Exhibit 10.6

 

LEASE AGREEMENT

 

This LEASE AGREEMENT (“Lease”) is made and entered into this              day of
June, 2005 by and between CSM INVESTORS II, INC., a Minnesota corporation
(“Landlord”) and SECURE COMPUTING CORPORATION, a Delaware 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): Approximately 94,400 total square feet of rentable area
(comprised of 74,400 square feet of warehouse space, 20,000 square feet of
office space) within the Building (defined herein) containing approximately
106,650 square feet of rentable area, located in the Project (defined herein)
containing approximately 106,650 total square feet of rentable area and commonly
known as the MIDWAY CORPORATE BUSINESS PARK – PHASE I. The rentable area of the
Premises, Building and Project shall be subject to adjustment pursuant to the
terms of this Lease.

 

B. Initial Lease Term; Options to Extend (Section 4): One hundred twenty (120)
full calendar months, commencing on the Commencement Date (established pursuant
to Section 4.A. herein) and expiring on the Expiration Date (established
pursuant to Section 4.A. herein). The Lease Term shall be subject to adjustment
pursuant to the terms of this Lease. Tenant shall also have the option to extend
the term of this Lease pursuant to Section 4.B. herein.

 

C. Base Rent (Section 5):

 

Initial Term:

 

Months

--------------------------------------------------------------------------------

   Monthly Base Rent

--------------------------------------------------------------------------------

   Per Rentable Sq. Ft.

--------------------------------------------------------------------------------

1-12

   $ 89,286.67    $ 11.35

13-24

   $ 90,230.67    $ 11.47

25-36

   $ 91,174.67    $ 11.59

37-48

   $ 92,118.67    $ 11.71

49-60

   $ 93,062.67    $ 11.83

61-72

   $ 94,006.67    $ 11.95

73-84

   $ 94,950.67    $ 12.07

85-96

   $ 95,894.67    $ 12.19

97-108

   $ 96,838.67    $ 12.31

109-120

   $ 97,782.67    $ 12.43

 

Option Terms:

 

Months

--------------------------------------------------------------------------------

   Monthly Base Rent

--------------------------------------------------------------------------------

     Per Rentable Sq. Ft.

--------------------------------------------------------------------------------

121-180

   95% of Market      95% of Market

181-240

   95% of Market      95% of Market

 

Base Rent shall be subject to adjustment pursuant to the terms of this Lease.

--------------------------------------------------------------------------------

D. Proportionate Share (Section 7): Eighty-eight and 51/100 percent (88.51%)
subject to adjustment pursuant to the terms of this Lease.

 

E. Permitted Use (Section 10): General office, warehouse, distribution and
computer laboratory.

 

F. Security Deposit (Section 24): None.

 

G. Address of Premises: 2340 Energy Park Drive, St. Paul, MN 55108

 

H. Addresses for Invoices and Payments:

 

If to Landlord:

   If to Tenant:

If By Electronic Transfer of Funds:

   SECURE COMPUTING CORPORATION      2340 Energy Park Drive (to Landlord’s bank
account designated by written notice to Tenant from time to time, please call
Landlord’s Cash Management Department at (612) 305-7000 for bank account
information)    St. Paul, MN 55108 If By Check:     

CSM INVESTORS II, INC.

   SECURE COMPUTING CORPORATION

c/o CSM INVESTORS, INC.

   2340 Energy Park Drive

SDS 12-1243

   St. Paul, MN 55108

P.O. BOX 86

   Attn: Accounting Department

MINNEAPOLIS, MN 55486-1243

    

 

I. Addresses for Legal Notices (Section 19):

 

If to Landlord:

   If to Tenant:

CSM INVESTORS II, INC.

   SECURE COMPUTING CORPORATION

c/o CSM CORPORATION

   2340 Energy Park Drive

500 WASHINGTON AVE. S., SUITE 3000

   St. Paul, MN 55108

MINNEAPOLIS, MN 55415-1151

   Attn: Mary Budge – General Counsel

Attn: V.P. Property Management

    

(with copy to:)

    

CSM CORPORATION

    

500 WASHINGTON AVE. S., SUITE 3000

    

MINNEAPOLIS, MN 55415-1151

    

Attn: General Counsel

    

 

-2-

--------------------------------------------------------------------------------

SECTION 2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, in “As-Is” condition subject to punch list and latent defect
provisions and the terms of this Lease Agreement, the premises (“Premises”)
depicted on the site plan attached hereto as EXHIBIT A. The Premises contains
approximately 94,400 total square feet of rentable area (comprised of
approximately 74,400 square feet of warehouse space, 20,000 square feet of
office space). The Premises is located within the building (“Building”) depicted
in the site plan attached hereto as EXHIBIT A containing approximately 106,650
total square feet of rentable area, inclusive of Common Building Areas. 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 commonly known
as the Midway Corporate Business Park – Phase I, is located at the street
address of 2300-2400 Energy Park Drive, St. Paul, Minnesota, and is comprised of
approximately 106,650 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.

 

Notwithstanding the above, in the event that Landlord is unable to secure
release of the Department of Transportation easement document number 440909
dated April 6, 1962 in favor of the State of Minnesota Department of
Transportation (“the Easement”) on or before August 15, 2005, then Landlord will
have the option to substitute the parking lot, driveway, landscaping, and green
space improvements depicted on the alternate site plan attached hereto as
Exhibit A-1. Landlord agrees to use all commercially reasonable efforts to
secure the release of the Easement. If landlord has not secured the release of
the Easement on or before August 15, 2005, Landlord shall continue efforts to
secure its release during the term of the Lease. If the release of the Easement
is secured, Landlord will, at Landlord’s sole cost and expense and as soon as
possible after the release of the Easement convert the driveway, parking lot,
landscaping and green spaces to reflect the site improvements reflected in
Exhibit A.

