decorate and to make, at any time or times, at its own expense, repairs, alterations, additions and improvements, structural or otherwise, in 4 or to the Leased Premises and the Building, and to perform any acts related to the safety, protection or preservation thereof, and during such operations to take into and through the Leased Premises or any part of the Building all material and equipment required and to close or temporarily suspend operation of entrances, doors, corridors, or other facilities, provided that Landlord shall cause as little inconvenience or annoyance to Tenant as is reasonably necessary in the circumstances, and shall not do any act which permanently reduces the size of the Leased Premises. Landlord may do any such work during ordinary business hours and Tenant shall pay Landlord for overtime and for any other expenses incurred if Landlord agrees to conduct such work during other hours as requested by Tenant. 11. FIRE OR OTHER CASUALTY; CASUALTY INSURANCE (a)Substantial Destruction of the Building. If the Building should be substantially destroyed (which, as used herein, means destruction or damage to at least seventy-five percent (75%) of the Building) by fire or other casualty, either party hereto may, at its option, terminate this Lease by giving written notice thereof to the other party within thirty (30) days of such casualty. In such event, the rent shall be apportioned to and shall cease as of the date of such casualty. (b)Partial Destruction of the Leased Premises. If the Leased Premises should be rendered partially un-tenantable for the purpose for which they were leased (which, as used herein, means such destruction or damage as would prevent Tenant from carrying on its business on the Leased Premises to an extent not exceeding forty percent (40%) of its normal business activity) by fire or other casualty, Tenant may, at its option, elect to fix such damage at its own expense, with no reimbursement by Landlord, or terminate this Lease. Should Tenant elect to fix or otherwise repair the Leased Premises under this Paragraph 11(b), Tenant warrants that all repairs will be done in a good workmanlike manner with materials equal in quality and class to the original materials, and in compliance with any and all laws, statutes, ordinances, regulations, fire codes, building codes and restrictions and requirements. In the event Tenant elects to terminate under this paragraph, Tenant agrees to provide Landlord with 30 days written notice to that effect, whereupon both parties shall be released from all further obligations and liability hereunder. (c)Casualty Insurance. Without limiting Tenant’s liability under this Lease, Landlord shall procure and maintain a policy or policies of public liability insurance, insuring against injury or death to persons and loss or damage to property; provided, however, that Landlord shall not be responsible for, and shall not be obligated to insure against, any loss or damage to personal property (including, but not limited to, any furniture, machinery, equipment, goods or supplies) of Tenant or which Tenant may have on the Leased Premises or any trade fixtures installed by or paid for by Tenant on the Leased Premises or any additional improvements which Tenant may construct on the Leased Premises. If Tenant's operation or any alterations or improvements made by Tenant pursuant to the provisions of Paragraph 10(c) hereof result in an increase in the premiums charged during the Term on the casualty insurance carried by Landlord on the Leased Premises, then the cost of such increase in insurance premiums shall be borne by Tenant, who shall reimburse Landlord for the same after being billed therefor. Tenant shall at all times during the term, carry, at its own expense, property insurance with an insurance company licensed to do business in the State of Minnesota, covering its personal property, furniture, machinery, equipment, supplies, stored goods, trade fixtures installed by or paid for by Tenant or any additional improvements which Tenant may construct on the Leased Premises which coverage shall be no less than eighty percent (80%) of replacement value. Tenant shall also carry business interruption insurance on such terms as shall be reasonably satisfactory to Landlord. Tenant shall furnish Landlord with a certificate evidencing that such coverages are in full force and effect. 5 (d)Waiver of Subrogation. Landlord and Tenant hereby release each other and each other's employees, agents, customers and invitees from any and all liability for any loss, damage or injury to property occurring in, on or about or to the Leased Premises, improvements to the Leased Premises or personal property within the Leased Premises, by reason of fire or other casualty which are covered by applicable standard fire and extended coverage insurance policies. Because the provisions of this paragraph will preclude the assignment of any claim mentioned herein by way of subrogation or otherwise to an insurance company or any other person, each party to this Lease shall give to each insurance company which has issued to it one or more policies of fire and extended coverage insurance notice of the terms of the mutual releases contained in this paragraph, and have such insurance policies properly endorsed, if necessary, to prevent the invalidation of insurance coverages by reason of the mutual releases contained in this paragraph. 