EXHIBIT 10.16
LEASE AGREEMENT
BY AND BETWEEN
ACKY-3100 LAKE LIMITED PARTNERSHIP
AND
VITAL IMAGES, INC.
January 31, 1997
TABLE OF CONTENTS
1. LEASE OF PREMISES
2. DEFINITIONS
3. EXHIBITS AND ADDENDA
4. DELIVERY OF POSSESSION
5. RENT
6. PROJECT OPERATING COSTS
7. INTEREST AND LATE CHARGES
8. SECURITY DEPOSIT
9. UTILITY SERVICES
10. TENANT'S USE OF THE PREMISES
11. CONDITION OF THE PREMISES
12. CONSTRUCTION, REPAIRS AND MAINTENANCE
13. ALTERATIONS AND ADDITIONS
14. LEASEHOLD IMPROVEMENT; SECURITY INTEREST
15. RULES AND REGULATIONS
16. CERTAIN RIGHTS RESERVED BY LANDLORD
17. ASSIGNMENT AND SUBLETTING
18. HOLDING OVER
19. SURRENDER OF PREMISES
20. DESTRUCTION OR DAMAGE
21. EMINENT DOMAIN
22. INDEMNIFICATION
23. INSURANCE
24. WAIVER OF SUBROGATION
25. SUBORDINATION AND ATTORNMENT
26. TENANT ESTOPPEL CERTIFICATES
27. TRANSFER OF LANDLORD'S INTEREST
28. DEFAULT
29. BROKERAGE FEES
30. NOTICES
31. QUIET ENJOYMENT
32. OBSERVANCE OF LAW
33. FORCE MAJEURE
34. CURING TENANT'S DEFAULTS
35. SIGN CONTROL
36. HAZARDOUS SUBSTANCES
37. RELOCATION OF PREMISES - INTENTIONALLY
DELETED
38. PUBLIC ACCOMMODATIONS LAWS
39. MISCELLANEOUS
THE VITAL IMAGES, INC. LEASE
This Lease between Acky-3100 Lake Limited Partnership, a Minnesota limited
partnership, ("Landlord"), and Vital Images, Inc., an Iowa corporation
("Tenant"), is dated as of January 31, 1997.
1. LEASE OF PREMISES
In consideration of the Rent (as defined in Section 5.01) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown on the floor plan attached hereto as Exhibit A, and further
described in Section 2.01. The Premises are located within the Building and
Project described in Section 2.13. Tenant shall have the nonexclusive right
(unless otherwise provided herein) in common with Landlord, other tenants,
subtenants and invitees to use the Common Areas (as defined in Section 2.10).
2. DEFINITIONS
As used in this Lease, the following terms shall have the following meanings:
2.01 Premises: (a) Premises A: that portion of the Building on the first (1st)
floor containing approximately 10,370 square feet of Rentable Areas, shown
on Exhibit "A", located in and known as Lake Pointe Corporate Centre; (b)
Premises B: that portion of the Building on the second (2nd) floor
containing approximately 3,846 square feet of Rentable Area shown on
Exhibit "A", located in and known as Lake Pointe Corporate Centre (Premises
A and Premises B are collectively referred to herein as the "Premises").
2.02 Commencement Date:
(a) Premises A - February 10, 1997
(b) Premises B - September 1, 1997
2.03 Expiration Date: January 31, 2002, unless otherwise extended or sooner
terminated in accordance with the provisions of this Lease.
2.04 Term: The period commencing on the Commencement Date and expiring at
midnight of the Expiration Date or as extended by the exercise of any
option to extend the Term.
2.05 Security Deposit (Section 8): $150,000.00.
2.06 Intentionally deleted.
2.07 Monthly Installments of Base Rent:
Period Rental Rate Per Monthly Installments
Square Foot
2/10/97-8/31/97 $9.50 $8,209.58
9/1/97-1/31/98 $9.50 $11,254.33
2/1/98-1/31/99 $9.88 $11,704.51
2/1/99-1/31/00 $10.28 $12,178.37
2/1/00-1/31/01 $10.69 $12,664.09
2/1/01-1/31/02 $11.11 $13,161.64
2.08 Monthly Installments of Improvements Rent:
Period Rental Rate Per Monthly Installments
Square Foot
2/1/97-8/31/97 $1.50 $1,296.25
9/1/97-1/31/02 $1.50 $1,777.00
2.09 Tenant's Proportionate Share: 21.6% as of the Commencement Date for
Premises A and 29.6% as of the Commencement Date for Premises B.
Tenant's Proportionate Share shall equal a fraction, the numerator of
which is the Rentable Area of the Premises, and the denominator of
which is the Rentable Area of the Building, as determined by Landlord
from time to time. Should the area of the Premises or of the Building
change, such share shall be adjusted and shall equal a fraction, the
numerator of which is the Rentable Area of the Premises, and the
denominator of which is the Rentable Area of the Building, as
determined by Landlord from time to time.
2.10 Common Area: All areas designated by Landlord for common use or
benefit of all tenants, their customers or invitees within the
Building and Project, including but not limited to, parking lots,
landscaped and vacant areas, drainage ditches, passages for trucks and
automobiles, areaways, roads, walks, curbs, corridors, malls, roof,
lanes and arcades together with public facilities such as building
lobbies, restrooms, comfort rooms, lounges, drinking fountains,
toilets, stairs, ramps, elevators, shelters, porches, bus stations and
loading docks, with facilities appurtenant to each. The Common Area
shall not include commercial areas intended for renting or roads
maintained by public authority. Landlord may expand, contract or
change said Common Area from time to time as Landlord deems desirable,
with a view to the improvement of the convenience and use of Common
Area by tenants, their employees and customers.
2.11 Estimated Project Operating Cost: $5.30 psf per annum.
2.12 Estimated Real Estate Taxes: $1.45 psf per annum.
2.13 Project: The building of which the Premises are a part (the
"Building") and any other buildings or improvements on the real
property (the "Property") located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ and further depicted on Exhibit B. The
project is known as Lake Pointe Corporate Centre.
2.14 Rentable Area: As to the Premises, the number of rentable square feet
of floor area as may from time to time be subject to lease by Tenant
and, as to the Project, the number of rentable square feet of floor
area as may from time to time be subject to lease or available for
leasing in the Project, in each case, as determined by Landlord and
applied on a consistent basis throughout the Project.
2.15 Parking: Tenant shall be permitted, at no additional cost, to park 4
cars per 1,000 square feet of Rentable Area of the Premises on a non-
exclusive basis in the area(s) designated by Landlord for parking.
Tenant shall abide by any and all parking regulations and rules
established from time to time by Landlord.
2.16 Landlord's Mailing Address: Acky-3100 Lake Limited Partnership, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
With a copy to the Building Manager: Ackerberg Properties, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
2.17 Tenant's Mailing Address: Vital Images, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
2.18 Tenant's Work: shall have the meaning set forth on Exhibit C attached
hereto.
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2.19 Projected Delivery Date: shall be February 10, 1997 with respect to
Premises A and not later than September 1, 1997 with respect to
Premises B.
2.20 State: The State of Minnesota.
2.21 Tenant's Use Clause (Article 10): General office use
2.22 Broker(s)
Landlord's: Ackerberg Properties, Inc.
Tenant's: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates
3. EXHIBITS AND ADDENDA
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
Addendum 1 Option to Extend Term
Addendum 2 Option to Expand
Addendum 3 Right of First Offer
Addendum 4 Termination Option
Exhibit A Floor Plan showing the Premises.
Exhibit B Site Plan of the Project / Legal Description.
Exhibit C Tenant's Work.
Exhibit D General Specifications for Tenant's Alterations or Improvements
4. DELIVERY OF POSSESSION
If Landlord does not deliver possession ("Deliver Possession") of Premises A or
Premises B to Tenant on the applicable Commencement Date, Landlord shall not be
liable for such failure, the Expiration Date shall not change and the validity
of this Lease shall not be impaired, but Rent with respect to Premises A or
Premises B, as the case may be, shall be abated until delivery of possession.
"Delivery of possession" shall be deemed to occur on the date Landlord notifies
Tenant that Premises A or Premises B, as the case may be, are ready for
occupancy. If Landlord permits Tenant to enter into possession of either
Premises A or Premises B before the applicable Commencement Date, such
possession shall be subject to the provisions of this Lease, including, without
limitation, the payment of Rent. Notwithstanding the foregoing, if for any
reason Landlord is unable to Deliver Possession of Premises A or Premises B to
Tenant on or prior to the date falling sixty (60) days following the applicable
Commencement Date and such failure does not result either from Force Majeure
Events (as defined in Section 9.05 below) or Tenant caused delays, then (a)
Landlord shall not be subject to any liability therefor and (b) such delay and
Landlord's ability to Deliver Possession shall not effect either the validity of
this Lease or the obligations of either Landlord or Tenant hereunder or be
deemed to extend the Expiration Date; provided, however, that under such
circumstances Tenant shall have the right to terminate this Lease, by giving
written notice of the same to Landlord at any time following the end of such 60-
day period and prior to the first to occur of (a) the thirtieth (30th) day
following the end of such 60-day period and (b) the date Landlord does Deliver
Possession which termination shall be effective upon receipt of such notice.
5. RENT
5.01 Definition of Rent. All costs (other than Base Rent and Improvement
Rent) which Tenant is required or agrees to pay to Landlord under this
Lease shall be deemed additional rent (which, together with the Base
Rent and Improvement Rent is sometimes referred to as "Rent"). Rent
shall be paid to the Landlord or at such place as Landlord may from
time to time designate in writing, without any prior demand therefor
and without deduction or offset, in lawful money of the United States
of America.
5.02 Payment of Rent. The monthly installments of Rent shall be payable in
advance on or before the first day of each calendar month of the Term.
If the Term begins (or ends) on other than the first (or
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last) day of a calendar month, the Rent for the partial month shall be
prorated on a per diem basis. Tenant shall pay Landlord the first
Monthly Installment of Rent when Tenant executes the Lease.
5.03 Allocation of Payments. Any payment by Tenant of an amount less than
the Rent provided for in this Lease shall be applied to the earliest
due Rent. No endorsement on any check or acceptance of any payment
shall be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover
the balance of the Rent or pursue any other remedy provided for in
this Lease.
6. PROJECT OPERATING COSTS
6.01 Definition of Project Operating Costs. Tenant agrees to pay as Rent,
Tenant's Proportionate Share of all costs, expenses and obligations
attributable to the Project and its operation (the "Project Operating
Costs") as provided below. The term "Project Operating Costs" shall
include all those items described in the following subparagraphs a.
and b.
a. All taxes, assessments, water and sewer charges and other similar
governmental charges due and payable on or attributable to the
Building or Project or their operation, including without
limitation, (1) real property taxes or assessments due and
payable against the Building or Project ("Real Estate Taxes"),
(2) any and all costs, including attorney's fees, incurred by
Landlord in contesting the amount of any taxes or assessments
levied against the Building or the Project provided any refunds
resulting from such contest shall be credited against Project
Operating Costs in the year received, and (3) any tax measured by
gross rentals received from the leasing of the Premises, Building
or Project, excluding any net income, franchise, capital stock,
estate or inheritance taxes imposed by the State or federal
government or their agencies, branches or departments; provided
that if at any time during the Term any governmental entity
levies, assesses or imposes on Landlord any (i) general or
special, ad valorem or specific, excise, capital levy or other
charge directly on the Rent received under this Lease or on the
rent received under any other leases of space in the Building or
Project, or (ii) any license fee, excise or franchise tax, or
charge measured by or based, in whole or in part, upon such rent,
or (iii) any transfer, transaction, or similar tax, or
assessment, based directly or indirectly upon the transaction
represented by this Lease, or (iv) any occupancy, use, per capita
or other tax or charge based directly or indirectly upon the use
or occupancy of the Premises or other premises within the
Building or Project, then any such taxes, assessments, levies and
charges shall be deemed to be included in the term Project
Operating Costs. For purposes of this subsection, if any
assessment is payable in installments, Tenant shall only be
obligated to pay its Proportionate Share of any such assessment
over the maximum number of installments permitted by the
assessing authority and shall only be liable for any such
installments due during the Term as and when such installments
become due and payable. Tenant shall not be liable for any such
installments that are due either before or after the Term;
provided, however, that Tenant's liability for Real Estate Taxes
(including assessments payable in installments) shall be prorated
for the years in which this Lease commences and terminates.
b. The total cost incurred by Landlord in owning, operating, and
maintaining the Project, in a manner deemed by Landlord
reasonable and appropriate and for the best interests of the
tenants of the Project, including, without limitation, management
fees (not to exceed 5% of gross receipts of the Project), all
costs and expenses (relating to the land, Common Area and
improvements) of operating, maintaining, repairing, lighting,
cleaning, painting, striping, inspecting, insuring (including but
not limited to liability insurance for personal injury, death and
property damage, insurance against fire, theft or other
casualties, worker's compensation insurance, insurance covering
personnel engaged in the operation, administration, maintenance
and repair of the Project, insurance against liability for
defamation and claims of false arrest, and Landlord's plate glass
insurance), removing of
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snow, ice, debris and surface water, renting of music, regulation
of traffic, pest control, utilities, janitorial service, window
washing, sewer and security (including the cost of uniforms,
equipment and all employment taxes, electronic intrusion and fire
control devices and telephone monitoring and alert systems),
complying with laws and regulations (including improvements or
changes required by new laws or regulations), costs associated
with a transportation demand management program, costs of
replacing or retrofitting HVAC systems to comply with laws or
regulations, charges related to indoor air quality control, fees
for permits and licenses, reasonable fees of attorneys,
accountants and other professionals, employment costs in
connection with the Project, as well as all costs and expenses of
repairs and replacement of gutters, downspouts, roofs, building
service equipment, paving, curbs, sidewalks, walkways, roadways,
parking surfaces, landscaping, drainage, equipment and fixtures.
It is the intention of Landlord and Tenant that this Lease be
fully net to Landlord; and accordingly Project Operating Costs
shall include all costs and expenses incurred by Landlord in
connection with the Project except for costs of leasing to
tenants, initial or expansion capital construction costs,
depreciation of initial or expansion capital construction costs,
and interest on money borrowed for such construction costs.