 

As soon as reasonably possible after the Commencement Date, and thereafter
should there be a change in the rentable area of the Premises, Building or
Project, Landlord will provide Tenant with a calculation of the rentable area of
the Premises, Building and Project as determined by Landlord’s architect as set
forth in the preceding paragraph. Thereafter, Landlord and Tenant shall execute
an addendum to this Lease substantially in the form attached hereto as EXHIBIT
B, confirming said determination and adjusting, to the extent applicable, (i)
the area of the Premises, Building and the Project, (ii) the Base Rent, and
(iii) Tenant’s Proportionate Share of Operating Expenses, to reflect the actual
rentable square foot area of the Premises, Building and the Project. Until such
time as said as-built measurements are available and provided that such square
footage is within 10% of the square footage set forth in the preceding
paragraph, Tenant agrees that the estimated square feet of rentable area of the
Premises, Building and the Project set forth in Section 1.A. above shall be
utilized to compute Base Rent, Tenant’s Proportionate Share of Operating
Expenses, and any other sums due hereunder based in whole or in part on the
square footage of the Premises or the Project and Landlord shall reconcile such
amounts paid if the actual square footage is different than that set forth in
Section 1.A.

 

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 the tenants of the Project are collectively referred to
herein as “Common Areas”. Tenant and its employees, invitees and customers shall
have the non-exclusive right to use, without charge, all Common Areas, in common
with Landlord and all other tenants and occupants of the Project, and their
respective employees, invitees and customers, but 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

 

-3-

--------------------------------------------------------------------------------

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 particular tenants, entrances, exits, driveways, and roads.
Notwithstanding the above, Common Building Areas in the Building shall be
limited to the building mechanical/utility room depicted on the common area
space plan attached hereto as Exhibit C. 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, utilization of the Common Areas, or Tenant’s
quiet enjoyment of the Premises.

 

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 upon the earlier
of (a) thirty (30) days after the date Landlord delivers the Premises to Tenant
with the Shell Improvements and the Tenant Improvements (both defined in Section
12.D. herein) Substantially Complete (as defined in this section) or (b) the
date Tenant opens for business in the Premises (“Commencement Date”) and
continuing through and including the last day of the one hundred twentieth
(120th) full calendar month thereafter (“Expiration Date”); provided, however,
that if the Expiration Date is other than the last day of any given calendar
month, then the Lease Term shall continue in full force and effect at the same
rent then in effect through and including the last day of the calendar month in
which the Expiration Date occurs. The initial one hundred twenty (120) months of
this Lease shall be referred to herein as the “Initial Term”. Notwithstanding
the foregoing, in no event shall the Commencement Date be deemed to be a date
prior to March 1, 2006. The anticipated delivery date of the Premises by
Landlord to Tenant is February 1, 2006. Notwithstanding anything in this Lease
to the contrary, if Landlord cannot deliver possession of the Premises to the
Tenant on February 1, 2006 with the Shell Improvements and the Tenant
Improvements Substantially Complete, this Lease shall not be void or voidable,
nor shall Landlord be liable for any loss or damage resulting therefrom except
as hereinafter provided, however, (i) all Rent shall be abated until thirty (30)
days after Landlord delivers possession of the Premises to Tenant with the Shell
Improvements and the Tenant Improvements Substantially Complete, and (ii) the
Commencement Date shall be thirty (30) days after the actual date Landlord
delivers possession of the Premises to Tenant with the Shell Improvements and
the Tenant Improvements Substantially Complete and the Expiration Date shall be
the last day of the one hundred twentieth (120th) full calendar month
thereafter. On or before July 25, 2005, Landlord will provide written notice to
Tenant indicating one of the following delivery options for completing the Shell
Improvements and Tenant Improvements set forth in this Lease: (i) Landlord will
deliver the Premises to Tenant with the Shell Improvements and the Tenant
Improvements Substantially Complete on or before February 1, 2006, (ii) Landlord
will deliver the Premises to Tenant with the Shell Improvements and the Tenant
Improvements Substantially Complete on or before June 1, 2006, (iii) Landlord
will deliver the Premises to Tenant with the Shell Improvements and the Tenant
Improvements Substantially Complete on or before September 1, 2006 or (iv)
Landlord will be unable to deliver the Premises to Tenant. The delivery options
set forth in the preceding sentence shall be subject to delays caused by Force
Majeure (as defined in Section 35.G. of this Lease). If Landlord’s notice
indicates that Landlord will deliver the Premises to Tenant on or before
February 1, 2006, and Landlord does not deliver the Premises to Tenant by such
date, then Landlord will pay the out-of-pocket costs payable to Tenant’s
existing landlord under the holdover section of those two (2) certain Leases
both dated February 9, 1996 (the “Existing Leases”) between Secure

 

-4-

--------------------------------------------------------------------------------

Computing Corporation and Everest Investments IV (the “Holdover Costs”) for the
period commencing February 1, 2006 and ending on the date Landlord delivers the
Premises to Tenant. If Landlord’s notice indicates that Landlord will deliver
the Premises to Tenant on or before June 1, 2006, then Landlord will pay to
Tenant on a monthly basis for the period commencing February 1, 2006 to May 31,
2006 an amount equal to the lesser of: (i) the amount that the actual monthly
Holdover Costs exceed Tenant’s monthly gross rent payment last due under the
Existing Leases or (ii) fifty percent (50%) of Tenant’s normal monthly gross
rent payment last due under the Existing Leases. Additionally, if Landlord does
not deliver the Premises to Tenant on or before June 1, 2006, then Landlord
shall pay Tenant’s Holdover Costs for the period commencing June 1, 2006 and
ending on the date Landlord delivers the Premises to Tenant. If Landlord’s
notice indicates that Landlord will deliver the Premises to Tenant on or before
September 1, 2006, then Landlord will pay to Tenant on a monthly basis for the
period commencing February 1, 2006 to August 31, 2006 an amount equal to the
lesser of: (i) the amount that the actual monthly Holdover Costs exceed Tenant’s
monthly gross rent payment last due under the Existing Leases or (ii) fifty
percent (50%) of Tenant’s normal monthly gross rent payment last due under the
Existing Leases. Additionally, if Landlord does not deliver the Premises to
Tenant on or before September 1, 2006, then Landlord shall pay Tenant’s Holdover
Costs for the period commencing September 1, 2006 and ending on the date
Landlord delivers the Premises to Tenant. If Landlord’s notice indicates that
Landlord will be unable to deliver the Premises to Tenant, then this Lease shall
be null and void and of no further force and effect, except that Landlord shall
pay to Tenant on a monthly basis for the period commencing February 1, 2006 to
August 31, 2006 an amount equal to the lesser of: (i) the amount that the actual
monthly Holdover Costs exceed Tenant’s monthly gross rent payment last due under
the Existing Leases or (ii) fifty percent (50%) of Tenant’s normal monthly gross
rent payment last due under the Existing Leases. Upon such delivery, Landlord
and Tenant shall execute an addendum to this Lease confirming the Commencement
Date and Expiration Date. Notwithstanding anything in this Lease to the
contrary, in the event that Landlord fails to deliver the Premises to Tenant
with all of the Shell Improvements and Tenant Improvements Substantially
Complete by October 31, 2006 for any reason (including, without limitation, for
reasons set forth in Section 35.G. herein), Tenant shall have the right to
terminate this Lease, at any time thereafter prior to the Shell Improvements and
the Tenant Improvements being Substantially Complete, by delivering written
notice to Landlord no later than the date the Shell Improvements and the Tenant
Improvements are Substantially Complete.

