EXHIBIT 10.20
PURCHASE AGREEMENT
("AGREEMENT")
THIS PURCHASE AGREEMENT is made and entered into as of this 25th of February,
2003 between LECTEC CORPORATION, a Minnesota corporation ("Seller"), and ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, LLC, a Minnesota limited liability company, its successors and
assigns ("Purchaser"). For purposes of this Agreement, the term "Effective Date"
shall mean the date on which the last of Seller and Purchaser have executed and
delivered this Agreement to the other, and Seller has delivered the Property
Information (as hereinafter defined) to Purchaser.
In consideration of the covenants and agreements contained herein, the parties
agree as follows:
1. PREMISES.
A. Premises. Subject to compliance with the terms and conditions of this
Agreement, Seller shall sell to Purchaser and Purchaser shall purchase
from Seller the following (collectively, the "Premises"):
1. The real property located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ DRIVE, in the City
of MINNETONKA, Minnesota, County of HENNEPIN, State of MINNESOTA,
legally described in EXHIBIT A attached hereto, consisting of
approximately 3.23 acres of real property together with all
easements, tenements, hereditaments, and appurtenances belonging
thereto (the "Land"); and
2. All buildings, structures and other improvements erected or
placed on the land (the "Improvements").
B. Excluded Assets; Liabilities of Seller.
1. Seller shall retain and not sell to Purchaser any assets
pertaining to the Premises thereon to the extent not described in
Section 1.A. above (including but not limited to all supplies,
tools, machinery, furniture, fixtures, equipment, and other items
of personal property located on or about the Improvements or used
in connection with the maintenance, management or operation of
the Premises or Improvements (collectively, the "Personal
Property")).
2. Except as specifically set forth herein, Purchaser shall not
assume, pay, perform or discharge (or cause to be paid, performed
or discharged) any liabilities, expenses, or other obligations of
Seller, whether known, unknown, liquidated, unliquidated, fixed,
contingent, or otherwise.
2. PURCHASE PRICE; PAYMENT.
A. Purchase Price. The purchase price for the Premises shall be $845,000
("Purchase Price").
B. Payment.
1. ▇▇▇▇▇▇▇ Money. The sum of $1,000 refundable ▇▇▇▇▇▇▇ money
("▇▇▇▇▇▇▇ Money") shall be deposited by Purchaser with a title
insurance company licensed to issue title insurance in the State
of MINNESOTA and mutually acceptable to Purchaser and Seller
("Escrow Agent") within three (3) business days following
Purchaser's
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receipt of a fully executed copy of this Agreement. The ▇▇▇▇▇▇▇
Money shall be placed and held by Escrow Agent in its commercial
interest bearing account in accordance with the terms of this
Agreement and shall be credited against the Purchase Price in
favor of Purchaser at closing. Any and all interest accruing on
the ▇▇▇▇▇▇▇ Money pursuant to this Agreement shall be paid to
Purchaser and shall accrue solely for Purchaser's benefit. If
Purchaser provides Seller with written notice of Purchaser's
waiver or satisfaction of all the conditions to closing set forth
in Section 7 of this Agreement, then the ▇▇▇▇▇▇▇ Money shall be
deemed non-refundable to Purchaser, except as otherwise provided
in Sections 3.D., 5.B., 5.C., 14.A. or elsewhere in this
Agreement.
2. Cash. The balance of the Purchase Price shall be paid (subject to
prorations, reductions and credits as provided below) by wire
transfer of good funds to the Escrow Agent's trust account so
that Seller receives its closing proceeds in its account no later
than 3:00 p.m. Central Time on the day of the closing.
3. TITLE TO BE DELIVERED; COMMITMENT; SURVEY; TITLE OBJECTIONS.
A. Title To Be Delivered. At closing, Seller agrees to convey Marketable
Fee Simple Title in the Premises. For purposes of this Agreement, the
term "Marketable Fee Simple Title" means title to the Premises that,
when acquired by Purchaser, will be insurable by the Escrow Agent
under its standard ALTA (Form 10/17/92) Owner's Title Insurance
Policy, at standard rates and free and clear of all liens,
encumbrances, easements, covenants, conditions and restrictions other
than the Permitted Exceptions (defined herein).
B. Commitment. As soon hereafter as reasonably possible, Seller at its
sole cost and expense shall cause to be issued and delivered to
Purchaser a commitment ("Commitment") covering the Premises issued by
Escrow Agent wherein Escrow Agent agrees to issue to Purchaser upon
the recording of the Deed (defined herein) and the conveyance
documents described herein an ALTA (Form 10/17/92) Owner's Title
Insurance Policy, with standard coverage, in the full amount of the
purchase price. The Commitment shall have an effective date after the
date of this Agreement, shall be accompanied by copies of all recorded
documents affecting the Premises, and shall include searches for real
estate taxes and pending and levied special assessments. Seller shall
deliver a copy of the Survey (defined herein) to Escrow Agent so that
the initial Commitment may be amended or supplemented to contain any
survey exceptions to title.
C. Survey. As soon hereafter as reasonably possible, Seller at its sole
cost and expense shall cause to be delivered to Purchaser a current
ALTA/ACSM Land Title Survey ("Survey") of the Premises prepared by a
duly licensed land surveyor in the State of MINNESOTA reasonably
approved by Purchaser, which Survey shall meet the then current
accuracy standards jointly adopted by ALTA and ACSM and shall contain
a certification as set forth in the attached EXHIBIT B dated after the
date of this Agreement and shall contain items 1 through 11, and 13
through 16 inclusive of Table A of the 1999 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys. Seller shall deliver to
said surveyor a copy of the Commitment to be delivered to Purchaser as
provided above, so that the Survey delivered to Purchaser will include
and identify the location of any encroachments, easements,
encumbrances or other restrictions that are identified or disclosed in
the Commitment.
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D. Title Objections. PURCHASER SHALL HAVE UNTIL TEN (10) DAYS FROM THE
DATE IT RECEIVES THE LATTER OF THE COMMITMENT OR SURVEY (OR THREE (3)
DAYS IN THE CASE OF ANY UPDATE OR SUPPLEMENT THERETO) TO MAKE ITS
OBJECTIONS TO MATTERS DISCLOSED IN THE COMMITMENT OR SURVEY (OR ANY
UPDATE OR SUPPLEMENT THERETO) IN WRITING TO SELLER. Any exception
disclosed in the Commitment or Survey (or any update or supplement
thereto) and not timely objected to by Purchaser within the applicable
ten (10) day period shall be deemed a "Permitted Exception" hereunder.
SELLER SHALL HAVE UNTIL TWENTY (20) DAYS AFTER IT RECEIVES SUCH
OBJECTIONS TO HAVE THE SAME REMOVED OR SATISFIED, USING ITS BEST
EFFORTS. If Seller shall fail to have such objections removed within
that time, then, as Purchaser's sole remedies, Purchaser may, at its
sole discretion, either (a) terminate this Agreement without any
liability on its part and receive the ▇▇▇▇▇▇▇ Money (together with
interest) back, (b) waive such objections in writing and proceed to
closing with the understanding that such uncured objections shall be
deemed Permitted Exceptions at closing, or (c) attempt to cure such
uncured objections, in which event Purchaser shall have an additional
TWENTY (20) DAYS to attempt to cure such objections, and if Purchaser
is not successful in curing such objections, Purchaser shall then have
the right to either terminate this Agreement pursuant to clause (a)
above or waive such objections pursuant to clause (b) above.
Notwithstanding anything contained herein to the contrary, Seller
shall be obligated to cure (i) mortgage or deed of trust financing or
similar liens given for security or collateral purposes, (ii) state,
federal or local tax liens or liens for the nonpayment of special
assessments, and (iii) any other judgment liens or non-consensual
liens (collectively, "Liens"), it being the understanding and
agreement that any such Liens will be satisfied out of Seller's
proceeds at closing, if not sooner paid.
4. SELLER'S PROPERTY INFORMATION; PURCHASER'S INSPECTIONS.
A. Seller's Property Information. Concurrently with Seller's acceptance
and delivery of this Agreement to Purchaser, Seller shall deliver to
Purchaser, at no cost to Purchaser, complete and accurate copies of
any contracts, leases, licenses or other agreements pertaining to the
Premises, including any amendments thereof, and copies of all permits,
plats, authorizations, notices, consents, approvals, plans,
specifications, surveys, engineering studies, analysis, soil test
borings, environmental studies and other documentation pertaining to
the physical condition, development and operation of the Premises and
any other information reasonably requested by Purchaser (whether
prepared by Seller, Seller's agents or independent contractors, any
governmental authority or agency, federal, state or local, or any
other third party), to the extent that Seller has the same in its
possession or has a right of possession thereto ("Property
Information").
B. Purchaser's Inspections. Purchaser, its counsel, accountants, agents
and other representatives, upon reasonable prior oral or written
notice to Seller, shall have full and continuing access to the
Premises. Purchaser and its agents and representatives, with
reasonable prior oral or written notice to Seller, shall also have the
right to enter upon the Premises at any time after the execution and
delivery hereof for any purpose whatsoever, including inspecting,
surveying, engineering, test boring, performance of environmental
tests and such other work as Purchaser shall consider appropriate and
shall have the further right to make such inquiries of governmental
agencies and utility companies, etc., and to make such feasibility
studies and analyses as it considers appropriate (collectively the
"Inspections"). Purchaser shall indemnify and hold harmless Seller
from and against any liabilities or damages to persons or property
arising from Purchaser's entry onto the Premises hereunder, unless
such liabilities or damages arise from the negligence or willful
misconduct of Seller, and provided, however, that Purchaser's
indemnification and hold harmless obligations shall not apply to any
liabilities or damages arising out of or in any
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way related to contaminated soil, asbestos, or other environmental
hazards discovered during the Inspections and not introduced onto the
Premises by Purchaser or its agents, employees or contractors.
Purchaser shall repair or restore any damage to the Property caused by
the Inspections.
5. CONTROL OF PREMISES; CONDEMNATION.
A. Control of Premises. Until the closing, except for Purchaser's
indemnification obligations set forth in Section 4.B. above, and
except in the case of the willful misconduct of Purchaser or its
agents, Seller shall have the full responsibility and the entire
liability for any and all damages or injury of any kind whatsoever to
the Premises, the Improvements thereon, and all persons, whether
employees or otherwise, and all property from and connected to the
Premises. Seller agrees to keep the Premises continually insured
during the term of this Agreement under a policies of (i) commercial
general liability insurance with policy limits of not less than
$1,000,000 per incident, and (ii) fire, hazard and all risk property
insurance in amount equal to one hundred percent (100%) of the
replacement value of the Improvements. Until the closing, Seller shall
have the full responsibility for the continued operation, maintenance
and repair of the Premises, provided, however, Seller shall not (i)
enter into any new leases or any amendments, modifications, extensions
or renewals of existing leases, or (ii) approve of any assignment or
sublease of an existing lease, without the prior written consent of
the Purchaser, which may be withheld in Purchaser's sole discretion.
B. Condemnation. If, prior to the closing, the Premises shall be the
subject of an action in eminent domain or a proposed taking by a
governmental authority, whether temporary or permanent, Purchaser, at
its sole discretion, shall have the right to terminate this Agreement
upon notice to Seller without liability on its part by so notifying
Seller and the ▇▇▇▇▇▇▇ Money (with interest) shall be refunded to
Purchaser. If Purchaser does not exercise its right of termination,
(i) any and all proceeds arising out of any such eminent domain or
taking shall be held in trust by Seller for the benefit of Purchaser
and paid to Purchaser at closing; and (ii) the "Premises" shall
thereafter be defined to mean the Premises less the portion taken by
eminent domain or condemnation. In no event shall the Purchase Price
be increased by the amount of any such proceeds.
C. Casualty. If, prior to the closing, the Premises or the Improvements
are materially damaged or destroyed, Purchaser, at its sole
discretion, shall have the right to terminate this Agreement upon
notice to Seller without liability on its part by so notifying Seller
and the ▇▇▇▇▇▇▇ Money (with interest) shall be refunded to Purchaser.
If the Premises or Improvements are not materially damaged or
destroyed or Purchaser does not exercise its right of termination,
Seller shall proceed forthwith to repair the damage to the Premises
and Improvements and any and all proceeds arising out of such damage
or destruction, if the same be insured, shall be held in trust by
Seller for the benefit of such repair. In no event shall the Purchase
Price be increased by the amount of any such proceeds.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. In order to induce
Purchaser to enter into this Agreement and purchase the Premises, Seller
hereby represents, warrants and covenants to Purchaser:
A. Seller is a duly organized and validly existing corporation under the
laws of the State of Minnesota, (ii) Seller is qualified to do
business in the state in which the Premises are located, (iii) the
corporation has full right and authority to enter into this Agreement,
(iv) each person signing on behalf of the corporation is authorized to
do so, (v) the execution and delivery of this Agreement by Seller will
not constitute a default under any indenture,
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agreement, contract, mortgage or other instrument to which Seller is a
party, (vi) Seller is not a "foreign person" as that term is defined
under Internal Revenue Code Section 1445(F)(3), and (vii) the sale of
the Property is not subject to any withholding requirements imposed by
the Internal Revenue Code, including, without limitation, Section
1445(F)(3).
B. To Seller's knowledge, no action in condemnation, eminent domain or
public taking proceedings are now pending or contemplated against the
Premises.
C. To Seller's knowledge, no ordinance or hearing is now before any local
governmental body which either contemplates or authorizes any public
improvements or special tax levies, and there has been no public
improvements constructed, the cost of which may be assessed against
the Premises. There are no special assessments currently a lien
against or encumbering the Premises, except as shown by the
Commitment.
D. To Seller's knowledge, there is no actual or threatened action,
litigation, or proceeding by any organization, person, individual or
governmental agency (including governmental actions under condemnation
authority or similar proceedings) affecting the Premises.
E. Seller has Marketable Fee Simple Title interest to the Premises.
F. Except as shown by the Commitment, there are no delinquent taxes
against the Property, and there are no "Green Acres" taxes against the
Property. Seller has not appealed any taxes or assessments payable
against the Premises and has made no commitments or agreements with
any taxing authorities pertaining to the payment of taxes and
assessments against the Premises or the assessed value of the
Premises.
G. The Premises will as of the date of closing be free and clear of all
liens, security interests, encumbrances, leases or other restrictions
or objections to title other than the Permitted Exceptions.
H. All labor or material which have been furnished to the Premises during
the one hundred twenty (120) days prior to the closing date have been
fully paid for or will be fully paid for prior to the closing date so
that no lien for labor or materials rendered can be asserted against
the Premises.
I. To Seller's knowledge, no fire insurance underwriter or governmental
authority has requested any alterations or any additions to the
Premises.
J. To Seller's knowledge, there are no management, maintenance or service
contracts, leases, licenses, purchase agreements, purchase options,
rights of first refusal, or other unrecorded agreements affecting the
Premises, except as set forth on EXHIBIT C. Seller agrees not to enter
into any new, or modify any existing, written or oral service
contracts, leases, licenses or other recorded or unrecorded agreements
affecting the Premises hereafter without Purchaser's prior written
consent which may be withheld in Purchaser's sole discretion.
K. To Seller's knowledge, Seller, in its ownership, use, maintenance and
occupancy of the Property, is not in violation of and has not
violated, any applicable federal, state, county or local statutes,
laws, regulations, rules, ordinances, codes, standards, orders,
licenses and permits of any governmental authorities relating to
environmental matters (being hereinafter collectively referred to as
the "Environmental Laws"), including by way of illustration and not by
way of limitation, (A) the Clean Air Act, the federal Water Pollution
Control Act of 1972, the Resource Conservation and Recovery Act of
1976, the
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Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Toxic Substances Control Act, or the Minnesota
Environmental Response and Liability Act (including any amendments or
extensions thereof and any rules, regulations, standards or guidelines
issued pursuant to any of said Environmental Laws). To Seller's
knowledge, during Seller's period of ownership of the Property, (i)
neither Seller, its agents, employees and independent contractors nor
any tenant, has operated the Premises for the purpose of receiving,
handling, using, storing, treatment, transporting and disposing of
petroleum products or any Hazardous Material as defined in said
Environment Laws, other toxic dangerous or hazardous chemicals,
materials, substances, pollutants and wastes, or any chemical,
material or substance exposure to which is prohibited, limited or
regulated by any federal, state, county, regional or local authority
(all the foregoing being hereinafter collectively referred to as
"Hazardous Materials"); (ii) there are no existing or pending remedial
actions or other work, repairs, construction or capital expenditures
with respect to the Premises in connection with the Environmental
Laws, nor has Seller received any notice of any of the same; (iii) no
Hazardous Materials have been or will be released into the
environment, or have been or will be deposited, spilled, discharged,
placed or disposed of at, on, the Premises, nor has Seller used the
Premises as a landfill or a disposal site for Hazardous Materials or
for garbage, waste or refuse of any kind; (iv) there are no locations
off the Premises where Hazardous Materials generated by or on the
Premises by Seller have been treated, stored, deposited or disposed
of; (v) the sale of the Premises by Seller to Purchaser does not
require notice to or the prior approval, consent or permission of any
federal, state or local governmental agency, body, board or official;
(vi) no notices of any violation of any of the matters referred to in
the foregoing sections relating to the Premises or its use have been
received by Seller and there are no writs, injunctions, decrees,
orders or judgments outstanding, no lawsuits, claims, proceedings or
investigations pending or threatened, relating to the ownership, use,
maintenance or operation of the Premises, nor is there any basis for
any such lawsuit, claim, proceeding or investigation being instituted
or filed.