Notwithstanding anything contained in this Article 6 to the
contrary, any Project Operating Costs which are properly charged
to a capital account shall not be included in Project Operating
Costs in a single year but shall instead be amortized over their
useful lives, as determined by Landlord in accordance with
generally accepted accounting principles, and only the annual
amortization amount together with interest at the rate of nine
percent (9%) per annum shall be included in Project Operating
Costs for a particular year.
c. If the Project does not have ninety-five percent (95%) occupancy
during an entire calendar year, then the variable cost component
of Project Operating Costs (i.e. the component of Project
Operating Costs that may vary depending upon the occupancy level
of the Project) shall be equitably adjusted so that the total
amount of Project Operating Costs equals the total amount which
would have been paid or incurred by Landlord had the Project been
ninety-five percent (95%) occupied for the entire calendar year.
In no event shall the Landlord be entitled to receive from Tenant
and any other tenants in the Project an aggregate amount in
excess of the actual Project Operating Costs as a result of the
foregoing provisions.
6.02 Payment of Project Operating Costs. Tenant's Proportionate Share of
Project Operating Costs shall be payable by Tenant to Landlord as
follows:
a. To provide for current payments of Tenant's Proportionate Share
of Project Operating Costs, Tenant shall pay as additional rent,
an amount equal to Tenant's Proportionate Share of the Project
Operating Costs payable during each calendar year, as estimated
by Landlord from time to time. Such payments shall be made in
monthly installments, commencing on the first day of the month
following the month in which Landlord notifies Tenant of the
amount it is to pay hereunder and continuing until the first day
of the month following the month in which Landlord gives Tenant a
new notice of estimated Project Operating Costs.
b. On or before April 1 of each calendar year (or as soon thereafter
as is practical), Landlord shall deliver to Tenant a statement
setting forth Tenant's Proportionate Share of the actual Project
Operating Costs for the preceding calendar year. If Tenant's
Proportionate Share of the actual Project Operating costs for the
previous calendar year exceeds the total of the monthly payments
made by Tenant for such year, Tenant shall pay Landlord the
amount of the deficiency within thirty (30) days of the receipt
of the statement. If such total exceeds Tenant's Proportionate
Share of the actual Project Operating Costs for such calendar
year, the Landlord shall credit against Tenant's next ensuing
monthly installment(s) of Rent an amount equal to the difference
until the credit is exhausted. If a credit is due from Landlord
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on the Expiration Date, Landlord shall pay Tenant the amount of
the credit on or before the next succeeding April 1. The
obligations of Tenant and Landlord to make payments required
under this Section 6.02 shall survive the Expiration Date.
c. Tenant's Proportionate Share of Expenses in any lease year having
less than 365 days shall be prorated on a daily basis.
d. If any dispute arises as to the amount of any additional rent due
hereunder, Tenant shall have the right after reasonable notice
and at reasonable times to inspect Landlord's accounting records
at Landlord's accounting office and, if after such inspection
Tenant still disputes the amount of additional rent owed, a
certification as to the proper amount shall be made by Landlord's
certified public accountant, which certification shall be final
and conclusive. Tenant agrees to pay the cost of such
certification unless it is determined that Landlord's original
statement overstated Project Operating Costs by more than five
percent (5%).
6.03 Other Taxes Payable by Tenant. Tenant shall reimburse Landlord upon
demand for all taxes payable by Landlord (other than net income taxes)
which are not otherwise reimbursable under this Lease, whether or not
now customary or within the contemplation of the parties, where such
taxes are upon, measured by or reasonably attributable to (a) the cost
or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or the cost or value of any
leasehold improvements made to the Premises, regardless of whether
title to such improvements is held by Tenant or Landlord; (b) the
gross or net Rent payable under this Lease, including, without
limitation, any rental or gross receipts tax levied by any taxing
authority with respect to the receipt of the Rent hereunder; (c) the
possession, leasing, operation, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises or any portion
thereof; or (d) this transaction or any document to which Tenant is a
party creating or transferring an interest in the Premises.
7. INTEREST AND LATE CHARGES
If Tenant fails to pay any Rent or other charges under the terms of this Lease
within seven (7) days after the due date, the unpaid amounts shall bear interest
from the due date at the lesser of fifteen percent (15%) per annum or the
maximum rate then allowed by law. Tenant acknowledges that the late payment of
Rent will cause Landlord to lose the use of that money and incur costs and
expenses not contemplated under this Lease, including without limitation,
mortgage penalties, collection costs and accounting expenses, the exact amount
of which is extremely difficult to ascertain. Therefore, in addition to
interest, if any Rent is not received by Landlord within seven (7) days from the
date it is due, Tenant shall pay Landlord a late charge equal to five percent
(5%) of such amount. Landlord and Tenant agree that this late charge represents
a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the loss suffered from such non-payment by Tenant.
8. SECURITY DEPOSIT
8.01 Subject to the provisions of Section 8.04 below, Tenant agrees to
deposit with Landlord the Security Deposit set forth at Section 2.05
upon execution of this Lease, as security for Tenant's performance of
its obligations under this Lease. Landlord and Tenant agree that the
Security Deposit may be commingled with other funds of Landlord but
Landlord agrees to invest the Security Deposit in an interest bearing
money market account, certificate of deposit, or similar investment
vehicle or pay interest on the Security Deposit as if so invested. Any
interest earned on the Security Deposit shall be deemed part of the
"Security Deposit" for purposes of this Lease. Notwithstanding the
foregoing, Tenant has the option of posting the Security Deposit with
Landlord in the form of a Letter of Credit (as defined herein). As
used herein, the term "Letter of Credit" shall mean an unconditional
letter of credit in favor of Landlord and issued by a bank and in such
form as is satisfactory to Landlord. If Tenant so elects to post a
Letter of Credit as the Security Deposit, Tenant shall deposit with
Landlord not less than thirty (30) days prior to the expiration of the
Letter of Credit (and not less than thirty (30) days prior to the
expiration date of each renewal Letter of Credit deposited by Tenant
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hereunder), a renewal Letter of Credit in form and content identical
to the original Letter of Credit deposited hereunder. If Tenant fails
to so deposit any such renewal Letter of Credit on or before the date
such deposit is to be made and does not cure such failure within five
(5) days after notice thereof from Landlord, Landlord may draw the
entire proceeds of the Letter of Credit then on deposit with
Landlord and the proceeds so drawn shall comprise the Security Deposit
and shall be held and applied by Landlord in accordance with the
provisions of this Lease. In the event Tenant fails to perform any of
its obligations under this Lease, Landlord may draw the proceeds of
the Letter of Credit (insofar as the same constitute the Security
Deposit) and apply such proceeds in accordance with the provisions of
Section 8.02 of this Lease.
8.02 If Tenant fails to pay Rent or any other amount when due, or fails to
perform any of the terms hereof and such failure extends beyond any
notice and cure periods provided in this Lease, Landlord may use all
or any portion of the Security Deposit for amounts then due and
unpaid, for payment of any amount for which Landlord has become
obligated as a result of Tenant's default, and for any loss sustained
by Landlord as a result of Tenant's default. Landlord may use this
deposit without prejudice to any other remedy Landlord may have. If
Landlord uses any of the Security Deposit, Tenant shall, within
fifteen (15) days after written demand therefor, restore the Security
Deposit to the full amount originally deposited; Tenant's failure to
do so shall constitute an act of default hereunder and Landlord shall
have the right to exercise any remedy provided for in Article 28.
Within thirty (30) days after the Term has expired or Tenant has
vacated the Premises, whichever shall last occur, and provided Tenant
is not then in default on any of its obligations hereunder, Landlord
shall return the Security Deposit to Tenant. If Landlord sells its
interest in the Premises, Landlord may deliver the Security Deposit to
the purchaser of Landlord's interest and thereupon be relieved of any
further liability or obligation with respect to the Security Deposit.
8.03 Notwithstanding the foregoing, in the event Tenant is not then in
default on any of its obligations hereunder and has not theretofore
defaulted, then effective as of the third (3rd) anniversary of the
Commencement Date for Premises A, the Security Deposit shall be
reduced by $50,000.00 (i.e., the remaining Security Deposit shall
equal $100,000.00) and, accordingly, (a) if the Security Deposit is in
the form of cash, Landlord shall return $50,000.00 to Tenant within
thirty (30) days after the third (3rd) anniversary of the Commencement
Date for Premises A or (b) if a Letter of Credit is posted as the
Security Deposit, Tenant may replace the Letter of Credit with a
Letter of Credit in the amount of $100,000.00 on or after the third
(3rd) anniversary of the Commencement Date for Premises A in
accordance with the provisions of Section 8.01 regarding replacement
of a Letter of Credit.
8.04 Notwithstanding the foregoing provision of this Article 8, if at any
time during the Term, (a) Tenant is not in default on any of its
obligations hereunder and has not therefore defaulted, and (b)
Tenant's "net worth" is in excess of $1,000,000.00 and Tenant has, in
the aggregate, cash on hand and marketable securities in excess of
$3,000,000.00 (the "Security Deposit Release Requirements"), then
Landlord shall return the Security Deposit to Tenant within thirty
(30) days after Tenant's satisfaction of the Security Deposit Release
Requirements; provided, however, that if at any time during the Term
Landlord determines that the Security Deposit Release Requirements are
no longer satisfied, Tenant shall be required within ten (10) days
after notice of the same from Landlord to post the Security Deposit in
accordance with the foregoing provisions of this Article 8. In
connection with Landlord's ability to determine whether the Security
Deposit Release Requirements are satisfied on an ongoing basis, (a) if
Tenant is a publicly held corporation, Tenant agrees to furnish
Landlord (i) on a quarterly basis during the Term its current 10 Q
statement filed with the Securities and Exchange Commission ("SEC")
which shall include unaudited financial statements certified as true
and correct by the chief financial officer of Tenant and (ii) on an
annual basis during the Term its current 10 K filed with the SEC which
shall include its current audited financial statements together with
an opinion from a nationally recognized firm of certified public
accountants that the same are true and correct or ((b) if Tenant is
not a publicly held corporation. Tenant shall furnish Landlord (i) on
a quarterly basis during the Term its current unaudited financial
statements certified as true and
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correct by the chief financial officer of Tenant and (ii) on an annual
basis during the Term its current audited financial statements
certified as true and correct by a nationally recognized firm of
certified public accountants; it being further understood that if
Tenant fails to timely and properly furnish Landlord with financial
statements in accordance with the terms and conditions of this
sentence, the same shall constitute a failure by Tenant to satisfy the
Security Deposit Release Requirements. Landlord acknowledges that as
of the date hereof Tenant has satisfied the Security Deposit Release
Requirements and accordingly shall have no duty to post the Security
Deposit unless and until Landlord determines that the Security Deposit
Release Requirements are no longer satisfied.
9. UTILITY SERVICES
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9.01 Electricity, Gas, Water and Sewer. Landlord agrees to provide mains,
conduits and other facilities to supply gas, water, sewer and
electricity to the Premises. Tenant shall pay as part of Tenant's
Proportionate Share of Project Operating Costs for all electricity,
gas, water, rubbish removal and other utilities used in the Project
(including the Premises).
9.02 Heating, Air Conditioning and Ventilating. Landlord agrees at its own
cost to provide a building standard system designed to heat, air
condition and ventilate the Premises, the Common Areas and other
occupied Areas of the Project. Tenant agrees to accept and use such
heating, air conditioning and ventilation system in the Premises and
to allow Landlord access to maintain, repair and replace the system
and all other HVAC equipment serving the Project, including equipment
serving other tenants, and such cost shall be considered part of
Project Operating Costs, subject to reimbursement from Tenant in the
amount of Tenant's Proportionate Share. The HVAC costs shall reflect
all costs and expenses of full operation between the hours of 7:00
a.m. - 6:00 p.m. Monday through Friday and 9:00 a.m. - 12:00 p.m.
Saturday. Should Tenant require additional HVAC outside these hours,
Tenant shall pay an additional charge for such service on an hourly
basis (at Landlord's actual cost) as additional Rent. Such charge
shall be determined by Landlord and transmitted to Tenant in writing,
which writing shall include a reasonable breakdown of such charge.
9.03 Rubbish Removal. Landlord shall be responsible for contracting for all
removal of trash, rubbish, debris and recyclables generated by Tenant.
Tenant shall be required to pay rubbish removal and recycling fees
through Project Operating Costs based on Tenant's Proportionate Share.
Upon written notice from Landlord that such a program has been
implemented, Tenant shall participate and fully cooperate with any
recycling program instituted by Landlord. If Tenant fails to do so,
Tenant shall pay a penalty equal to $.25 (twenty-five cents) per
square foot of Rentable Area in the Premises per year, prorated for
the period of non-compliance.
9.04 Discontinuance of Service. Whenever any bills for rent, operating
costs, real estate taxes or any other service, are not paid by Tenant
prior to the expiration of any applicable notice and cure periods
provided in this Lease, Landlord reserves the right upon notice to
Tenant to discontinue service, without liability to Tenant. No such
action by Landlord, or notice thereof, shall be construed as an
eviction or disturbance of possession or as an election by Landlord to
terminate this Lease.
9.05 Interruption of Service. Landlord shall not be liable in damages or
otherwise if any utility service or other service to the Premises
shall be interrupted or impaired by fire, accident, riot, strike, act
of God, the making of necessary repairs or improvements or by any
causes beyond Landlord's control (collectively, "Force Majeure
Events"); provided, however, if as a result of any such interruption
or impairment (unless such interruption or impairment is due to the
act or neglect of Tenant, its agents, contractors or employees or
Force Majeure Events) (a) the Premises are rendered untenantable for a
period in excess of three (3) consecutive Business Days (as
hereinafter defined) and (b) Tenant is unable to and does not occupy
the Premises during such period of untenantability, then, in such
event Base Rent shall ▇▇▇▇▇ on a per diem basis for the period
beginning on the fourth (4th) Business Day of continuous
untenantability and ending on the date the Premises are again rendered
tenantable. As
8
used in this Lease, the term "Business Day" shall mean each calendar
day occurring within the Term except for Saturdays, Sundays and
holidays.
9.06 Compliance with Laws. Tenant shall comply with all present and future
laws, ordinances, rules, regulations, or governmental or quasi-
governmental directives (including without limitation those
requirements of the Occupational Safety and Health Administration
that relate to Tenant's specific use and occupancy of the Premises)
regarding the indoor air quality of the Premises and the maintenance
of any heating, ventilating, and air conditioning equipment or
system for which the Tenant is responsible pursuant to this Lease.
10. TENANT'S USE OF THE PREMISES
--- ----------------------------
10.1 Permitted Use. Tenant shall use the Premises solely for the purposes
set forth at Section 2.21. Tenant shall not conduct or permit
auctions or sheriff's sales at the Property. Tenant shall not grant
any concession, license or permission to any third party to sell
merchandise or services in the Premises.