 

For purposes of this Lease, the term “Substantially Complete” shall mean that
all work included within the scope of the Shell Improvements (including parking
lot striping of the first lift of asphalt pavement) and the Tenant Improvements
shall be completed by Landlord, excepting Punchlist Items (defined in Section
12.D. herein). Notwithstanding the foregoing, the final lift of asphalt pavement
and landscaping for the Project (collectively, the “Spring Site Work”) shall not
be included within the definition of Substantially Complete. Spring Site Work
shall be completed as soon as reasonably possible in the spring of 2006 as
weather permits and shall be done in a manner so as to minimize interference
with Tenant’s use and occupancy of the Premises. If Landlord does not complete
the Spring Site Work by June 30, 2006, subject to Force Majeure (as defined in
Section 35.G. of this Lease) and delays by Tenant, then Tenant shall receive a
Rent credit in the amount of $100.00 per day for each day after June 30, 2006
until Landlord does in fact complete the Spring Site Work.

 

B. Option Terms. Tenant shall have the option (singularly, “Option” or together
“Options”) to extend the term of this Lease for up to two (2) additional
consecutive sixty (60) month terms under the same terms and conditions contained
herein, provided however, that upon Tenant’s exercise of

 

-5-

--------------------------------------------------------------------------------

each such Option, the Base Rent shall be adjusted in each instance to equal 95%
of the then current market rate for similar space in the Minneapolis/St. Paul
“Midway” area (“Market Area”) determined in accordance with Section 4.C. below.
Tenant may exercise each such Option by delivering written notice to Landlord,
stating its intent to exercise the Option, not less than two hundred ten (210)
days prior to the expiration of the initial Lease Term or preceding Option Term,
as the case may be. In the event that Tenant fails to deliver timely notice of
its intent to exercise any such Option, Tenant’s right to the Option and any
subsequent Option shall be deemed null and void. Conditions of the exercise of
each 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. It shall be a
further condition of the exercise of Tenant’s second Option that Tenant has
exercised and faithfully completed its first Option Term.

 

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 Option Term, Landlord will submit to Tenant Landlord’s proposed market rate
determination (“Landlord’s Proposed Market Rate”). Considerations for
determining the Landlord’s Proposed Market Rate shall include, but not be
limited to, term, condition of the space, required improvements, market
concessions and other factors customarily considered in determining market
rates.

 

  (2) If Tenant does not notify Landlord within twenty (20) 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.

 

  (3) If the market rate is not mutually agreed upon within the Negotiation
Period then Tenant shall have the option to (i) elect to determine the market
rate under the conditions set forth below or (ii) within ten (10) days after the
expiration of the Negotiation Period rescind its Option to extend with no
further obligation with written notice to Landlord and the Option notice shall
be null and void. 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.

 

-6-

--------------------------------------------------------------------------------

  (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
Option 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, except as otherwise permitted in this
Lease, as base rent during the term of this Lease (“Base Rent”), the sum of
money set forth in Section 1.C. of this Lease, which has been computed based
upon the total rentable area of the Premises. If the amount of rentable area in
the Premises changes from time to time, then Base Rent shall be equitably
adjusted by Landlord based on the then current rentable area of the Premises as
determined by Landlord pursuant to Section 2 of this Lease. The initial monthly
installment of Base Rent shall be due and payable on or before the Commencement
Date and all succeeding installments of Base Rent shall be due and payable on or
before the first day of each succeeding calendar month during the term of this
Lease; provided, however, that if the Commencement Date is other than the first
day of a calendar month, then the monthly Rent for such partial month shall be
prorated based on the number of days in such partial month and paid in advance.
Tenant shall also pay to Landlord, as additional rent, all other sums due under
this Lease and the word “Rent”, as used in this Lease, shall mean the Base Rent
and the additional rent payable hereunder. All Rent shall be payable to

 

-7-

--------------------------------------------------------------------------------

Landlord by electronic transfer of funds at the bank account designated by
Landlord by written notice to Tenant from time to time. Notwithstanding the
foregoing, if Tenant elects not to pay by electronic transfer of funds, then
upon prior written notice to Landlord, Tenant may pay Rent by check to 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 Landlord has not received Rent or
other sums due under this Lease by the end of the fifth (5th) day after Tenant’s
receipt of Landlord’s notice of nonpayment, and Landlord has given Tenant such
notice on two (2) previous occasions in the same calendar year of the Lease
Term, or any extension thereof, Tenant shall be subject to the interest charge
outlined in Section 35.I. and a late payment charge of $500.00 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 unless otherwise agreed by the parties in writing, 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 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. Landlord shall provide monthly invoices to
Tenant depicting rents due and payable, however, such monthly invoices provided
to Tenant by Landlord are provided 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 Base Rent for such holdover period, an amount
equal to one and one-half (1.5) times the rate of Base 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, 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 Base Rent for the holdover period, an amount equal to the rate of
Base 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 Base 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 unless otherwise provided in the
Lease, as additional rent during the Lease