The representations and warranties set forth in this Section 6 shall be
continuing and shall be true and correct on and as of the closing date with
the same force and effect as if made at that time and all such
representations, warranties and covenants shall survive closing for 10
years and shall not be affected by any investigation, verification or
approval by any party hereto or by anyone on behalf of any party hereto and
shall not merge into Seller's deed being delivered at closing. Seller
agrees to indemnify and hold Purchaser harmless from and against and to
reimburse Purchaser with respect to any and all claims, demands, causes of
action, loss, damage, liabilities, and costs (including attorney's fees and
court costs) asserted against or incurred by Purchaser by reason of or
arising out of the breach of any representation, warranty or covenant as
set forth in this Section 6. Notwithstanding any provision of this
Agreement to the contrary, in any of the foregoing representations and
warranties, the words "to Seller's knowledge", or any variation thereof,
shall mean to the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇, President of Seller.
Notwithstanding any provision in this Agreement to the contrary, if, during
the course of Purchaser's investigation of the Property, but before the
Closing Date, Purchaser learns that any of Seller's representations set
forth in this Section 6 are untrue, then such representation shall be
deemed to conform to the fact as discovered by Purchaser. Except as
otherwise set forth in this Agreement, (i) Purchaser is purchasing the
Property in the Property's "as-is, with all faults" condition; and (ii) in
determining whether or not to purchase the Property, Purchaser is relying
only on its investigation of the Property and not on any representation or
warranty of Seller.
7. CONDITIONS TO CLOSING. The closing of the transaction contemplated by this
Agreement and all the obligations of Purchaser and Seller, as the case may
be, under this Agreement are subject to fulfillment, ON OR BEFORE FEBRUARY
12, 2003 (THE "CONDITION DATE"), of the following conditions precedent:
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A. Purchaser shall have determined that the physical status or condition
of the Premises, including without limitation, condition of the
Improvements (including without limitation, roof, heating, air
conditioning and ventilation systems, mechanical, electrical and other
utility systems, windows, structure, parking lot, parking lot lighting
and foundation) and environmental, geotechnical (soil), wetland,
floodplain, drainage and availability of adequate access and
utilities, shall be satisfactory to Purchaser in its sole discretion.
Purchaser shall determine the same from review of the Property
Information and the Inspections performed pursuant to Section 4, and
any other inquiries or other examinations, studies or evaluations of
the Premises, if any, which Purchaser elects to perform or to have
performed, and by taking into consideration such facts as Purchaser
deems relevant.
Purchaser may acknowledge satisfaction or waiver of any of the foregoing
conditions, only by delivering written notice of satisfaction or waiver to
Seller on or before the Condition Date. If Purchaser does not acknowledge
in writing the satisfaction of one or more of the foregoing conditions (or
otherwise waive the same in writing) on or before the Condition Date, then
this Agreement shall automatically be deemed to be null and void, without
action required of either party, the ▇▇▇▇▇▇▇ Money (and all interest) shall
be returned to Purchaser, and Purchaser and Seller shall thereafter be
released from any liability or obligation hereunder.
Notwithstanding anything contained herein to the contrary, it shall be a
condition of Purchaser's obligation to close this transaction that (i) the
representations and warranties made by Seller in Section 6 shall be correct
as of the Closing Date with the same force and effect as if such
representations were made at such time, subject to the provisions of the
last grammatical paragraph of Section 6, (ii) the status and marketability
of title shall have been established to Purchaser's satisfaction in
accordance with this Agreement, and (iii) Seller shall have executed and
delivered to Purchaser the Lease Agreement in the form attached hereto as
EXHIBIT D.
Notwithstanding anything to the contrary, Seller's obligations to close
under this Agreement are subject to Seller's having received, by the
Closing Date, approval of the grant of warrants described in Section 19 of
this Agreement by Seller's board of directors. If Seller has not received
such approval by the Closing Date, then Seller may terminate this
Agreement, whereupon the ▇▇▇▇▇▇▇ Money will be returned to Purchaser and
the parties hereto shall have no further liability or obligation hereunder
or with regard to the Property, except as set forth 4(B) hereof.
8. CLOSING DATE. Subject to the fulfillment or waiver of the conditions
hereof, and provided that all of the covenants, representations and
warranties of Seller are true and correct on the closing date as though
made on such date, subject to the provisions of the last grammatical
paragraph of Section 6, the closing of the purchase and sale shall take
place on FEBRUARY 28, 2003 or upon such earlier date which Purchaser
selects upon five (5) days' written notice to Seller (the "Closing Date").
The closing shall take place at the offices of Escrow Agent or at such
other place as Seller and Purchaser may mutually determine, and, at either
Seller's or Purchaser's election, may be an escrow closing which the
parties do not physically attend. Possession of the Premises shall be
delivered to Purchaser on the Closing Date, free of the leasehold or
possessory interest of Seller and any tenants, licensees or occupants
thereof, except pursuant to the Lease.
9. SELLER'S OBLIGATIONS AT CLOSING. At or prior to the Closing Date, Seller
shall execute and deliver or cause to be delivered to Purchaser:
A. Seller's duly recordable Limited Warranty Deed (the "Deed") to the
Premises (in the form attached hereto as EXHIBIT E and made a part
hereof conveying to Purchaser Marketable Fee Simple Title to the
Premises and all rights appurtenant thereto.
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B. The ALTA (Form 10/17/92) Owner's Title Insurance Policy in conformity
with the requirements of this Agreement, or a "marked-up" Commitment
in form acceptable to Purchaser.
C. Escrow Agent's standard affidavit of Seller confirming that Seller is
not a "foreign corporation" within the meaning of Section 1445 of the
Internal Revenue Code.
D. Escrow Agent's standard affidavit of Seller in form and content
sufficient to allow Escrow Agent to delete the standard exceptions
contained in Purchaser's Owners Title Insurance Policy relative to (i)
parties in possession (but with the exception of Seller's continued
occupancy of the Property pursuant to the Lease), (ii) liens for
labor, materials, or services, and (iii) unrecorded easements or other
instruments.
E. The Lease Agreement.
F. A certificate at closing confirming that the representations and
warranties set forth in Section 6 of this Agreement are true and
correct as of the Closing Date as though made as of such date, subject
to the provisions of the last grammatical paragraph of Section 6.
G. Such other documents as may be reasonably required by this Agreement
(including, without limitation, authorizing resolutions of Seller, if
required by Escrow Agent) all in a form reasonably satisfactory to
Purchaser, Seller and Escrow Agent.
10. DELIVERY OF PURCHASE PRICE; OBLIGATIONS AT CLOSING. At closing, subject to
the terms, conditions, and provisions hereof and the performance by Seller
of its obligations as set forth herein, the ▇▇▇▇▇▇▇ Money shall be
delivered to Seller (except any interest accrued thereon) and credited
against the Purchase Price, and Purchaser shall deliver the balance of the
Purchase Price to Seller pursuant to Section 2 above. At closing, Purchaser
shall also execute and deliver the Lease Agreement to Seller.
11. CLOSING COSTS. The following costs and expenses shall be paid as follows in
connection with the closing:
A. Seller shall pay:
1. The cost to prepare and deliver to Purchaser the Commitment
(including, without limitation, the cost of any title search and
exam by Escrow Agent); the cost of the Survey; all fees to record
all of the documents necessary to permit Seller to convey
Marketable Fee Simple Title to the Premises to Purchaser (other
than the fee to record the Deed); the cost of any endorsements
necessary to convey Marketable Fee Simple Title to Purchaser; and
one-half (1/2) of the closing fee and/or escrow fee charged by
Escrow Agent in connection with the escrow of ▇▇▇▇▇▇▇ Money or
the closing of this transaction.
2. Any state, county or municipal deed tax, excise tax or transfer
fee imposed on the conveyance, and any fees and costs incurred by
Seller.
3. Any deferred or delinquent real estate taxes or utilities and
Seller's pro-rata share of those costs and expenses set forth in
Section 12 below.
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4. All special assessments existing as of the Closing Date, whether
levied, pending, deferred or assessed, including without
limitation, the unpaid balance of special assessments and/or
installments of special assessments certified for payment to the
real estate taxes.
5. Attorneys' fees and costs of Seller's attorneys, except as set
forth in Section 18(J).
B. Purchaser shall pay the following costs in connection with the
closing:
1. The documentary fee necessary to record the Deed.
2. The premium for the Owner's Title Policy and for any extended
coverage title insurance endorsement requested by Purchaser.
3. One-half (1/2) of the closing fee and/or escrow fee charged by
Escrow Agent in connection with the escrow of ▇▇▇▇▇▇▇ Money or
the closing of this transaction.
4. The brokerage fee of the Broker pursuant to Section 13 herein.
5. Attorneys' fees and costs of Purchaser's attorneys, except as set
forth in Section 18(J).
C. The terms of this Section 11 shall survive the closing of the
transaction contemplated herein.
12. PRORATIONS. The following prorations shall be made as of the Closing Date:
A. Real estate taxes (excluding any outstanding special assessments
and/or installments of special assessments certified to the real
estate taxes for payment Seller is obligated to pay pursuant to
Section 11.A.4 hereof) allocable to the Premises that are due and
payable in the year of closing shall be prorated between Seller and
Purchaser to the Closing Date. Seller shall pay all such real estate
taxes due and payable in years prior to the year of closing. Purchaser
shall assume responsibility for the payment of all such taxes due and
payable in years subsequent to the year of closing. If as of the
Closing Date the Premises is not assessed for purposes of property
taxation separately from all other real property, then the real estate
taxes for the total tax parcel shall be paid in full at closing, and
the amount of taxes allocable to the Premises shall be determined
based upon the ratio that the square footage of the Premises bears to
the square footage of all the real property within the total tax
parcel.
B. The terms of this Section 12 shall survive the closing of the
transaction contemplated herein.
13. BROKERAGE. Seller and Purchaser represent and warrant to each other that
they have not engaged the services of any broker in connection with the
sale and purchase contemplated by this Agreement, except that Purchaser has
engaged the services of WELSH COMPANIES (▇▇▇▇ ▇▇▇▇▇▇▇) ("Broker"), for
whose services Purchaser agrees to pay $35,000 only upon the closing of
this transaction. Broker shall have no right to any portion of the ▇▇▇▇▇▇▇
Money if this Agreement is terminated, canceled or rescinded. Purchaser
hereby agrees to indemnify, defend and hold Seller harmless for any claim
(including reasonable expenses incurred in defending such claim) made by
Broker in connection with this transaction. Each party hereby agrees to
indemnify, defend and hold harmless the other party for any claim
(including reasonable expenses
9
incurred in defending such claim) made by a broker, sales agent or similar
party (other than Broker) claiming to be entitled to a commission in
connection with this transaction by reason of the acts of the indemnifying
party. Broker shall execute this Agreement for purposes of evidencing its
consent and agreement with the terms of this Section 13. Failure of Broker
to execute this Agreement shall not affect the validity of this Agreement
as between Seller and Purchaser. The terms of this Section 13 shall survive
the closing of the transaction contemplated herein.
14. REMEDIES.
A. Seller Default. If Seller defaults in the performance of this
Agreement, then Escrow Agent shall promptly refund the ▇▇▇▇▇▇▇ Money
(and all interest) to Purchaser, and Purchaser may either (i) cancel
this Agreement by written notice to Seller, or (ii) seek specific
performance of this Agreement against Seller, as long as Purchaser
prosecutes such specific performance within 6 months after the date of
Seller's default.
B. Purchaser Default. If Purchaser defaults in the performance of this
Agreement, Seller's sole and exclusive remedy shall be to cancel this
Agreement by delivering written notice of such default to Purchaser
("Seller's Default Notice"), in which event Purchaser shall have the
opportunity to cure such default within thirty (30) days after receipt
of Seller's Default Notice, and if Purchaser fails to timely cure such
default after receipt of Seller's Default Notice, then this Agreement
shall be deemed canceled without further action between the parties
and the Escrow Agent shall deliver the ▇▇▇▇▇▇▇ Money to Seller as
liquidated damages, it being the understanding and agreement of the
parties that it would be impractical or extremely difficult to
determine the actual damages to Seller in the event of Purchaser's
default, and that the ▇▇▇▇▇▇▇ Money is a reasonable estimate of the
damages which Seller would incur as a result of Purchaser's default
hereunder.
15. ESCROW. Escrow Agent is authorized and agrees by acceptance thereof to
promptly deposit the ▇▇▇▇▇▇▇ Money as provided herein and to hold same in
escrow and to disburse the same in accordance with the terms and conditions
of this Agreement. The sole duties of Escrow Agent regarding the ▇▇▇▇▇▇▇
Money shall be those described herein, and Escrow Agent shall be under no
obligation to determine whether the other parties hereto are complying with
any requirements of law or the terms and conditions of any other agreements
among said parties. Escrow Agent may conclusively rely upon and shall be
protected in acting upon any written notice, consent, order or other
document believed by it to be genuine and to have been signed or presented
by the proper party or parties to this Agreement. Escrow Agent shall have
no duty or liability to verify any such written notice, consent, order or
other document, and its sole responsibility shall be to act as expressly
set forth in this Agreement. Escrow Agent shall be under no obligation to
institute or defend any action, suit or proceeding in connection with this
Agreement. If Purchaser and Seller execute any separate escrow instructions
or an escrow agreement with Escrow Agent, then in the event of a conflict
between the terms of such escrow instructions or escrow agreement and the
terms of this Agreement, the terms of this Agreement shall control. Escrow
Agent shall also execute this Agreement solely for the purpose of
acknowledging its agreement with and understanding of the terms of this
Section 15 and the other provisions of this Agreement relative to receipt,
escrow, investment and disbursement of the ▇▇▇▇▇▇▇ Money. Failure of Escrow
Agent to execute this Agreement shall not affect the validity of this
Agreement as between Seller and Purchaser. Notwithstanding anything in this
Section to the contrary, in the event of a dispute between Seller and
Purchaser sufficient in the sole discretion of Escrow Agent to justify its
doing so, or in the event that Escrow Agent has not disbursed the ▇▇▇▇▇▇▇
Money on or before the date of Closing pursuant hereto, Escrow Agent shall
be entitled to tender into the registry or custody of any court of
competent jurisdiction the ▇▇▇▇▇▇▇ Money, together with such pleadings as
it may deem appropriate, and thereupon be discharged from all further
duties and liabilities under this Agreement with respect to the ▇▇▇▇▇▇▇
Money (other than with respect to any liabilities for willful misconduct or
breach of trust by Escrow Agent). Any such legal action may be brought in
such court as Escrow Agent shall determine to have jurisdiction thereof.
10
16. SIGNAGE. Intentionally omitted.
17. TIME FOR ACCEPTANCE. This Agreement, when duly executed by all of the
parties hereto, shall be binding upon the parties hereto, their heirs,
representatives, successors and assigns. In the event this Agreement has
not been duly executed by Seller and delivered to Purchaser or its agent on
or before February 7, 2003 AT 5:00 P.M. C.S.T., then the offer herein and
herewith made by Purchaser shall automatically and unconditionally
terminate and this Agreement shall be null and void, and Escrow Agent shall
immediately return to Purchaser the ▇▇▇▇▇▇▇ Money.
18. MISCELLANEOUS. The following general provisions govern this Agreement.
A. No Waivers. The waiver by either party hereto of any condition or the
breach of any term, covenant or condition herein contained shall not
be deemed to be a waiver of any other condition or of any subsequent
breach of the same or of any other term, covenant or condition herein
contained. Purchaser, in its sole discretion may waive any right
conferred upon Purchaser by this Agreement; provided that such waiver
shall only be made by Purchaser giving Seller written notice
specifically describing the right waived.
B. Time of Essence. Time is of the essence of this Agreement.
C. Governing Law. This Agreement is made and executed under and in all
respects to be governed and construed by the laws of the State of
MINNESOTA and the parties hereto hereby agree and consent and submit
themselves to any court of competent jurisdiction situated in the
State of MINNESOTA.
D. Notices. All notices and demands given or required to be given by any
party hereto to any other party shall be deemed to have been properly
given if and when delivered in person, the next business day after
being sent by reputable overnight commercial courier (e.g. U.P.S. or
Federal Express), sent by facsimile (with verification of receipt) or
three (3) business days after having been deposited with the U.S.
Postal Service and sent by registered or certified mail, postage
prepaid, addressed as follows (or sent to such other address as any
party shall specify to the other party pursuant to the provisions of
this Section):
TO SELLER: TO PURCHASER:
LECTEC CORPORATION ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. So.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ----------------------
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PHONE: ▇▇▇-▇▇▇-▇▇▇▇ ----------------------
FAX: ▇▇▇-▇▇▇-▇▇▇▇
with copy to: with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III ----------------------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ----------------------
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------
11
IN THE EVENT EITHER PARTY DELIVERS A NOTICE BY FACSIMILE, AS SET FORTH
ABOVE, SUCH PARTY MUST SEND THE NOTICE TO THE OTHER PARTY BY ONE OF
THE OTHER METHODS DESCRIBED ABOVE.