10.02 Manner of Use. Tenant shall not use or occupy the Premises in
violation of any law or restriction affecting the Building or
Project, and shall immediately discontinue any use of the Premises
which is declared by any governmental authority to be a violation of
law or the certificate of occupancy. Tenant shall, at Tenant's own
cost and expense, comply with all laws, regulations, or directions
of any governmental or quasi-governmental agency or authority which
shall impose any duty upon Tenant or Landlord with respect to the
Premises due to Tenant's specific use or occupation thereof or any
additions or alterations made to the Premises by or on behalf of
Tenant. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, extended coverage or
other insurance policy covering the Building or Project, and shall
comply with all rules, orders, and recommendations. Tenant shall
reimburse Landlord for any additional premium charged for such
policy by reason of Tenant's failure to comply with the provisions
of this Article. Tenant shall not do or permit anything to be done
on or about the Premises which will interfere with the rights of
other tenants or occupants of the Building or of the Project, or
injure or annoy them, or use or allow the Premises to be used for
any unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant
shall not commit or suffer to be committed any waste in or upon the
Premises.
11. CONDITION OF THE PREMISES
--- -------------------------
Landlord shall deliver the Premises "broom clean" and in an "AS-IS WHERE-IS"
condition. No promise of Landlord to alter, remodel, repair or improve the
Premises, the Building or the Project and no representation, express or implied,
respecting any matter or thing relating to the Premises, Building, Project or
this Lease (including, without limitation, the condition of the Premises, the
Building or the Project) have been made to Tenant by Landlord or its Broker or
Sales Agent, other than as may be contained herein.
12. CONSTRUCTION, REPAIRS AND MAINTENANCE
--- -------------------------------------
12.01 Landlord's Obligations.
----------------------
a. Landlord shall, in a manner consistent with other similar first-
class office buildings in the Minneapolis-St. ▇▇▇▇ metropolitan
area, maintain the Common Areas, the roof, the foundations, the
four outer walls, downspouts and gutters of the Building and, to
the point the same are solely serving the Premises or the
premises of other tenants or other occupants of the Project, the
plumbing, sewage and heating, air conditioning and ventilating
systems, in good repair, ordinary wear and tear excepted. Except
as otherwise expressly provided in this Lease, Landlord shall
have no liability to Tenant nor shall Tenant's obligations under
this Lease be reduced or abated by reason of any inconvenience,
annoyance, interruption or injury to business arising from
Landlord's making any repairs or changes which Landlord is
required or permitted by this Lease or required by law to make to
any portion of the Project.
9
Landlord shall nevertheless use reasonable efforts to minimize
any interference with Tenant's business in the Premises.
b. Except as otherwise expressly provided herein, Landlord shall not
be liable for any loss or damage that may be caused by persons
occupying adjoining premises or any part of the Building, or any
person present in the Project for any other purpose or for any
loss from burst, stopped or leaking water, gas, sewer, sprinkler
or steam pipes or plumbing fixtures, or from any failure of or
defect in any electric line, circuit or facility.
12.02 Tenant's Obligations.
--------------------
a. Tenant at Tenant's sole expense shall: 1) maintain the Premises
in a clean, orderly and sanitary condition; 2) keep any trash
temporarily stored in the Premises in accordance with local codes
and removed on a regular basis to such location as Landlord may
determine; 3) keep all mechanical apparatus installed by Tenant
free of material vibration and noise which may be transmitted
beyond the Premises; 4) comply with all laws, ordinances, rules
and regulations of governmental authorities; 5) maintain the
Premises in good order, condition and repair, including the
surfaces of the ceilings, walls and floors, all doors, all
windows, all plumbing, pipes and fixtures, electrical wiring,
switches and fixtures located within or solely serving the
Premises, Building Standard furnishings, and special items and
equipment installed by or at the expense of Tenant.
b. Tenant shall be responsible for all repairs and alterations in
and to the Premises, Building and Project and the facilities and
systems thereof, the need for which arises out of: 1) Tenant's
use or occupancy of the Premises; 2) the installation, removal,
use or operation of Tenant's Property (as defined in Article 13)
in the Premises; 3) the moving of Tenant's Property into or out
of the Building; or 4) the act, misuse or negligence of Tenant,
its agents, contractors, employees or invitees.
c. If Tenant fails to maintain the Premises in good order and repair
as required pursuant to the terms of this Lease, Landlord shall
give Tenant notice to correct the condition. If Tenant fails to
commence such work promptly, then Landlord shall have the right
to do such acts and expend such funds as are reasonably necessary
to perform the same at the expense of Tenant. Any amount so
expended by Landlord shall be paid by Tenant with interest at the
lesser of fifteen percent (15%) per annum or the maximum rate
then allowed by law. Landlord shall have no liability to Tenant
as a result of performing any such work.
d. Tenant shall not: 1) place or maintain any merchandise or other
objects outside the perimeter of the Premises; 2) use or permit
the use of any loud speakers, flashing, moving and/or rotating
lights, sound amplifiers, musical instruments, or television or
radio broadcasts which are in any manner audible or visible
outside the Premises; 3) permit accumulations of garbage or other
refuse within the Premises; 4) permit odors to emanate from the
Premises; 5) distribute advertising in or upon any automobiles in
the Common Areas; 6) permit the parking of delivery vehicles so
as to interfere with the use of any driveway, walk, parking area
or other Common Areas in the Project; 7) receive or ship articles
of any kind except through service facilities designated by
Landlord; 8) overload the electrical wiring serving the Premises,
and will install any additional electrical wiring which may be
required at its expense.
12.03 No Offset. Tenant shall not have the right to make repairs at
Landlord's expense or, except as expressly provided in Section 9.05
above, to offset the cost of repairs against Rent or to terminate
this Lease because of Landlord's failure to keep the Premises in
good order, condition and repair.
10
12.04 Load and Equipment Limits. Tenant shall not place a load upon any
floor of the Premises which exceeds the load per square foot which
such floor was designed to carry, as determined by Landlord or
Landlord's structural engineer. The cost of any such determination by
Landlord's structural engineers shall be paid for by Tenant upon
demand. Tenant shall not install machinery or mechanical equipment
which cause noise or vibration to such a degree as to be
objectionable to Landlord or other Building tenants.
13. ALTERATIONS AND ADDITIONS
-------------------------------
13.01 Tenant shall not make any addition or alterations to the Premises without
obtaining the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion or may be conditioned on Tenant's
removing any such additions or alterations upon the expiration of the Term
and restoring the Premises to the same condition as on the date Tenant
took possession or on other requirements of Landlord. All work shall be
done in a good and workmanlike manner by licensed personnel approved by
Landlord (which approval shall not be unreasonably withheld).
Notwithstanding the foregoing but subject to the remaining provisions of
this Article 13 and provided Tenant obtains Landlord's prior written
approval of the contractors with whom Tenant intends to contract (which
approval shall not be unreasonably withheld), Tenant may, without
Landlord's prior written consent (except for Landlord's prior written
approval of Tenant's contractors as aforesaid), make or cause to be made
non-mechanical, non-electrical and non-structural additions or alterations
to the Premises, the cost of which, in the aggregate, do not exceed the
sum of $10,000.00 in any calendar year.
13.02 Tenant shall pay the costs of any work done on the Premises pursuant
to Section 13.01, and shall keep the Premises, Building and Project
free and clear of liens of any kind. Tenant shall indemnify, defend
against and keep Landlord free and harmless from all liability,
loss, damage, costs, attorneys' fees and any other expense incurred
on account of claims by a person performing work or furnishing
materials or supplies for Tenant or any person claiming under
Tenant.
13.03 Tenant shall keep Tenant's leasehold interest free and clear of all
attachment or judgment liens. Before the actual commencement of any
work Tenant shall give Landlord sufficient notice to enable Landlord
to post notices of non-responsibility for the proper protection of
Landlord's interest, and Landlord shall have the right to enter the
Premises and post such notices at any reasonable time.
13.04 With respect to any additions or alterations (or series of related
additions or alterations) costing in excess of $20,000.00, Landlord
may require, at Landlord's sole option, that Tenant provide at
Tenant's expense, a lien and completion bond at least one and one-
half (1-1/2) times the total estimated cost of such additions or
alterations to protect Landlord against liens and to insure timely
completion of the work.
13.05 Unless their removal is required by Landlord as provided in Section
13.01, all additions or alterations shall become the property of
Landlord upon the expiration of the Term; provided, however,
Tenant's moveable equipment, machinery and trade fixtures shall
remain the property of Tenant and, may be removed, subject to the
provisions of Section 14.02.
14. LEASEHOLD IMPROVEMENT; TENANT'S PROPERTY; SECURITY INTEREST
----------------------------------------------------------------
14.01 All fixtures, equipment, and improvements attached to or built into
the Premises, whether or not by or at the expense of Tenant, shall
be and remain a part of the Premises, shall be the property of
Landlord and shall not be removed by Tenant except as expressly
provided in Section 14.02.
14.02 All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located in
the Premises and acquired by or for the account of Tenant, without
expense to Landlord and all furniture and other articles of movable
personal property owned by Tenant ("Tenant's Property") shall be and
shall remain the property of Tenant and, provided Tenant is not then
in default under the terms and provisions of this Lease, may be
removed
11
by Tenant at any time during the Term. Tenant shall promptly repair
any damage to the Premises or to the Building resulting from such
removal.
15. RULES AND REGULATIONS
--------------------------
15.01 Upon notice thereof, Tenant agrees to comply with all rules and
regulations for the safe, efficient and lawful operation of the
Project as Landlord may from time to time make.
16. CERTAIN RIGHTS RESERVED BY LANDLORD
----------------------------------------
16.01 Landlord reserves the following rights, exercisable without
liability to Tenant:
a. To name the Building and Project and to change the name or
street address of the Building or Project (provided that, unless
the same arises due to changes in law, Landlord agrees to
reimburse Tenant for the actual cost of reasonable quantities of
stationery and business cards rendered unusable by any such
change in name or street address);
b. To approve all signs on the exterior or interior of the Building
and Project;
c. To have pass keys to the Premises and all doors within the
Premises, excluding Tenant's vaults and safes;
d. On reasonable prior notice to Tenant, to inspect the Premises,
and to show the Premises to any prospective purchaser or
mortgagee of the Project, or to others having an interest in the
Project or Landlord, and during the last six months of the Term,
to show the Premises to prospective tenants thereof; and
e. Upon advance notice (which may be verbal) to Tenant (except in
the case of emergencies and for standard janitorial and
mechanical services), to enter the Premises to make inspections,
repairs, alterations, or additions to the Premises or the
Building and to take all steps as may be necessary or desirable
for the safety, protection, maintenance or preservation of the
Premises or the Building or Landlord's interest therein, or as
may be necessary for the operation or improvement of the
Building or in order to comply with laws or requirements of
governmental or other authority. Landlord shall not be liable to
Tenant in connection with any such entry; provided, however,
that Landlord agrees to use commercially reasonable efforts
(except in an emergency) to minimize interference with Tenant's
business in the Premises in the course of any such entry.
17. ASSIGNMENT AND SUBLETTING
------------------------------
17.01 Tenant shall not assign this Lease or sublet all or any part of the
Premises without the prior written consent of Landlord, which
consent may be withheld at Landlord's sole discretion. If Tenant is
a corporation, partnership or limited liability entity, any
cumulative transfer of fifty percent (50%) or greater interest in
such entity shall be considered an assignment and shall require the
consent of Landlord as described herein. Fifty percent (50%) of any
sums or other economic consideration received by Tenant as a result
of such assignment or subletting, however denominated under the
assignment or sublease, which exceed, in the aggregate: 1) the total
sums which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to any portion of the
Premises subleased); plus 2) any real estate brokerage commissions
or fees payable in connection with such assignment or subletting,
shall be paid to Landlord as additional Rent under this Lease
without affecting or reducing any other obligations of Tenant
hereunder.
17.02 Notwithstanding the provisions of Section 17.01, Tenant may assign
this Lease or sublet the Premises or any portion thereof, without
Landlord's consent to any corporation which controls, is controlled
by or is under common control with Tenant, or to any corporation
resulting from a merger or consolidation with Tenant, or to any
person or entity which acquires all the assets and obligations of
12
Tenant's business. Without limiting the foregoing, and
notwithstanding anything to the contrary contained herein, Landlord
acknowledges that (i) as of the date of this Lease, Tenant is a
wholly-owned subsidiary of Bio-Vascular, Inc., a Minnesota
corporation ("Bio-Vascular"), (ii) within the next several months,
Bio-Vascular expects to consummate a spin-off of Tenant, and (iii)
in connection with such spin-off, Tenant will be re-organized as a
Minnesota corporation, retaining its corporate name "Vital Images,
Inc." ("Post Spin-Off Vital"). Landlord agrees that, for purposes of
this Lease, including without limitation all Addenda attached
hereto, the above-described spin-off transaction shall not
constitute an assignment, sublease or transfer of Tenant's interest
in this Lease, and that Post Spin-Off Vital shall, for all purposes
under this Lease, be deemed to be the "Tenant". Additionally,
notwithstanding the foregoing provisions of this Article 17, so long
as Tenant is a publicly traded company, the sale or transfer of
stock in Tenant shall not be deemed an assignment or other transfer
of Tenant's interest in this Lease.
Landlord further agrees that Post Spin-Off Vital, and any sublessee
or assignee permitted under this Section 17.02 shall, for purposes
of the rights and options available to Tenant pursuant to this Lease
including the Addenda attached hereto, be deemed to be the "Tenant"
under this Lease, as if the same was the original Tenant named
herein, and all of such rights and options shall be available to
Post Spin-Off Vital and any such sublessee or assignee to the same
degree as they are available to Tenant.
17.03 No subletting or assignment shall relieve Tenant of the obligation
to pay Rent and to perform all other obligations under this Lease.
In the event of default by an assignee or subtenant of Tenant or any
successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such assignee, subtenant or
successor.
17.04 If Tenant requests the consent of Landlord to any assignment or
subletting, then Tenant shall, upon demand, pay Landlord any
attorneys' fees reasonably incurred by Landlord in considering such
act or request (not to exceed $2,500.00 in any one instance).
18. HOLDING OVER
-----------------
If after expiration of the Term, Tenant remains in possession of the Premises,
Tenant shall, at Landlord's option, become a tenant from month to month only,
upon all the provisions of this Lease (except as to term and Base Rent), but the
"Monthly Installments of Base Rent" payable by Tenant shall be increased to one
hundred fifty percent (150%) of the Monthly Installments of Base Rent payable by
Tenant at the expiration of the Term. Such monthly rent shall be payable in
advance on or before the first day of each month. The foregoing shall not be
construed as a consent by Landlord to any such holding over or as a waiver by
Landlord of its right to reacquire its possession of the Premises through
summary proceedings or to recover damages arising from such holdover.