12. GENERAL PUBLIC LIABILITY, INDEMNIFICATION AND INSURANCE (a)Except for the negligence or intentional misconduct of Landlord, Landlord's agents, servants or employees, Tenant shall insure against, and shall indemnify Landlord and hold it harmless from, any and all liability for any loss, damage or injury to person or property, arising out of use, occupancy or operations of Tenant and occurring in, on or about the Leased Premises and Tenant hereby releases Landlord from any and all liability for the same. Tenant's obligation to indemnify Landlord hereunder shall include the duty to defend against any claims asserted by reason of such loss, damage or injury and to pay any judgments, settlements, costs, fees and expenses, including attorney's fees, incurred in connection therewith. (b)Tenant shall at all times during the Term carry, at its own expense, for the protection of Tenant, Landlord and Landlord's management agent (if any), as their interests may appear, one or more policies of general public liability and property damage insurance, issued by one or more insurance companies licensed to do business in the State of Minnesota and acceptable to Landlord, covering Tenant's use, occupancy and operations providing minimum coverages of $1,000,000 combined single limit for bodily injury and property damage per occurrence with $2,000,000 aggregate coverage. Such insurance policy or policies shall name Landlord, its agents and employees, as additional insureds and shall provide that they may not be canceled or materially changed on less than thirty (30) days prior written notice to Landlord. Tenant shall furnish Landlord with certificates evidencing such insurance. Should Tenant fail to carry such insurance and furnish Landlord with copies of all such policies after a request to do so, Landlord shall have the right to obtain such insurance and collect the cost thereof from Tenant. Landlord shall have the right during the term of this Lease to adjust the minimum coverage levels stipulated above upon written notice to Tenant. Within thirty (30) days of such written notice, Tenant shall provide Landlord with evidence of such adjustment. Tenant shall also provide Landlord with certificates evidencing workers' compensation insurance coverages. Tenant's insurance coverages required hereby shall be deemed to be additional obligations of Tenant and shall not be a discharge or limitation of Tenant's indemnity obligations contained in Paragraph 12(a) hereof. (c)Landlord and its partners, shareholders, affiliates, officers, agents, servants and employees shall not be liable for any damage to person, property or business or resulting from the loss of use thereof sustained by Tenant or by any other persons due to the Building or any part thereof or any appurtenances thereof becoming out of repair, or due to the happening of any accident or event in or about the Building, including the Leased Premises, or due to any act or neglect of any tenant or occupant of the Building or of any other person. This provision shall apply particularly, but not exclusively, to damage caused by gas, electricity, snow, ice, frost, steam, sewage, sewer gas or odors, fire, water or by the bursting or leaking of pipes, faucets, sprinklers, plumbing fixtures and windows and shall apply without distinction as to the person whose act or neglect was responsible for the 6 damage and whether the damage was due to any of the causes specifically enumerated above or to some other cause. Tenant agrees that all personal property located in the Leased Premises shall be at the risk of Tenant only, and that Landlord shall not be liable for any loss or damage thereto or theft thereof. 7 13. EMINENT DOMAIN. If the whole or any part of the Leased Premises shall be taken for public or quasi-public use by a governmental authority under the power of eminent domain or shall be conveyed to a governmental authority in lieu of such taking, and if such taking or conveyance shall cause the remaining part of the Leased Premises to be un-tenantable and inadequate for use by Tenant for the purpose for which they were leased, then Tenant may, at its option, terminate this Lease as of the date Tenant is required to surrender possession of the Leased Premises. If a part of the Leased Premises shall be taken or conveyed but the remaining part is tenantable and adequate for Tenant's use, then this Lease shall be terminated as to the part taken or conveyed as of the date Tenant surrenders possession; Landlord shall make such repairs, alterations and improvements as may be necessary to render the part not taken or conveyed tenantable; and the rent shall be reduced in proportion to the part of the Leased Premises so taken or conveyed. All compensation awarded for such taking or conveyance shall be the property of Landlord without any deduction therefrom for any present or future estate of Tenant, and Tenant hereby assigns to Landlord all its right, title and interest in and to any such award. 