5. Approve Lease for old Public Works Buliding-Road Runner0
CITY OF
CHANgASSEN
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 C C
DATE: February 27, 2012 0 ��, t
SUBJ: Old Public Works Building Lease
PROPOSED MOTION
"The City Council approves the attached lease with Road Runner Diesel Services,
to commence on March 1, 2011, and allow the City Attorney's office to make
minor changes if needed to the Final Draft"
Approval requires a simple majority vote of the council.
BACKGROUND
Road Runner Diesel Services, Inc. would like to lease the old Public Works
facility. Road Runner owns and operates a fleet of five over - the -road car carriers.
Highlights of the lease agreement are as follows:
• Three -year lease commencing March 1, 2012.
• Lease to include 18,696 sq. ft. of space (all of the main building space).
• Rent for the first 6 months is $7,925 per month and for the second six
months is $12,389 per month. The City will generate $118,104 in revenue,
but will be responsible for all expenses.
• Year 2 rent will be $7,011 per month (4.50 triple net per square foot), with
the tenant being responsible for actual cam (insurance and maintenance)
and taxes. This will result in the city generating $84,132 in rent.
• Year 3 rent will be $7,400.50 per month (4.75 triple net per square foot),
with tenant responsible for actual cam and taxes. This will result in the
city generating $88,806 in rent.
• City warrants all equipment is currently in working order.
• Gas and electric charges will be billed back at actual costs by the city.
• Rent deposit will be $30,000.00.
• The city will be responsible for annual inspection of the hydraulic hoists.
• No structural changes will be made by tenant without pre- approval.
• The city will level out the area to the west of the building for trailer
storage and place class 5 gravel there if needed.
G: \Admin \LH \old PW Building, 1591 Park Rd \Road Runner Lease Approval Staff Report.doc
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Mr. Todd Gerhardt
February 27, 2012
Page 2
Commission to be paid to Marathon Real Estate according to the
following schedule:
o 2012: 7% of base rent, $8,267.28
o 2013: 6% of base rent, $5,047.92
o 2014: 5% of base rent, $4,440.30
RECCOMENDATION
Staff recommends approval of the lease with Road Runner Diesel Services.
ATTACHMENT
1. Location Map
2. Lease
2
G: \Admin \LH \old PW Building, 1591 Park Rd \Road Runner Lease Approval Staff Report.doc
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LEASE AGREEMENT
THIS LEASE AGREEMENT ( "Lease ") is entered into and made as of the day of
February, 2012 by and between the CITY OF CHANHASSEN, a Minnesota municipal corporation,
( "Landlord "), and ROAD RUNNER DIESEL SERVICES, INC., 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 building ( "Building ") located on the property at 1591
Park, Chanhassen, MN 55317 (the "Property "), known as the "Public Works Building ", containing
approximately 18,696 square feet of rentable space, together with the parking lot and other areas of the
Property legally described on Exhibit "A" and shown on Exhibit `B" hereinafter referred to as the
"Leased Premises ".
2. TERM. The term of this Lease (the "Term ") shall be for a period of three (3) years,
commencing March 1, 2012 (the "Commencement Date "), and ending midnight on February 28, 2015
(the "Expiration Date ") subject to adjustment as hereinafter provided (if any), unless this Lease shall be
sooner terminated as hereinafter provided.
3. RENT. As and for Rent of the Leased Premises, Tenant shall pay to Landlord the following
amounts all of which are hereinafter collectively referred to as the "Rent" and the obligation of the
Tenant to pay said Rent shall survive the termination of this Lease.
(a) Base Rent Tenant shall pay to Landlord the following as "Base Rent" in equal monthly
installments paid in advance on or before the first day of each month of the terms of this Lease:
(i)
March 1, 2012 — August 1, 2012
$7,925.00 per month
(ii)
September 1, 2012 — February 1, 2013
$12,209.00 per month
(iii)
March 1, 2013 — February 1, 2014
$7,011.00 per month
(iv)
March 1, 2014 — February 1, 2015
$7,400.00 per month
The Base Rent is due and payable without set -off, counterclaim or deduction of any type and
without demand or presentment therefor being made and in lawful money of the United States and
shall be a net return to Landlord except as specifically set forth herein.