19. SURRENDER OF PREMISES
--------------------------
19.01 Tenant shall surrender the Premises to Landlord on the Expiration
Date or upon earlier termination of this Lease, in clean condition
and in as good condition as when Tenant took possession, except for
reasonable wear and tear, loss by fire or other casualty, or loss by
condemnation. Tenant shall remove Tenant's Property on or before the
Expiration Date and promptly repair all damage to the Premises or
Building caused by such removal or by Tenant's use of the Premises.
On the Expiration Date Tenant shall surrender all keys to the
Premises.
19.02 If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise pursuant to the terms and conditions of
this Lease, any of Tenant's Property left on the Premises shall be
deemed to be abandoned, and, at Landlord's option, title shall pass
to Landlord under this Lease as by a quit-claim ▇▇▇▇ of sale. If
Landlord elects to remove all or any part of such Tenant's Property,
the cost of removal, including repairing any damage to the Premises
or Building caused by such removal, shall be paid by Tenant.
13
19.03 No act of Landlord, including the acceptance of keys to the
Premises, shall constitute an acceptance of the surrender of the
Premises before the expiration of the Term. Only a written notice
from Landlord to Tenant shall constitute acceptance of the surrender
of the Premises and accomplish a termination of the Lease.
19.04 Without limitation of any other rights or remedies of Landlord
hereunder, Tenant shall be responsible for all consequential damages
to Landlord as a result of Tenant's failure to surrender the
Premises within sixty (60) days after the expiration or earlier
termination of the Term and otherwise in accordance with this Lease
(such 60-day period to be reduced to thirty [30] days if Landlord
notifies Tenant in writing that it requires the Premises for another
tenant or occupant), and this clause shall survive the termination
of the Lease.
20. DESTRUCTION OR DAMAGE
--------------------------
20.01 If the Premises is damaged by fire, earthquake, act of God, the
elements or other casualty, Landlord shall repair such damage and
this Lease shall remain in full force and effect; provided, however,
that if (a) the Building is so damaged as to require repairs to the
Building exceeding fifty percent (50%) of the full insurable value
of the Building, (b) the damage occurs less than two (2) years prior
to the Expiration Date, exclusive of any renewal periods, or (c)
Landlord does not for any reason (including, without limitation, by
reason of the terms of any mortgage or other loan document) receive
sufficient insurance proceeds to restore the Project (including the
Premises) in its entirety, then, in any such case, Landlord shall
have the right to terminate this Lease by giving Tenant written
notice thereof within sixty (60) days after the date of such
casualty, in which case this Lease shall terminate as of the date of
such notice; provided, however, that if Landlord elects to so
terminate pursuant to clause (b) above and Tenant exercises any
available extension option within ten (10) days after receipt of
such termination notice, then such termination shall be deemed null
and void and of no further force and effect. If such damage is not
the result of the negligence or willful misconduct of Tenant or
Tenant's agents, employees, contractors, licensees or invitees, the
Base Rent shall be abated to the extent Tenant's use of the Premises
is impaired, commencing with the date of damage and continuing until
completion of the repairs required of Landlord under Section 20.02.
Furthermore, if such repairs cannot, in Landlord's reasonable
opinion, be made within one hundred eighty (180) days after the date
of such damage, Landlord shall so notify Tenant within thirty (30)
days after the date of such damage and in such case Tenant shall
have the right, by written notice given to Landlord within fifteen
(15) days after the date Landlord's notice is given to Tenant, to
terminate this Lease as the date of such fire or other casualty.
Additionally, if any such damage or casualty renders all or a
substantial portion of the Premises untenantable and the same occurs
less than two (2) years prior to the Expiration Date, then Tenant
shall have the right to terminate this Lease by giving written
notice thereof to Landlord within fifteen (15) days after the date
of such casualty, in which case this Lease shall terminate as of the
date of such notice. Notwithstanding anything contained in this
Section 20.01 to the contrary, if any such damage or casualty
renders all or a substantial portion of the Premises untenantable
and Landlord proceeds to repair and restore the Premises pursuant to
this Article 20 but, subject to matters beyond Landlord's reasonable
control, does not in fact substantially complete said repairs and
restorations as to render a substantial portion of the Premises
tenantable within two hundred ten (210) days from the date such
damage occurred, then either Landlord or Tenant shall have the right
to terminate this Lease by giving notice to the other at any time
following the expiration of said two hundred ten (210) day period,
which termination shall be effective as of the date such notice is
received; provided, however, that if Landlord is able to
substantially complete such repairs and restorations so as to render
the Premises tenantable on or prior to the date on which Landlord
receives Tenant's termination notice as aforesaid, then Landlord and
Tenant shall no longer have the right to terminate this Lease in
accordance with the provisions of this Section 20.01 and any
termination notice received by either party after the date Landlord
is able to substantially complete such repairs and restorations
shall be of no force and effect.
14
20.02 If the Premises are to be repaired under this Article, Landlord
shall repair at its cost any injury or damage to the Premises
(exclusive of any alterations, additions or improvements made to the
Premises by Tenant which shall be promptly repaired by Tenant, at
its sole cost and expense). Landlord and Tenant agree to use
reasonable efforts to cooperate and coordinate any repairs or
restoration to the Premises that are required pursuant to this
Article. Tenant shall be responsible at its sole cost and expense
for the repair, restoration and replacement of any other Leasehold
Improvements and Tenant's Property. Landlord shall not be liable for
any loss of business inconvenience or annoyance arising from any
repair or restoration of any portion of the Premises, Building or
Project as a result of any damage from fire or other casualty.
21. EMINENT DOMAIN
-------------------
21.01 If the whole of the Building or Premises is lawfully taken by
condemnation or under threat thereof or in any other manner for any
public or quasi-public purpose this Lease shall terminate as of the
date of such taking, and Rent shall be prorated to such date. If
less than the whole of the Building or Premises is so taken, this
Lease shall be unaffected by such taking, provided that: a) Tenant
shall have the right to terminate this Lease by notice to Landlord
given within ninety (90) days after the date of such taking if a
significant portion of the Premises is taken and the remaining area
of the Premises is not reasonably sufficient, in Tenant's reasonable
business judgment, for Tenant to continue operation of its business,
and Landlord shall have the right to terminate this Lease by notice
to Tenant given within ninety (90) days after the date of such
taking. If either Landlord or Tenant so elects to terminate this
Lease, the Lease shall terminate on the thirtieth (30th) day after
either such notice. The Rent shall be prorated to the date of
termination, If this Lease continues in force upon such partial
taking, the Base Rent and Tenant's Proportionate Share shall be
equitably adjusted according to the remaining Rentable Area of the
Premises and Project.
21.02 In the event of any taking, partial or whole, all of the proceeds of
any award, judgment or settlement payable by the condemning
authority shall be the exclusive property of Landlord. Tenant,
however, shall have the right, to the extent that Landlord's award
is not reduced or prejudiced, to claim from the condemning authority
(but not from Landlord) such compensation as may be recoverable by
Tenant in its own right for relocation expenses and damage to
Tenant's personal property.
21.03 In the event of a partial taking of the Premises, or transfer under
threat thereof, which does not result in a termination of this
Lease, Landlord shall restore the remaining portion of the Premises
as nearly as practicable to its condition prior to the condemnation
or taking (exclusive of any alterations, additions or improvements
made to the Premises by Tenant which shall be promptly restored by
Tenant, at its sole cost and expense). Landlord and Tenant agree to
use reasonable efforts to cooperate and coordinate any repairs or
restoration to the Premises that are required pursuant to this
Article.
22. INDEMNIFICATION
--------------------
22.01 Tenant shall indemnify and hold Landlord harmless against and from
liability and claims of any kind for loss or damage to property of
Tenant or any other person, or for any injury to or death of any
person, arising out of: a) Tenant's use and occupancy of the
Premises, or any work, activity or other things allowed by Tenant to
be done in or about the Premises; b) any breach or default by Tenant
of any of Tenant's obligations under this Lease; or c) any negligent
or otherwise tortious act or omission of Tenant, its agents,
employees, invitees or contractors. Tenant shall at Tenant's
expense, and by counsel satisfactory to Landlord, defend Landlord in
any action arising from any such claim and shall indemnify Landlord
against all costs, attorneys' fees, expert witness fees and any
other expenses incurred in such action. As a material part of the
consideration for Landlord's execution of this Lease, Tenant hereby
assumes all risk of damage or injury to any person or property in or
about the Premises from any cause which is coverable by standard
"all risk" property insurance policy.
15
22.02 Except with respect to matters arising solely as a result of
Landlord's negligence or willful misconduct, Landlord shall not be
liable for injury or damage which may be sustained by the person or
property of Tenant, its employees, invitees or customers, or any
other person in or about the Premises, caused by or resulting from
fire, steam, electricity, gas, water or rain which may leak or flow
from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, whether
such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or Project or from
other sources. Landlord shall not be liable for any damages arising
from any act or omission of any other tenant of the Building or
Project.
22.03 Except with respect to matters which result from the negligence or
willful misconduct of any one or more of Tenant, its officers,
directors, agents, contractors, employees or invitees, Landlord
agrees to indemnify, defend and hold Tenant harmless against and
from liability and claims of any kind (including reasonable
attorney's fees and court costs) for loss or damage to property of
Tenant, or for any injury to or death of any person occurring in or
about the Common Area which arises out of Landlord's operation of
the Project or the wrongful acts or omissions of Landlord, its
agents, employees, invitees or contractors.
23. INSURANCE
--------------
23.01 All insurance required to be carried by Tenant hereunder shall be
issued by responsible insurance companies acceptable to Landlord and
Landlord's lender and qualified to do business in the State. Each
policy shall name Landlord, and any mortgagee of Landlord of which
Tenant has been notified in writing, as an additional insured. Each
policy shall contain: a) a cross-liability endorsement; b) a
provision that such policy shall be primary and non-contributing
with respect to any policies carried by Landlord and that any
coverage carried by Landlord shall be excess insurance; and c) a
waiver by the insurer of any right of subrogation against Landlord,
its agents, employees and representatives, which arises under such
policy or by reason of any act or omission of Landlord, its agents,
employees or representatives. A certificate of the insurer
evidencing the existence and amount of each insurance policy
required hereunder shall be delivered to Landlord before the date
Tenant is first given the right of possession of the Premises, and
thereafter within thirty (30) days after any demand by Landlord
therefor. No such policy shall be cancelable, except after twenty
(20) days written notice to Landlord and Landlord's lender. Tenant
shall furnish Landlord with renewals or "binders" of any such policy
at least ten (10) days prior to the expiration thereof. Tenant
agrees that if Tenant does not take out and maintain such insurance,
Landlord may (but shall not be required to) procure insurance on
Tenant's behalf and charge the Tenant the premiums together with a
fifteen percent (15%) handling charge, payable upon demand. Tenant
shall have the right to provide such insurance coverage pursuant to
blanket policies, provided such blanket policies expressly afford
coverage to the Premises, Landlord, Landlord's mortgagee and Tenant
as required by this Lease.
23.02 Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
maintain in effect policies of casualty insurance covering: a) fire
and extended coverage insurance, including protection against
vandalism and malicious mischief, plus "all-risk" endorsements
insuring all Leasehold Improvements (including any alterations,
additions or improvements as may be made by Tenant pursuant to the
provisions of Article 13 hereof); b) trade fixtures, merchandise and
other personal property; and c) Tenant's plate glass insurance on
the storefront of Premises. The proceeds of such insurance shall be
used for the repair or replacement of the property so insured.
23.03 Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
maintain in effect workers' compensation insurance as required by
law and comprehensive public liability and property damage insurance
with respect to the construction of improvements on the Premises,
the operation of the Premises and the operations of Tenant in or
about the Premises providing personal injury and broad form property
damage coverage
16
for not less than Two Million Dollars ($2,000,000.00) combined
single limit for bodily injury, death and property damage liability.
23.04 Landlord shall at all times during the Term carry fire and extended
coverage property insurance in an amount equal to at least eighty
percent (80%) of the full replacement value of the Project.
24. WAIVER OF SUBROGATION
--------------------------
Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other, on
account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have (or be required to have under the terms of this Lease) in force
at the time of the loss or damage. Tenant shall give notice to its insurance
carriers that the foregoing mutual waiver of subrogation is contained in this
Lease.
25. SUBORDINATION AND ATTORNMENT
---------------------------------
This Lease, and the rights of Tenant hereunder, are and shall be subordinate to
the interests of (i) all present and future ground leases and master leases of
all or any part of the Project or Property; (ii) present and future mortgages
and deeds of trust encumbering all or any part of the Project or Property; (iii)
any past and future advances made under any such mortgages or deeds of trust;
and (iv) all renewals, modifications, replacements and extensions of any such
ground leases, master leases, mortgages and deeds of trust; provided, however,
that any lessor under any such ground lease or master lease or any mortgagee or
beneficiary under any such mortgage or deed of trust shall have the right to
elect, by written notice given to Tenant, to have this Lease made superior in
whole or in part to any such ground lease, master lease, mortgage or deed of
trust. Within twenty (20) days after written demand therefor, Tenant shall
execute, acknowledge and deliver any instruments reasonably requested by
Landlord or any such lessor, mortgagee or beneficiary to effectuate the purposes
of this Article 25 so long as the same provides that Tenant's possession of the
Premises shall not be disturbed in the event of a foreclosure or deed-in-lieu of
foreclosure unless Tenant is in default under the terms and provisions of this
Lease. In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of any lease in which Landlord is lessee, Tenant shall attorn to the
purchaser, transferee or lessor as the case may be, and recognize that party as
Landlord under this Lease.
26. TENANT ESTOPPEL CERTIFICATES
---------------------------------
Within ten (10) days after written request from Landlord, Tenant shall execute
and deliver a written statement certifying that this Lease is unmodified and in
full force and effect, or is in full force and effect as modified and stating
the modifications; the amount of and the date to which Rent has been paid in
advance; the amount of any security deposited with Landlord; and that Landlord
is not in default hereunder or, if Landlord is claimed to be in default, stating
the nature of any claimed default. Any such statement may be relied upon by a
purchaser, assignee or lender. Tenant's failure to execute and deliver such
statement within the time required shall at Landlord's election be a default
under this Lease and shall also be conclusive upon Tenant that this Lease is in
full force and effect and has not been modified except as represented by
Landlord in good faith; that there are no uncured defaults in Landlord's
performance and that Tenant has no right of offset, counterclaim or deduction
against Rent.