14. LIENS. Tenant shall not cause or allow any mechanic's lien or other lien shall be filed against the Leased Premises or against other property of Landlord (whether or not such lien is valid or enforceable as such). 15. RENTAL, PERSONAL PROPERTY AND OTHER TAXES. Landlord shall pay before delinquency any and all real estate taxes, assessments, fees or charges (hereinafter referred to as "taxes"), related to the Leased Premises, except any sales, gross income, rental, business occupation or other taxes, levied or imposed upon Tenant's business operation in the Leased Premises and any personal property or similar taxes levied or imposed upon Tenant's trade fixtures, leasehold improvements or personal property located within the Leased Premises, which will be Tenant’s responsibility. In the event any such taxes are charged to the account of, or are levied or imposed upon the property of Landlord, Tenant shall reimburse Landlord for the same. 16. ASSIGNMENT AND SUBLETTING. Tenant may not assign or otherwise transfer its interest in this Lease or sublet the Leased Premises or any part thereof without the express, prior written consent of Landlord. Tenant has approval to lease 1 bay of inside storage to Dave Soliday/Game’nRide. 17. SUBORDINATION OF LEASE TO MORTGAGES. This Lease is subject and subordinate to any mortgage, deed of trust or similar encumbrance, including ground or underlying leases presently existing or hereafter voluntarily placed upon the Leased Premises, including any renewals, extensions or modifications thereof; and the recording of any such mortgage, deed of trust or similar encumbrance shall make it prior and superior to this Lease regardless of the date of execution or recording of either document. Tenant shall, at Landlord's request, execute and deliver within five (5) days to Landlord, without cost, any instrument which may be deemed necessary or desirable by Landlord to confirm the subordination of this Lease; and if Tenant fails or refuses to do so, Landlord may execute such instrument in the name and as the act of Tenant. Tenant shall attorn to any subsequent owner or transferee of the Leased Premises regardless of whether or not a subordination agreement has been executed by Tenant. 18. DEFAULTS AND REMEDIES (a)Default by Tenant. The occurrence of any one or more of the following events shall be a default and breach of this Lease by Tenant: 8 (i)Tenant shall fail to pay any monthly installment of Base Rent or additional expenses or charges within five (5) days after the same shall be due and payable. (ii)Tenant shall fail to perform or observe any term, condition, covenant or obligation required to be performed or observed by it under this Lease for a period of thirty (30) days after notice thereof from Landlord; provided, however, that if the term, condition, covenant or obligation to be performed by Tenant is of such nature that the same cannot reasonably be performed within such thirty-day period, such default shall be deemed to have been cured if Tenant commences such performance within said thirty-day period and thereafter diligently undertakes to complete the same, but in any event completes cure within ninety (90) days after notices from Landlord. (iii)Tenant shall vacate or abandon or fail to occupy for a period of thirty (30) days, the Leased Premises or any substantial portion thereof; (iv)Tenant makes or attempts to make an assignment for the benefit of creditors; or substantially all of Tenant's assets in, on or about the Leased Premises or Tenant's interest in this Lease are attached or levied upon under execution (and Tenant does not discharge the same within thirty (30) days thereafter); or (v)Tenant causes or permits a hazardous condition to exist on the Leased Premises and fails to cure such condition immediately after notice thereof from Landlord. (b)Remedies of Landlord. Upon the occurrence of any event of default set forth in Paragraph 18(a) hereof, Landlord shall have the following rights and remedies, in addition to those allowed by law, any one or more of which may be exercised without further notice to or demand upon Tenant: (i)Landlord may apply the security deposit or re-enter the Leased Premises and cure any default of Tenant, in which event Tenant shall reimburse Landlord for any costs and expenses which Landlord may incur to cure such default; and Landlord shall not be liable to Tenant for any loss or damage which Tenant may sustain by reason of Landlord's action, regardless of whether caused by Landlord's negligence or otherwise. (ii)Landlord may terminate this Lease as of the date of such default, in which event: (A) Neither Tenant nor any person claiming under or through Tenant shall thereafter be entitled to possession of the Leased Premises, and Tenant shall immediately thereafter surrender the Leased Premises to Landlord; (B) Landlord may re-enter the Leased Premises and dispossess Tenant or any other occupants of the Leased Premises by summary proceedings, ejectment or otherwise, and may remove their effects, without prejudice to any other remedy which Landlord may have for possession or arrearages in rent; and (C) Notwithstanding the termination