Any party, by notice given as aforesaid, may change the address to
which subsequent notices are to be sent to such party.
E. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of each of the parties
hereto. This Agreement may be assigned or transferred by Purchaser at
any time without consent of Seller, including, without limitation, to
a lender of Purchaser, provided the assignee agrees to be bound by the
terms of this Agreement. Upon such assignment, and written assumption
by the assignee delivered to Seller, Purchaser shall have no further
or other obligations under this Agreement, provided, however, that the
original Purchaser shall remain liable for and not be released from
its indemnification obligations under Section 4 of this Agreement.
F. Invalidity. If for any reason any term or provision of this Agreement
shall be declared void and unenforceable by any court of law or equity
it shall only affect such particular term or provision of this
Agreement and the balance of this Agreement shall remain in full force
and effect and shall be binding upon the parties hereto.
G. Complete Agreement. All understandings and agreements heretofore had
between the parties are merged into this Agreement which alone fully
and completely expresses their agreement. This Agreement may be
changed only in writing signed by both of the parties hereto and shall
apply to and bind the successors and assigns of each of the parties
hereto and shall not merge with the deed delivered to Purchaser at
closing.
H. Counterparts. This Agreement may be executed in one or more
counterparts each of which when so executed and delivered shall be an
original, but together shall constitute one and the same instrument.
I. Calculation of Time Periods. Unless otherwise specifically provided
herein, in computing any period of time described in this Agreement,
the day of the act or event after which the designated period of time
begins to run is not to be included and the last day of the period so
computed is to be included, unless such last day is a Saturday, Sunday
or legal holiday under the laws of the State of MINNESOTA, in which
event the period shall run until the end of the next day which is
neither a Saturday, Sunday or legal holiday. The final day of such
period shall be deemed to end at 5:00 p.m., MINNESOTA time.
J. Attorneys' Fees. If any dispute arises between the parties regarding
this Agreement or the subject matter thereof, the prevailing party in
any court action, administrative proceeding or alternative dispute
resolution commenced or maintained to resolve such dispute, shall be
entitled to an award of reasonable attorneys' fees, disbursements and
court costs in addition to any other remedy to which the parties are
entitled.
K. Survival. Except as set forth in Section 6 hereof, all of the
warranties, covenants, and representations made herein by either
Seller or Purchaser shall for one year survive closing and the
delivery of the Deed to Purchaser, or the earlier termination of this
Agreement.
12
19. ADDITIONAL CONSIDERATION; GRANT OF WARRANTS. Seller will grant to Purchaser
a warrant (the "Warrant") to purchase 200,000 shares of Seller's common stock,
par value $.01, at $.90 per share. The Warrant shall be in the form of EXHIBIT F
attached hereto and made a part hereof.
20. REPRESENTATIONS, WARRANTIES AND UNDERSTANDINGS OF PURCHASER Purchaser
represents and warrants to Seller, and understands, as follows:
A. Purchaser is purchasing the Warrant, and the shares underlying the
Warrant (the "Warrant Shares"), solely for Purchaser's own account for
investment purposes and not with a view to or for sale or distribution of the
Warrant or Warrant Shares (collectively, the "Securities") or any portion
thereof and without any present intention of selling, offering to sell or
otherwise disposing of or distributing the Securities or any portion thereof in
any transaction other than a transaction complying with the registration
requirements of the Securities Act of 1933, as amended (the "Act"), and
applicable state securities or "blue sky" laws, or pursuant to an exemption
therefrom. The entire legal and beneficial interest of the Securities are being
purchased for, and will be held for, Purchaser's account only, and specifically
are not being purchased in whole or in part for any other person or entity.
B. Purchaser has carefully reviewed and is familiar with the reports
filed by Seller pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act Reports"). Purchaser has been given access to full and complete
information regarding Seller, including, in particular, the current financial
condition of Seller and the risks associated therewith and has utilized such
access to Purchaser's satisfaction for the purpose of obtaining information or
verifying information in the Exchange Act Reports, and particularly, Purchaser
has either attended or been given reasonable opportunity to attend a meeting
with representatives of Seller for the purpose of asking questions of, and
receiving answers from, such representatives concerning Seller and to obtain any
additional information, to the extent reasonably available, necessary to verify
the accuracy of information provided in the Exchange Act Reports.
C. Purchaser understands that the Securities as an investment involve a
high degree of risk, including, without limitation, the risks described in the
"Cautionary Statements" filed as Exhibit 99.1 to Seller's reports filed with the
Securities and Exchange Commission (the "SEC") on Form 10-K.
D. Purchaser has carefully considered and has, to the extent Purchaser
believes such discussion necessary, discussed with Purchaser's professional
legal, tax and financial advisors the suitability of an investment in Seller for
the particular tax and financial situation of Purchaser. Purchaser has
determined that the Securities are a suitable investment for Purchaser based on
Purchaser's investment objectives and financial needs. Purchaser has adequate
net worth and means for providing for Purchaser's current financial needs and
contingencies, has no need for liquidity of investment with respect to the
Securities and is in a financial position to bear the economic risk of, and
withstand a complete loss of, the purchase price of the Securities. Purchaser's
overall commitment to investments which are illiquid or not readily marketable
is not disproportionate to Purchaser's net worth, and investment in the
Securities will not cause such overall commitment to become excessive.
E. Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of Purchaser's purchase of the Securities. Purchaser understands that (a)
the Securities have not been registered under the Act, (b) the Securities are
characterized under the Act as "restricted securities" and, therefore, cannot be
sold or transferred unless they are subsequently registered under the Act or an
exemption from such registration is available, and (c) except as provided in the
Warrant, neither Seller nor any of its officers or directors has any obligation
to register the Securities under the Act. In this connection, Purchaser is
familiar with Rule 144 of the SEC as presently in effect, and understands the
resale limitations imposed thereby and by the Act. Purchaser understands that
Purchaser shall in no event make any disposition
13
of all or any portion of the Securities unless (x) there is then in effect a
registration statement under the Act covering such proposed disposition and such
disposition is made in accordance with said registration statement or (y)
Purchaser shall have notified Seller of the proposed disposition and shall have
furnished Seller with a reasonably detailed statement of the circumstances
surrounding the proposed disposition, and Purchaser shall have furnished Seller
with an opinion of Purchaser's counsel in form and substance reasonably
acceptable to counsel for Seller to the effect that such disposition will not
require registration of the Securities under the Act. Purchaser understands that
the Warrant and all share certificates will bear a legend restricting the
transfer thereto consistent with the foregoing and that Seller will make a
notation in its records accordingly.
F. Purchaser is an accredited investor as defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended (or all of its equity
owners are accredited investors). Purchaser was not organized for the purpose of
acquiring the Securities. Purchaser's principal place of business and principal
office are located within the State of Minnesota and all of its equity owners
are bona fide residents of said state except as otherwise disclosed to Seller in
writing.
G. Except as set forth in this Agreement, no representations or
warranties have been made to Purchaser by Seller or any agent, employee or
affiliate of Seller and in entering into this transaction, the Purchaser is not
relying on any information, other than that contained herein and in the Exchange
Act Reports and the results of independent investigation by Purchaser.
H. All information which Purchaser has provided concerning Purchaser is
correct and complete as of the date hereof. Purchaser agrees to indemnify, hold
harmless and defend Seller and its affiliates and agents with respect to any and
all loss, damage, expense, claim, action or liability any of them may incur as a
result of the breach or untruth of any of the representations, warranties or
other information of Purchaser in this Agreement. Purchaser understands and
agrees that if Seller or anyone acting on its behalf discovers any breach or
untruth of any such representations, warranties or other information, Seller
may, at its option, rescind the sale of the Securities to Purchaser.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
SELLER: LECTEC CORPORATION PURCHASER: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------- ------------------------------------
ITS: Chairman, CEO, President ITS: Owner
------------------------------ -----------------------------------
15
ACCEPTANCE BY BROKER
The undersigned, whether one or more, being the Broker referred to in this
Agreement, hereby acknowledges and accepts the terms and conditions of this
Agreement. Any amendment, modification or termination of this Agreement shall
not require the signature of the undersigned, except to the extent Section 13 of
this Agreement may be amended or modified (excluding termination of Section 13
due to lapse, termination or cancellation of this Agreement).
Acknowledged and agreed to this 5 day of February, 2003.
BROKER:
WELSH COMPANIES, LLC
By: ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Its: VR
--------------------------------
16
ACCEPTANCE BY ESCROW AGENT
The undersigned, being the Escrow Agent referred to in the above Agreement,
hereby acknowledges and accepts the terms of this Agreement as its escrow
instructions and agrees to act in accordance herewith.
Acknowledged and agreed to this ________ day of _________________________, 2003.
ESCROW AGENT:
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
----------------------------------
Its:
---------------------------------
17
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
▇▇▇ ▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
18
EXHIBIT B
FORM OF SURVEYOR'S CERTIFICATION
I HEREBY CERTIFY TO [INSERT NAME OF PURCHASER] AND [INSERT NAME OF TITLE
INSURANCE COMPANY] AND THEIR HEIRS, SUCCESSORS AND ASSIGNS, THAT I HAVE
PERSONALLY INSPECTED AND SURVEYED, ON THE GROUND, THE FOLLOWING DESCRIBED
PROPERTY (THE "PROPERTY"), AND THIS PLAT OF SURVEY WAS MADE BY ME, OR UNDER MY
DIRECTION AND SUPERVISION, EFFECTIVE AS OF THE CERTIFICATION DATE SET FORTH
BELOW:
(INSERT PROPER LEGAL DESCRIPTION, INCLUDING REFERENCE TO RECORDING DATA OF
SUBDIVISION PLAT, IF APPLICABLE)
I FURTHER CERTIFY THAT (a) THIS PLAT OF SURVEY IS A TRUE, CORRECT AND ACCURATE
DRAWING AND REPRESENTATION OF THE PROPERTY AND OF THE SIZE, LOCATION, EXTERIOR
DIMENSIONS AND BOUNDARIES THEREOF; (b) THAT THE STREET ADDRESSES, LOCATIONS AND
DIMENSIONS OF ALL BUILDINGS, AND THE LOCATIONS AND DIMENSIONS OF ALL PARKING
AREAS, OF ANY OTHER IMPROVEMENTS UPON THE PROPERTY, OF ALL FENCES AND/OR
RETAINING WALLS THEREON, OF ALL RECORDED AND/OR VISIBLE EASEMENTS, RESTRICTIONS
AND COVENANTS (AND THE SAME ARE REFERENCED TO THE APPROPRIATE RECORDED DOCUMENT
NUMBER OR OTHER APPLICABLE RECORDING INFORMATION), OF ALL STREETS, ROADS,
RIGHTS-OF-WAY, AND MEANS OF PUBLIC AND/OR PRIVATE ACCESS WHICH AFFECT, BENEFIT,
BURDEN OR ARE ADJACENT TO THE PROPERTY, OF ALL DITCHES, SEPTIC SYSTEMS, DRAIN
FIELDS, UTILITY LINES AND/OR SYSTEMS (FROM EACH BUILDING OR OTHER LOCATION ON
THE PROPERTY TO THEIR POINT OF CONNECTION WITH THE PUBLIC SYSTEMS) WHICH AFFECT,
BENEFIT, OR BURDEN THE PROPERTY, AND OF ALL BUILDING SETBACK LINES AND/OR OTHER
SETBACK LINES WHICH AFFECT THE PROPERTY, ARE CORRECTLY AND ACCURATELY SHOWN
HEREON; (c) THAT THERE ARE NO DISCREPANCIES, CONFLICTS, GAPS, OVERLAPS, BOUNDARY
DISPUTES, SHORTAGES IN AREA, ENCROACHMENTS OF IMPROVEMENTS OVER BOUNDARY LINES
FROM OR ONTO THE PROPERTY OR UPON EASEMENTS OR RIGHTS-OF-WAY LOCATED ON OR
ADJACENT TO THE PROPERTY, NO OVERLAPPING OF IMPROVEMENTS, NO VISIBLE EASEMENTS,
NO OVERLAPPING OF EASEMENTS, AND NO ROADS, ALLEYS, RIGHTS-OF-WAY OR BUILDING
SETBACK LINES WHICH AFFECT THE PROPERTY, EXCEPT AS SHOWN HEREON; (d) THAT THERE
ARE NO FENCES, RETAINING WALLS, LIGHTPOSTS OR OTHER IMPROVEMENTS APPURTENANT TO
THE PROPERTY WHICH ARE LOCATED WITHIN THE BOUNDARY LINES OF ADJOINING
PROPERTIES, EXCEPT AS SHOWN HEREON; (e) THAT THE LEGAL DESCRIPTION OF THE
PROPERTY, AS SET FORTH HEREON, IS CORRECT, COMPLETE AND ACCURATE; (f) THAT THE
PROPERTY IS NOT LOCATED IN ANY FLOOD PLAIN UNDER ANY STATE OR FEDERAL LAW,
INCLUDING WITHOUT LIMITATION, A "SPECIAL FLOOD HAZARD AREA" (100 YEAR FLOOD
PLAIN), OR IN AN IDENTIFIED "FLOOD PRONE AREA", AS DEFINED BY THE U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, PURSUANT TO THE FLOOD DISASTER
PREVENTION ACT OF 1973, AS AMENDED, AS REFLECTED BY FLOOD INSURANCE RATE MAP
PANEL # ______________, DATED ______, WHICH MAP PANEL COVERS THE AREA IN WHICH
THE PROPERTY IS LOCATED; (g) THAT THIS PLAT OF SURVEY AND THE SURVEY ON WHICH IT
IS BASED WERE MADE IN ACCORDANCE WITH "MINIMUM STANDARD DETAIL REQUIREMENTS FOR
ALTA/ACSM LAND TITLE SURVEYS", AS JOINTLY ESTABLISHED AND ADOPTED BY ALTA AND
ACSM IN 1999, MEETS THE CURRENT ACCURACY STANDARDS JOINTLY ADOPTED BY ALTA AND
ACSM FOR AN ALTA/ACSM URBAN LAND TITLE SURVEY, AS DEFINED THEREIN, AND CONTAINS
ITEMS 1 THROUGH 11, AND 13 THROUGH 16 INCLUSIVE OF TABLE A OF THE 1999 MINIMUM
STANDARD DETAIL REQUIREMENTS FOR ALTA/ACSM LAND TITLE SURVEYS.
DATED: , 20 BY:
-------------------- -------.
L.S. NO.
19
EXHIBIT C
20
LEASE AGREEMENT
This LEASE AGREEMENT ("Lease") is made and entered into this 25th day of
February, 2003 by and between RED CIRCLE DRIVE, LLC, a Minnesota limited
liability company ("Landlord") and LECTEC CORPORATION, a Minnesota corporation
("Tenant").
SECTION 1. FUNDAMENTAL LEASE TERMS. Subject to the covenants, terms and
conditions of this Lease as more particularly set forth herein, the fundamental
terms of this Lease are as follows:
A. PREMISES (SECTION 2): The entire building ("Building") comprised of
approximately 29,975 total square feet of rentable area located in the
Project (defined herein) containing approximately 29,975 total square feet
of rentable area, in addition to the Project. The Premises is depicted on
Exhibit A attached hereto and made a part hereof.
B. INITIAL LEASE TERM (SECTION 4): Twelve (12) months, commencing on February
25, 2003, and expiring twelve full calendar months thereafter on February
25, 2004. The Lease Term shall be subject to adjustment pursuant to the
terms of this Lease, and subject to Tenant's right to renew the lease Term
pursuant to Section 4.B. hereof.
C. RENT (SECTION 5): During the initial Lease Term, Tenant's Rent under this
Lease shall consist of Tenant's monthly estimated Proportionate Share of
Operating Expenses and any additional rent payable hereunder. Rent during
the Renewal Term shall be comprised of Tenant's monthly estimated
Proportionate Share of Operating Expenses plus Base Rent in accordance with
Section 4.B. hereof, and any additional rent payable hereunder.
D. PROPORTIONATE SHARE (SECTION 7): One hundred percent (100%).
E. PERMITTED USE (SECTION 10): Tenant may use the Premises for general office
use, assembly, research and development, and storage incidental to the
foregoing.
F. SECURITY DEPOSIT (SECTION 24): None.
G. ADDRESS OF PREMISES: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
H. ADDRESSES FOR INVOICES AND PAYMENTS:
IF TO LANDLORD: IF TO TENANT:
RED CIRCLE DRIVE, LLC LECTEC CORPORATION
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇: President
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
21
I. ADDRESSES FOR LEGAL NOTICES (SECTION 19):
IF TO LANDLORD: IF TO TENANT:
RED CIRCLE DRIVE, LLC LECTEC CORPORATION
▇/▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ DRIVE
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: President
(with copy to:) (with a copy to:)
------------------------- ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------- Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
-------------------------
SECTION 2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, in "As-Is" condition, the premises ("Premises") depicted on the
site plan attached hereto as EXHIBIT A. The Premises contains approximately
29,975 TOTAL SQUARE FEET OF RENTABLE AREA. The Premises is comprised of the
entire Building depicted in the site plan attached hereto as EXHIBIT A. The
Building, all other improvements within the area outlined on EXHIBIT A, Common
Areas (as defined herein), and the real property underlying the same are
collectively referred to herein as the "Project". The Project is located at the
street address of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, and is
comprised of approximately 29,975 total square feet of rentable area. For
purposes of this Lease, the number of square feet of rentable area in the
Premises, Building and Project (including without limitation, the Common
Building Areas), has been and will be determined by measuring from the exterior
face of exterior walls, and from the midline or centerpoint of interior or party
walls.