27. TRANSFER OF LANDLORD'S INTEREST
------------------------------------
In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease occurring after the consummation of such
sale or transfer. If any security deposit or prepaid Rent has been paid by
Tenant, Landlord may transfer the security deposit or prepaid Rent to Landlord's
successor and Landlord shall be relieved of any and all further liability with
respect thereto.
28. DEFAULT
------------
28.01 Events of Default. The occurrence of any one or more of the
following matters constitutes a Default by Tenant under this Lease:
17
a. Failure by Tenant to pay Rent or any other amounts required
under this Lease within seven (7) days after notice of failure
to pay on the due date (provided, however, that Landlord shall
not be required to furnish Tenant with notice of Tenant's
failure to pay Rent or any other amounts required under this
Lease more than twice per calendar year and thereafter Tenant's
failure to pay Rent or any other amounts required under this
Lease as and when due shall constitute a Default by Tenant under
this Lease without any requirement of notice);
b. Failure by Tenant to observe or perform any other provision of
this Lease, if such failure continues for thirty (30) days after
notice thereof from Landlord to Tenant unless such non-monetary
default cannot reasonably be cured within such thirty (30) day
period, in which case Tenant shall have such additional time as
is reasonably necessary to cure such default provided that
Tenant commences such cure within the initial 30-day period and
diligently pursues the same to completion thereafter;
c. The levy upon, under writ of execution or the attachment by
legal process of, the leasehold interest of Tenant;
d. Tenant vacates or abandons the Premises or fails to take
possession of the Premises within thirty (30) days after the
same becomes available for occupancy whether or not Tenant
continues to pay Rent due under this Lease;
e. Tenant becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors, or consents to the
appointment of a trustee or receiver for Tenant or for the major
part of its property;
f. A trustee or receiver is appointed for Tenant or for the major
part of its property; or
g. Any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding for relief under any
bankruptcy law, or similar law for the relief of debtors, is
instituted by Tenant or against Tenant and is allowed against
it, or is consented to by it or is not dismissed within sixty
(60) days after such institution.
28.02 Rights and Remedies of Landlord. If a Default occurs, Landlord shall
have the rights and remedies hereinafter set forth, which shall be
distinct, separate and cumulative and shall not operate to exclude
or deprive Landlord of any other right or remedy allowed it by law:
a. Landlord may terminate this Lease by giving to Tenant notice of
Landlord's election to do so and all right, title and interest
of Tenant hereunder shall expire, on the date stated in such
notice;
b. Landlord may terminate the right of Tenant to possession of the
Premises without terminating this Lease by giving notice to
Tenant that Tenant's right to possession shall end on the date
stated in such notice;
c. Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit
for the specific performance of any covenant contained herein,
or for the enforcement of any other appropriate legal remedy,
including recovery of all amounts due or to become due from
Tenant under any of the provisions of this Lease.
28.03 Right to Re-Enter. If Landlord exercises any of the remedies
provided in Section 28.02, Tenant shall vacate the Premises and
immediately deliver possession thereof to Landlord, and Landlord may
18
reenter and take complete possession of the Premises, full and
complete license to do so being hereby granted to Landlord, and
Landlord may remove all occupants and property therefrom, without
being deemed guilty in any manner of trespass, eviction or forcible
entry and without relinquishing Landlord's right to Rent or any
other right given to Landlord hereunder.
28.04 Current Damages. If Landlord terminates the right of Tenant to
possession of the Premises without terminating this Lease, Landlord
shall have the right to immediate recovery of all amounts then due
hereunder. Such termination of possession shall not release Tenant,
in whole or in part, from Tenant's obligation to pay Rent hereunder
for the full Term, and Landlord shall have the right to recover from
Tenant, and Tenant shall remain liable for, all Rent and any other
sums accruing under this Lease during the period from the date of
such notice of termination of possession to the stated end of the
Term. Landlord may relet the Premises or any part thereof for the
account of Tenant upon such terms as Landlord shall determine and
may collect the rents from such reletting. Landlord shall not be
required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant relative to such reletting. Landlord
may make repairs, alterations and additions in or to the Premises
and redecorate the same to the extent deemed by Landlord necessary
or desirable and change the locks to the Premises. Tenant upon
demand shall pay the cost of all of the foregoing together with
Landlord's expenses of reletting. The rents from any such reletting
shall be applied first to the payment of the expenses of re-entry,
reletting, redecoration, repair and alterations and second to the
payment of Rent to be paid by Tenant. Any excess shall be credited
against the amount of Rent which becomes due and payable hereunder
Any such excess shall belong to Landlord solely. No such reentry or
repossession, repairs, alterations and additions, or reletting shall
be construed as an election on Landlord's part to terminate this
Lease, unless a written notice of such intention is given to Tenant,
or shall operate to release Tenant in whole or in part from any of
Tenant's obligations hereunder. Landlord may ▇▇▇ and recover
judgment for any deficiencies remaining after the application of the
proceeds of any such reletting.
28.05 Final Damages. If this Lease is terminated by Landlord pursuant to
Section 28.02, Landlord shall be entitled to recover from Tenant and
Tenant shall pay all Rent accrued and unpaid for the period up to
and including such termination date, as well as all other additional
sums for which Tenant is liable under this Lease, and all costs,
including court costs and attorneys' fees incurred by Landlord in
the enforcement of its rights and remedies hereunder. Landlord shall
be entitled to recover as damages a) the unamortized portion of
Landlord's contribution to the cost of tenant improvements and
alterations, if any, installed by either Landlord or Tenant pursuant
to this Lease, b) the aggregate Rents which would have been payable
after the termination date had this Lease not been terminated, less
the rental value of the Premises for said period (provided, however,
that if the rental value exceeds the value of the Rent provided to
be paid by Tenant for the balance of the Term of the Lease, Landlord
shall have no obligation to pay Tenant the excess or any part
thereof) and c) any damages in addition thereto, including
reasonable attorneys' fees and court costs, which Landlord sustains
as a result of the breach of any of the covenants of this Lease
other than for the payment of Rent.
28.06 Removal of Personal Property. All property of Tenant removed from
the Premises by Landlord pursuant to any provision of this Lease or
applicable law may be handled, removed or stored by Landlord at the
cost and expense of Tenant, and Landlord shall not be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay
Landlord for all expenses incurred by Landlord with respect to such
removal and storage. All such property not removed from the Premises
or retaken from storage by Tenant within thirty (30) days after the
end of the Term, however terminated, shall be conclusively deemed to
have been conveyed by Tenant to Landlord as by quit-claim ▇▇▇▇ of
sale.
28.07 Attorneys' Fees. In the event the parties hereto become involved in
any proceeding to enforce this Lease or the rights, duties or
obligations hereunder, the prevailing party in such proceeding shall
be entitled to receive, as part of any award, reasonable attorney's
fees.
19
28.08 No Waiver. No delay or omission in the exercise of any right or
remedy of Landlord upon any Default by Tenant shall impair such
right or remedy or be construed as a waiver of such default. The
receipt and acceptance by Landlord of delinquent Rent shall not
constitute a waiver. Any waiver by Landlord of any default must be
in writing and shall not be a waiver of any other default concerning
any other provision of the Lease.
29. BROKERAGE FEES
Tenant warrants and represents that it has not dealt with any real estate broker
or agent in connection with this Lease or its negotiation except those noted in
Section 2.22. Tenant shall indemnify Landlord from any expense or liability
(including costs of suit and reasonable attorneys' fees) for any compensation,
commission or fees claimed by any other real estate broker or agent in
connection with this Lease that is claiming by, through or under Tenant.
30. NOTICES
All notices, required to be given under this Lease shall be in writing and
deemed duly served or given if personally delivered or sent by certified or
registered U.S. mail, postage prepaid, and addressed if to Landlord, to
Landlord's Mailing Address; and if to Tenant, to Tenant's Mailing Address or if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from time
to time by notice to the other designate another place for receipt of future
notices. Any notice shall be deemed to have been served at the time the same was
posted.
31. QUIET ENJOYMENT
Landlord covenants that it has the right to enter into this Lease, and that
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall quietly enjoy the Premises, subject to the terms of this Lease and
to any mortgage, lease, or other agreement to which this Lease may be
subordinate.
32. OBSERVANCE OF LAW
Tenant shall, at its sole cost and expense, promptly comply with all laws and
governmental regulations or requirements now in force or which may hereafter be
in force, and with the requirements of any board of fire insurance underwriters
or other similar bodies now or hereafter constituted, relating to the occupancy
of the Premises, excluding structural changes not required as a result of
Tenant's specific use or occupation of the Premises, the Building and the
Project or any alterations or additions made to the Premises by Tenant.
33. FORCE MAJEURE
Any prevention or delay of work to be performed by Landlord or Tenant which is
due to strikes, labor disputes, inability to obtain labor, materials, equipment
or reasonable substitutes therefor, acts of God, governmental restrictions or
regulations, judicial orders, hostile government actions, civil commotion, fire
or other casualty, or other causes beyond the reasonable control of the party
obligated to perform hereunder, shall excuse performance of the work by that
party for a period equal to the duration of that prevention or delay. Nothing in
this Article 33 shall excuse or delay Tenant's obligation to pay Rent or other
charges under this Lease.
34. CURING TENANT'S DEFAULTS
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same at the expense of Tenant. Tenant shall pay Landlord
all costs of such performance promptly upon receipt of a ▇▇▇▇ therefor.
35. SIGN CONTROL
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord. Landlord shall have the right to
remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant for such removal, and to charge the cost of
removal to Tenant. Notwithstanding the foregoing, in the event that any tenant
of the Building other than ReMax (or its successors or assigns) is given
exterior signage on the Building or Project, then, so long as Tenant is not in
default hereunder and this Lease is in full force and effect, Tenant shall be
afforded rights to exterior signage under the same terms and
20
conditions as such other tenant; provided that the size of any such signage
afforded to Tenant and such other tenant(s) of the Building shall be based pro
rata upon the sizes of their respective premises.
36. HAZARDOUS SUBSTANCES
36.01 Defined Terms.
a. "Claim" shall mean and include any demand, cause of action,
proceeding or suit for any one or more of the following: 1)
actual or punitive damages, losses, injuries to person or
property, damages to natural resources, fines, penalties.
interest, contribution or settlement; 2) the costs of site
investigations, feasibility studies, information requests,
health or risk assessments, or Response (as hereinafter defined)
actions; and 3) enforcing insurance, contribution or
indemnification agreements.
b. "Environmental Laws" shall mean and include all federal, state
and local statutes, ordinances, regulations and rules relating
to environmental quality, health, safety, contamination and
clean-up, including, without limitation, the Clean Air Act, 42
U.S. C. Section 7401 et seq.; the Clean Water Act, 33 U.S.C.
Section 1251 et seq. and the Water Quality Act of 1987; the
Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7
U.S.C. Section 136 et seq.; the Marine Protection, Research, and
Sanctuaries Act, 33 U.S.C., Section 1401 et seq.; the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; the
Noise Control Act, 42 U.S.C. Section 4901 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., as amended by the Hazardous and
Solid Waste Amendments of 1984; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act; the Emergency Planning and Community Right-
to-Know Act, and Radon Gas and Indoor Air Quality Research Act;
the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section
2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et
seq.; the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section
10101 et seq.; the Minnesota Environmental Response and
Liability Act ("▇▇▇▇▇"), Minn. Stat. Ch. 115B; and the state
superlien and environmental clean-up statutes, with implementing
regulations and guidelines, as amended from time to time.
Environmental Laws shall also include all state, regional,
county, municipal and other local laws, regulations, and
ordinances insofar as they are equivalent or similar to the
federal laws recited above or purport to regulate Hazardous
Materials (as hereinafter defined).
c. "Hazardous Materials" shall mean and include the following,
including mixtures thereof: any hazardous substance, pollutant,
contaminant, waste, by-product or constituent regulated under
CERCLA; oil and petroleum products and natural gas, natural gas
liquids, liquefied natural gas and synthetic gas usable for
fuel; pesticides regulated under the FIFRA; asbestos and
asbestos containing materials, PCBs, and other substances
regulated under the TSCA; source material, special nuclear
material, by-product material and any other radioactive
materials or radioactive wastes, however produced, regulated
under the Atomic Energy Act or the Nuclear Waste Policy Act;
chemicals subject to the OSHA Hazard Communication Standard, 29
C.F.R. Section 1910.1200 et seq.; and industrial process and
pollution control wastes, whether or not hazardous within the
meaning of RCRA; any substance whose nature and/or quantity or
existence, use, manufacture, disposal or effect render it
subject to federal, state or local regulation, investigation,
remediation, or removal as potentially injurious to public
health or welfare.
21
d. "Use" means to manage, generate, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or burn for
energy recovery, incinerate, accumulate speculatively,
transport, transfer, dispose of, or abandon Hazardous Materials.
e. "Release" or Released" shall mean any actual or threatened
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or
disposing of Hazardous Materials into the environment, as
"environment" is defined in CERCLA.
f. "Response" or "Respond" shall mean action taken in compliance
with Environmental Laws to correct, remove, remediate, cleanup,
prevent, mitigate, monitor, evaluate, investigate, assess or
▇▇▇▇▇ the Release of a Hazardous Material.
36.02 Tenant's Obligations with Respect to Environmental Matters. During
the term of this Lease, Tenant shall comply at its own cost with all
Environmental Laws with respect to its use and occupancy of the
Premises. Tenant shall not Use, or authorize the Use of, any
Hazardous Materials on the Premises, without prior written
disclosure to and approval by the Landlord. Tenant shall not take
any action that would subject the Premises to permit requirements
under RCRA for storage, treatment or disposal of Hazardous
Materials. Tenant shall not dispose of Hazardous Materials in
dumpsters provided for tenant use. Tenant shall not discharge
Hazardous Materials into Project drains or sewers. Tenant shall not
cause or allow the Release of any Hazardous Materials on, to, or
from the Project. Tenant shall arrange at its own cost for the
lawful transportation and off-site disposal of all Hazardous
Materials that it generates. Notwithstanding the foregoing, normal
quantities of Hazardous Materials customarily used in the conduct of
general administrative and executive office activities (e.g., copier
fluids and cleaning supplies) may be Used at the Premises without
Landlord's prior written consent so long as the same are Used at all
times in compliance with the manufacturer's instructions therefor
and all applicable Environmental Laws.