(b) Additional Rent Except as set forth in this Lease, Tenant shall pay as additional rent
( "Additional Rent ") Tenant's share of all of the cost, expenses and obligation of operating and
maintaining the Leased Premises, including the Building and the Property, which may arise during the
terms of the Lease (as are further described in this Lease) including, but not limited to, all Utility
Charges, Insurance, Taxes and Assessments, Operating Charges and all cost and expenses of
maintenance, repair, replacement and care of the Leased Premises which are not paid directly by the
Tenant as hereinafter provided.
162806v2
Notwithstanding any other term, covenantor condition of this Lease, Tenant shall not be liable
for any Additional Rent for the period of this Lease from March 1, 2012 to February 28, 2013.
(c) 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 five percent (5 %) 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
lesser of eighteen percent (18 %) or the maximum amount permitted by law from the date due until
paid.
4. OPERATING CHARGES.
(a) Tenant shall pay to Landlord, as Additional Rent, Tenant's share of Operating Charges
as hereinafter defined which shall be paid monthly by the Tenant. Estimated amounts of such
Operating Charges shall be paid in monthly installments in advance on the first day of each month
during the Term of this Lease beginning on March 1, 2013 and continuing until the termination of this
Lease. Landlord shall provide Tenant with the initial estimate of Tenant's Share of Operating Charges
to be paid by Tenant on or before February 1, 2013 and from time to time thereafter during the Term of
this Lease, Landlord may notify Tenant in writing of any adjustments to the monthly installments of
Operating Charges to be paid by Tenant hereunder and thereafter as is reasonably practicable, Landlord
shall notify Tenant of the actual Operating Charges for each calendar year and provide Tenant a
statement thereof in reasonable detail. Within thirty (30) days after such notice, Tenant shall pay to
Landlord or Landlord shall credit against the obligations of Tenant, as the case may be, the difference
between the estimated payments made by Tenant during the prior calendar year and the actual amount
of the Tenant's Share of the Operating Charges as shown on such statement. Operating Charges shall
be prorated from March 1, 2013 for calendar year 2013 and for the year in which the Term of this
Lease ends based on the number of days of the Term during such years. Tenant's obligation to pay
Operating Charges through the Termination Date shall survive the termination of this Lease.
Tenant's share of Operating Charges shall be ninety percent (90 %) of said Operating Charges.
(b) "Operating Charges" as used herein shall mean all sums expended or obligations
incurred by;Landlord with respect to the Property, whether or not now foreseen, determined on an
accrual basis (including reasonably foreseeable expenditures not occurring annually), including, but
not limited to, the actual costs of contractors and/or others providing services; inspection fees; and
legal fees incurred in the maintenance and operation of the Property; materials and supplies, which
materials and supplies were used in or charges were incurred in maintenance and operation of the
Property; repairs, maintenance and operation include, but are not limited to, snow removal, parking lot
sweeping, window washing, parking lot lighting and trash removal and replacements respecting the
Leased Premises and the Property, including costs of materials, supplies, tools and equipment used in
connection therewith, including the repaving of parking areas, which is necessary as a result of
Tenant's use; costs incurred in connection with the operation, maintenance, repair, replacing,
inspection and servicing (including maintenance contracts, if any) of mechanical equipment including
the hoists located in the Building and the cost of materials, supplies, tools and equipment used in
connection therewith, all other expenses and costs of every kind and nature necessary or desirable to be
incurred for the purpose of operating and maintaining of the Property and Leased Premises, whether or
162806v2 2
not similar to the foregoing which Tenant is not obligated to pay under the terms of this Lease.
Operating Charges shall not include (i) Landlord's actual cost of utilities or other services paid by
Landlord which are separately metered for the Building and the Leased Premises which Tenant shall
pay directly to Landlord on a monthly basis as hereinafter provided, (ii) costs incurred by Landlord for
any alterations or improvements for other tenants (if any), (iii) depreciation of the Building and major
components, (iv) special assessments, and (v) debt service on indebtedness of Landlord, and (vi)
replacements of the original components of the Building.
(c) Tenant shall be solely and exclusively responsible for the actual cost of the following
utilities and any other building services necessary for Tenant's use and occupancy of the Building and
Leased Premises for Tenant's trucking business and storage use or as may be required by law or
directed by governmental authority ( "Utility Charges ") and insurance cost which shall be paid to
Landlord as Additional Rent:
(i) Cost of all heating, ventilation and air conditioning of the Building including electrical
and gas;
(ii) Cost of all electricity for lighting and operating business machines and other equipment
in the Leased Premises including the Building;
(iii) Cost of all gas;
(iv) Cost of all water and sewer;
(v) Cost of all replacement of all lamps, bulbs, starters and ballasts used in the Building on
the Leased Premises;
(vi) Cost of the "all risk" insurance carried by the Landlord on the Building as hereinafter
set forth.