 

-8-

--------------------------------------------------------------------------------

Term, Tenant’s Proportionate Share of all costs which Landlord may incur in
owning, maintaining, operating, and repairing (including replacements when
repairs are not economically prudent in Landlord’s reasonable discretion) the
Building, Common Areas and all other improvements 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 and fulfillment of its obligations under Section 12.A. herein; (b)
utility charges for Common Areas of the Project and water, sewer and any other
utility charges not separately metered to a particular tenant in the Building as
provided in Section 8 herein; (c) exterior window washing; (d) debris, snow and
ice removal; (e) parking lot sweeping, patching and sealcoating; (f)
maintenance, repair and replacement of landscaping, irrigation systems and
retaining walls; (g) management fees (not to exceed four percent (4%) of the
total gross rent for the Project); (h) wages and benefits payable to employees
of Landlord below the level of corporate property manager employed to perform
maintenance, operation, repair or replacement work for the Project but based
upon the allocation of work exclusively performed on the Project; (i) all
services, tools, equipment, and supplies used for maintaining, operating,
repairing or replacing the Project but based on the allocation of the use of
such items at the Project; (j) 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 Premises,
including without limitation the so called Minnesota “state general tax”, and
reasonable legal fees and administrative fees (except those payable to third
parties) incurred in connection with actions to reduce the same; (k) all
premiums, deductibles, retentions, commissions, service fees and reasonable
administrative fees payable to third parties 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; (l) maintenance, repair, monitoring and testing of fire
sprinkler systems, storm sewer ponds, wetlands and ground water; (m) the yearly
amortization of major non-recurring capital expenditures, costs, repairs, and
replacements (including without limitation, improvements Landlord is required to
make to the Project pursuant to this Lease, if any, to comply with applicable
laws, and installation of any device or equipment which improves the operating
efficiency of any system within the Premises or the Project) which shall be
amortized over the useful life of the improvement and at an interest rate as
reasonably determined by Landlord but not to exceed eight percent (8%), and (n)
all other expenses which would generally be regarded as operating, repair,
replacement and maintenance expenses or Common Area expenses.

 

The foregoing notwithstanding, Operating Expenses shall not include (1) costs
for any employees above the rank of building manager; (2) leasing commissions
and marketing costs related to leasing or releasing of the Project; (3) payments
of principal, interest, financing or refinancing costs on debt or amortization
payments on any mortgage or underlying ground lease encumbering the Project; (4)
Landlord’s franchise or income taxes; (5) bad debts, rent loss or reserves for
bad debts or rent loss; (6) repairing or replacing any damage caused by
condemnation; (7) costs reimbursed to Landlord from insurance proceeds or third
parties; (8) costs of capital repairs or capital replacements (except as
specifically permitted herein), capital improvements and equipment; except
those: (a) required by laws enacted on or after the date the certificate of
occupancy issued for the Tenant Improvements is issued, with the cost of any
such improvements and equipment depreciated over the useful life of the
improvement and/or equipment, or (b) installed at the Project to reduce
Operating Expenses, with the cost of any such improvements and equipment
depreciated over the useful life of the improvement and/or equipment; (9)
depreciation, and lender’s fees; (10) expenses in connection with services or
other benefits which are not offered to Tenant but which are provided to another
tenant or occupant of the Project; (11) costs incurred

 

-9-

--------------------------------------------------------------------------------

by Landlord due to the violation by Landlord or any tenant or occupant of
Project (other than Tenant) of the terms and conditions of any lease of space in
the Project; (12) tax penalties incurred as a result of Landlord’s negligence,
inability or unwillingness to make payments when due, not attributable to
Tenant’s failure to make payments to Landlord for such items in accordance with
this Lease; (13) all special assessments in excess of $5,000.00 which can be
paid by Landlord in installments shall be paid by Landlord in the maximum number
of installments permitted by law and not included as Operating Expenses except
in year in which the assessment installment is actually paid; (14) any and all
costs arising from the presence of hazardous materials in or about the Project,
including, without limitation, hazardous materials, in the groundwater or soil,
except to the extent caused by the acts or omissions of Tenant or its Affiliated
Parties (as defined in Section 11.A.); (15) costs to repair defects in the
structural portions of the Project, but maintenance and repair of the roof and
exterior of the Project may be included unless deemed capital repair or
replacement; (16) costs (including all related attorneys’ fees and costs of
settlement judgments and payments in lieu thereof) arising from claims, disputes
or potential disputes between Landlord and other tenants of the Project; (17)
Landlord’s general corporate overhead and general administrative expenses, other
than management services allocated to the Project; (18) damage and repairs
necessitated by the negligence or willful misconduct of Landlord or Landlord’s
employees, contractors or agents; and (19) interest, penalties or other costs
arising out of Landlord’s failure to make timely payment of its obligations.
Notwithstanding anything to the contrary contained herein, the Operating Expense
exclusion set forth in subparagraph (8) of this paragraph shall automatically
terminate upon the expiration of the one hundred eightieth (180th) month of the
Lease Term.

 

Notwithstanding the foregoing, Landlord agrees that Tenant’s annual per square
foot pro-rata share of Operating Expenses (excluding real estate taxes and the
items set forth in Section 7.A.(j) above, insurance and snow removal expenses)
shall not exceed the following during the original term of this Lease:

 

Calendar Year

--------------------------------------------------------------------------------

   Operating Expenses (excluding
real estate taxes, insurance and snow
removal) Per Square Foot

--------------------------------------------------------------------------------

      2006

   $ 1.47

      2007

   $ 1.49

      2008

   $ 1.55

      2009

   $ 1.63

      2010

   $ 1.71

      2011

   $ 1.80

      2012

   $ 1.89

      2013

   $ 1.98

      2014

   $ 2.07

      2015

   $ 2.16

      2016

   $ 2.25

 

B. Proportionate Share. Tenant’s proportionate share of Operating Expenses
(“Proportionate Share”) shall be equal to a fraction, the numerator of which is
the total rentable square footage of the Premises, and the denominator of which
is the total rentable square footage of the Project. Landlord shall invoice
Tenant for 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, and which
amount shall be due and payable

 

-10-

--------------------------------------------------------------------------------

at the same time Base Rent is due in twelve (12) equal monthly installments.
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; provided,
however, Tenant shall not be responsible for charges in excess of actual costs.