36.03 Copies of Notices. During the term of this Lease, Tenant shall
provide Landlord promptly with copies of all summons, citations,
directives, information inquiries or requests, notices of potential
responsibility, notices of violation or deficiency, orders or
decrees, Claims, complaints, investigations, judgments, letters,
notices of environmental liens or Response actions in progress, and
other communications, written or oral, actual or threatened, from
the United States Environmental Protection Agency, Occupational
Safety and Health Administration, Minnesota Pollution Control
Agency, or other federal, state or local agency or authority, or any
other entity or individual, concerning any Release of a Hazardous
Material on, to or from the Premises, the imposition of any lien on
the Premises, or any alleged violation of or responsibility under
Environmental Laws. Landlord and Landlord's beneficiaries, agents
and employees shall have the right to enter the Premises and conduct
appropriate inspections or tests in order to determine Tenant's
compliance with Environmental Laws.
36.04 Tests and Reports. Upon written request by Landlord, if the same are
in Tenant's possession or required by law, Tenant shall provide
Landlord with the results of any appropriate reports and tests with
transportation and disposal contracts for Hazardous Materials, with
any permits issued under Environmental Laws, and with any other
applicable documents to demonstrate that Tenant complies with all
Environmental Laws relating to the Premises.
36.05 Tenant's Obligation to Respond. If Tenant's Use of Hazardous
Materials at the Premises gives rise to liability or to a Claim
under any Environmental Law, causes a significant public health
effect, or creates a nuisance, Tenant shall promptly take all
applicable action in Response.
36.06 Indemnification. Tenant shall indemnify, defend, and hold harmless
Landlord, its beneficiaries, its lenders, any managing agents and
leasing agents of the Premises, and their respective agents,
22
partners, officers, directors and employees from and against any and
all Claims arising from or attributable to any breach by Tenant of
any of its warranties, representations or covenants in this Article.
Tenant's obligations hereunder shall survive the termination or
expiration of this Lease.
36.07 Landlord's Statement. To the best of Landlord's knowledge there are
no Hazardous Materials (other than normal quantities of Hazardous
Materials customarily used in connection with the operation,
administration, maintenance and repair of office complexes similar
to the Project) located in the Building or Premises. For purposes of
this Section, the clause "best of Landlord's knowledge" shall mean
the actual present knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
37. RELOCATION OF PREMISES - Intentionally Deleted
38. PUBLIC ACCOMMODATIONS LAWS
Landlord with respect to the Common Areas, and Tenant, with respect the
Premises, each covenant and agree to complete any and all alterations,
modifications or improvements specifically required by the Americans With
Disabilities Act, including, but not limited to, remodeling, renovation,
rehabilitation, reconstruction, changes or rearrangements in structure, and
changes or rearrangements to wall configuration or full height partitions
which are or become necessary, in order to comply with all Public
Accommodation Laws, regardless of whether such modifications are the legal
responsibility of Landlord, Tenant or third party; provided, however, that
Tenant's obligations pursuant to this Article 38 only apply to alterations,
modifications or improvements that are required as a result of Tenant's
specific use or occupancy of the Premises or as a result of any additions
or alterations made to the Premises by or on behalf of Tenant. Landlord and
Tenant covenant and agree to use their reasonable efforts to insure that
any and all alterations, modifications or improvements undertaken pursuant
hereto are accomplished in a manner which will not substantially interfere
with the others' use or possession of space in the Project or Building. All
costs incurred by Landlord to comply with Public Accommodations Laws in the
Common Areas shall be included in Project Operating Costs, including the
amortization of capital expenditures together with an interest rate of 12%
per annum over a period of five (5) years.
Landlord agrees to permit Tenant, at Tenant's cost, to make any
improvements or modifications to the Premises which are required by Public
Accommodation Laws that are Tenant's responsibility hereunder, and to
approve such improvements or modifications, provided that all such
improvements or modifications are made in compliance with applicable Public
Accommodations Laws and otherwise in accordance with Article 13
hereinabove. Tenant acknowledges and agrees that, while Landlord may review
and approve plans and specifications for Tenant's leasehold improvements,
(and may construct Tenant's leasehold improvements for Tenant), Landlord
assumes no responsibility for compliance of such plans and specifications,
the Premises, or Tenant's leasehold improvements, with Public
Accommodations Laws, and Tenant shall hold Landlord harmless from Tenant's
failure to comply with the requirements thereof.
For the purposes of this Lease, "Public Accommodation Laws" shall mean all
applicable federal, state and local laws, regulations, and building codes,
in effect during the term of this Lease, governing non-discrimination in
employment, public accommodations and commercial facilities, including,
without limitation, the requirements of the Americans With Disabilities Act
42 USC 12101.
39. MISCELLANEOUS
39.01 Addenda. If any provision contained in a Rider to this Lease is
inconsistent with any other provision herein, the provision
contained in the Rider shall control, unless otherwise provided in
the Rider.
39.02 Captions, Articles and Section Numbers. The captions appearing
within the body of this Lease have been inserted for reference only
and in no way define, limit or enlarge the scope or meaning of this
Lease.
39.03 Changes Requested by Lender. Neither Landlord or Tenant shall
unreasonably withhold its consent to changes or amendments to this
Lease requested by the lender on Landlord's interest, so long as
23
these changes do not alter the basic business terms of this Lease or
materially and adversely alter any of Tenant's rights or obligations
hereunder.
39.04 Choice of Law. This Lease shall be construed and enforced in
accordance with the laws of Minnesota.
39.05 Consent. Notwithstanding anything contained in this Lease to the
contrary, Tenant shall have no claim against Landlord for money
damages by reason of any refusal, withholding or delaying by
Landlord of any consent, approval or statement of satisfaction.
Tenant's only remedies therefor shall be an action for specific
performance, or declaratory judgment to enforce any right to such
consent.
39.06 Corporate Authority. If Tenant is a corporation, Tenant represents
and warrants that each individual signing this Lease is duly
authorized to execute and deliver this Lease on behalf of the
corporation, and that this Lease is binding on Tenant in accordance
with its terms. Tenant shall deliver a certified copy of a
resolution (as well as a related incumbency certificate) of its
board of directors authorizing such execution.
39.07 Execution of Lease; No Option. The submission of this Lease to
Tenant shall be for examination purposes only, and does not
constitute a reservation of or option for Tenant to lease the
Premises. Execution of this Lease by Tenant and its return to
Landlord shall not be binding on Landlord notwithstanding any time
interval, until Landlord has in fact signed and delivered this Lease
to Tenant.
39.08 Mortgagee Protection. Tenant agrees to send by certified or
registered mail to any first mortgagee or beneficiary of Landlord
whose address has been furnished to Tenant, a copy of any notice of
default served by Tenant on Landlord. If Landlord fails to cure such
default within the time provided for in this Lease, such mortgagee
or beneficiary shall have an additional thirty (30) days to cure
such default; provided, that if such default cannot reasonably be
cured within that thirty (30) day period, then such mortgage or
beneficiary shall have such additional time to cure the default as
is reasonably necessary under the circumstances.
39.09 Prior Agreements; Amendments. This Lease contains all of the
agreements of the parties with respect to any matter covered or
mentioned in this Lease, and no prior agreement or understanding
pertaining to any such matter shall be effective for any purpose. No
provisions of this Lease may be amended or added to except by an
agreement in writing signed by the parties or their respective
successors in interest.
39.10 Recording. Tenant shall not record this Lease without the prior
written consent of Landlord.
39.11 Severability. A final determination by a court that any provision of
this Lease is invalid shall not affect the validity of any other
provision.
39.12 Successors and Assigns. This Lease shall apply to and bind the
heirs, personal representatives, and permitted successors and
assigns of the parties.
39.13 Time of the Essence. Time is of the essence of this Lease.
39.14 Waiver. Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.
24
39.15. Independent Covenants. Each covenant, agreement, obligation, or
other provision of this Lease to be performed by Tenant is a
separate and independent covenant of Tenant and not dependent on
any other provisions of this Lease.
39.16 Joint and Several Liability. If Tenant comprises more than one
person or entity, or if this Lease is guaranteed by any party, all
such persons and entities shall be jointly and severally liable for
payment of rents and the performance of Tenant's obligations
hereunder.
The parties hereto have executed this Lease as of the dates set forth below.
TENANT: LANDLORD:
Vital Images, Inc., Acky-3100 Lake Limited Partnership,
an Iowa corporation a Minnesota limited partnership
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: The Saratoga Corporation,
---------------------------- a Wisconsin corporation
Its: President & CEO Its: General Partner
---------------------------
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
ITS: President
-------------------------------
DATE: 2/12/97 DATE: 2/12/97
-------------------------- -----------------------------
25
EXHIBIT "A"
FLOOR PLAN
(ATTACHED)
[FLOOR PLAN OF PREMISES "A"]
A-1
[FLOOR PLAN OF PREMISES "B"]
A-2
EXHIBIT "B"
SITE PLAN /LEGAL DESCRIPTION
Page 1 of 2
Tract 1: That part of the East 25 feet, measured at right angles, of Lot E
lying North of the South 40 feet thereof;
Tract 2: That part of Lot H lying Westerly of a line drawn parallel with and
200 feet East, measured at right angles, from the West line of Lot H and North
of a line described as beginning at the intersection of the West line of said
Lot H and a line drawn parallel with and 40 feet North, measured at right
angles, from the south line thereof, thence Each along said parallel line to its
intersection with a line drawn parallel with and 55.5 feet Northwesterly,
measured at right angles, from the center line of Lake Street, as said center
line is shown in "West End Subdivision, Minneapolis, Minn."; thence
Northeasterly along said last described parallel line to an intersection with a
line drawn parallel with and 200 feet East measured at right angles from the
West line of said Lot H;
Tract 3: That part of Lot H, described as commencing at a point where a line
parallel with and 40 feet Northwesterly, measured at right angles, from the
center line of Lake Street, as said center line is shown in "West End
Subdivision, Minneapolis, Minn." is intersected by a line parallel with and 200
feet East measured at right angles, from the West line of said Lot H thence
North along said last mentioned parallel line 578.4 feet to the actual point of
beginning thence continuing North along said last mentioned parallel line 21.6
feet; thence East at right angles to said parallel line to an intersection with
the Westerly line of ▇▇▇▇ Boulevard, as said Westerly line is described and
shown in Book 359 of Deeds, page 379; thence Southerly along said Westerly line
to an intersection with a line drawn East at right angles to said parallel line
from the actual point of beginning; thence West to the actual point of
beginning;
all in "West End Subdivision, Minneapolis, Minn.", according to the recorded
plat thereof.
Together with an easement for the purposes of maintaining a concrete wall and
steel fence over that part of said Lot H described as commencing at a point
where a line drawn parallel with and 40 feet Northwesterly, measured at right
angles from the center line of Lake Street as said center line is shown in "West
End Subdivision, Minneapolis, Minn.", is intersected by a line parallel with and
200 feet East, measured at right angles, from the West line of said Lot H;
thence North along said last mentioned parallel line 600 feet to the actual
point of beginning of the tract of land to be described; thence East at a right
angle 92.2 feet; thence North at a right angle 2.05 feet; thence West at a right
angle 37.7 feet; thence Southwesterly to the actual point of beginning.
Hennepin County, Minnesota
B-1
[EXHIBIT "B" SITE PLAN/LEGAL DESCRIPTION]
Page 2 of 2
B-2
EXHIBIT "C"
TENANT'S WORK
None
EXHIBIT "D"
GENERAL SPECIFICATIONS FOR TENANT'S ALTERATIONS OR IMPROVEMENTS
1. Landlord's Approvals of Plans
1.1 All plans for improvements or alterations are subject to Landlord
approval; however, such approval does not signify code approval. Tenant shall
have sole responsibility for compliance with all applicable statutes, codes,
ordinances and other regulations for all work. In instances where several sets
of requirements must be met, Landlord's requirements shall govern unless
prohibited by code. All conditions and measurements should be field-verified by
the Tenant.
1.2 Tenant must provide Landlord with Floor Plans and Working Drawings for
the Premises. Upon receipt of Tenant's drawings, Landlord shall review and
return to Tenant one copy marked either "Approved", "Approved with Changes" or
"Revise and Resubmit". Tenant shall resubmit revised drawings within ten working
days and the same procedure will be repeated until Landlord initials the
drawings "Approved" or "Approved with Changes".
1.3 Specific written approval of Landlord is required for the following:
a) Drilling, cutting, coring or construction of any openings,
penetrations or other alterations or improvements to the demising walls of the
Premises, the exterior of the Premises or Building, or floors, columns or roof
of the Premises or Building.
b) Installation or testing of any alarm or signal system, or any
interruption of or connection to the Building fire or life-safety systems.
c) Installation or connection to any vents or ductwork, or to any
water, sewer, gas, or electrical lines.
d) Construction of any mezzanine.
e) Installation of any odor-producing equipment.
f) Installation of any sign visible from the exterior of the
Premises.
g) Modifications to Floor Plans or Working Drawings previously
approved under Section 1.2 above.
2. Codes, Permits and Insurance
2.1 Tenant has full and complete responsibility to comply with all
applicable codes, ordinances, statutes and regulations of any governing
authority in the design and operation of the Premises, and to obtain all
necessary licenses and permits required for construction, occupancy and
operation.
2.2 Tenant shall obtain a building permit and shall provide Landlord with
one set of plans approved by the Department of Inspections and a copy of the
permit before commencement of any demolition or construction.
2.3 Prior to commencement of any work, Tenant shall provide Landlord with
Certificates of Insurance evidencing coverage of Tenant's contractor and
subcontractors for Worker's Compensation and
Employer's Liability Insurance; Comprehensive General Liability Insurance; and
Comprehensive Automobile Liability Insurance. All such certificates shall name
Landlord and Landlord's Agent as additional insureds.
2.4 Tenant shall provide Landlord with a copy of the Certificate of
Occupancy issued by the Department of Inspections upon completion of the work.
3. Construction Rules and Procedures
3.1 Tenant or Tenant's contractor shall contact Landlord at least three
business days prior to the start of construction and shall provide Landlord with
a list of names, addresses and telephone numbers of all contractors and
subcontractors that will be involved in the work.
3.2 Tenant is responsible for securing the Premises. All property in the
Premises shall be there at the risk of Tenant and Landlord shall not be liable
for damage or theft.
3.3 Tenant shall arrange for all utility services to be placed in Tenant's
name prior to the start of construction. Tenant nor Tenant's contractor shall
not use any common area outlets for utility services. Tenant is responsible for
the cost of all temporary utility services during construction.