SECTION 3. COMMON AREAS. All areas and facilities of the Building and Project
that are provided and designated by Landlord from time to time for the general
use and convenience of Tenant are collectively referred to herein as "Common
Areas". Except as otherwise provided herein, Tenant and its employees, invitees
and customers shall have the exclusive right to use, without charge, all Common
Areas. Tenant's use of the Common Areas shall be subject to any reasonable rules
and regulations, and amendments or additions thereto, which may be adopted by
Landlord from time to time. The term "Common Areas" shall include, without
limitation, (i) all interior common mechanical rooms, utility rooms, restrooms,
vestibules, stairways or corridors within the Building not intended to
selectively serve one or more tenants (herein, "Common Building Areas"), and
(ii) all exterior pedestrian walkways, patios, landscaped areas, sidewalks,
service drives, plazas, malls, throughways, loading areas and parking areas not
exclusively reserved to Tenant, entrances, exits, driveways, and roads. Landlord
reserves the right to make use of or grant easements over, under or across the
exterior portions of the Building and Common Areas of the Project so long as
such use does not materially disturb or otherwise materially interfere with
Tenant's business operations in the Premises, Building signage or utilization of
the Common Areas.
SECTION 4. LEASE TERM.
A. Initial Term. Tenant hereby takes the Premises from Landlord, upon and
subject to the covenants, terms and conditions hereinafter set forth, for
the term (herein, "term of this Lease" or "Lease Term") commencing on
February 28, 2003 ("Commencement Date") and continuing through and
including the expiration of twelve full calendar months thereafter on
February 27, 2004 ("Expiration Date"), subject to Tenant's right to renew
the Lease Term pursuant to Section 4.B. herein.
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B. Renewal Term. Tenant shall have the option ("Option") to extend the term of
this Lease for up to two (2) additional, consecutive sixty (60) month terms
(the "Renewal Term(s)") under the same terms and conditions contained
herein, provided, however, that in addition to other Rent payable
hereunder, Tenant shall also pay Landlord Base Rent which shall be
determined to be the then current market rate for similar space in the
southwestern suburban Twin Cities area ("Market Area") determined in
accordance with SECTION 4.C. below. Tenant may exercise each such Renewal
Term by delivering written notice to Landlord ("Renewal Notice"), stating
its irrevocable intent to exercise the Option, not less than one hundred
eighty (180) days prior to the expiration of the initial Lease Term, or
expiration of the first Option, as the case may be. In the event that
Tenant fails to deliver timely notice of its intent to exercise any Option,
Tenant's right to the Option and any subsequent Option shall be deemed null
and void. Conditions of the exercise of such Option shall be that Tenant is
not in Default pursuant to Section 18 of this Lease and that this Lease is
in full force and effect.
C. Market Rate Determination. If the market rate must be determined in
accordance with the provisions of SECTION 4.B. above, the parties hereto
agree as follows:
(1) Within fifteen (15) days following receipt of Tenant's Renewal Notice
for the Renewal Term, Landlord will submit to Tenant Landlord's
proposed market rate determination ("Landlord's Proposed Market
Rate").
(2) If Tenant does not notify Landlord within fifteen (15) days after
receipt of Landlord's Proposed Market Rate that Tenant disagrees with
Landlord's Proposed Market Rate, then Landlord's Proposed Market Rate
shall be deemed approved and accepted by Tenant. If Tenant timely
notifies Landlord of Tenant's disagreement with Landlord's Proposed
Market Rate, then the parties agree to negotiate in good faith for a
period of thirty (30) days following Landlord's receipt of Tenant's
notice of disagreement (the "Negotiation Period") in an attempt to
reach agreement on the market rate. In connection therewith, each
party shall submit to the other party such evidence as it then has to
substantiate its proposed market rate. If the market rate is not
mutually agreed upon by the parties within the Negotiation Period, the
Renewal Notice shall remain in full force and effect and the market
rate shall be determined by arbitration in accordance with the
remaining provisions of this SECTION 4.C.
(3) If the market rate is not mutually agreed upon within the Negotiation
Period, then within ten (10) days after the expiration of the
Negotiation Period, the parties shall choose a neutral individual
having at least ten (10) years recognized brokerage experience with
first-hand knowledge in the determination of commercial rental rates
in the Market Area ("Expert"), and the Expert shall determine the
market rate within twenty (20) business days after expiration of the
Negotiation Period. If the parties cannot mutually agree on an Expert
within seven (7) days after expiration of the Negotiation Period, each
party shall notify the other as to the name, address, and telephone
number of an arbitrator (having similar experience and qualifications
required of the Expert) it has selected to serve on the board of
arbitration ("Board"). The two (2) arbitrators will appoint a third
arbitrator having such experience and qualifications as promptly as
reasonably possible and the three (3) arbitrators will constitute the
Board. All three (3) arbitrators must also be persons totally
disinterested in any economic way in the ultimate resolution of the
market rate.
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(4) After the Board is appointed, it will proceed as expeditiously as
reasonably possible to resolve the dispute in accordance with the
commercial rules of arbitration of the National Arbitration Forum and
to notify the parties of its decision as to the market rate within
twenty (20) business days of the appointment of the last member of the
Board. Both Landlord and Tenant may each state in writing what it
proposes the market rate should be including whatever support for such
contention it wishes to have considered by the Board. The Board shall
arrange for such simultaneous exchange of such written information to
both Landlord and Tenant and shall accept additional evidence,
rebuttals or other matters the parties may wish to present until five
days prior to the date on which the Board shall render its decision.
The Board shall not be limited to choosing between one (1) of the two
(2) market rates proposed by the parties but may substitute its
opinion as to market rate, provided, however, that the determination
of the Board shall be made as follows:
(a) Each member of the Board will independently determine the market
rate and simultaneously disclose to each other his or her
separate determination.
(b) If the high market rate is less than ten percent (10%) higher
than the middle market rate and the low market rate is less than
ten percent (10%) lower than the middle market rate, then the
average market rate of the three Board members shall be the
market rate.
(c) If either the high market rate or the low market rate deviates
from the middle market rate by more than ten percent (10%), then
the average of the two market rate determinations closest by
dollar amount shall be the market rate.
Upon the determination of the market rate pursuant to the foregoing terms,
such determination shall be final and binding upon the parties. If for any
reason the determination of the market rate has not been made as of the
commencement of the Renewal Term, then Tenant shall nevertheless pay Base
Rent at Landlord's Proposed Market Rate pending determination of the market
rate pursuant to the mechanism described above. Any rent paid by Tenant at
a rate other than the market rate determined pursuant to the foregoing
terms shall be adjusted retroactively. Any and all fees and expenses
charged by the Expert shall be divided equally between Landlord and Tenant,
or alternatively, Landlord and Tenant shall each pay any and all fees and
expenses incurred in connection with such party's own Board member and the
fees and expenses of the third Board member shall be divided equally
between Landlord and Tenant.
SECTION 5. RENT. Tenant agrees to pay Landlord monthly in advance, without
demand, offset, abatement or deduction, as rent, all sums due under this Lease
and the word "Rent", as used in this Lease, shall mean Tenant's monthly payment
of its Proportionate Share of Operating Expenses and the additional rent payable
hereunder; provided, however, that during the Renewal Term, Rent shall also
include Base Rent determined under Section 4.B. and 4.C. of this Lease. All Rent
shall be payable to Landlord at the address set forth in SECTION 1.H. above, or
at such other address as may from time to time be designated by Landlord. If any
Rent or other sum due from Tenant is not received by Landlord on or before the
fifth (5th) day of the month for which the Rent or such sum is due, then a late
payment charge of $50 per occurrence shall become due and payable to Landlord,
all in addition to such amounts owed under this Lease. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated Rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as Rent be deemed an accord and satisfaction, and Landlord shall
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Rent or pursue any other remedy in this Lease provided. Any
sums paid to Landlord by Tenant pursuant to this Lease shall be applied to
Tenant's
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account in the following order: first to the payment of costs of collection,
including without limitation attorneys' fees and court costs; then to the
payment of late charges and accrued interest due on past due amounts; then to
the payment of Rent. Periodic Rent invoices that may be provided to Tenant by
Landlord are provided at the discretion and will of Landlord and as a courtesy
only and in no event shall the date of delivery or receipt of an invoice, or the
failure to deliver an invoice, extend the time for payment of Rent or the date
Rent is due and payable.
SECTION 6. SURRENDER OF POSSESSION AND HOLDING OVER. In the event that Tenant
fails to surrender possession of the Premises upon the expiration or termination
of this Lease, then Tenant shall be obligated to (i) vacate and deliver the
Premises to Landlord immediately upon receipt of written notice to vacate from
Landlord, (ii) pay Landlord as Rent for such holdover period, an amount equal to
one and one-half (1.5) times the rate of Rent for the Premises immediately prior
to the expiration or termination of this Lease, together with all additional
rent and other sums and charges as provided in this Lease, and (iii) indemnify,
hold harmless and defend Landlord against all claims for liability, costs or
damages by any other party to whom Landlord may have leased all or part of the
Premises. If Tenant holds over with the prior written consent of Landlord, then
Tenant's occupancy for the holdover period shall be deemed a month to month
occupancy terminable by either party upon thirty (30) days written notice to the
other party, and all of the terms and provisions of this Lease shall be
applicable during that period, except that Tenant shall pay Landlord monthly, in
advance, as Rent for the holdover period, an amount equal to Rent in effect on
the date of expiration or termination of this Lease, together with all
additional rent and other sums and charges as provided in this Lease; provided,
however, that Landlord shall have the right, from time to time, to adjust the
Rent payable by Tenant during the holdover period by providing Tenant with at
least thirty (30) days prior written notice of such adjustment. No holding over
by Tenant, without the prior written consent of Landlord shall operate to extend
the term of this Lease. Nothing contained herein shall be construed to give
Tenant any right to hold over or to impair or limit any of Landlord's rights and
remedies set forth in this Lease if Tenant holds over without the prior written
consent of Landlord, including without limitation, the right to terminate this
Lease at any time during such holdover period, to recover possession of the
Premises from Tenant, or to recover damages from Tenant from such holding over.
SECTION 7. OPERATING EXPENSES.
A. Operating Expenses. Tenant shall also pay Landlord monthly in advance,
without demand, offset, abatement or deduction, as additional rent
during the Lease Term, Tenant's Proportionate Share of all costs which
Landlord may incur in owning, managing and operating the Building, and
Common Areas within the Project. All such costs are referred to herein
as "Operating Expenses" and are hereby defined to include, without
limitation, the following: (a) costs (including without limitation,
sales and service taxes) incurred by Landlord in the management of the
Project, including management fees which do not exceed 1.5% of
Landlord's gross receipts from the Project; (b) all real property
taxes, installments of special assessments and governmental impositions
of any kind whatsoever imposed upon Landlord by reason of its
ownership, operation or management of the Project, including without
limitation the so called Minnesota "state general tax", and court
filing fees and legal fees incurred in connection with actions to
reduce the same, but legal fees may only be included in Operating
Expenses to the extent reductions are obtained during the Term; (c)
dues and assessments by means of covenants, conditions, easements or
restrictions of record and/or owners' associations if any, which accrue
against the Project during the term of this Lease; (d) all premiums,
deductibles and retentions for insurance coverages Landlord is required
to carry pursuant to Section 12.B. herein or by its lender, or that
Landlord otherwise deems reasonably necessary to carry, including
without limitation, property insurance, commercial general liability
insurance, and rent loss insurance; and (e) all other expenses which
would generally be regarded as operating, repair, replacement and
maintenance expenses or Common Area expenses.
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The following items shall not be considered Operating Expenses:
1. Amounts paid directly by Tenant.
2. Alterations solely for the benefit of another tenant of the
Building.
3. Interest and any increase in the rate of interest payable by
Landlord with respect to any mortgage on the Project.
4. Amortization or other payments on loans to Landlord.
5. Depreciation of the Project or any part thereof.
6. Leasing commissions or brokerage commissions of any kind.
7. Legal expenses for disputes with Tenant.
8. Income, excess profits or franchise taxes measured by the income
of Landlord.
9. Expenses for repair or replacement paid by proceeds of insurance
or condemnation.
10. Expenses incurred in leasing or procuring new tenants.
11. The amount of rent or other charges payable under and pursuant to
any ground lease or master lease pertaining to the Project.
12. Any advertising or promotional expenses.
13. Any cost representing an amount paid to an entity related to
Landlord which is in excess of competitive costs charged by
others.
14. Any work to be completed at Landlord's sole expense without
reimbursement under this Lease.
15. Charitable, political or trade association contributions.
16. Costs associated with the operation of the business of the
entity which constitutes the Landlord, as distinguished from the
costs of operation of the Project, including, without limitation,
accounting, tax legal, consulting and auditing costs.
17. Landlord's general overhead and administrative expenses, except
for the management fee and employee expense (reasonably allocated
to the Project) for employees of Landlord or its affiliates
performing maintenance and repairs of the Project.
18. Reserves of any kind, including but not limited to reserves for
replacement (except reasonable reserve for roof replacement), bad
debts, lost rent or similar charges.
19. Wages, costs and salaries associated with off-site employees,
except to the extent working at the Project and allocated
equitably and proportionately to the Project.
B. Proportionate Share. Tenant's proportionate share of Operating
Expenses ("Proportionate Share") shall be equal to one hundred percent
of the Operating Expenses of the Project. Landlord may invoice Tenant
monthly for one twelfth (1/12th) of Tenant's estimated annual
Proportionate Share of Operating Expenses for each calendar year,
which amount shall be adjusted reasonably from time-to-time by
Landlord based upon anticipated Operating Expenses. Tenant's
Proportionate Share of Operating Expenses for the years in which the
Lease Term commences and terminates shall be prorated as equitably
determined by Landlord based upon the Commencement Date and date of
termination of the Lease Term. Notwithstanding anything contained
herein to the contrary, during the year in which this Lease
terminates, Landlord, prior to the termination date, shall have the
option to invoice Tenant for Tenant's Proportionate Share of the
Operating Expenses based upon the previous year's Operating Expenses.
C. Intentionally omitted.
D. Reconciliation. Within four (4) months following the close of each
calendar year, Landlord shall provide Tenant an accounting showing in
reasonable detail the computations of Operating Expenses due pursuant
to this Section, provided, however, that Landlord's failure to timely
provide any such accounting within the applicable four (4) month
period shall not relieve Tenant of its obligation to pay any sums due
to Landlord relative to any such reconciliation. If the accounting
shows that the total of the monthly payments made by Tenant exceeds
the amount of Operating Expenses due by Tenant under this Section, the
accounting shall be accompanied by evidence of
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a credit to Tenant's account, except that if the Lease Term has
expired, then the amount of the credit shall be paid to Tenant. If the
accounting shows that the total of the monthly payments made by Tenant
is less than the amount of Operating Expenses due by Tenant under this
Section, the accounting shall be accompanied by an invoice for the
additional Operating Expenses due from Tenant and Tenant shall pay
Landlord the amount set forth in the invoice within thirty (30) days
following receipt of same.
E. Tenant's Right to Inspect Landlord's Books. Within thirty (30) days
after receiving Landlord's annual reconciliation statement for
Operating Expenses, Tenant may at Tenant's sole expense (except as
otherwise provided herein) request an audit of Landlord's Operating
Expenses by an independent certified public accountant chosen by
Landlord from a list of not fewer than three submitted by Tenant in
conjunction with the request. If Tenant does not request such audit
within said thirty (30) day period, Tenant shall be deemed to have
waived its right to audit Landlord's books for the applicable
reconciliation statement and Operating Expenses referenced therein. If
Landlord does not make the choice within fifteen (15) days, Tenant may
do so. The auditor shall have access to those records of Landlord
pertaining to Operating Expenses for the year in question. The auditor
shall report to the parties within thirty (30) days after being chosen.
The report of the auditor shall be final and binding on both parties
with respect to the year in question unless Landlord disputes the audit
by notice to Tenant within fifteen (15) business days after receiving
the report. If the report is disputed by Landlord, the parties shall
select a mutually acceptable auditor to review the report, and the
determination of the mutually acceptable reviewing auditor shall be
final and binding on both parties. If the actual Operating Expenses
differ from those charged to Tenant, payments required to make
adjustments in rent conform to the final report shall be made within 30
days after receipt of the final report. All expenses of the audit shall
be borne by Tenant unless the audit, or the final determination by the
reviewing auditor if Tenant's audit is disputed by Landlord, discloses
that Landlord's reconciliation statement contains an overstatement of
Operating Expenses of more than 7%, in which case all reasonable
expenses (excluding travel, meals and lodging) of Tenant's audit and of
the reviewing auditor resolving a disputed audit shall be borne by
Landlord, and payment of Operating Expenses shall be adjusted
accordingly.