(d) 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 4 hereof.
(e) 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
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.
5. TAXES AND ASSESSMENTS.
(a) Tenant shall bear, pay and discharge as Additional Rent, Tenant's Share of taxes and
other charges, taxes and assessments, of every kind or nature whatsoever which shall be charged,
assessed, imposed or levied, or become a lien upon or on account of the Leased Premises or any
appurtenances thereof or personal property thereon, during the Term of the Lease (the "Taxes and
Assessments "), whether imposed on Tenant or Landlord or against any right, title or interest of
Landlord or Tenant or either of them, by virtue of or under any present or future law or requirement of
162806v2
any governmental or quasi - governmental body or authority, or pursuant to any recorded restrictions or
covenants. Taxes and Assessments shall be prorated for the year 2013 from March 1, 2013 and during
the last year of the Term of the Lease on a daily basis. During each month of the term of this Lease
beginning with March 1, 2013, Tenant shall make a monthly escrow deposit with Landlord equal to
1 /12th of the Taxes and Assessments on the Property which will be due and payable under the terms of
this Lease. Tenant authorizes Landlord to use the funds deposited by Tenant with Landlord under this
Section 5.0 to pay the above items levied or assessed against the Property. Each Tax Escrow Payment
shall be due and payable at the same time and in the same manner as the time and manner of the
payment of Base Rent as provided herein. Landlord will establish an Initial Estimated Tax Escrow
Payment on or before February 1, 2013, which Initial Estimated Tax Escrow Payment shall be based
upon the estimated Taxes and Assessments that will be due and payable on the Property for the year
2013. The monthly Tax Escrow Payment is subject to increase or decrease as determined by Landlord
to reflect an accurate escrow of the estimated Taxes and Assessments during the term of this Lease.
The Tax Escrow Payment account of Tenant shall be reconciled annually and if Tenant's total Tax
Escrow Payments are less than the actual Taxes and Assessments on the Property, Tenant shall pay to
Landlord upon demand the difference; if the total Tax Escrow Payments by Tenant are more than the
actual Taxes and Assessments on the Leased Premises, Landlord shall retain such excess and credit it
to Tenant's Tax Escrow Payment account. If requested by Landlord, Tenant shall provide satisfactory
evidence of Tenant's discharge of any obligations provided by this Section that may be billed directly
to Tenant. No interest shall accrue on any such escrow accounts.
(b) Taxes and Assessments shall mean all real estate taxes levied or assessed upon or with
respect to the land or improvements comprising the Property including the Building or Rent or other
sums payable hereunder. If, at any time during the Term of the Lease, a tax or excise on rents or
income or other tax however described is levied or assessed by the United States or the State of
Minnesota, or any political subdivision thereof, on account of the Rent hereunder or the interest of
Landlord under this Lease, such tax or excise shall constitute and be included as a tax hereunder.
Should the State of Minnesota or any political subdivision thereof, or any other governmental authority
having jurisdiction over the Property impose a tax, assessment, charge, or fee, which Landlord shall be
required to pay, wholly or partially, in substitution for or as a supplement to such real estate taxes or
levy against the land, or building, to the extent that the same is in substitution for or as a supplement to
said real estate taxes, such taxes, assessments, fees or charges shall be deemed to constitute taxes
hereunder. Notwithstanding the foregoing, taxes shall not include any tax on Landlord's income.
(c) In the event Landlord does not contest any real estate tax or assessment for any calendar
year during the Term of this Lease, then Tenant may, with Landlord's consent, contest in good faith
and with reasonable diligence, such real estate tax assessment, provided Landlord shall not suffer any
loss or damage as a result of such contest, no interest, penalties, or costs will be assessed against
Landlord or the Property as a result of such contest, there shall be no sale or forfeiture of the Property
or any part thereof or interest therein as a result of such contest, and such contest shall not cause any
real estate tax payment to become delinquent. Notwithstanding Tenant's contest of such real estate tax
assessment! Landlord may pay any real estate taxes or any portion thereof then unpaid, at any time.