of this Lease Landlord may either declare all rent which would have been due under this Lease for the balance of the Term or exercised renewal period to be immediately due and payable, whereupon Tenant shall be obligated to pay the same to Landlord, together with all loss or damage which Landlord may sustain by reason of such termination and reentry, or relet all or any part of the Leased Premises for a term different from that which would otherwise have constituted the balance of the Term and for rent and on 9 terms and conditions different from those contained herein, whereupon Tenant shall be obligated to pay to Landlord as liquidated damages the difference between the rent provided herein and that provided for in any lease covering a subsequent reletting of the Leased Premises, for the period which would otherwise have constituted the balance of the Term, together with all of Landlord's costs and expenses for preparing the Leased Premises, for reletting, including all repairs, leasehold improvements, marketing costs, broker's and attorney's fees, and all loss or damage which Landlord may sustain by reason of such termination, re- entry and reletting, it being expressly understood and agreed that the liabilities and remedies specified above shall survive the termination of this Lease. (iii)Landlord may terminate Tenant's right of possession of the Leased Premises and may repossess the Leased Premises by unlawful detainer or eviction action, by taking peaceful possession or otherwise, without terminating this Lease, in which event Landlord may, but shall be under no obligation to, relet the same for the account of Tenant, for such rent and upon such terms as shall be satisfactory to Landlord. For the purpose of such reletting, Landlord is authorized to decorate, repair, remodel or alter the Leased Premises. If Landlord fails to so relet the Leased Premises, Tenant shall pay to Landlord as damages a sum equal to the rent which would have been due under this Lease for the balance of the Term or exercised renewal period as such rent shall become due and payable hereunder from time to time during the Term. If the Leased Premises are relet and a sufficient sum shall not be realized from such reletting after paying all of the costs and expenses of all decoration, repairs, remodeling, alterations and additions and the expenses of such reletting and of the collection of the rent accruing therefrom to satisfy the rent provided for in this Lease, Tenant shall satisfy and pay the same upon demand therefor from time to time. Tenant shall not be entitled to any rents received by Landlord in excess of the rent provided for in this Lease. (iv)Landlord may sue for injunctive relief or to recover damages for any loss resulting from the breach. Any agreement for an extension of the Term or any additional period thereafter shall not thereby prevent Landlord from terminating this Lease for any reason specified in this Lease. If any such right of termination is exercised by Landlord during the Term or any extension thereof, Tenant's right to any further extension shall thereby be automatically canceled. Any such right of termination of Landlord contained herein shall continue during the Term and any subsequent extension hereof. (c)Landlord’s Security Interest. Landlord reserves, and is hereby granted, a security interest on all fixtures, equipment and personal property (tangible and intangible) now or hereafter located in or on the Leased Premises to secure all sums due from and all obligations to be performed by Tenant hereunder, which lien and security interest may be enforced by Landlord in any manner provided by law, including, without limitation, under and in accordance with the Uniform Commercial Code as adopted in Minnesota. At Landlord's request, Tenant shall execute and file, where appropriate, all documents required to perfect the security interest herein granted. (d)Default by Landlord and Remedies of Tenant. Landlord shall not be deemed to be in default under this Lease until Tenant has given Landlord written notice specifying the nature of the default and Landlord does not cure such default within thirty (30) days after receipt of such notice or within such reasonable time thereafter as may be necessary to cure such default where such default is of such a character as to reasonably require more than thirty (30) days to cure. 10 (e)Waiver of Covenants. Failure of Landlord to insist, in any one or more instances, upon strict performance of any term, covenant, condition, or option of this Lease, or to exercise any option herein contained, shall not be construed as a waiver, or a relinquishment for the future, of such term, covenant, condition, or option, but the same shall continue and remain in full force and effect. The receipt by Landlord of rents with knowledge of breach in any of the terms, covenants, conditions, or options, of any of this Lease to be kept or performed by Tenant shall not be deemed a waiver of such breach, and Landlord, shall not be deemed to have waived any provision of this Lease unless expressed in writing and signed by Landlord. (f)Attorney Fees. If Tenant defaults in the performance or observance of any of the terms, conditions, covenants or obligations contained in this Lease and Landlord placed the enforcement of all or any part of this Lease, the collection of any rent due or to become due or the recovery of possession of the Leased Premises in the hands of an attorney, or if Landlord incurs any fees or out-of- pocket costs in any litigation, negotiation or transaction in which Tenant causes Landlord (without Landlord's fault) to be involved or concerned, Tenant agrees to reimburse Landlord for the attorney's fees and costs incurred thereby, whether or not suit is actually filed. 