SECTION 8. UTILITIES. Commencing on the Commencement Date, Tenant shall pay
directly to the pertinent utility provider when due, without demand, offset or
deduction, as additional rent during the Lease Term, all charges for utilities
furnished to or for the use or benefit of Tenant or the Premises. Except to the
extent of Landlord's negligence (unless waived pursuant to SECTION 15.C.
herein), Landlord shall not be liable for damages or otherwise, and Tenant shall
have no right of demand, offset, abatement or deduction, if any utility
provider's service to the Premises is interrupted or impaired by weather, fire,
accident, riot, strike, act of God, the making of necessary repairs or
improvements, or any other causes beyond the reasonable control of Landlord. If
any public authorities require a reduction in energy consumption in the use or
operation of the Building or Project, Tenant agrees to conform to such
requirements.
SECTION 9. ADDITIONAL TAXES. If applicable in the jurisdiction where the
Premises are located, Tenant shall pay and be liable for all rental, sales,
service and use taxes or other similar taxes arising from Tenant's operation of
its business within the Premises, if any, levied or imposed by any city, state,
county or other governmental body having authority, and if levied upon Landlord,
such payments shall be included within the definition of Operating Expenses and
recoverable by Landlord pursuant to SECTION 7 above.
SECTION 10. PERMITTED USE. The Premises are leased to Tenant solely for the use
and purpose set forth in SECTION 1.E. of this Lease ("Permitted Use"). Tenant
shall not use, occupy, or permit the use or occupancy of the Premises or any
portion thereof for any other use or purpose whatsoever, without obtaining the
prior written consent of Landlord which consent shall not be unreasonably
withheld.
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SECTION 11. ADDITIONAL OBLIGATIONS OF TENANT.
A. Occupancy and Use. Tenant shall occupy the Premises and conduct its
business in such a manner as is lawful, reputable and will not create a
nuisance. Tenant shall not overload, damage or deface the Premises or do
any act which may make void or voidable any insurance on the Premises or
the Project, or which may render an increased or extra premium payable for
such insurance, but if Tenant does so, Tenant will be liable for such
premiums as additional rent. Tenant and its employees, agents, customers,
vendors and suppliers (collectively, "Affiliated Parties") shall not
utilize any portion of the loading dock area or the Common Areas for the
storage of pallets, crates, boxes, refuse or rubbish other than that which
is placed in rubbish containers or dumpsters provided by or approved by
Landlord.
B. Signs. Tenant shall not install, place, erect, or paint any sign, marquee
or awning of any type or description in or about the Premises or Project
which are visible from the exterior of the Premises, except those signs
submitted to and approved by Landlord in writing, which approval shall not
be unreasonably withheld, and which signs are in conformance with
applicable governmental laws, rules, regulations and ordinances. However,
Landlord hereby approves Tenant's signs which are installed in, on, and
about the Project on the date hereof. Landlord shall have the right to
approve, which approval shall not be unreasonably withheld, the type and
size, location and color of all signs which Tenant desires to use or place
in or upon the exterior or windows of the Premises or the Building.
Landlord may install temporary or permanent signage relating to the Project
in the Common Areas that does not materially interfere with Tenant's
signage as approved by Landlord hereunder. Landlord will not install any
"For Lease" signs until (i) the last six months of the initial Lease Term,
or (ii) if Tenant exercises its Right to Renew, the last six months of the
Extended Renewal Term (as hereinafter defined).
C. Compliance With Laws, Rules and Regulations. Except as otherwise provided
in this SECTION 11.C., during the Lease Term and the Extended Renewal Term,
if any, Tenant shall, at its sole cost and expense, cause the Premises and
Tenant's use thereof to comply with all laws, ordinances, orders, rules and
regulations of state, federal, municipal or other agencies or bodies having
jurisdiction over the use, condition or occupancy of the Premises,
including without limitation, any repairs, alterations or modifications to
the exterior or structural elements of the Building or to the Common Areas
of the Project necessary to comply with applicable laws. Further, Tenant
shall be solely responsible for the entire cost and expense of any work
required to comply with applicable laws due to Tenant's specific use or
occupancy of the Premises or due to Tenant's acts or omissions, or as a
result of any alterations, modifications or improvements to the Premises or
Building constructed by Tenant during the Lease Term and Renewal Term, if
any.
Upon not less than forty-five (45) days prior written notice to Tenant,
Tenant will also comply with the reasonable rules and regulations of the
Project adopted by Landlord. Landlord shall have thereafter have the right
at all times, upon forty-five (45) days prior written notice to Tenant, to
change and amend the rules and regulations in any reasonable manner as may
be deemed advisable for the safety, care, cleanliness, preservation of good
order and operation or use of the Project or the Premises. All rules and
regulations of the Project, and amendments or modifications thereof, will
be sent by Landlord to Tenant in writing and shall thereafter be carried
out and observed by Tenant.
D. Tenant's Insurance Obligations. Tenant shall, during the term hereof, keep
in full force and effect at its expense the following insurance coverages:
(1) Property insurance, including plate glass coverage, written on the
Insurance Service Office's Special Perils form, or equivalent,
covering the full replacement value of (a)
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Tenant's personal property, goods, inventory, supplies, signs,
furniture, and moveable trade fixtures, equipment and
machinery (collectively, "Tenant's Personal Property"), and
(b) Improvements (defined herein) Tenant is required to remove
at Lease expiration or termination pursuant to SECTION 11.F.
herein;
(2) Commercial General Liability insurance in an amount of not
less than $1,000,000 per "occurrence" and $2,000,000
"aggregate" for the Premises, insuring Tenant and its
Affiliated Parties against liability for bodily injury, death,
personal injury, and including contractual liability coverage.
The amount of such liability insurance shall not limit
Tenant's liability under this Lease. Such policy or policies
shall name Landlord and Landlord's management agent, if any,
and upon request, Landlord's designated mortgagee, as
additional insureds and shall provide that thirty (30) days'
prior written notice must be given to Landlord prior to
modification or cancellation of such policy of insurance.
Tenant shall furnish certificates satisfactory to Landlord at the time
this Lease is executed, and thereafter from time to time within ten
(10) days after written request by Landlord, evidencing that such
coverages are in full force and effect. Within ten (10) days after
written request by Landlord, Tenant shall also provide Landlord with a
copy of such policies of insurance. All such insurance carried by
Tenant shall be issued by companies having an A.M. Best Company rating
B+ or better.
E. Tenant's Maintenance and Repair Obligations. Tenant shall at its sole
expense and all times throughout the term of this Lease, including
renewals and extensions thereof, keep and maintain the Building and the
Premises and all of Tenant's signage in a clean, safe, sanitary, and
working condition and in compliance with all applicable federal, state,
and local laws, codes, ordinances, rules and regulations. Tenant's
obligations hereunder shall include, but not be limited to, the
maintenance, repair and replacement, if necessary, of the following
items: (i) heating, ventilation and air conditioning system and
equipment (including a regular preventative maintenance contract), (ii)
lighting, wiring, and plumbing fixtures, piping, and equipment, (iii)
water heaters, (iv) motors and machinery, (v) all interior fixtures
(including without limitation, trade fixtures, walls, partitions,
doors, door handles, locks, closures and frames, and windows),
including the regular painting thereof, (vi) all exterior entrances,
windows, doors, door handles, locks, closures and frames, docks
(including without limitation, lifts, dock levelers, awnings, dock
shelters, and staircase supports, treads and railings), including the
regular painting thereof and the replacement of all broken glass, (vii)
the exterior and structural portions of the Building (including
exterior painting and tuckpointing), including without limitation, the
roof (including flashing and drainage systems) and foundation, (viii)
fire sprinkler system, (ix) utility lines up to connection points with
the Building, (x) parking areas, (xi) Common Areas (including without
limitation site lighting, project identification signs, snow and ice
removal, maintenance of landscaping and irrigation systems), and (xii)
all other improvements within the Project. When used in this provision,
the term "repair" shall include replacements or renewals when
necessary, and all such repairs made by the Tenant shall be equal in
quality and class to the original work. Tenant shall keep the
sidewalks, entrances, exits, drive aisles and parking areas of the
Project clean and shall remove snow and ice accumulations therefrom.
Tenant shall keep lawn areas neatly mowed and trimmed and reasonably
free of weeds and shall keep landscaped areas properly irrigated and
reasonably free of weeds and litter. Within ten (10) days after written
request by Landlord, Tenant shall provide to Landlord written proof
substantiating Tenant's performance of any maintenance, repair or
replacement required under the terms hereof. If Tenant fails, refuses
or neglects to maintain or repair the Premises as required in this
Lease, then subject to the notice and cure period requirements of
SECTION 18.A.(2) herein (except in the event of an emergency when no
prior notice need be given by Landlord), Landlord may make such
repairs, without liability to Tenant for any loss or damage that may
accrue to Tenant's merchandise, personal property, furniture, trade
fixtures, equipment, or other property or to Tenant's business by
reason thereof, provided that
29
Landlord shall use reasonable efforts not to disturb or otherwise
interfere with Tenant's operations in the Premises, and upon
completion thereof, Tenant shall pay to Landlord all costs incurred by
Landlord in making such repairs, including ten percent (10%) for
overhead, within thirty (30) days after Landlord delivers to Tenant an
invoice for such costs.
Notwithstanding any provision in this Lease to the contrary, if Tenant
is required to perform any improvement to the Property that is
considered a capital improvement based on sound accounting principles
applicable to the ownership or management of office/warehouse/light
industrial buildings in the Twin Cities metropolitan area, then (i)
Landlord shall perform the capital improvement work and initially pay
for same subject to reimbursement as provided herein, and (ii) the
cost of the capital improvement shall be amortized over its useful
life as reasonably determined by Landlord based on sound accounting
principles applicable to the ownership or management of
office/warehouse/light industrial buildings in the Twin Cities
metropolitan area at an interest rate of ten percent (10%) per annum
and shall be included as a component of Tenant's monthly Base Rent,
provided, however, Tenant will not be responsible for the portion of
the amortization of such capital improvement that occurs outside of
the Lease Term, unless extended or renewed. Upon completion of any
such work by Landlord, the parties will execute an addendum to this
Lease confirming the cost of such work, the amortization schedule for
such cost computed per the above terms, and increasing Tenant's
monthly Base Rental obligations by the monthly installments of the
amortized sum calculated per the above terms.
F. Alterations and Improvements. Subject to Tenant obtaining, at its sole
expense, any and all necessary federal, state and municipal
governmental licenses, permits or approvals, Tenant shall have the
right, at its sole expense, to construct and install all tenant
improvements, furniture, trade fixtures, equipment, machinery and
other improvements necessary for Tenant to utilize the Premises for
its Permitted Use; provided, however, that such work is performed in a
workmanlike manner and Tenant uses reasonable efforts not to disturb
other tenants' use of their demised premises or the Common Areas
during performance of such work. Prior to installing or making any
alterations, physical additions or tenant improvements (collectively,
"Improvements") on or within the Premises, Tenant shall (i) obtain
Landlord's written approval of plans and specifications for such
improvements, which approval shall not be unreasonably withheld, and
(ii) forward to Landlord a copy of all governmental approvals required
for the Improvements that Tenant has obtained, together with names and
addresses of all contractors and subcontractors who will be working at
the Premises. All such work shall be performed by qualified, licensed
and insured contractors or subcontractors, and Tenant shall hold
harmless, indemnify and defend Landlord from any liens, damages,
costs, liability, or claims for personal injury, property damage or
death arising from installation of any such improvements. Tenant shall
not make or allow to be made any Improvements that (i) are structural
in nature, (ii) affect the mechanical, electrical, utility or other
service systems for the Building, (iii) are visible from the exterior
of the Building, or (iv) that cost in excess of $10,000.00, without
first obtaining the written consent of Landlord, which consent shall
not be unreasonably withheld. Any Improvements in or to the Premises
made by Tenant shall, at Landlord's option, become the property of
Landlord and shall be surrendered to Landlord upon the termination of
this Lease; provided, however, upon request by Landlord, Tenant shall
remove any designated Improvements upon expiration or earlier
termination of the Lease Term, and further provided, that, this clause
shall not apply to Tenant's Personal Property, which shall remain the
property of Tenant and shall be removed by Tenant prior to the end of
the term of this Lease. Notwithstanding the foregoing, at the time
Landlord gives its consent to any alteration, addition, or improvement
requested by Tenant, Landlord will advise Tenant in writing whether
Landlord will require the removal thereof at the end of the Term, as
the Term may be extended. Tenant shall repair any damage to the
Premises arising from installation or removal of such Improvements or
Tenant's Personal Property in order to restore the Premises to the
condition required by the terms of SECTION 11.J. herein. All costs of
installation and removal of such Improvements and Tenant's Personal
Property and repair to the Premises relating thereto,
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shall be paid by Tenant and if not paid, shall be deemed additional
rent recoverable by Landlord under this Lease.
G. Hazardous Substances. Tenant and its Affiliated Parties shall not
manufacture, generate, treat, transport, dispose of, release,
discharge, or store on, under or about the Premises or the Project
(except as reasonably required in the ordinary course of Tenant's
business operations in the Premises or for routine maintenance
thereof, to the extent used in compliance with applicable laws), any
asbestos, petroleum or petroleum products, explosives, toxic
materials, or substances defined as hazardous wastes, hazardous
materials, or hazardous substances under any federal, state, or local
law or regulation ("Hazardous Materials"). Tenant shall indemnify,
hold harmless and defend (with counsel reasonably approved by
Landlord) Landlord from and against any claims, damages, penalties,
liabilities, and costs (including reasonable attorneys fees and
expenses and court costs) caused by or arising out of (i) a violation
of the foregoing prohibition by Tenant or (ii) the presence of any
Hazardous Materials on, under, or about the Premises or the Project
during the term of the Lease to the extent caused by or arising out of
the actions or omissions of Tenant or its Affiliated Parties during
the Lease Term as may be extended. Tenant shall clean up, remove,
remediate and repair any soil or ground water contamination and damage
caused by the presence or release of any Hazardous Materials in, on,
under or about the Premises or the Project during the term of the
Lease to the extent caused by or arising, out of the actions or
omissions of Tenant or its Affiliated Parties during the Lease Term,
as may be extended, as required by applicable law and subject to
Landlord's prior reasonable approval of the scope of Tenant's work.
Tenant shall immediately give Landlord written notice (i) upon
learning of the presence or release of any Hazardous Materials on or
about the Premises or the Project by Tenant, (ii) upon receiving any
notices from governmental agencies pertaining to Hazardous Materials
which may affect the Premises or the Project, or (iii) upon receipt of
notice of pending or threatened claims against Tenant or the Project
due to the presence or release of Hazardous Materials on or about the
Premises or the Project. The obligations of both parties hereunder
shall survive the expiration or earlier termination of this Lease and
the monetary obligations of Tenant shall be deemed additional Rent
payable to and recoverable by Landlord hereunder. Landlord shall
indemnify, hold harmless and defend (with counsel reasonably approved
by Tenant) Tenant from and against any claims, damages, penalties,
liabilities, and costs (including reasonable attorneys fees and
expenses and court costs) caused by or arising out of the presence or
release of Hazardous Materials on or about the Premises or the Project
at any time after execution, to the extent arising from the actions or
omissions of Landlord or its Affiliated Parties.
H. Mechanic's and Materialmen's Liens. Tenant shall keep the Premises and
the Project free from any claims or liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf
of Tenant and Tenant shall immediately notify Landlord of any such
claim or lien of which Tenant has knowledge. Tenant will pay and
discharge any mechanic's, materialmen's or other lien against the
Premises resulting from Tenant's failure to make payment to such
▇▇▇▇▇▇▇ party, or will post bond, cash escrow or other security
reasonably required by Landlord and diligently contest the lien. If a
lien is claimed and Tenant does not cause it to be removed or
contested (together with posting of bond, cash escrow or other
security reasonably required by Landlord) within thirty (30) days
after notice from Landlord to do so, then Landlord may require that
Tenant provide to Landlord, at Tenant's sole cost and expense, a bond,
letter of credit or cash escrow in an amount equal to one and one-half
(1.5) times the amount of the lien, to insure Landlord against any
liability for such lien. If Tenant contests the lien, it will do so at
its expense in an expeditious manner. If the lien is reduced to final
judgment, Tenant will discharge the judgment.
I. Financial Statements. Tenant shall, within fifteen (15) days following
written request by Landlord, furnish to Landlord, or any present or
prospective lender or buyer of the Project, Tenant's prior year and
most current year-to-date financial statements (including a balance
sheet and an income
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statement) certified by an officer or general partner of Tenant, which
statements shall be in reasonable detail and conform to generally
accepted accounting principles. Landlord, and the recipient of the
financial statements shall keep and maintain Tenant's financial
statements in a confidential manner.