3.4 All trash and construction debris will be contained and disposed of in
the manner stated in the Lease.
3.5 No contractor parking will be provided.
4. Costs Billed Back to Tenant by Landlord
4.1 At Landlord's option, certain portions of Tenant's Work may be
performed by Landlord's Contractor and billed back to Tenant. Portions of the
work subject to this procedure may include, but are not specifically limited to:
a) Final connection to Building power source, water supply line,
sewer line, common ductwork or vents, gas lines, sprinkler systems, or fire
alarm systems.
b) Structural alterations such as core drilling, roof penetrations,
cutting or patching of any floors, walls, columns or beams.
c) Installation of any fireproofing.
d) Reviews of Tenant's plans by Landlord's consultants, as
necessary.
e) Any alterations, additions or modifications to the Premises'
facade, storefront or entryways.
ADDENDUM 1
OPTION TO EXTEND TERM
This Addendum is attached to and made part of that certain Lease (the "Lease")
dated January 31, 1997 by and between Acky-3100 Lake Limited Partnership, as
Landlord, and Vital Images, Inc. as Tenant, covering the Property (the
"Property"). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Addendum shall supersede any inconsistent
or conflicting provisions of the Lease.
A. Option(s) to Extend Term.
1.01 Grant of Option. Landlord hereby grants to Tenant one (1) option (the
"Option") to extend the Lease Term, for an additional term of five (5) years
(the "Extension"), on the same terms and conditions as set forth in the Lease
(including, without limitation, the provisions regarding Improvements Rent), but
at an increased Base Rent as set forth below.
1.02 Exercise of Option: The Option shall be exercised only by written
notice delivered to Landlord at least two hundred seventy (270) days before the
expiration of the Lease Term. If Tenant fails to deliver Landlord written notice
of the exercise of the Option within the prescribed time period, such Option
shall lapse, and there shall be no further right to extend the Lease Term. The
Option shall be exercisable by Tenant on the express conditions that at the time
of the exercise and on the commencement date of such Extension, Tenant shall not
be in default under any of the provisions of the Lease.
1.03 Base Rent: Annual Base Rent during the Extension shall initially be
equal to the sum of (a) annual Base Rent payable immediately prior to the
commencement date of the Extension, plus (b) the greater of (i) the CPI
Adjustment (as hereinafter defined) and (ii) the product of .04, multiplied by
annual Base Rent payable immediately prior to the commencement date of the
Extension. Thereafter, Base Rent payable during the Extension shall be by four
percent (4%) increased on each anniversary of the commencement date of the
Extension, (the same being achieved by multiplying the Base Rent by 104%).
1.04 CPI Adjustment. For purposes hereof, the term "CPI Adjustment" shall
mean an amount equal to the product of (i) the product of $9.50 multiplied by
the number of rentable square feet in the Rentable Area of the Premises
immediately prior to the commencement date of the Extension, multiplied by (ii)
the percentage of increase in the CPI (as hereinafter defined) published for
November 2001 over the CPI published for November 1996.
1.05 Definition of CPI. For purposes hereof "CPI" shall mean the numerical
index of the "Revised Consumer Price Index, All, Urban Consumers New Series"
(1982-84 = 100) published by the United States Department of Labor, Bureau of
Labor Statistics. If the Department of Labor discontinues publication of the
CPI, any comparable consumer price index which shall be subsequently published
to supersede the CPI shall be used, and if none is published, then the Consumer
Price Index published by the United States Department of Commerce (with proper
adjustment) shall be used to determine the above-described increase in annual
Base Rent.
ADDENDUM 2
OPTION TO EXPAND
This Addendum is attached to and made part of that certain Lease (the "Lease")
dated January 31, 1997 by and between Acky-3100 Lake Limited Partnership, as
Landlord, and Vital Images, Inc. as Tenant, covering the Property (the
"Property"). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Addendum shall supersede any inconsistent
or conflicting provisions of the Lease.
1. Option to Expand.
-----------------
1.01 Subject to the terms and conditions hereinafter set forth, and
provided that if the same is exercised on or after February 10, 1999 Tenant has
theretofore waived its termination option set forth in Addendum 4 hereto or the
same has expired by lapse of time, Tenant shall have an option to lease
additional premises in the Building constituting 7,077 rentable square feet as
outlined on Exhibit A attached hereto (the "Expansion Premises"), for a term
commencing as set forth below.
1.02 Tenant must exercise its expansion option, if at all, by notice to
Landlord given no later than one hundred twenty (120) days prior to the
Expansion Premises Commencement Date (as hereinafter defined), time being of the
essence. If not timely exercised, the Tenant's expansion shall terminate and
Tenant shall have no further right to lease the Expansion Premises pursuant to
this Section.
1.03 The term of the lease of Expansion Premises shall commence on the date
specified in Tenant's Notice of Exercise pursuant to Section 1.02 above (which
must be at least 120 days following the date of Tenant's notice and prior to the
Expiration Date) (the "Expansion Premises Commencement Date").
1.04 If Tenant has validly exercised its option to lease the Expansion
Premises, then effective as of the Expansion Premises Commencement Date, the
Expansion Premises shall be included in the Premises, subject to all the terms,
conditions and provisions of this Lease, except as follows:
(a) the Rentable Area of the Premises shall be increased by the Rentable
Area of the Expansion Premises (which shall be deemed to be 7,077
square feet) (i.e., subject to the addition of any First Offer Space
[as defined in Addendum 3], the total Rentable Area of the Premises
will be 21,293);
(b) Tenant's Proportionate Share shall be increased by the percentage
obtained by dividing the Rentable Area of the Expansion Premises by
the Rentable Area of the Building (i.e., subject to the addition of
any First Offer Space, Tenant's Proportionate Share shall be 44.3%);
(c) the term of the demise covering the Expansion Premises shall commence
on the Expansion Premises Commencement Date and shall expire
simultaneously with the expiration or earlier termination for the
Term, including any extension or renewal thereof;
(d) the Expansion Premises shall be rented in "as is" condition as of the
Expansion Premises Commencement Date;
(e) the Base Rental Rate per square foot of the Rentable Area of the
Expansion Premises shall be equal to the product of the number of
rentable square feet of Rentable Area of the Expansion
1
Premises, multiplied by the Rental Rate set forth in Section 2.07 of
the Lease from time to time; and
(f) the Improvements Rental Rate per square foot of the Rentable Area of
the Expansion Premises shall be equal to the product of the number of
rentable square feet of Rentable Area of the Expansion Premises,
multiplied by the Rental Rate set forth in Section 2.08 of the Lease
from time to time.
1.05 Tenant may only exercise its option to lease the Expansion Premises,
and an exercise thereof shall only be effective, if at the time of Tenant's
exercise and on the Expansion Premises Commencement Date, this Lease is in full
force and effect and Tenant is not in default under this Lease and (inasmuch
named in this Lease) the entire Premises are occupied by the original Tenant
named herein, and Tenant has not assigned this lease or sublet all or any
portion of the Premises. Without limitation of the foregoing, no sublessee or
assignee shall be entitled to exercise the option and no exercise of the option
by the original Tenant named herein shall be effective if Tenant assigns this
lease or subleases all or part of the Premises prior to the Expansion Premises
Commencement Date.
1.06 If Landlord should be unable for any reason to deliver possession of
the Expansion Premises on the Expansion Commencement Date, Landlord shall not be
subject to any liability for failure to deliver possession. Such failure to
deliver possession shall not affect either the validity of this lease or the
obligations of either Landlord or Tenant hereunder, or be construed to extend
the expiration of the Term of this Lease either as to the Expansion Premises or
to the balance of the Premises; provided, however, that under such
circumstances, Rent shall not commence as to the Expansion Premises until
Landlord does deliver possession. Notwithstanding the foregoing, if for any
reason Landlord is unable to Deliver Possession of the Expansion Premises to
Tenant on or prior to the date falling sixty (60) days following the Expansion
Premises Commencement Date and such failure does not result either from Force
Majeure Events or Tenant caused delays, then (a) Landlord shall not be subject
to any liability therefor and (b) such delay and Landlord's ability to Deliver
Possession shall not effect either the validity of this Lease or the obligations
of either Landlord or Tenant hereunder or be deemed to extend the Expiration
Date either with respect to the Expansion Premises or the balance of the
Premises; provided, however, that under such circumstances Tenant shall have the
right to terminate this Lease, by giving written notice of the same to Landlord
at any time following the end of such 60-day period and prior to the first to
occur of (a) the thirtieth (30th) day following the end of such 60-day period
and (b) the date Landlord does Deliver Possession which termination shall be
effective upon receipt of such notice.
1.07 Upon the valid exercise by Tenant of its expansion option, at the
request of either party hereto, Landlord and Tenant shall enter into a written
supplement to this lease confirming the terms, conditions and provisions
applicable to the Expansion Premises as determined in accordance with the
provisions of this Section.
1.08 The parties acknowledge that there is currently a security system (the
"Security System") that services the Premises as well as the Expansion Premises.
The Security System is currently owned and operated by The ▇▇▇▇▇▇▇▇▇ Group
("TAG"). TAG is the current tenant of the Expansion Premises pursuant to a lease
with Landlord. In the event that Tenant leases the Expansion Premises (either
pursuant to this Addendum or pursuant to its right of first offer contained in
Addendum 3 hereto), then subject to the rights of TAG, if any, and any other
party having an interest in the Security System, Tenant shall have the right to
use the Security System from and after the Expansion Premises Commencement Date
or First Offer Space Commencement Date (as defined in Addendum 3), as the case
may be, through and including the expiration or earlier termination of this
Lease; it being further understood that (i) Landlord makes no warranty as to the
condition or fitness of the Security System, (ii) Landlord shall have no
obligation to operate, repair, replace or maintain the Security System and (iii)
any use of the Security System by Tenant shall be in compliance with all of the
terms and provisions of this Lease.
2
ADDENDUM 3
RIGHT OF FIRST OFFER
This Addendum is attached to and made part of that certain Lease (the "Lease")
dated January 31, 1997 by and between Acky-3100 Lake Limited Partnership, as
Landlord, and Vital Images, Inc. as Tenant, covering the Property (the
"Property"). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Addendum shall supersede any inconsistent
or conflicting provisions of the Lease.
1. Right of First Offer. Landlord hereby grants to Tenant the right to
lease any space located in the Building not previously leased to Tenant ("First
Offer Space"), on the terms and conditions hereinafter set forth, when and if
such space become "available for leasing" during the First Offer Period (as
hereinafter defined).
1.01 First Offer Space shall be deemed "available for leasing" after the
latest to occur of (i) the expiration or earlier termination of any existing
lease for such space, including any renewals or extensions thereof, and (ii) if
such space is subject to an expansion option, right of first offer or right of
first refusal in an existing lease, upon the expiration of such option, right of
first offer or right of first refusal or the earlier expiration of the given
lease.
1.02 If First Offer Space becomes available for leasing during the First
Offer Period, then, prior to offering such First Offer Space to the public for
lease, Landlord shall give Tenant written notice (an "Offer Notice") of the
location and net rentable area of such portion of the First Offer Space, the
date of commencement of the term of the demise (the "First Offer Space
Commencement Date"), the expiration date of the term of the demise (which may
extend beyond the Expiration Date for the balance of the Premises so long as (if
the same extends beyond the Expiration Date) the term of the demise is no longer
than 3 years in duration), and the "Prevailing Rental Rate" (as defined in
Section 1.09 below) for such portion of the First Offer Space.
1.03 Tenant's right to lease the First Offer Space described in any such
Offer Notice from Landlord shall be exercisable by written notice from Tenant to
Landlord ("Tenant's Notice") of Tenant's election to exercise said right given
not later than five (5) days after Landlord's Offer Notice is given, time being
of the essence. Tenant may not elect to lease less than the entire area of the
First Offer Space described in such Offer Notice. If Tenant does not timely
exercise its option to lease the entire area of the First Offer Space described
in an Offer Notice by Tenant's Notice, Tenant's right of first offer with
respect to such First Offer Space shall thereupon expire and Tenant shall have
no further right to lease the same pursuant to this Addendum. Notwithstanding
the foregoing, if Tenant agrees with all of the terms and provisions of an Offer
Notice other than Landlord's determination of the Prevailing Rental Rate and
Tenant notifies Landlord of such disagreement in Tenant's Notice, Landlord and
Tenant agree to negotiate the "Prevailing Rental Rate" in good faith for a
period of ten (10) days following Tenant's Notice. If Landlord and Tenant do not
come to agreement with respect to the Prevailing Rental Rate within such 10-day
period, Tenant shall have the right to rescind its exercise with respect to such
First Offer Space by notice given to Landlord on or prior to the expiration of
such 10-day period; it being further understood that (a) if Landlord and Tenant
do come agreement with respect to the Prevailing Renal Rate with respect to any
First Offer Space that is disputed in a Tenant's Notice then the same shall be
deemed the "Prevailing Rental Rate" pursuant to the terms of this Addendum with
respect to such First Offer Space and (b) if Landlord and Tenant do not reach
agreement with respect to the Prevailing Rental Rate and Tenant does not timely
and properly exercise its rescission right described above, Tenant shall be
deemed to accept the Prevailing Rental Rate originally set forth in Landlord's
Offer Notice for the pertinent First Offer Space and the same shall apply for
purposes of this Addendum.
1.04 If Tenant has validly exercised its right to lease First Offer Space,
then, effective as of the pertinent First Offer Space Commencement Date, such
First Offer Space shall be included in the Premises, subject to all of the
terms, conditions and provisions of this Lease, except as follows:
(a) the Rentable Area of the Premises shall be increased by the
rentable area of the First Offer Space, and Tenant's Proportionate Share shall
be increased by the percentage obtained by dividing the rentable area of the
First Offer Space by the Rentable Area of the Building;
1
(b) the term of the demise covering such First Offer Space shall
commence on the pertinent First Offer Space Commencement Date and shall expire
as of the expiration date set forth in the applicable Offer Notice (which may in
accordance with Section 1.02 above extend beyond the Expiration Date for the
balance of the Premises);
(c) unless otherwise agreed by Landlord and Tenant the First Offer
Space shall be rented in its "as is" condition as of the First Offer Space
Commencement Date; and
(d) the rental rate per square foot of net rentable area for the
First Offer Space shall be equal to the Prevailing Rental Rate.