 

C. Exclusions. Without limiting the foregoing, if any tenant or other occupant
of the Project separately maintains any part of the Building, or any part of the
Common Areas, or separately pays for the cost of any utilities serving its
premises, or separately insures its premises, or is separately required to pay
real estate taxes on its premises or any separate tax parcel contained within
its premises, then on a line item basis (i) the cost of such Building and common
area maintenance, utilities, insurance and taxes shall be excluded from the
definition of Operating Expenses, and (ii) the total rentable square feet of
area contained within the premises of such tenant or occupant shall be excluded
from the denominator of the fraction comprising Tenant’s Proportionate Share of
the Operating Expenses, as set forth above in the preceding paragraph, for the
purpose of computing Tenant’s Proportionate Share of those costs of Building and
common area maintenance, utilities, insurance and taxes for the Project not
separately paid as provided above.

 

D. Reconciliation. Within six (6) 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 six (6) month period shall not relieve Tenant of its obligation
to pay any sums due to Landlord relative to any such reconciliation so long as
said reconciliation is provided to Tenant with eighteen (18) months of the first
day of the applicable calendar year. 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
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 one hundred eighty (180)
days after receipt of Landlord’s annual reconciliation statement for Operating
Expenses, Tenant may inspect Landlord’s books and records relative to
computation of Operating Expenses referenced in said reconciliation statement.
If Tenant does not perform such inspection within said one hundred eighty (180)
day period, Tenant shall be deemed to have waived its right to inspect
Landlord’s books for the applicable reconciliation statement and charges
referenced therein. Tenant may perform only one (1) such inspection in each
calendar year during the Lease Term. Any such inspection shall be performed at
the offices of Landlord and shall be performed at Tenant’s sole cost and
expense, unless the amount paid by Tenant exceeds the actual expense by more
than 4%, in which case Landlord shall pay the reasonable cost of Tenant’s
inspection, excluding travel, lodging and meal expenses.

 

SECTION 8. UTILITIES. Commencing on the Commencement Date, Tenant shall also pay
when due,

 

-11-

--------------------------------------------------------------------------------

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. Consumption charges for all utilities for the Premises that have
been separately metered by Landlord or the utility provider, including gas,
electrical, and communications shall be paid by Tenant directly to the utility
provider when due. Consumption charges for any utilities not separately metered
to a particular tenant in the Building, including water & sewer utilities and
sprinkler monitoring shall be included within the definition of Operating
Expenses and recoverable by Landlord as provided in Section 7 above; provided,
however, that (i) if Tenant and one or more (but less than all) other tenants of
the Project share a utility meter, then Tenant shall pay Landlord monthly
one-twelfth (1/12) of Tenant’s annual estimated pro-rata share of consumption
charges for such shared utility service as equitably determined by Landlord, and
(ii) to the extent Tenant uses a disproportionate amount of water and sewer
service as reasonably determined by Landlord, Landlord shall have the right to
submeter Tenant’s usage of water and sewer service and collect from Tenant
monthly, in advance, one-twelfth (1/12th) of the annual estimated consumption
charges for such services, which amounts shall be reconciled annually together
with Landlord’s reconciliation of Operating Expenses. 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. Except as otherwise
provided 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. Notwithstanding the foregoing, in the event (i) either (x) such
interruption or impairment of service is caused by the negligence of Landlord or
its contractors, agents or employees or (y) such interruption or impairment is
not caused by Tenant’s acts or omissions and Landlord fails to take all
commercially reasonable steps to restore such service as soon as reasonably
possible, (ii) the interruption or impairment of service continues for a period
of three (3) consecutive business days, and (iii) as a result of such
interruption or impairment of service the Premises are rendered untenantable as
reasonably determined by Landlord and Tenant, then in such case the payment of
Rent shall equitably abate in proportion to the area of the Premises rendered
untenantable by such disrupted utility beginning on the fourth (4th) day and
such abatement shall continue until such service is restored to the Premises,
provided, however, (a) in no event shall the abatement exceed the actual amount
of insurance proceeds recovered by Landlord under its rent loss insurance for
the Project, (b) a condition precedent to Tenant’s right of abatement is that
Tenant shall cooperate with Landlord and provide such information or
certifications reasonably required in order to submit a claim for such rent loss
insurance, and (c) the abatement shall only apply to the extent the type of
utility interrupted is either gas, electric, water or sewer.

 

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 reimbursed to Landlord by Tenant as additional rent.

 

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. Landlord represents that Tenant’s use as set forth in this section is
allowed within the existing zoning of the Project.

 

-12-

--------------------------------------------------------------------------------

SECTION 11. ADDITIONAL OBLIGATIONS OF TENANT.

 

A. Occupancy and Use. Tenant shall occupy the Premises, conduct its business and
control its officers, directors, shareholders, members, managers, employees,
agents, contractors, and invitees (collectively, “Affiliated Parties”) in such a
manner as is lawful, and will not create a nuisance as determined by applying a
reasonable industry standard. 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. Tenant shall not permit any operation within the
Premises which emits any noise, odor, or matter which intrudes into other
portions of the Project or otherwise interferes with, annoys or disturbs any
other tenant or occupant of the Project in its normal business operations or
Landlord in its management of the Project. Tenant and its Affiliated Parties,
customers, vendors and suppliers shall not utilize any common portion of the
loading dock area or the Common Areas for (i) overnight or long term parking,
placement, or storage of vehicles, trailers, storage containers, or their
equivalents used in whole or in part for storage of inventory, supplies, goods
or the like, except with Landlord’s prior written consent, or (ii) 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. Tenant
shall have the right to use and occupy the Premises seven days a week, twenty
four hours per day.