J. Obligations Upon Termination. Upon the termination of this Lease in
any manner whatsoever, Tenant shall (i) remove Tenant's Personal
Property (and the personal property of any other person claiming under
Tenant), including without limitation, all tanks, cans or containers
for the use and/or storage of gasoline, oil, grease, petroleum
products, cleaning supplies, chemicals, paint, paint thinners,
solvents, and any other item considered hazardous substances or
hazardous materials under any applicable law that are owned or
utilized by Tenant, and if requested by Landlord, any other
improvements made at any time to the Premises by or at the request of
Tenant, which Landlord has notified Tenant in writing at the time
Tenant requested Landlord's consent thereto that such items were to be
removed, (ii) repair any injury or damage to the Premises arising from
installation or removal of such personal property or improvements, and
(iii) quit and deliver up the Premises to Landlord peaceably and
quietly in as good order and condition as the same are now in or
hereafter may be put in by Landlord or Tenant, ordinary wear and tear,
damage from casualty, and repairs or restoration which are Landlord's
obligation excepted. If Tenant does not return possession of the
Premises to Landlord in the condition required by this Lease, then (i)
any improvements Tenant is required to remove upon the termination of
this Lease or any of Tenant's Personal Property that are not removed
on or before the date of termination of this Lease, however
terminated, shall be deemed abandoned and Landlord may remove and
dispose of the same as it deems prudent and any cost in regard thereto
shall be payable by Tenant as additional Rent, (ii) Landlord may
repair and restore the Premises to the condition required above and
recover the costs of doing so from Tenant, and (iii) Tenant shall be
liable to Landlord for the fair market value of lost rentals accruing
during the period of time necessary for Landlord to remove Tenant's
improvements and Tenant's Personal Property and to repair and restore
the Premises to the condition noted above.
SECTION 12. OBLIGATIONS OF LANDLORD.
A. Landlord's Maintenance and Repair Obligations. Landlord shall not be
required to make any improvements, replacements or repairs of any kind
or character to the Premises or the Project during the term of this
Lease except as are specifically set forth elsewhere in Section 16 or
Section 17 of this Lease.
B. Landlord's Insurance Obligations. During the term of this Lease,
Landlord shall carry hazard and property insurance coverage on the
Building in an amount equal to the full replacement cost thereof.
Landlord shall not be obligated in any way or manner to insure any of
Tenant's Personal Property upon or within the Premises or any
Improvements which Tenant is required to remove pursuant to SECTION
11.F hereof. Landlord shall also carry Commercial General Liability
insurance in an amount of at least $1,000,000 per "occurrence" and
$2,000,000 "aggregate" per this location. Landlord may also carry such
other insurance coverage, including without limitation, rent loss
insurance, of the type and in amounts as Landlord deems prudent.
Notwithstanding the foregoing, any insurance carried or required to be
carried by Landlord relative to the Project may be maintained under a
blanket policy or policies of insurance covering the Project and other
properties owned by Landlord and its affiliates, and all premiums paid
by Landlord or its management agent for such insurance, to the extent
properly allocable to the Project, and the cost of repairs not covered
under such insurance due to deductible provisions, shall be included
within the definition of Operating Expenses under SECTION 7 of this
Lease. Tenant shall have no right in or claim to the proceeds of any
policy of insurance maintained by Landlord under this Lease even if
the cost of such insurance is borne by Tenant pursuant to SECTION 7 of
this Lease. If an increase in any insurance premiums paid by Landlord
relative to the Project is caused by
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Tenant's specific use of the Premises, then Tenant shall pay the amount of
such increase as additional rent to Landlord.
C. Landlord's Warranty of Possession. Landlord warrants that it has the right
and authority to execute this Lease, and Tenant, upon payment of the
required Rent and subject to the terms, conditions, covenants and agreements
contained in this Lease, shall have quiet enjoyment and possession of the
Premises during the full term of this Lease as well as any extension or
renewal thereof. Landlord shall not be responsible for the acts or omissions
of any other lessee or third party that may interfere with Tenant's use of
the Premises.
SECTION 13. ASSIGNMENT AND SUBLETTING. During the initial twelve (12) month term
of this Lease, Tenant shall not either voluntarily or by operation of law,
assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any
interest therein, and shall not sublet the Premises or any part thereof, or any
right or privilege appurtenant thereto, or allow any person, other than the
employees, agents, or contractors of Tenant, to occupy or use the Premises or
any portion thereof. During the Renewal Term, Tenant shall not either
voluntarily or by operation of law, assign, transfer, mortgage, pledge,
hypothecate or encumber this Lease or any interest therein, and shall not sublet
the Premises or any part thereof, or any right or privilege appurtenant thereto,
or allow any person, other than the employees, agents, or contractors of Tenant,
to occupy or use the Premises or any portion thereof, without the prior written
consent of Landlord, such consent not to be unreasonably withheld, conditioned
or delayed. Any assignment or transfer of this Lease by transfer of a majority
interest of stock, asset sale, merger, consolidation, liquidation or
dissolution, or any changes in the ownership of, or power to vote in excess of
fifty percent (50%) of its outstanding stock, shall constitute an assignment for
purposes of this Section. Notwithstanding the foregoing, Tenant may, upon at
least five (5) days prior written notification to Landlord, sublease or assign
all or any portion of the Premises during the Term to any parent, subsidiary,
affiliate of Tenant, or any entity which directly or indirectly controls, is
controlled by or under common control of the Tenant, or to any entity which
purchases all or substantially all of the assets and business of Tenant
conducted from the Premises without having the obligation of securing the
Landlord's prior approval or consent; provided, however, upon consummation of
the assignment or sublease, Tenant shall promptly deliver a copy of the written
assignment or sublease document to Landlord, together with such information that
Landlord might reasonably request to determine the identity, state of formation,
principal place of business, type of business operation, and financial
wherewithal of the assignee or subtenant.
No assignee or sublessee of the Premises or any portion thereof may assign or
sublet the Premises or any portion thereof. Upon the occurrence of a Default
hereunder, if all or any part of the Premises are then assigned or sublet,
Landlord, in addition to any other remedies provided by this Lease or provided
by law, may, at its option, collect directly from the assignee or sublessee all
rents becoming due to Tenant by reason of the assignment or sublease. Any
acceptance of Rent or collection by Landlord of other sums directly from the
assignee, sublessee or any other person shall not be construed as a novation or
release of Tenant or any guarantor from the further performance of their
respective obligations under this Lease or any guarantee hereof, and shall not
be construed as a waiver by Landlord of any provisions hereof or any right
hereunder. Any assignment or subletting without consent of Landlord shall be
void, and shall at the option of Landlord, constitute a default under this
Lease. Consent to one assignment, subletting, occupation or use by any other
person or entity shall not be deemed to be a consent to any subsequent
assignment, subletting, occupation or use by another person or entity. No
subletting or assignment by Tenant, made with or without Landlord's consent,
shall ever release Tenant from its obligation to pay the Rent and perform all
other obligations to be performed by Tenant hereunder for the term of this
Lease, or release any guarantor from any obligation or liability under any
guarantee of this Lease.
SECTION 14. LANDLORD'S RIGHT OF ACCESS. At any and all reasonable times
hereunder during Tenant's normal business hours, with reasonable oral or written
notice, Landlord and its Affiliated Parties shall have the right to access and
enter the Premises to inspect the same, to show the Premises to
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prospective purchasers, lessees (but only during the last six (6) months of the
Lease Term or extension or renewal thereof), mortgagees, insurers or other
interested parties, and to alter, improve, maintain, or repair the Premises or
any other portion of the Project. If such access is other than during Tenant's
normal business hours, Landlord shall give Tenant at least 24 hours prior
written notice, except in the event of an emergency when no such prior notice
shall be required. Tenant shall not prohibit Landlord or its Affiliated Parties
from entering the Premises, but Landlord will use reasonable efforts not to
disrupt Tenant's business operations at the Premises. Landlord shall have the
right to use any and all means which Landlord may deem reasonably necessary to
gain entry to the Premises in an emergency without liability therefor. Tenant
shall permit Landlord to install, use, maintain and repair pipes, cables,
conduits, plumbing, vents and wires under or through the raceways, conduits,
risers, utility lines or ceiling plenum of the Premises as often and to the
extent that Landlord may now or hereafter deem to be necessary or appropriate
for the proper use, leasing, operation and maintenance of the Project.
SECTION 15. INDEMNITY AND WAIVER OF SUBROGATION.
A. Tenant Release. Tenant agrees that Landlord and its Affiliated Parties
shall not be liable to Tenant or its Affiliated Parties for, and Tenant
hereby releases such parties from, any damage, compensation, liability,
loss or claim from any cause, other than the negligence (unless waived
pursuant to SECTION 15.C. herein) or willful misconduct of Landlord or its
Affiliated Parties, relative to or arising from: (i) loss or damage to
Tenant's Personal Property or Improvements that Tenant is required to
remove pursuant to SECTION 11.F. hereof; (ii) any injury to person or
damage to property on or about the Premises; (iii) any criminal act on or
about the Premises or Project; or (iv) interference with Tenant's business
operations or loss of occupancy or use of the Premises arising from
Landlord's performance of its maintenance and repair obligations under this
Lease or from Landlord's right to access or enter the Premises under this
Lease. Tenant acknowledges and agrees that Landlord has no duty or
obligation to provide security for the Premises, Building or Common Areas
of the Project.
B. Indemnity. Tenant agrees to hold harmless, defend (with counsel reasonably
approved by Landlord) and indemnify Landlord and its Affiliated Parties
against any damage, compensation, liability, loss, claim or fees
(including, without limitation, reasonable attorneys' fees) arising out of
any personal injury, death or property loss or damage occurring in or about
the Premises or the Project during the Lease Term, regardless of when such
claim is made, to the extent arising from the willful misconduct or
negligent acts or omissions of Tenant or its Affiliated Parties. Landlord
agrees to hold harmless, defend (with counsel reasonably approved by
Tenant) and indemnify Tenant and its Affiliated Parties against any damage,
compensation, liability, loss, claim or fees (including, without
limitation, reasonable attorneys' fees) arising out of any personal injury,
death or property loss or damage occurring in or about the Premises or the
Project during the Lease Term, regardless of when such claim is made, to
the extent arising from the willful misconduct or negligent acts or
omissions of Landlord or its Affiliated Parties.
C. Waiver of Subrogation. Notwithstanding anything in this Lease to the
contrary, Landlord and Tenant hereby waive and release each other and their
respective Affiliated Parties of and from any and all right of liability,
recovery, claim, action or cause of action, against each other or their
Affiliated Parties (or anyone claiming through or under them by way of
subrogation or otherwise), for any damage, compensation, liability, loss or
claim, regardless of cause or origin, including without limitation,
negligence of Landlord or Tenant and their respective Affiliated Parties,
to the extent related to or arising from property damage suffered by the
waiving/releasing party.
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SECTION 16. CASUALTY LOSS.
A. Total Destruction. If all of the Premises or the Project are totally
destroyed by fire or any other event ("Casualty"), then this Lease shall
terminate at the option of either Landlord or Tenant by written notice to
the other party within sixty (60) days following the date of Casualty, and
the Rent shall be abated for the unexpired portion of the Lease effective
as of the date of Casualty.
B. Partial Destruction. If the Premises is partially damaged by Casualty, and
if the Premises are damaged to such extent that the damage cannot, in
Landlord's reasonable judgment, be rebuilt or repaired economically (taking
into account the time necessary to receive any insurance proceeds and using
normal construction methods without overtime or other premium) within two
hundred ten (210) days after the date of Casualty, then this Lease shall
terminate at the option of Landlord or Tenant by written notice to the
other party within sixty (60) days following the date of Casualty, and the
Rent shall be abated for the unexpired portion of the Lease effective as of
the date of Casualty. Notwithstanding anything herein to the contrary if
the Premises or the Project is partially damaged by Casualty and either (i)
insurance proceeds are not made available to Landlord or are inadequate for
restoration, or (ii) repair or restoration of the same would not be
economically prudent in Landlord's determination, then Landlord shall have
the right to terminate this Lease by written notice to Tenant within sixty
(60) days following the date of Casualty, and the Rent shall be abated for
the unexpired portion of the Lease effective as of the date of Casualty.
C. Restoration Obligations. If this Lease is not terminated pursuant to
SECTION 16.A. or SECTION 16.B. above, then Landlord shall, at its sole
expense, proceed with reasonable diligence, subject to Force Majeure delays
(as defined in SECTION 27.G. of this Lease) to rebuild or repair the
Premises (including Improvements made or paid for by Tenant, the loss of
which is covered by insurance carried by Landlord, but excluding Tenant's
Personal Property and Improvements that Tenant is required to remove
pursuant to SECTION 11.F. above), the Building or other improvements within
the Project to as near the condition in which they existed immediately
prior to the date of Casualty as reasonably possible. If the Premises are
to be rebuilt or repaired and are untenantable in whole or in part
following the Casualty, then the Rent payable under this Lease during the
period for which the Premises are untenantable shall be abated in
proportion to the areas of the Premises rendered untenantable (as
reasonably and equitably determined by Landlord and Tenant) from the date
of Casualty until restoration is completed by Landlord. Notwithstanding
anything contained herein to the contrary, if the holder of a Mortgage
purchases or acquires Landlord's interest in the Premises or the Project by
foreclosure sale or deed in lieu thereof, then such holder shall not be
bound by the restoration obligations set forth in this SECTION 16 and shall
have the option either to use any such insurance proceeds to restore the
Premises in accordance with the terms of this Lease or to terminate this
Lease and retain all such proceeds as its own and upon such termination the
Rent shall be abated for the unexpired portion of the Lease effective as of
the date of Casualty. Notwithstanding any provision herein to the contrary,
if more than twenty percent (20%) of the Premises or Tenant's parking
spaces within the Project is destroyed by casualty, and restoration of same
is reasonably expected to take longer than two hundred ten (210) days, than
Tenant may, by notice to Landlord, terminate this Lease.
D. Insurance Proceeds. Tenant hereby waives any right in or claim to the
proceeds of any policy of insurance maintained by Landlord under this
Lease. If any insurance proceeds are recoverable on account of any Casualty
affecting the Premises or the Project, then Tenant agrees that as between
this Lease and any recorded mortgage, deed of trust or other instrument
presently existing or hereafter created covering Landlord's interest in all
or part of the Premises or the Project, and all increases, refinancings,
extensions, renewals, amendments and modifications thereof (collectively,
"Mortgage"), the terms of such Mortgage shall govern and be determinative
relative to the payment and disposition of such proceeds.
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SECTION 17. EMINENT DOMAIN.
A. Total Taking. If the entire Premises or the Project are taken by eminent
domain, either party shall have the right to terminate this Lease as of the
date of taking, and the Rent shall be abated for the unexpired portion of
the Lease effective as of the date of the taking, by that party's giving
notice to the other party within 30 days after the date of such taking.
B. Partial Taking. If more than twenty percent (20%) of the Premises or the
Project or the parking serving the Premises is taken by eminent domain,
Landlord or Tenant shall have the right to terminate this Lease as of a
date specified by Landlord or Tenant by giving written notice thereof to
the other party within sixty (60) days after the date of taking. If neither
party elects to terminate this Lease, then Landlord shall, at its sole
expense, proceed with reasonable diligence, subject to Force Majeure
delays, to rebuild or repair the Premises (inclusive of Improvements made
or paid for by Tenant, the loss of which is covered by condemnation
proceeds received by Landlord, but excluding Tenant's Personal Property and
Improvements that Tenant is required to remove pursuant to SECTION 11.F.
above), the Building or other improvements within the Project to as near
the condition in which they existed immediately prior to the date of taking
as reasonably possible. If part of the Premises is rendered untenantable
following any taking, then the Rent payable under this Lease shall be
abated in proportion to the areas of the Premises rendered untenantable (as
reasonably and equitably determined by Landlord) effective as of the date
of taking.
C. Condemnation Proceeds. All damages awarded for a taking under the power of
eminent domain shall belong to and be the exclusive property of Landlord
whether such damages be awarded as compensation for diminution in value of
the leasehold estate hereby created or to the fee of the Premises or the
Project; provided, however, that Tenant shall be entitled to maintain an
action for a separate award to Tenant for (a) Tenant's moving and business
relocation expenses, (b) loss of Tenant's Personal Property, and (c) any
other compensable interest Tenant may have under Minnesota law. If any
condemnation proceeds are recoverable by Landlord on account of any taking
affecting the Premises or the Project, then Tenant agrees that as between
this Lease and any Mortgage, the terms of such Mortgage shall govern and be
determinative relative to the payment and disposition of such proceeds.
SECTION 18. DEFAULT AND REMEDIES.
A. Default by Tenant. Each of the following occurrences shall be deemed an
event of default ("Default") by Tenant under this Lease:
(1) Tenant has not paid any past due installment of Rent or any other
payment required pursuant to this Lease within five (5) days after
Landlord gives written notice of nonpayment to Tenant, provided,
however, that no more than two (2) such notices shall be required to
be given in any calendar year; or
(2) Tenant has not complied with any term, provision or covenant of this
Lease, other than the payment of Rent, and has not cured such
noncompliance within ten (10) days after written notice to Tenant, or
such longer period as may be reasonably required, if the nature of
cure is such that it cannot be completed within ten (10) days, so long
as Tenant commenced cure within the initial ten (10) day period and
thereafter diligently pursues cure to completion; or
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(3) Tenant files a petition, or an involuntary petition is filed against
Tenant (and is not dismissed within sixty (60) days), or Tenant
becomes insolvent under any applicable federal or state bankruptcy or
insolvency law, or Tenant admits that it cannot meet its financial
obligations as they become due, or a receiver or trustee shall be
appointed for all or substantially all of the assets of Tenant (and is
not dismissed within sixty (60) days), or Tenant shall make a transfer
in fraud of creditors or shall make an assignment for the benefit of
creditors; or
(4) Tenant does or permits to be done any act which results in a lien
being filed against the Premises or the Project, and such lien is not
discharged or bonded over pursuant to SECTION 11.H. of this Lease.