19. BANKRUPTCY OR INSOLVENCY. It is understood and agreed that the following shall apply in the event of the bankruptcy or insolvency of Tenant: (a)If a petition is filed by, or an order for relief is entered against Tenant under Chapter 7 of the Bankruptcy Code and the trustee of Tenant elects to assume this Lease for the purpose of assigning it, such election or assignment, or both, may be made only if all of the terms and conditions of subparagraphs (b) and (c) below are satisfied. To be effective, an election to assume this Lease must be in writing and addressed to Landlord, and in Landlord's business judgment, all of the conditions hereinafter stated, which Landlord and Tenant acknowledge to be commercially reasonable, must have been satisfied. If the trustee fails so to elect to assume this Lease within sixty (60) days after his appointment, this Lease will be deemed to have been rejected, and Landlord shall then immediately be entitled to possession of the Leased Premises without further obligation to Tenant or the trustee and this Lease shall be terminated. Landlord's right to be compensated for damages in the bankruptcy proceeding, however, shall survive such termination. (b)If Tenant files a petition for reorganization under Chapters 11 or 13 of the Bankruptcy Code, or if a proceeding filed by or against Tenant under any other chapter of the Bankruptcy Code is converted to a Chapter 11 or 13 proceeding and Tenant's trustee or Tenant as debtor-in-possession fails to assume this Lease within sixty (60) days from the date of the filing of such petition or conversion, then the trustee or the debtor-in-possession shall be deemed to have rejected this Lease. To be effective any election to assume this Lease must be in writing addressed to Landlord and, in Landlord's business judgment, all of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable, must have been satisfied: (i)The trustee or the debtor-in-possession has cured or has provided to Landlord adequate assurance, as defined in this subparagraph (b), that: (1)The trustee will cure all monetary defaults under this lease within ten (10) days from the date of assumption and (2)The trustee will cure all non-monetary defaults under this Lease within thirty (30) days from the date of assumption. 11 (ii)The trustee or the debtor-in-possession has compensated Landlord, or has provided Landlord with adequate assurance, as hereinafter defined, that within ten (10) days from the date of assumption Landlord will be compensated for any pecuniary loss it has incurred arising from the default of Tenant, the trustee, or the debtor-in-possession, as recited in Landlord's written statement of pecuniary loss sent to the trustee or debtor-in-possession. (iii)The trustee or the debtor-in-possession has provided Landlord with adequate assurance of the future performance of each of Tenant's obligations under this Lease; provided however, that: (1)From and after the date of assumption of this Lease, the trustee or the debtor-in-possession shall pay the Base Rent payable under this Lease in advance in equal monthly installments on each date that such Rents are payable. (2)The trustee or debtor-in-possession shall also deposit with Landlord, as security for the timely payment of Rent, an amount equal to three (3) months' Base Rent and other monetary charges accruing under this Lease; (3)If not otherwise required by the terms of this Lease, the trustee or the debtor-in-possession shall also pay in advance, on each day that any installment of Base Rent is payable, one-twelfth (1/12) of Tenant's annual Operating Expenses, and other obligations under this Lease; and (4)The obligations imposed upon the trustee or the debtor-in-possession will continue for Tenant after the completion of bankruptcy proceedings. (iv)Landlord has determined that the assumption of this Lease will not: (1)Breach any provision in any other lease, mortgage, financing agreement, or other agreement by which Landlord is bound relating to the Property, Building or Leased Premises; or (2)If requested by Landlord, the assignee will obtain guarantees, in form and substance satisfactory to Landlord (i.e. letter(s) of credit), from one or more persons who satisfy Landlord's standards of creditworthiness; and (3)Landlord has obtained consents or waivers from any third parties which may be required under any lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment. (c)When, pursuant to the Bankruptcy Code, the trustee or the debtor-in-possession is obligated to pay reasonable use and occupancy charges for the use of all or part of the Leased