 

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 which are in
conformance with Landlord’s sign criteria attached hereto as EXHIBIT D and in
conformance with applicable governmental laws, rules, regulations and
ordinances. Landlord shall have the right to approve, which approval shall not
be withheld, provided such signs are in conformance with Exhibit D and
applicable government laws, codes or regulations. 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.
Notwithstanding the above, Tenant shall have exclusive rights to Tenant
identification signage on the north elevation of the Building, non-exclusive
rights to Tenant identification signage on the west elevation of the building
(adjacent to Tenant’s Premises) and the top position on the project’s monument
sign. The cost of Tenant’s monument signage shall be paid by Landlord.

 

C. Compliance With Laws, Rules and Regulations. Except as otherwise provided in
this Section 11.C., from and after the Commencement Date, 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. 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 shall be
made by Landlord and shall be included within the definition of Operating
Expenses and reimbursed to Landlord under Section 7 of this Lease, provided,
however, Tenant shall be solely responsible and shall reimburse Landlord for the
entire cost and expense of such work if compliance is necessary 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 or on behalf of Tenant.

 

-13-

--------------------------------------------------------------------------------

Tenant will also comply with the reasonable rules and regulations of the Project
adopted by Landlord, provided such rules and regulations shall be applied
equally to all Tenants and do not unreasonably interfere with Tenant’s ability
to conduct its business. Landlord shall have the right at all times, upon thirty
(30) 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) Tenant’s personal property, goods, inventory, supplies,
signs, furniture, and moveable trade fixtures, equipment and machinery
(collectively, “Tenant” 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 CSM Corporation (or Landlord’s
other designated management agent) 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 evidence satisfactory to Landlord at the time this Lease is
executed, and thereafter from time to time within twenty (20) days after written
request by Landlord, 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 certificate of insurance, and in the event of a claim against
the Landlord’s insurance, 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.

 

Notwithstanding the foregoing, the originally named Tenant hereunder (i.e.
Secure Computing Corporation) shall have the right to satisfy the insurance
requirements of this Section 11.D. pursuant to (i) a blanket insurance policy
covering other properties in addition to the Premises, (ii) a plan of
self-insurance, or (iii) a combination of any of the foregoing insurance
programs, but only if Tenant has a net worth of at least $100,000,000
demonstrated by Tenant’s current annual reports filed with the SEC or by current
independently audited financial statements certified by an officer of Tenant. To
the extent any deductible is permitted or allowed as part of any insurance
policy carried by Tenant in connection with this Section 11.D., then Tenant
shall be deemed to be covering the amount of the deductible under its
self-insurance program, provided, however, in no event shall the deductible
exceed $10,000 without Landlord’s prior written consent. If Tenant elects to
self-insure hereunder, Tenant shall notify Landlord in writing of its intent to
self-insure and shall provide Landlord with a schedule of coverages, certificate
of self-insurance or other reasonably acceptable written evidence identifying
the coverages Tenant has elected to self-insure.

 

-14-

--------------------------------------------------------------------------------

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 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. Within thirty (30) days after the Commencement Date, Landlord will
assign to Tenant any warranties in Landlord’s possession for items which Tenant
is responsible for maintaining, repairing and replacing under this Lease.
Tenant’s obligations hereunder shall include, but not be limited to, the
maintenance, repair and replacement, if necessary, of the following items to the
extent they exclusively serve the Premises: (i) heating, ventilation and air
conditioning system and equipment (including a regular preventative maintenance
contract) provided, however, if replacement of the HVAC system or equipment is
necessary during the first one hundred eighty (180) months of the Lease Term as
reasonably determined by Landlord and is not required due to Tenant’s negligent
acts or omissions, then Landlord will perform the replacement work and bear the
cost thereof, (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), and (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), and the replacement of
all broken glass. 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
sidewalk in front of the Premises clean and shall remove snow accumulations of
less than one inch. 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 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.

 

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

 

-15-

--------------------------------------------------------------------------------

service systems for the Building, (iii) are visible from the exterior of the
Building, or (iv) that cost in excess of $5,000.00, 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, Landlord must identify the Improvements which it
will require to be removed at the time of its approval so as to enable Tenant to
decide whether or not to proceed with Improvements. 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, 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. 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, as required by
applicable law and subject to Landlord’s prior reasonable approval of the scope
of Tenant’s work.’ Tenant shall promptly 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. At Landlord’s option, any
penalties, damages or costs of compliance arising from the presence or release
of Hazardous Materials not caused by the acts or omissions of Landlord or its
employees, agents or contractors or any other tenant of the Project, may be
included within the definition of Operating Expenses and recoverable by Landlord
pursuant to Section 7 above, not to exceed $1,000 per year. 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 prior to execution of this Lease, or at any
time after

 

-16-

--------------------------------------------------------------------------------

execution, to the extent arising from the actions or omissions of Landlord, its
Affiliated Parties, or any prior owner of the Premises or the Project. Landlord
agrees to provide to Tenant all existing environmental reports in Landlord’s
possession as of the date of this Lease. Landlord will use commercially
reasonable efforts to seek a closure letter from the Minnesota Pollution Control
Agency in connection with any items set forth in the existing environmental
reports.

 

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 liening 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. In the event that the Tenant becomes a privately traded
company, 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 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 shall
advise the recipient of the financial statements that they shall be kept and
maintained 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) and if requested by
Landlord, any other improvements made at any time to the Premises by or at the
request of Tenant subject to Section 11.F., (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 in upon completion of
initial construction thereof or thereafter may be put in by Landlord or Tenant,
ordinary wear and tear 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
reasonable 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.

 

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 in this Section or elsewhere in this

 

-17-

--------------------------------------------------------------------------------

Lease. Landlord shall maintain, repair and replace the roof (including flashing
and drainage systems), fire sprinkler system, utility lines up to connection
points with the Building, foundation, parking areas, Common Areas (including
without limitation site lighting, project identification signs, landscaping and
irrigation), and the exterior and structural portions of the Building and other
improvements within the Project (including exterior painting and tuckpointing),
provided, that Landlord’s cost of maintaining, repairing and replacing the items
set forth in this Section shall be included within the definition of Operating
Expenses and recoverable by Landlord pursuant to Section 7 of this Lease,
subject to the Operating Expense exclusions set forth in Section 7. Landlord
shall use reasonable efforts not to disturb or otherwise interfere with Tenant’s
operations in the Premises when performing any maintenance or repair at the
Premises.