1.05 If Landlord should be unable to deliver possession on the First
Offer Space Commencement Date of the First Offer Space that Tenant has exercised
its right to lease by reason of any act or occurrence beyond the reasonable
control of Landlord, including by reason of the unlawful holding over of any
tenants or occupants beyond the expiration of their lease terms or other causes
of any nature, Landlord shall not be subject to any liability for failure to so
deliver possession. Such failure to deliver possession shall not affect either
the validity of this Lease or the obligations of either Landlord or Tenant
hereunder or be construed to extend the expiration of the Term either as to such
First Offer Space or the balance of the Premises; provided, however, that under
such circumstances, Rent shall not commence as to such First Offer Space until
Landlord is able to deliver possession. Notwithstanding the foregoing, if for
any reason Landlord is unable to Deliver Possession of any First Offer Space to
Tenant on or prior to the date falling sixty (60) days following the applicable
First Offer Space Commencement Date and such failure does not result either from
Force Majeure Events or Tenant caused delays, then (a) Landlord shall not be
subject to any liability therefor and (b) such delay and Landlord's ability to
Deliver Possession shall not effect either the validity of this Lease or the
obligations of either Landlord or Tenant hereunder or be deemed to extend the
expiration date with respect to either the pertinent First Offer Space or the
balance of the Premises; provided, however, that under such circumstances Tenant
shall have the right to terminate this Lease, by giving written notice of the
same to Landlord at any time following the end of such 60-day period and prior
to the first to occur of (a) the thirtieth (30th) day following the end of such
60-day period and (b) the date Landlord does Deliver Possession which
termination shall be effective upon receipt of such notice.
1.06 As used herein, the term "First Offer Period" shall mean the
period commencing on the Commencement Date for Premises A and expiring on the
date falling two hundred seventy (270) days prior to expiration of the Term.
1.07 If Tenant has validly exercised its right to lease First Offer
Space, at Landlord's option, Landlord and Tenant shall execute and deliver an
amendment to this Lease reflecting the lease of such First Offer Space by
Landlord to Tenant on the terms provided above, which amendment shall be
executed and delivered prior to the pertinent First Offer Space Commencement
Date.
1.08 The right of first offer contained herein shall automatically
terminate and become null and void and of no force and effect upon the
occurrence of any of the following: (i) the expiration or termination of this
Lease, (ii) the termination of Tenant's right to possession of the Premises,
(iii) the assignment of this Lease by Tenant, (iv) the sublease by Tenant of all
or part of the Premises, (v) the failure of Tenant to timely or properly
exercise the right of first offer or (vi) any default by Tenant under this Lease
that extends beyond all applicable notice and cure periods.
1.09 For purposes of this Lease, the "Prevailing Rental Rate" shall
mean the prevailing annual rental rate per square foot of rentable area, as
determined in good faith by Landlord for leases of approximately the same
duration and commencing at approximately the same time as the term for which the
prevailing rental rate is being determined, for improved space in the Building
comparable to the applicable First Offer Space in the area, degree of
improvement and location (to the extent that quoted rental rates in the Building
vary with regard to location). The components of the prevailing rental rate may
included, among the other then prevailing components of rent: a fixed annual
rent (such as Base Rent), periodic adjustments or additions to a fixed annual
rent based on a share of Building real estate taxes and other expenses (such as
the Project Operating Costs) or increases based on an inflation index (such as
CPI Adjustment).
2
ADDENDUM 4
TERMINATION OPTION
This Addendum is attached to and made part of that certain Lease (the "Lease")
dated January 31, 1997 by and between Acky-3100 Lake Limited Partnership, as
Landlord, and Vital Images, Inc. as Tenant, covering the Property (the
"Property"). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Addendum shall supersede any inconsistent
or conflicting provisions of the Lease.
1. Termination Option. Provided that (a) Tenant is not in default hereunder at
the time of exercise or on the Termination Date (as hereinafter defined), (b)
this Lease is then in full force and effect and (c) Tenant has not exercised any
right to lease First Offer Space pursuant to a Tenant's Notice tendered on or
after February 10, 1999 (unless Tenant has rescinded such exercise pursuant to
Section 1.03 of Addendum 3 hereto), Tenant shall have the option to terminate
this Lease (the "Termination Option"), effective as of the day immediately
preceding the third (3rd) anniversary of the Commencement Date for Premises A
(the "Termination Date"), by giving written notice to Landlord ("Tenant's
Termination Notice") no later than one hundred twenty (120) days prior to the
Termination Date, together with a sum equal to the quotient of (i) the product
of (A) $11.38 multiplied by (B) the number of rentable square feet in the
Rentable Area of the Premises, divided by (ii) 3 (the "Termination Payment")
time being of the essence; provided, however, that if Tenant exercises its
option to expand pursuant to Addendum 2 above or any right to lease First Offer
Space pursuant to Addendum 3 above prior to February 10, 1999, then,
notwithstanding the foregoing, Tenant must furnish Landlord with Tenant's
Termination Notice no later then one hundred eighty (180) days prior to the
Termination Date together with the Termination Payment, time being of the
essence, in order to exercise the Termination Option. If the Termination Option
is not timely exercised or the Termination Payment is not made to Landlord in a
timely manner, the Termination Option shall, thereupon expire and Tenant shall
thereafter have no further right to terminate this Lease. If Tenant shall elect
to terminate this Lease by timely furnishing Landlord Tenant's Termination
Notice and by making the Termination Payment in a timely manner, then on the
Termination Date this Lease shall be deemed to have expired by lapse of time and
Tenant shall return the Premises to Landlord on or before the Termination Date
in accordance with the terms of this Lease. Tenant may only exercise the
Termination Option, and an exercise thereof shall only be effective, if at the
time of Tenant's exercise and on the Termination Date, this lease is in full
force and effect and Tenant is not in default under this Lease, and (inasmuch as
the Termination Option is intended only for the benefit of the original Tenant
named in this Lease) the Premises are occupied by the original Tenant named
herein and said Tenant has not assigned this Lease or sublet all or any portion
of the Premises. Without limitation of the foregoing, no sublessee or assignee
shall be entitled to exercise the Termination Option, and no exercise of the
Termination Option by the original Tenant named herein shall be effective if
said Tenant assigns this Lease or subleases all or any portion of the Premises
prior to the Termination Date. Notwithstanding the foregoing, in the event that
(i) Tenant properly exercises the Termination Option and makes the Termination
Payment in a timely manner and (ii) thereafter (but prior to the Termination
Date) Landlord and Tenant negotiate and enter into a lease for other space in
the Building, Landlord agrees to reimburse the Termination Payment to Tenant.
February 12, 1997
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇▇ Group
Suite 100
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Sharing Arrangements
Dear ▇▇. ▇▇▇▇▇▇▇▇▇:
As you know, Vital Images, Inc. ("Vital") has entered into a Lease Agreement
with Acky-3100 Lake Limited Partnership (the "Landlord") of even date herewith
(the "Vital Lease"). Pursuant to the Vital Lease, Vital will lease certain
premises located on the first floor ("Premises A") of the building known as Lake
Pointe Corporate Centre in Minneapolis (the "Building") and certain premises
located on the second floor of the Building ("Premises B"). The Landlord has
also granted to Vital the right to lease additional space on the first floor of
the Building ("Premises C") upon not less than 120 days' prior notice to the
Landlord. It is Vital's understanding that the ▇▇▇▇▇▇▇▇▇ Group ("Ackerberg")
has entered into a lease of Premises C with the Landlord (the "Ackerberg
Lease").
The purpose of this letter is to set forth the understandings of Vital and
Ackerberg with respect to the shared use of certain portions of Premises A and
Premises C, the shared use and compensation of a receptionist, the shared use of
the existing security system and ▇▇▇▇▇▇▇▇▇'▇ telephone system, the potential
early occupancy of portions of Premises B by Vital and certain other matters
pertaining to Premises C. The understanding of the parties with respect to each
of these matters is as follows:
1. Shared Space. The parties hereby acknowledge and agree that, within
Premises A is located an employee entrance area, a computer room (the "Computer
Room"), a coat room and a lunch room (collectively, the "Shared Vital Space")
and within Premises C is located a reception area (the "Shared Ackerberg
Space"). Ackerberg desires access to and use of the Shared Vital Space, for
itself and its employees, during the term of its occupancy of Premises C. Vital
desires access to and use of the Shared Ackerberg Space, for itself, its
employees, customers and invitees, throughout its occupancy of Premises A. For
purposes of this letter agreement, the parties agree that the Shared Vital Space
and the Shared Ackerberg Space is as outlined on Exhibit A hereto. Vital hereby
agrees to permit Ackerberg and its employees access
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
February 12, 1997
Page 2
to and use of the Shared Vital Space, in common with Vital and its employees;
provided, however, that in recognition of Vital's confidentiality concerns,
access to the Computer Room shall be limited to those employees of Ackerberg who
require such access in connection with performing their employment duties for
Ackerberg. Ackerberg hereby agrees to permit Vital, its employees, customers and
invitees, access to and use of the Shared Ackerberg Space, in common with
Ackerberg, its employees, customers and invitees. Vital's use of the Shared
Ackerberg Space hereunder, and ▇▇▇▇▇▇▇▇▇'▇ use of the Shared Vital Space
hereunder, shall be consistent with the rules and regulations applicable under
the Vital Lease and with such other reasonable rules of conduct as may be
established from time to time by Vital and/or Ackerberg. Vital and Ackerberg
shall each bear their own expenses, and their own share of operating expenses
under the Vital Lease and the Ackerberg Lease, respectively, relating to the
Shared Vital Space and the Shared Ackerberg Space, respectively.
2. Receptionist. Vital acknowledges that Ackerberg currently employs a
receptionist, who performs telephone answering, facsimile and related
receptionist duties for ▇▇▇▇▇▇▇▇▇'▇ business from a location within the Shared
Ackerberg Space. Ackerberg hereby agrees to permit such receptionist to perform
the same and similar duties for Vital's business in the Building. In
consideration of such services, Vital hereby agrees to pay Ackerberg on a
monthly basis an amount equal to 50% of the sum of (i) the salary or wages paid
to, and (ii) any standard fringe benefits accruing for the benefit of, such
receptionist, by or from Ackerberg. Vital and Ackerberg shall each have the
right to terminate the receptionist-sharing arrangement described in this
paragraph 2 at any time upon thirty (30) days' prior notice to the other party.
In the event of any such cancellation, Ackerberg agrees that Vital shall have
the right to locate another receptionist, together with telephone, computer and
related reception equipment, in the reception area contained within the
Ackerberg Space for the purpose of providing reception services in connection
with Vital's business.
3. Security and Phone Systems. Vital and Ackerberg each hereby
acknowledges that (i) there is presently located within the Building a security
system serving Premises A, Premises B and Premises C (the "Security System"),
and (ii) Ackerberg has installed and is presently using a "PBX" telephone system
in connection with its business operations in the Building (the "Telephone
System"). Ackerberg hereby agrees that (a) Vital shall have free access to and
use of the Security System in connection with its occupancy of Premises A and
Premises B, with no charge or fee to be paid by Vital for such access or usage,
and (b) Ackerberg shall leave in place the Security System card-key readers and
all wiring related thereto for Vital's use upon any vacation of Premises C by
Ackerberg. Ackerberg also agrees to permit Vital to use the Telephone System,
until such time as Vital installs its own telephone system, to provide handsets
relating to such usage and to program the Telephone System to support such
usage. Vital hereby agrees to pay to Ackerberg on a monthly basis an equitable
amount based upon Vital's usage of handsets and its relative usage of the
Telephone System, which amount shall be reasonably determined by Ackerberg based
upon amounts paid by
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
February 12, 1997
Page 3
Ackerberg for it usage of the Telephone system, and to pay all costs relating to
long distance charges, expenses for local telephone service and costs relating
to installation of any phone lines necessary for such usage. Vital estimates
that it may require usage of the Telephone System and handsets for approximately
one to three months, after which time Vital expects that it will have to install
its own telephone system. In this regard, Ackerberg agrees not to restrict
Vital's access to phone line wiring or related systems necessary for
installation of Vital's own Telephone System.
4. Early Occupancy of Premises B. As set forth in the Vital Lease,
Vital's Lease and occupancy of Premises B is scheduled to commence on September
1, 1997 (the "Commencement Date"). Vital acknowledges that Ackerberg is or may
be using and/or occupying all or a portion of Premises B between the date hereof
and the Commencement Date. At the mutual convenience of Ackerberg and Vital,
and notwithstanding the foregoing, Vital and Ackerberg agree that Vital may
occupy, on an office-by-office basis, Premises B from time to time after the
date hereof and prior to the Commencement Date. Should Vital so occupy all or
any portion of Premises B, Vital agrees to pay to Ackerberg rent for any such
space so occupied at the applicable per square foot rental rate then in affect
under the Vital Lease, together with any share of occupancy expenses and real
estate taxes allocated to such space pursuant to the Ackerberg Lease.
5. Premises C Restrictions. Ackerberg hereby acknowledges that, under the
Vital Lease, Vital has the right to lease Premises C from the Landlord upon not
less 120 days prior notice to the Landlord, and that Ackerberg shall have the
obligation to vacate Premises C prior to the Commencement Date of Vital's Lease
of Premises ▇. ▇▇▇▇▇▇▇▇▇ further agrees (i) that it will not materially alter or
modify the presently existing tenant improvements within Premises C, without
first notifying Vital in writing of such intended alteration or modification;
and (ii) that, should Ackerberg desire to assign its rights to occupy Premises
C, or to sublet all or any portion of Premises C, Ackerberg shall first notify
Vital of such intention.
Ackerberg and Vital hereby agree that this letter agreement shall remain in
effect (except as otherwise specifically set forth herein) until the earliest to
occur of (a) this letter agreement is terminated by mutual written consent of
Ackerberg and Vital, (b) Vital leases and occupies Premises C pursuant to its
expansion right set forth in Addendum 2 to the Vital Lease, or (c) the
expiration or earlier termination of the Ackerberg Lease or the Vital Lease or
of ▇▇▇▇▇▇▇▇▇'▇ or Vital's respective right of possession under the Ackerberg
Lease or the Vital Lease, respectively. In the event of any breach of this
letter agreement, the non-breaching party shall be entitled to any and all
rights available at law or in equity. This letter agreement shall not be
amended or modified in any respect, unless such amendment or modification is set
forth in writing and signed by Ackerberg and Vital.
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
February 12, 1997
Page 4
Very truly yours,
VITAL IMAGES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
& Its: President & CEO
-----------------------
Agreed and acknowledged this 12 day of February, 1997.
THE ▇▇▇▇▇▇▇▇▇ GROUP
By:
-------------------------
Its:
-----------------------
(Signature page to Letter Agreement)
[FLOOR PLAN OF LEASED PREMISES APPEARS HERE]