(d) Tenant's share of the Taxes and Assessments shall be ninety percent (90 %) of the Taxes
and Assessments as described above.
]62806v2 4
6. DRIVEWAY AREA. Tenant and its employees, customers and invitees shall have the
reasonable nonexclusive right to use, in common with Landlord and the other tenants and occupants of
the Property described in Exhibit "C" and their respective employees, customers and invitees and all
others to whom Landlord has or may hereafter grant rights to use the same, the public portion of the
Driveway Area as shown on Exhibit `B ". Landlord shall at all times have full control, management
and direction of the Driveway Area. Tenant shall not cause or allow any storage of materials or
equipment on the Driveway Area or block the use of the same at any time.
7. REPAIRS AND MAINTENANCE. Notwithstanding the foregoing and except to the extent
necessitated by the negligence or willful misconduct of Tenant, its agents, contractors, invitees or
employees, Landlord shall, maintain the exterior walls (including glass), roof and foundation of the
Building and the hoists located thereon. Except as set forth herein, Tenant shall, at its expense, keep
the Leased Premises and every part thereof, in good condition and repair, ordinary wear and tear
excepted, including the heating, air conditioning, electrical and plumbing equipment and facilities
servicing the Leased Premises including the hoist and, such other repairs and replacements in the
Leased Premises which may be required by reason of acts or negligence of Tenant, its agents,
employees, customers or invitees, or the particular nature of Tenant's use of the Leased Premises.
Tenant shall be responsible for repairing any damage to the Leased Premises caused by the installation
or moving of Tenant's furniture, equipment and personal property. Tenant shall, at its expense, also
repair or replace with glass of equal quality any broken or cracked plate or other glass in doors,
windows, and elsewhere in the Building which were damaged by Tenant or its employees or
contractors or invitees. Tenant shall not defer any repairs or replacements to the Building by reason of
the anticipated of the expiration of the Term. If Tenant fails to perform the maintenance and repair as
required herein the Landlord, at Landlord's option, may elect to perform all or part of the maintenance,
repairs and servicing which is the obligation of the Tenant hereunder and /or the obligation of all of the
other tenants of the Property with respect to the respective Leased Premises, in which event the costs
thereof shall be at Landlord's option either billed directly to and paid by Tenant as "Additional Rent"
or included in Operating Charges. Except as aforesaid, in the event that, at the request of Tenant,
Landlord at its option performs any maintenance, repairs or servicing of the Leased Premises which is
the obligation of the Tenant hereunder, then Tenant shall pay Landlord directly therefor. In the event
there is any 'Iwarranty in effect in connection with repairs or replacements made by Tenant and if
Landlord is, unwilling to pursue the warranty claim, then Tenant shall have the right to pursue the
warranty claim in connection with the repair and /or replacement made by Tenant. Landlord shall be
responsible for all snow and ice removal on the Driveway Area and the Parking Lot and all sidewalks
located on the Property and the cost hereof shall be included in the Operating Charges. Landlord shall
contract with a responsible third party reasonably acceptable to Landlord for regular and periodic
maintenance of all HVAC systems serving the Leased Premises and the hoists located on the Leased
Premises throughout the term of this Lease and said cost shall be included in the Operating Charges.
Upon expiration or earlier termination of this Lease, Tenant shall surrender the Leased Premises to
Landlord broom clean and in good condition and repair, normal wear and tear and damage by fire or
other casualty and condemnation only excepted.
8. SECURITY DEPOSIT
(a) Tenant has deposited with Landlord the sum of Thirty Thousand and No /100 Dollars
($30,000.00) 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,
162806v2
including, without limitation, the provisions relating to the payment of Base Rent or Additional Rent or
any other obligation of Tenant, as hereinafter defined, 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, Additional Rent, 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 provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned to Tenant.
(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 the Security Deposit.
9. LEASEHOLD IMPROVEMENTS. Tenant shall be solely and exclusively responsible for
the cost of any leasehold improvements that Tenant may choose to make to the Leased Premises
( "Tenant Improvements "). No Tenant Improvements shall be made by Tenant or Tenant's agents or
contractors without Landlord's prior written consent. Tenant shall have no right of reimbursement
from Landlord for any Tenant Improvements constructed by or caused to be constructed by Tenant and
Tenant shall not permit any liens to be placed against the Leased Premises. 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.
10. 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 "D ",
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.