 

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 $2000,000
“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 Premises may be
maintained under a blanket policy or policies of insurance covering the Premises
and other properties owned by Landlord and its affiliates, and all premiums,
commissions, service fees, reasonable third party administrative fees paid or
incurred by Landlord or its management agent (CSM Corporation) for such
insurance, to the extent properly allocable to the Premises, and the cost of
repairs not covered under such insurance due to deductible or retention
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 Tenant’s 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, but shall be
responsible for enforcement of rules and regulations it imposes in the Building.

 

D. Shell Improvements; Interior Tenant Improvements; Allowance; Punchlist.

 

(1) Shell Improvements. Landlord, at its sole cost and expense, shall complete
the shell improvements to the Building (“Shell Improvements”) substantially in
accordance with the (i) preliminary site plan attached hereto as Exhibit A or
A-1 as set forth in Section 2, (ii) the preliminary shell Building
specifications attached hereto as Exhibit E, (iii) the preliminary exterior
elevations of the Building attached hereto as Exhibit E-1, and (iv) the
preliminary rendering of the Building attached hereto as Exhibit E-2
(collectively, the “Preliminary Shell Plans”), subject to modifications required
by the City of St. Paul. The final construction drawings (the “Final Shell

 

-18-

--------------------------------------------------------------------------------

Plans”) for the Shell Improvements are subject to Tenant’s review and approval
and Landlord (and Landlord’s architect) shall review Final Shell Plans with
Tenant. Tenant shall either approve or conditionally approve the Final Shell
Plans by written notice to Landlord given within five (5) business days after
Tenant reviews the Final Shell Plans with Landlord. If Tenant fails to notify
Landlord within said five (5) business day period, then the Final Shell Plans
will be deemed approved by Tenant. Tenant’s review and approval of the Final
Shell Plans shall not be unreasonably withheld, conditioned or delayed. Any
delay in completion of construction of the Shell Improvements contributed to by
Tenant’s failure to timely review and approve the plans shall extend the
delivery date by a period equal to the Tenant’s delay. Changes or modifications
to the approved Final Shell Plans shall be submitted by Tenant to Landlord for
Landlord’s prior written approval which shall not be unreasonably withheld or
delayed. Landlord shall notify Tenant of any anticipated delay in completion of
the Shell Improvements attributable to a requested change order prior to
approving or denying the same and Tenant shall have the absolute and unilateral
right to withdraw an approved change order request within two (2) business days
after receipt of Landlord’s notification of the extent of anticipated delay
attributable to the proposed change order. Each approved change order no longer
subject to Tenant’s right of withdrawal shall constitute an amendment to this
Lease. Tenant shall reimburse Landlord, within thirty (30) days after written
request, for the cost of any change orders that increase the total cost of the
Shell Improvements as set forth in the approved Final Shell Plans.

 

(2) Interior Tenant Improvements; Tenant Improvement Allowance. Landlord shall
coordinate, contract, finance and construct initial interior tenant improvements
including preparation of all necessary plans and drawings to the Premises beyond
the Shell Improvements per final plans and specifications to be approved by the
parties (the “Tenant Improvements”) at Tenant’s sole cost and expense, except as
set forth in subparagraph (iii) of this section, including preparation of all
necessary plans and drawings, under the following terms and conditions:

 

  (i) Except for the Allowance (as defined below), Tenant shall pay for the
entire cost of labor and materials for constructing the Tenant Improvements.
Landlord shall provide one of its own in house architects or space planners, or
an outside architectural firm to work with Tenant to determine the design and
estimated costs of the Tenant Improvements, and to prepare the construction
plans and specifications at no additional cost to Tenant and which will not be
an offset against the Tenant Improvement Allowance. In addition, Landlord’s own
in house architects or an outside architectural firm and construction project
managers will provide all construction supervision services (including without
limitation, selection of contractors) required to complete the construction of
the Tenant Improvements at no additional cost to Tenant and which will not be an
offset against the Tenant Improvement Allowance. Provided Landlord solicits two
design/build proposals from general contractors that clearly state the general
contractors fee, general conditions, all associated additions to that work which
will be subcontracted and provided that the selected contractor’s costs are
reasonable and within current market pricing, the parties acknowledge and agree
that Landlord has the right, in its sole discretion, to select the general
contractor for the Tenant Improvements; provided, however, the general
contractor selected shall obtain bids from at least three (3) subcontractors for
each body of work that exceeds five thousand dollars ($5,000.00). Landlord and
Tenant acknowledge and agree that the preliminary space plan attached hereto as
Exhibit F and the preliminary tenant improvement specifications attached hereto
as Exhibit F-1 have been reviewed and approved by each party (collectively, the
“Preliminary TI Plans”).

 