Premises, it is agreed that such charges will not be less than the Base Rent as defined in this Lease, plus additional accrued charges and expenses and other monetary obligations of Tenant included herein. (d)Neither Tenant's interest in this Lease nor any estate of Tenant created in this Lease shall pass to any trustee, receiver, assignee for the benefit of creditors, or any other person or entity, nor otherwise by operation of law under the laws of any state having jurisdiction of the person or property of Tenant, unless Landlord consents in writing to such transfer. Landlord's acceptance of rent or any other payments from any trustee, receiver, assignee, person, or other entity will not be deemed 12 to have waived, or waive, either the requirement of Landlord's consent or Landlord's right to terminate this Lease for any transfer of Tenant's interest under this Lease without such consent. 20. ACCESS TO THE LEASED PREMISES. Landlord, its employees and agents of the Leased Premises shall have the right to enter any part of the Leased Premises at all reasonable times for the purposes of examining or inspecting the same, showing the same to prospective purchasers, mortgagees or tenants and for making such repairs, alteration or improvements to the Leased Premises as Landlord may deem necessary or desirable. If representatives of Tenant shall not be present to open and permit such entry into the Leased Premises at any time when such entry is necessary or permitted hereunder, Landlord and its employees and agents may enter the Leased Premises by means of a master key or otherwise, Landlord shall incur no liability to Tenant for such entry, nor shall such entry constitute an eviction of Tenant or a termination of this Lease, nor entitle Tenant to any abatement of rent therefore. 21. TERMINATION. Following expiration of the initial one-year term, after October 16,2012, either party may terminate this Lease without cause upon providing the other party thirty days written notice of such termination. 22. SURRENDER OF LEASED PREMISES. Upon the expiration, or earlier termination, of this Lease Tenant shall surrender the Leased Premises to Landlord, together with all keys, access cards, alterations, improvements, and other property as provided elsewhere herein, in broom-clean condition and in good order, condition and repair, except for ordinary wear and tear and damage which Tenant is not obligated to repair, failing which Landlord may restore the Leased Premises to such condition at Tenant's expense, which shall be payable upon demand. Upon such expiration or termination Tenant's trade fixtures, furniture and equipment shall remain Tenant's property, and if Tenant shall not then be in default under this Lease, Tenant shall have the right to remove the same prior to the expiration or earlier termination of this Lease, Tenant shall promptly repair any damage caused by any such removal, and shall restore the Leased Premises to the condition existing prior to the installation of the items so removed. Any of Tenant's trade fixtures, furniture or equipment not so removed shall be considered abandoned and may be retained by Landlord or be destroyed. 13 23. HOLDING OVER. If Tenant remains in possession of the Leased Premises without the consent of Landlord after the expiration or earlier termination of this Lease, Tenant shall be deemed to hold the Leased Premises as a tenant from month to month, terminable on thirty (30) days’ notice given by one party to the other and subject to all of the terms, conditions, covenants and provisions of this Lease (which shall be applicable during the holdover period), except that Tenant shall pay to Landlord twice the last current Base Rent, and additional charges or expenses, which shall be payable to Landlord on demand. In addition, Tenant shall be liable to Landlord for all damages occasioned by such holding over. Tenant shall vacate and surrender the Leased Premises to Landlord upon Tenant's receipt of notice from Landlord to vacate. No holding over by Tenant, whether with or without the consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided herein. 24. QUIET ENJOYMENT. Except as provided in Paragraph 23 hereof to the extent that it may be applicable, if and so long as Tenant pays the prescribed rent and performs or observes all of the terms, conditions, covenants and obligations of this Lease required to be performed or observed by it hereunder, Tenant shall at all times during the term hereof have the peaceable and quiet enjoyment, possession, occupancy and use of the Leased Premises without any interference from Landlord or any person or persons claiming the Leased Premises by, through or under Landlord, subject to any mortgages, underlying leases or other matters of record to which this Lease is or may become subject. 25. FORCE MAJEURE. All of the obligations of Landlord and of Tenant under this Lease are subject to and shall be postponed for a period equal to any delay or suspension resulting from fires, strikes, acts of God, and other causes beyond the control of the party delayed in its performance hereunder, this Lease remaining in all other respects in full force and effect and the Term not thereby extended. Notwithstanding the foregoing, the unavailability of funds for payment or performance of Tenant's obligations hereunder shall not give rise to any postponement or delay in such payment or performance of Tenant's obligations hereunder. 