If a Default under SECTION 18.A.(3) occurs, nothing contained herein shall
be construed to express or imply that Landlord consents to any assumption
and/or assignment of the Lease by Tenant or the inclusion of this Lease
within Tenant's bankruptcy estate, and Landlord expressly reserves the
right to object to any assumption and/or assignment of the Lease and to any
inclusion of this Lease within Tenant's bankruptcy estate. Neither Tenant
nor any trustee who may be appointed in such case shall conduct or permit
of any "fire", "bankruptcy", "going out of business", auction sale or other
public sale in or from the Premises.
B. Landlord's Remedies for Tenant's Default. Upon the occurrence of a Default
as defined above, Landlord may, in its sole discretion, elect any one or
more of the following remedies:
(1) to cancel and terminate this Lease by written notice to Tenant; or
(2) whether or not Landlord elects to terminate this Lease, to enter upon
and repossess the Premises with resort to judicial process by unlawful
detainer action, summary proceedings, ejectment, force, or otherwise
(provided, however, that if Tenant has abandoned or voluntarily
surrendered possession of the Premises, then Landlord may enter upon
and repossess the Premises without resort to judicial process or
notice of any kind), and Landlord may, at Landlord's option, enter the
Premises and take and hold possession thereof, and may remove all
persons and property from the Premises and such property may be
removed and stored in a public warehouse or elsewhere at the cost and
for the account of Tenant, without Landlord becoming liable for any
loss or damage which may be occasioned thereby, except in the case of
Landlord's willful misconduct; or
(3) to cure the Default at any time for the account and at the expense of
Tenant, in which event Tenant shall reimburse Landlord upon demand for
any amount expended by Landlord in connection with the cure,
including, without limitation, reasonable attorneys' fees and
interest; or
(4) to pursue any other remedy at law or in equity that may be available
to Landlord.
Upon and after repossession, whether or not Landlord has elected to
terminate this Lease, Landlord may, but shall not be obligated to, relet
the Premises, or any part thereof, to any one other than the Tenant, for
such time and upon such terms and uses as Landlord may determine in its
sole discretion. Landlord may also make alterations and repairs to the
Premises to the extent Landlord deems reasonably necessary or desirable to
relet the Premises. Any rent received shall be applied against Tenant's
monetary obligations hereunder, but Landlord shall not be responsible or
liable for any failure to collect any rent due upon such reletting.
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In the event of any such termination or repossession, Tenant shall be
liable to Landlord as follows:
(i) for all reasonable attorneys' fees and expenses incurred by
Landlord in connection with exercising any remedy hereunder;
(ii) for the unpaid installments of Rent, additional rent or other
unpaid sums that were due prior to such termination or
reentry, including without limitation, interest and late
payment fees, which sums shall be payable immediately;
(iii) for the installments of Rent, additional rent, and other sums
falling due pursuant to the provisions of this Lease for the
period after reentry, including without limitation, late
payment charges and interest, which sums shall be payable
immediately;
(iv) for all reasonable expenses incurred in releasing the
Premises, including leasing commissions, reasonable attorneys'
fees, and costs of alteration or repairs, which shall be
payable by Tenant as they are incurred by Landlord; and
(v) while the Premises are subject to any new lease or leases made
pursuant to this Section, for the amount by which the monthly
installments of rent payable under such new lease or leases is
less than the monthly installment for all charges payable
pursuant to this Lease, which deficiencies shall be payable
monthly.
C. Additional Remedies, Waivers, Miscellaneous.
(1) The rights and remedies of Landlord set forth herein shall be
in addition to any other right and remedy now and hereafter
provided by law. All rights and remedies shall be cumulative
and not exclusive of each other. Landlord may exercise its
rights and remedies at any times, in any order, to any extent,
and as often as Landlord deems advisable without regard to
whether the exercise of one right or remedy precedes, concurs
with or succeeds the exercise of another.
(2) A single or partial exercise of a right or remedy shall not
preclude a further exercise thereof, or the exercise of
another right or remedy from time to time, and shall not be
construed to relieve Tenant of any of its liabilities and
obligations under this Lease, which shall survive any such
election.
(3) No delay or omission by Landlord in exercising a right or
remedy shall exhaust or impair the same or constitute a waiver
of, or acquiescence to, a Default.
(4) No waiver of Default shall extend to or affect any other
Default or impair any right or remedy with respect thereto.
(5) No action or inaction by Landlord shall constitute a waiver of
Default.
(6) No waiver of a Default shall be effective unless it is in
writing and signed by Landlord.
D. Default by Landlord. If Landlord fails to timely perform any of its
obligations under this Lease, which failure continues for a period of
more than fifteen (15) days after receipt of written notice from Tenant
specifying such failure, or if such failure is of a nature that it
cannot be cured within said fifteen (15) day period and continues
beyond the time reasonably necessary to cure (and Landlord has not
commenced cure within the initial fifteen (15) day cure period and
thereafter diligently pursued cure to completion), then Landlord shall
be in default under this Lease and
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Tenant, subject to the terms of SECTION 23 of this Lease, shall have
the right to cure such default for and on behalf of Landlord and
collect the reasonable costs of cure from Landlord, and if Landlord
does not pay any such reasonable costs of cure incurred by Tenant
within thirty (30) days after receipt of written demand for payment
(together with backup reasonably required by Landlord substantiating
such costs incurred), then Tenant may offset such past due amounts
against the next installments of Base Rent coming due hereunder.
Notwithstanding anything to the contrary contained in this Lease,
Tenant shall not deduct more than fifty percent (50%) of the Base Rent
from any monthly installment of Base Rent if there are sufficient
months remaining in the term of this Lease within which to fully
recover the amount owed by Landlord (the "Maximum Offset Amount").
SECTION 19. NOTICES. All Rent and other payments required to be made by Tenant
shall be payable to Landlord at the address set forth in SECTION 1.H. of this
Lease, or such other address designated by Landlord by written notice to Tenant.
All payments required to be made by Landlord to Tenant shall be payable at the
address set forth in SECTION 1.H., or such other address within the United
States as designated by Tenant by written notice to Landlord. Any notice or
document required or permitted to be delivered by the terms of this Lease shall
be deemed to be delivered (whether or not actually received) when (i) deposited
in the United States Mail, postage prepaid, certified mail, return receipt
requested, or (ii) deposited with a reputable national commercial courier for
overnight delivery (e.g. Federal Express or U.P.S.), addressed to the parties at
the respective addresses set forth in SECTION 1.I. of this Lease, or such other
address as may be designated by written notice to the other party.
SECTION 20. LANDLORD ASSIGNMENT. Landlord shall have the right to sell, convey,
transfer, mortgage, or assign, in whole or in part, for collateral purposes or
otherwise, its rights and obligations under this Lease and in all or part of the
Premises and the Project. In the event of any sale, conveyance, transfer or
assignment made other than for collateral purposes, this Lease shall remain in
full force and effect, provided, however, that (i) Landlord shall be released
from any and all liabilities under this Lease first arising after the date of
such sale, conveyance, assignment or transfer, so long as the transferee assumes
in writing Landlord's obligations under this Lease first arising after the date
of transfer, and (ii) upon receipt of written notice from Landlord, Tenant shall
immediately and automatically attorn to the transferee, so long as the
transferee assumes in writing Landlord's obligations under this Lease first
arising after the date of transfer.
SECTION 21. SUBORDINATION AND ATTORNMENT. This Lease is subject and subordinate
to (i) the lien of any Mortgage which may now or hereafter encumber all or part
of the Project, and (ii) all existing recorded restrictions, covenants,
easements and agreements with respect to the Project, provided, however, that so
long as this Lease is in full force and effect and Tenant is not in default
beyond any applicable cure period hereunder, Tenant's possession of the Premises
shall not be disturbed. In order to confirm such subordination (and/or any other
terms set forth in this Section), Tenant shall, within ten (10) days after
written request from Landlord, execute and deliver to Landlord or any Mortgage
holder, any certification, instrument or other document reasonably required by
Landlord or such Mortgage holder, in form and content as reasonably required by
Landlord or such Mortgage holder, provided such certification, investment, or
document provides that Tenant's rights under this Lease will not be disturbed as
long as Tenant is not in default hereunder beyond any applicable cure period.
Tenant acknowledges and agrees that its failure to deliver any such statement in
a timely manner is a Default under this Lease. Notwithstanding anything
contained herein to the contrary, if the holder of any Mortgage elects to have
this Lease be prior to its lien, Tenant agrees that upon receipt of notice of
same from Landlord or such Mortgage holder, this Lease will be prior to such
lien.
If the interests of Landlord under this Lease shall be transferred by reason of
foreclosure, deed in lieu of foreclosure or other proceedings for enforcement of
any Mortgage to any third party transferee (including without limitation the
holder of any such Mortgage) (sometimes called the "New Owner"), then (i) Tenant
waives the provisions of any statute or rule of law, now or hereafter in effect,
which may give or purport to
39
give Tenant any right to terminate or otherwise adversely affect this Lease or
the obligations of Tenant hereunder, (ii) Tenant shall be bound to the New Owner
under the terms, covenants and conditions of this Lease for the balance of the
term remaining, including any extensions or renewals, with the same force and
effect as if the New Owner were Landlord under this Lease, (iii) Tenant shall
attorn to the New Owner as its Landlord, and (iv) so long as this Lease is in
full force and effect and Tenant is not in default beyond any applicable cure
period hereunder at the time of transfer to New Owner, this Lease shall remain
in full force and effect and the New Owner shall not disturb Tenant's possession
of the Premises. Notwithstanding anything in this Lease to the contrary, neither
the holder of any Mortgage, its successors or assigns (whether or not it
acquires the interest of Landlord under this Lease by foreclosure, deed in lieu
of foreclosure or other proceedings to enforce a Mortgage) or any New Owner
shall be liable for any act, omission and/or breach of the Lease by Landlord, or
bound by (a) any offsets or defenses which Tenant might have against Landlord,
(b) any prepayment by Tenant of more than one (1) month's installment of Rent,
(c) any amendment or modification of this Lease made subsequent to the granting
of the Mortgage by Landlord, (d) the application of insurance or condemnation
proceeds or the restoration of the Premises by Landlord in the event of a
casualty loss thereto or a taking thereof, (e) the commencement or completion of
any construction or restoration, or (f) restrictions on the use of other
properties owned by Landlord for purposes which compete with Tenant.
SECTION 22. ESTOPPEL CERTIFICATES. Tenant agrees to furnish, from time to time,
within fifteen (15) days after receipt of request from Landlord, a written
statement certifying, to the extent applicable, the following: (i) Tenant is in
possession of the Premises; (ii) the Lease is in full force and effect and there
have been no amendments or modifications, or if there have been amendments or
modifications, stating the amendments or modifications; (iii) the dates through
which the Rent and other charges hereunder have been paid by Tenant; (iv) Tenant
claims no present charge, lien, or claim or offset against Rent or, if Tenant
does, the nature and amount of such charge, lien, or claim of offset against
Rent; (v) the Rent is not and will not be prepaid for more than one month in
advance; (vi) to Tenant's knowledge, there is no existing default by reason of
some act or omission by Landlord; and (vii) such other matters as may be
reasonably required by Landlord or the Mortgage holder. Tenant agrees that any
such statement may be relied upon by any present owner or prospective purchaser
of the Project and any present or prospective Mortgage holder or assignee of
such Mortgage holder. Tenant acknowledges and agrees that its failure to deliver
any such statement in a timely manner is a Default under this Lease.
SECTION 23. LANDLORD'S LIABILITY. If Landlord shall be in default under this
Lease and, if as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
right, title and interest of Landlord in the Project as the same may then be
encumbered and neither Landlord nor any person or entity comprising Landlord
shall be liable for any deficiency. In no event shall Tenant have the right to
levy execution against any property of Landlord nor any person or entity
comprising Landlord other than its interest in the Project as herein expressly
provided.
SECTION 24. SECURITY DEPOSIT. Intentionally omitted.
SECTION 25. RELOCATION OPTION. Intentionally omitted.
SECTION 26. BROKERAGE. Landlord and Tenant each represents and warrants to the
other that there is no obligation to pay any brokerage fee, commission, finder's
fee or other similar charge in connection with this Lease. Each party covenants
that it will defend, indemnify and hold harmless the other party from and
against any loss or liability by reason of brokerage or similar services alleged
to have been rendered to, at the instance of, or agreed upon by said
indemnifying party. Notwithstanding anything herein to the contrary, Landlord
and Tenant agree that there shall be no brokerage fee or commission due on
expansions, options or renewals by Tenant.
40
SECTION 27. MISCELLANEOUS.
A. Limitation of Warranties. LANDLORD AND TENANT EXPRESSLY AGREE THAT EXCEPT
AS OTHERWISE SET FORTH IN THIS LEASE, THERE ARE AND SHALL BE NO IMPLIED
WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO
WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE.
B. Landlord's Management Agent. Landlord may appoint an agent to act as the
manager and operator of the Project for Landlord and is authorized to
accept service of process and receive or give receipts for notices and
demands on behalf of Landlord. Landlord reserves the right to change the
identity and status of its duly authorized agent upon written notice to
Tenant.
C. Tenant's Authority. Tenant does hereby represent and warrant that (i)
Tenant is a duly organized and validly existing corporation under the laws
of the State of Minnesota, (ii) Tenant is qualified to do business in the
state in which the Premises are located, (iii) the corporation has full
right and authority to enter into this Lease, and (iv) each person signing
on behalf of the corporation is authorized to do so.
D. Landlord's Authority. Landlord does hereby represent and warrant that (i)
Landlord is a duly organized and validly existing limited liability company
under the laws of the State of Minnesota, (ii) Landlord is qualified to do
business in Minnesota, (iii) the company has full right and authority to
enter into this Lease, and (iv) each person signing on behalf of the
company is authorized to do so.
E. Successors and Assigns. This Lease shall be binding upon and inure to the
benefit of Landlord and its heirs, personal representatives, successors and
assigns, and Tenant and its heirs, personal representatives and permitted
successors and assigns.
F. Severability. If any provision of this Lease or the application thereof to
any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Lease and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
G. Counterparts. This Lease may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original,
but together shall constitute one and the same instrument.
H. Force Majeure. The time within which either of the parties hereto shall be
required to perform any covenant or obligation in this Lease shall be
extended, without liability to the other party, if the performance or
non-performance of the covenant or obligation is delayed, caused or
prevented by an act of Force Majeure or by the other party, provided,
however, that the party entitled to such extension gives reasonable notice
to the other party of the Force Majeure occurrence causing such delay or
non-performance. For purposes of this Lease, "Force Majeure" shall mean any
of the following occurrences: act of God; fire; earthquake; flood;
explosion; actions or the elements of war; invasion; insurrection; riot;
mob violence; sabotage; inability to procure equipment, facilities,
materials or supplies in the open market; failure of power; failure of
transportation; strikes; lockouts; actions of labor unions; condemnation;
requisition; laws; orders of governments or civil or military authorities;
or any other cause, whether similar or dissimilar to the foregoing, not
within the reasonable control of Landlord or Tenant, as the case may be.
41
I. Submission of Lease. Submission of this Lease to Tenant for signature does
not constitute a reservation of space or an option to lease. This Lease is
not effective until execution by and delivery to both Landlord and Tenant.
J. Interest and Attorney's Fees. Without limiting and in addition to any other
remedy of Landlord hereunder, Tenant agrees to pay Landlord (i) accrued
interest on any sum not timely paid to Landlord when due at the rate of the
lesser of twelve percent (12%) per annum or the highest rate permitted by
law, (ii) Landlord's costs of collection of any past due sums owing by
Tenant, including without limitation court costs and reasonable attorney's
fees and expenses, whether suit is actually filed or not, and (iii) any
late charges set forth in SECTION 5 of this Lease.
K. Headings. The section headings appearing in this Lease are inserted only as
a matter of convenience and in no way define, limit, construe or describe
the scope or intent of any Section.
L. Amendment. This Lease may not be altered, waived, amended, or extended
except by an instrument in writing signed by Landlord and Tenant.
M. Entire Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter set forth herein, and supersedes
and replaces all other agreements or understandings of the parties, whether
oral or written.
N. Construction. THE PARTIES ACKNOWLEDGE AND AGREE THAT THEY AND THEIR
RESPECTIVE COUNSEL HAVE REVIEWED AND REVISED, OR HAVE HAD THE OPPORTUNITY
TO REVIEW AND REVISE, THIS AGREEMENT AND THAT THE NORMAL RULE OF
CONSTRUCTION TO THE EFFECT THAT AMBIGUITIES ARE TO BE RESOLVED AGAINST THE
DRAFTING PARTY SHALL NOT BE EMPLOYED IN THE INTERPRETATION OF THIS LEASE OR
ANY EXHIBITS, ADDENDUMS OR AMENDMENTS HERETO.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective the
day and year first above written.