11. USE OF THE LEASED PREMISES
(a) Specific Use / "As is" Basis The Leased Premises shall be occupied and used
exclusively for Tenant's trucking 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" basis
without any representations or warranties by Landlord as to its fitness for Tenant's business or use or
for any other particular purpose except as expressly set forth herein.
(b) !, Covenants Regarding Use In connection with its use of the Leased Premises, Tenant
agrees to do the following:
162806v2 6
(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, ordinary wear and
tear excepted, 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 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.
12. 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. All signs shall comply with all ordinances, rules and regulations of the Landlord..
13. REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES.
(a) I Repairs and Maintenance Landlord shall be responsible for the maintenance and repair
and good working order and condition of the walks, driveways, parking lots and landscaped areas
adjacent to the Leased Premises including mowing and the removal of snow and all costs associated
therewith shall be considered a part of the Operating Charges.
Tenant shall, at Tenant's expense, promptly repair all damage caused by the Tenant 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,
162806v2 7
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) 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.
(c) 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.
(d) Reserved Rights Landlord reserves the right to make, at any time or times, at its own
expense, repairs, alterations, additions and improvements, structural or otherwise, in 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.
14. 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 sixty percent (60 %) 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 have Landlord repair such damage at Landlord's own expense, or
162806v2 8
terminate this Lease. Should Tenant elect to have the Leased Premises repaired under this Paragraph
14, Landlord agrees 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. Notwithstanding the foregoing, if the Building is partially untenantable as set forth
above in the last six (6) months of the Lease, the Landlord shall not be required to repair the damage
and the Lease shall be terminated or if Tenant desires to use the Building in its then current condition
for the remaining term of the Lease, the Rent and Additional Rent shall be adjusted to reflect the actual
portion of the Building being used by the Tenant.
(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 " all risk" hazard insurance for loss or damage to the Building; 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 this Lease 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.
(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.
162806v2 9
15. 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
together with an Umbrella Liability Policy with a minimum of $1,000,000 per occurrence and
$1,000,000 aggregate. 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 this Lease.
(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
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.
16. 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
162806v2 10
conveyed to a governmental authority in lien 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.
17. 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).
18. 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.
19. 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.
20. 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.
21. 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:
162806v2 11
(i) Tenant shall fail to pay any monthly installment of Base Rent, Additional Rent or any
other charges set forth in this Lease 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 files for bankruptcy or 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 this
Lease, 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 to all payments and amounts owing by Tenant
for Base Rent, Additional Rent or other expenses and /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
162806v2 12
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 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
162806v2 13
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.
(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.
22. 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
162806v2 14
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.
(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
162806v2 15
(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
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.
23. 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.
24. TERMINATION. Following expiration of the Term, of this Lease, either party may terminate
this Lease without cause upon providing the other party thirty days written notice of such termination.
25. 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.
26. 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
162806v2 16
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.
27. QUIET ENJOYMENT. Except as may be provided in this Lease to the extent that it may be
applicable, if and so long as Tenant pays the prescribed Base Rent and /or Additional 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.
28. 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.
29. 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: City of Chanhassen
P.O. Box 147
Chanhassen, MN 55317
162806v2 17
Tenant: Road Runner Diesel Services, Inc.
30. 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.
162806v2 18
0) 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.
(1) 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 ROAD RUNNER DIESEL SERVICES, INC.
By: _
Its:
By: _
Its:
By:
Its:
By:
Its:
162806v2 19
EXHIBIT D
TENANT ESTOPPEL LETTER
Lease Dated:
Landlord:
Tenant:
Leased Premises:
20
Ladies and /or Gentlemen:
The undersigned ( "Tenant ") hereby confirms the following as of the date hereof:
Tenant is the tenant under the captioned lease (the "Lease "). All capitalized terms contained herein
have the meaning defined in the Lease.
The Commencement Date of the Term is , 200. The Expiration of the Term is
Tenant has accepted the Leased Premises for occupancy and the condition of the Leased Premises,
including the Leasehold Improvements constructed thereon and the Building is in conformity with the
provisions of this Lease in all respects, except for the following:
The rentable area of the Leased Premises is 18,696 square feet.
The lease is in full force and effect; there is not existing default on the part of Landlord under the
Lease; and the Lease has not been amended, modified, supplemented or superseded.
Dated: , 200
By:
Its:
162806v2 23