26. NOTICE AND PLACE OF PAYMENT (a)All rent and other payments required to be made by Tenant to landlord shall be delivered or mailed to Landlord at the address set forth below or any other address Landlord may specify from time to time by written notice given to Tenant. (b)All payments required to be made by Landlord to Tenant shall be delivered or mailed to Tenant at the address set forth in Paragraph 26(c) hereof or at any other address within the United States as Tenant may specify from time to time by written notice given to Landlord. (c)Any notice, demand or request required or permitted to be given under this Lease or by law shall be deemed to have been given if reduced to writing and mailed by Registered or Certified mail, postage prepaid, to the party who is to receive such notice, demand or request at the address set forth below or at such other address as Landlord or Tenant may specify from time to time by written notice. When delivering such notice, demand or request shall be deemed to have been given as of the date it was so delivered or mailed. Landlord: Tenant: City of Chanhassen Beniek Property Services, Inc. _8229 Upland Circle_____________ 7700 Market Blvd Chanhassen__________, MN 55317_____ PO Box 147 14 Chanhassen MN, 55317 Attn: __Brian Beniek______________ Attn: City Manager 27. MISCELLANEOUS GENERAL PROVISIONS (a)Estoppel Letters. Tenant shall, within ten (10) days following written request from Landlord, execute, acknowledge and deliver to Landlord or to any lender, purchaser or prospective lender or purchaser designated by Landlord a written statement certifying (i) that this Lease is in full force and effect and unmodified (or, if modified, stating the nature of such modification), (ii) the date to which rent has been paid, (iii) that there are not, to Tenant's knowledge, any uncured defaults (or specifying such defaults if any are claimed); and (iv) such further matters as may be requested by Landlord. Any such statement may be relied upon by any prospective purchaser or mortgagee of all or any part of the Leased Premises. Tenant's failure to deliver such statement within such period shall be conclusive upon Tenant that this Lease is in full force and unmodified, and that there are no uncured defaults in Landlord's performance hereunder. (b)Memorandum of Lease. If requested by either party, a Memorandum of Lease, containing the information required by law concerning this Lease shall be recorded in Carver County, Minnesota. (c)Applicable Law. This Lease and all matters pertinent thereto shall be construed and enforced in accordance with the laws of the State of Minnesota. (d)Entire Agreement. This Lease, including all Exhibits and Addenda, constitutes the entire agreement between the parties hereto and may not be modified except by an instrument in writing executed by the parties hereto. (e)Binding Effect. This Lease and the respective rights and obligations of the parties hereto shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto as well as the parties themselves; provided, however, that Landlord, its successors and assigns shall be obligated to perform Landlord's covenants under this Lease only during and in respect of their successive periods as Landlord during the term of this Lease. (f)Severability. If any provision of this Lease shall be held to be invalid, void or unenforceable, the remaining provisions hereof shall not be effected or impaired, and such remaining provisions shall remain in full force and effect. (g)No Partnership. Landlord shall not, by virtue of the execution of this Lease or the leasing of the Leased Premises to Tenant, become or be deemed a partner of Tenant in the conduct of Tenant's business on the Leased Premises or otherwise. (h)Waiver of Jury. To the extent permitted by Law, Tenant hereby waives any right it may have to a jury trial in the event of litigation between Tenant and Landlord pertaining to this Lease. (i)Right to Change Name and Building Address. Landlord reserves the right to change the name or street address of the Building. 15 (j)Limitation of Landlord's Personal Liability. Tenant specifically agrees to look solely to Landlord's interest in the Leased Premises for the recovery of any judgment against Landlord, it being agreed that Landlord shall never be personally liable for any such judgment. (k)Execution by Landlord. Submission of this instrument to Tenant, or Tenant's agents or attorneys, for examination or signature does not constitute or imply an offer to lease, reservation of space, or option to lease, and this Lease shall have no binding legal effect until execution hereof by both Landlord and Tenant. (l)Time of Essence. Time is of the essence of this Lease and each of its provisions. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first written above. Landlord: Tenant: CITY OF CHANHASSEN BENIEK PROPERTY SERVICES, INC. By: By: Its: Its: By: By: Its: Its: 16 EXHIBIT A (Rentable Area) 17 18