LANDLORD TENANT
RED CIRCLE DRIVE, LLC LECTEC CORPORATION
BY: BY:
------------------------------- --------------------------------
Print Name Print Name
---------------------------- -------------------------
Print Title: Print Title:
-------------------------- -----------------------
42
EXHIBIT A TO LEASE
PLAN OF PREMISES
43
EXHIBIT E (TO PURCHASE AGREEMENT)
LIMITED WARRANTY DEED
STATE DEED TAX DUE HEREON: $___________
Date: ______________, 2003
FOR VALUABLE CONSIDERATION, LECTEC CORPORATION, a Minnesota corporation,
Grantor, hereby conveys and quitclaims to RED CIRCLE, LLC, a Minnesota limited
liability company, Grantee, real property in Hennepin County, Minnesota,
described as follows:
▇▇▇ ▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
together with all hereditaments and appurtenances.
This Deed conveys after-acquired title. Grantor warrants that Grantor has not
done or suffered anything to encumber the property, EXCEPT:
Check box if applicable:
[ ] The Seller certifies the seller does not know of any ▇▇▇▇▇ on the
described real property.
[ ] A well disclosure certificate accompanies this document.
[ ] I am familiar with the property described in this instrument and I
certify that the status and number of ▇▇▇▇▇ on
the described real property have not changed since the last previously
filed well disclosure certificate.
LECTEC CORPORATION
By:
----------------------------------------
Its:
---------------------------------------
Affix Deed Tax Stamp Here
STATE OF MINNESOTA )
By:
------------------------------- )
Its:
------------------------------ )
COUNTY OF
---------------- )
44
This instrument was acknowledged before me on _______________, 200__, by
,_______________________________________, the ___________________ of LECTEC
CORPORATION, a Minnesota corporation, on behalf of the corporation.
NOTARIAL STAMP OR SEAL (OR OTHER TITLE OR RANK)
--------------------------------------------
SIGNATURE OF NOTARY PUBLIC OR OTHER OFFICIAL
Check here if part or all of the land is
Registered (Torrens) [ ]
Tax Statements for the real property
described in this instrument should be sent
to:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, LLC
-------------------------
-------------------------
-------------------------
THIS INSTRUMENT WAS DRAFTED BY:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP (JLT)
Suite 1500
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
45
EXHIBIT F TO PURCHASE AGREEMENT
THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO (1) REGISTRATION OR
(2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
To Purchase Shares of Common Stock of
LECTEC CORPORATION
February 25, 2003
LecTec Corporation, a Minnesota corporation (the "Company"), for value
received, hereby certifies that ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, LLC, a Minnesota limited
liability company, or its registered assigns (the "Holder") is entitled, subject
to the terms set forth below, upon exercise of this Warrant to purchase from the
Company 200,000 Shares of common stock, $0.01 par value, of the Company (the
"Common Stock") at $.90 per share (the "Exercise Price"). The Exercise Price is
subject to adjustments from time to time pursuant to the terms of this Warrant.
The shares issuable upon exercise of this Warrant, as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter referred to as the
"Warrant Shares."
This Warrant is further subject to the following provisions, terms and
conditions:
1. Term. The Holder may exercise this Warrant, in whole or in part, at
any time before the close of business on the date five years after the date
hereof.
2. Manner of Exercise. This Warrant may be exercised by the Holder, in
whole or in part (but not as to any fraction of a share of Common Stock), by
surrendering this Warrant, with the Exercise Form attached hereto as EXHIBIT A
filled in and duly executed by such Holder or by such Holder's duly authorized
attorney, to the Company at its principal office accompanied by payment of the
Exercise Price in the amount of the Exercise Price multiplied by the number of
shares as to which the Warrant is being exercised. The Exercise Price may be
paid in the form of a check or wire transfer of funds.
3. Effective Date of Exercise. Each exercise of this Warrant shall be
deemed effective as of the close of business on the day on which this Warrant is
surrendered to the Company as provided in Section 2 or Section 5. At such time,
the person or persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
Within 10 days after the exercise of this Warrant in full or in part, the
46
Company will, at its expense, cause to be issued in the name of and delivered to
the Holder: (i) a certificate or certificates for the number of full Warrant
Shares to which such Holder is entitled upon such exercise, and (ii) unless this
Warrant has expired, a new Warrant or Warrants (dated the date hereof and in
form identical hereto) representing the right to purchase the remaining number
of shares of Common Stock, if any, with respect to which this Warrant has not
then been exercised.
4. Adjustments. The above provisions are, however, subject to the
following:
(a) (i) If the Company shall at any time after the date of this Warrant
subdivide or combine the outstanding shares of Common Stock or declare
a dividend payable in Common Stock, then the number of shares of Common
Stock for which this Warrant may be exercised as of immediately prior
to the subdivision, combination or record date for such dividend
payable in Common Stock shall forthwith be proportionately decreased,
in the case of combination, or increased, in the case of subdivision or
dividend payable in Common Stock.
(ii) If the Company shall at any time after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the Exercise Price in
effect immediately prior to the subdivision, combination or record date
for such dividend payable in Common Stock shall forthwith be
proportionately increased, in the case of combination, or decreased, in
the case of subdivision or dividend payable in Common Stock.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or share exchange, combination, consolidation or merger of
the Company with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected in such a way that holders
of Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, share exchange, combination, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right at any time prior to the expiration of this
Warrant to receive upon exercise of this Warrant, upon the basis and upon the
terms and conditions specified in this Warrant and in lieu of the shares of the
Common Stock of the Company into which this Warrant could be exercisable or
convertible, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such stock as were
purchasable by the Holder immediately prior to such reorganization,
reclassification, share exchange, combination, consolidation, merger or sale,
and in any such case appropriate provisions shall be made with respect to the
rights and interests of Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Exercise Price and of the
number of shares purchasable upon exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company shall not
effect any such share exchange, combination, consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such share exchange, combination, consolidation
or merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed to the Holder, at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of
47
stock, securities or assets that, in accordance with the foregoing provisions,
such Holder may thereafter be entitled to receive upon exercise of this Warrant.
(c) Except for: (i) options to purchase shares of Common Stock and the
issuance of awards of Common Stock pursuant to employee, consultant and director
benefit plans adopted by the Company; (ii) shares of Common Stock issued upon
the exercise of such options granted pursuant to such plans; and (iii) the
issuance of securities upon the conversion or exercise of convertible notes,
warrants or options outstanding as of the date of issuance of this Warrant; if
and whenever the Company shall issue or sell any shares of its Common Stock for
a consideration per share less than the Exercise Price in effect immediately
prior to the time of such issue or sale of the Common Stock, then, forthwith
upon such issue or sale, the Exercise Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (x) an amount equal to
the product of (A) the then existing Exercise Price and (B) the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such issue or
sale and (2) the quotient obtained by dividing the consideration, if any,
received by the Company upon such issue or sale, by the then existing Exercise
Price immediately prior to the time of such issue or sale, by (y) an amount
equal to the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale and (2) the number of shares of Common
Stock thus issued or sold.
No adjustment of the Exercise Price, however, shall be made in an
amount less than one percent (1%) of such conversion price in effect on the date
of such adjustment, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent adjustment
which, together with any such adjustment so carried forward, shall be an amount
equal to or greater than two percent (2%) of the Exercise Price then in effect.
(d) Upon any adjustment pursuant to this Section 4, then and in each
such case, the Company shall give written notice thereof, by first class mail or
equivalent, postage prepaid, addressed to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares for which this Warrant may be
exercised, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
5. Net Exercise Rights.
(a) In addition to and without limiting the rights of the Holder with
respect to other terms of this Warrant, the Holder shall have the right (the
"Conversion Right") to convert this Warrant or any portion thereof into Warrant
Shares as provided in this Section 5 at any time or from time to time prior to
its expiration. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the Holder, without payment by the holder
of any exercise price or any cash or other consideration, that number of
Converted Warrant Shares equal to the quotient obtained by dividing the Net
Value (as hereinafter defined) of the Converted Warrant Shares by the fair
market value (as defined in Section 5(c) below) of a single Warrant Share,
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate warrant purchase price of the Converted
Warrant Shares from the aggregate fair market value of
48
the Converted Warrant Shares. Notwithstanding anything in this Section 5 to the
contrary, the Conversion Right cannot be exercised with respect to a number of
Converted Warrant Shares having a Net Value below One Hundred Dollars ($100). No
fractional shares shall be issuable upon exercise of the Conversion Right, and
if the number of shares to be issued in accordance with the foregoing formula is
other than a whole number, the Company shall pay to the holder of this Warrant
an amount in cash equal to the fair market value of the resulting fractional
share.
(b) The Conversion Right may be exercised by the holder of this Warrant
by the surrender of this Warrant at the principal office of the Company together
with a notice in the form attached hereto [FORM NOT ATTACHED], specifying that
the holder thereby intends to exercise the Conversion Right and indicating the
number of shares subject to this Warrant that are being surrendered (referred to
in Section 5(a) above as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the Company
of this Warrant together with the aforesaid written statement, or on such later
date as is specified therein (the "Conversion Date"), but not later than the
expiration date of this Warrant. Certificates for the Converted Warrant Shares
issuable upon exercise of the Conversion Right, together with a check in payment
of any fractional share and, in the case of a partial exercise, a new warrant
evidencing the shares remaining subject to this Warrant, shall be issued as of
the Conversion Date and shall be delivered to the holder of this Warrant within
fifteen (15) days following the Conversion Date.
(c) For purposes of this Section 5, the "fair market value" of a
Warrant Share as of a particular date shall be its "Market Price," calculated as
of the Conversion Date, as follows:
(i) if the capital stock into which the Warrants are
exercisable is traded on an exchange or is quoted on the Nasdaq
National Market, then the average closing or last sale prices,
respectively, reported for the ten (10) business days immediately
preceding the Conversion Date,
(ii) if the capital stock into which the Warrants are
exercisable is not traded on an exchange or on the Nasdaq National
Market but is traded on Nasdaq SmallCap Market or quoted on an
over-the-counter market, then the average closing bid and asked prices
reported for the ten (10) business days immediately preceding the
Conversion Date; or
(iii) if the capital stock into which the Warrants are
exercisable is not traded on an exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market or quoted on an over-the-counter market,
then the value as determined in good faith by the Board of Directors of
the Company.
6. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company unless and until
exercised or converted pursuant to the provisions hereof.
7. Exercise or Transfer of Warrant or Resale of Common Stock. The
Holder, by acceptance hereof, agrees to give written notice to the Company
before exercising this Warrant, or transferring this Warrant, in whole or in
part, or transferring any shares of Common Stock issued upon the exercise
hereof, of such Holder's intention to do so, describing briefly the manner of
any proposed transfer. Such notice shall include an opinion of counsel
reasonably
49
satisfactory to the Company that (i) the proposed exercise or transfer may be
effected without registration or qualification under the Securities Act of 1933,
as amended (the "Securities Act"), and any applicable state securities or blue
sky laws, or (ii) the proposed exercise or transfer has been registered under
such laws. Upon delivering such notice, such Holder shall be entitled to
exercise or transfer this Warrant or such Warrant Shares, all in accordance with
the terms of the notice delivered by such Holder to the Company; provided, that
an appropriate legend may be endorsed on the certificates for such shares
respecting restrictions upon transfer thereof necessary or advisable in the
opinion of counsel to the Company to prevent further transfer that would be in
violation of the Securities Act and applicable state securities or blue sky
laws.
If in the opinion of counsel to the Company or other counsel reasonably
acceptable to the Company the proposed exercise, transfer or disposition of this
Warrant or the Warrant Shares described in the written notice given pursuant to
this Section 7 may not be effected without registration of this Warrant or the
Warrant Shares, the Company shall promptly give written notice thereof to the
Holder within 10 days after the Company receives such notice, and such holder
will limit its activities in respect to such as, in the opinion of such counsel,
is permitted by law.
Further, notwithstanding anything above to the contrary, the Holder may
not transfer this Warrant in warrant form except to a subsidiary of the Holder.
8. Covenants of the Company. The Company covenants and agrees that all
shares that may be issued upon exercise of this Warrant will, upon issuance, be
duly authorized and issued, fully paid, nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of issuance upon exercise hereof, a sufficient number
of shares of its Common Stock to provide for the exercise of this Warrant.
9. Certain Notices. The Holder shall be entitled to receive from the
Company as promptly as possible after declaration thereof and at least 10 days
prior to the record date for determination of shareholders entitled thereto or
to vote thereon (or, if no record date is set, prior to the event), written
notice of any event that could require an adjustment pursuant to Section 4
hereof or of the dissolution or liquidation of the Company. All notices under
this Warrant shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to the Holder, to:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, LLC
---------------------
---------------------
50
if to the Company to:
LecTec Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Any party may change the above-specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed.
All notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).
10. Registration Rights.
(a) Within sixty (60) days of the issuance of at least a majority of
Warrant Shares, the Company shall use its reasonable best efforts to prepare and
file with the Securities and Exchange Commission a registration statement
pursuant to the Securities Act covering the resale of the Warrant Shares. The
Company shall bear all expenses in connection with such registration, including,
but not limited to, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, marketing expenses, expenses relating to any amendments
of or supplements to any Registration Statement or prospectus and the expense of
any special audit incident to or required by any such registration.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to effect any such registration pursuant to this Section 10 if (i) Form S-3
under the Securities Act is not available to the Company for such registration,
or (ii) the Company shall furnish to the Holder a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Company it would be detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, in which event the
Company shall have the right to defer such filing for up to 180 days after
delivery of such certificate.
(c) In connection with the filing of a registration statement, the
Company shall:
(i) Use its reasonable best efforts to cause the registration
statement to remain effective until the date on which all Warrant
Shares covered by the registration statement (1) have been registered
under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of
pursuant to such effective registration statement, or (2) are eligible
to be sold or distributed pursuant to Rule 144.
(ii) As soon as practicable, prepare and file with the
Securities and Exchange Commission such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement, as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
51
(iii) As soon as practicable, furnish to the Investors such
number of copies of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such
other documents as it may reasonably request in order to facilitate the
disposition of Warrant Shares included in such registration statement.
(iv) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holder, provided that the Company shall not
be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions in which it is not
otherwise required to so qualify or consent.
(v) Notify the Holder at any time when a prospectus relating
to such offering is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(vi) Notify the Holder (1) when the registration statement,
any pre-effective amendment, the prospectus, any prospectus supplement
or post effective amendment to the registration statement has been
filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective; (2) of
any written request by the Securities and Exchange Commission for
amendment or supplements to the registration statement or prospectus
therein; (3) of the notification to the Company by the Securities and
Exchange Commission of its initiation of any stop order suspending the
effectiveness of the Registrations Statement; and (4) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any Warrant Shares for sale under the applicable
securities or blue sky laws of any jurisdiction.
(d) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 10 that the Holder shall furnish to
the Company such information regarding itself, the Warrant Shares and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Warrant Shares and to execute such
documents in connection with such registration as the Company may reasonably
request.
(e) All rights under this Section 10 shall terminate on the date on
which all Warrant Shares issuable under this Warrant either (i) have been
registered under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of pursuant to
such effective registration statement, or (ii) they are eligible to be sold or
distributed pursuant to Rule 144.
11. Miscellaneous.
(a) No amendment, modification or waiver of any provision of this
Warrant shall be effective unless the same shall be in writing and signed by the
holder hereof.
(b) This Warrant shall be governed by and construed in accordance with
the laws of the State of Minnesota.
52
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
authorized officer and dated as of the date stated above.
LECTEC CORPORATION
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Its: President
-------------------------------------
53
EXHIBIT A
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered Holder in
Order to Exercise the Warrant
The undersigned hereby irrevocably elects to exercise the attached Warrant
to purchase, for cash pursuant to Section 2 thereof, 200,000 shares of Common
Stock issuable upon the exercise of such Warrant. The undersigned requests that
certificates for such shares be issued in the name of the registered Holder. If
this Warrant is not fully exercised, the undersigned requests that a new Warrant
to purchase the balance of shares remaining purchasable hereunder be issued in
the name of the registered Holder.
Date: ___________, 20__
-------------------------------------------------
[name of registered Holder]
-------------------------------------------------
[signature]
-------------------------------------------------
[title]
-------------------------------------------------
[street address]
-------------------------------------------------
[city, state, zip]
-------------------------------------------------
[tax identification number]
54
EXHIBIT B
NOTICE OF NET EXERCISE OF WARRANT: To Be Executed by the Registered Holder in
Order to Exercise the Warrant PURSUANT TO
SECTION 5)
The undersigned hereby irrevocably elects the net exercise of the attached
Warrant for, and to purchase thereunder, 200,000 Converted Warrant Shares, as
provided in Section 5 therein.
The undersigned requests that certificates for such shares be issued in the
name of the registered Holder. If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of the registered Holder.
Date: ___________, 20__
-------------------------------------------------
[name of registered Holder]
-------------------------------------------------
[signature]
-------------------------------------------------
[title]
-------------------------------------------------
[street address]
-------------------------------------------------
[city, state, zip]
-------------------------------------------------
[tax identification number]
55