-19-

--------------------------------------------------------------------------------

  (ii) Tenant shall cooperate with Landlord and use good faith, diligent efforts
to make all space planning decisions necessary for Landlord to be able to
complete the final plans (“Final TI Plans”) for the Tenant Improvements as soon
as reasonably possible after execution of this Lease. Notwithstanding anything
herein to the contrary, not later than July 15, 2005 (the “Space Planning
Deadline”), Tenant shall finalize all such space planning decisions by written
notice to Landlord delivered prior to expiration of the Space Planning Deadline.
After the earlier of the Space Planning Deadline or the date Tenant makes all
necessary space planning decisions, Landlord will proceed diligently to complete
the Final TI Plans for the Tenant Improvements and submit the same to Tenant for
approval and Landlord and its architect shall review Final Tenant Improvement
plans with Tenant and Tenant shall either approve or conditionally approve the
Final TI Plans by written notice to Landlord given within five (5) business days
after Tenant reviews the Final TI Plans for the Tenant Improvements with
Landlord. If Tenant fails to notify Landlord within said five (5) business day
period, then the Final TI Plans will be deemed approved by Tenant. Tenant’s
review and approval of said Final TI Plans shall not be unreasonably delayed,
conditioned or withheld. Changes or modifications to the approved Final TI Plans
shall be submitted by Tenant to Landlord for Landlord’s prior written approval
which shall not be unreasonably withheld or delayed. Landlord shall notify
Tenant of any anticipated delay in completion of the Tenant Improvements
attributable to a requested change order prior to approving or denying the same
and Tenant shall have the absolute and unilateral right to withdraw an approved
change order request within three (3) business days after receipt of Landlord’s
notification of the extent of anticipated delay attributable to the proposed
change order. Each approved change order no longer subject to Tenant’s right of
withdrawal shall constitute an amendment to this Lease. Any delay in
commencement of construction of the Tenant Improvements caused by (i) Tenant’s
failure to meet the Space Planning Deadline, (ii) Tenant’s failure to timely
approve the Final TI Plans and (iii) any change order requested by Tenant, shall
not extend the Commencement Date or the Expiration date. The parties acknowledge
and agree that the Final TI Plans are subject to the approval of the City of St.
Paul.

 

  (iii) Landlord represents that the cost of construction of the improvements
illustrated in the space plans and related specifications (attached as Exhibits
F and F-1) do not exceed the stated Tenant Improvement Allowance, and Landlord
agrees to provide Tenant a Tenant Improvement Allowance (the “Allowance”) not to
exceed Thirty Two and 50/100 Dollars ($32.50) per rentable square foot in the
Premises (as determined pursuant to Section 2), not including any storage space,
to be used by Tenant for the cost of constructing the Tenant Improvements. Prior
to commencing the Tenant Improvements, Landlord shall submit to Tenant a written
statement of the total cost of the Tenant Improvements as then known by
Landlord, and such statement shall indicate the amount, if any, by which the
total cost of the Tenant Improvements exceeds the Allowance (the “Excess
Costs”). Tenant agrees to pay an amount equal to the Excess Costs to Landlord
within ninety (90) after the Commencement Date. In the event, and each time,
that any change order by Tenant, unknown condition, delay caused by acts beyond
Landlord’s control or other event or circumstance causes the cost of the Tenant
Improvements to increase after

 

-20-

--------------------------------------------------------------------------------

the time that Landlord delivers to Tenant the initial statement of the cost of
the Tenant Improvements, Landlord shall deliver to Tenant a revised statement of
the total cost of the Tenant Improvements, indicating the revised calculation of
the Excess Costs, if any. Within ninety (90) days after the Commencement Date,
Tenant shall pay to Landlord an amount equal to the Excess Costs, as shown in
such revised statement, less the amounts previously paid by Tenant to Landlord
on account of the Excess Costs. Delays in the completion of the Tenant
Improvements resulting from the failure of Tenant to comply with the provisions
of this section shall not extend the Commencement Date or the Expiration date.
Landlord agrees that if Tenant does not utilize the full amount of the Allowance
against Qualified Costs, then at Tenant’s option after Tenant has taken
possession of the Premises and paid its first installment of Rent, the balance
may be utilized against future installments of Rent coming due under the Lease
Term. On not less than a monthly basis, Landlord shall review with Tenant all
qualified cost disbursements made from the Tenant Improvement Allowance and the
Shell Improvement costs. Landlord will provide a full and complete cost
breakdown, and background information, upon Tenant’s reasonable request.

 

Within forty-five (45) days of Substantial Completion, Landlord shall deliver to
Tenant a final sworn construction statement outlining all costs associated with
the construction of the Tenant Improvements and the Shell Improvements. Tenant
shall have access to Landlord’s and General Contractor’s accounting records for
review, and Tenant, at its option, may perform an audit of said records.

 

  (iv) Tenant may elect to have up to Five and No/100 Dollars ($5.00) per
rentable square foot of the additional Tenant Improvement costs amortized into
Base Rent over the Initial Term at an annual interest rate of eight percent
(8%). If Tenant so elects, then Landlord and Tenant agree to execute an
amendment to this Lease adjusting the Base Rent in accordance with the terms of
this Section 12.D.(2)(iv).

 

  (3) Punchlist. Within thirty (30) days after Landlord delivers the Premises to
Tenant Substantially Complete, Tenant shall prepare and deliver to Landlord a
detailed written list setting forth any deviations or deficiencies in the Shell
Improvements and the Tenant Improvements discovered by Tenant (herein,
“Punchlist Items”). Landlord shall correct or cure such Punchlist Items to
Tenant’s satisfaction within thirty (30) days after receipt of written notice of
such Punchlist Items; provided, however, that if the nature of the Punchlist
Items is such that it cannot be corrected or cured within thirty (30) days, then
Landlord shall have an additional reasonable amount of time within which to
correct or cure the pertinent Punchlist Item(s). Tenant’s failure to deliver
written notice to Landlord specifying the Punchlist Items within the thirty (30)
day period following the delivery date shall be construed as Tenant’s acceptance
of (i) the condition of the Premises and Building, and (ii) the performance of
Landlord’s obligations under this Lease regarding completion of the Shell
Improvements and the Tenant Improvements; provided, however, that this provision
shall not apply to latent defects discovered by Tenant after said thirty (30)
day period.

 

SECTION 13. ASSIGNMENT AND SUBLETTING. 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

 

-21-

--------------------------------------------------------------------------------

person, other than the employees of Tenant, to occupy or use the Premises or any
portion thereof, without the prior written consent of Landlord not to be
unreasonably withheld. Any assignment or transfer of this Lease by asset sale,
liquidation or dissolution shall constitute an assignment for purposes of this
Section. Any merger or consolidation of Tenant shall not constitute an
assignment of this Lease provided that Tenant is the surviving entity. The
transfer or sale of stock of Tenant shall not be deemed an assignment of this
Lease; provided, however, that Tenant shall notify Landlord in writing of a sale
of more than fifty percent (50%) of its outstanding stock.

 

If Tenant desires to assign or sublet all or any part of the Premises, Tenant
shall notify Landlord at least fifteen (15) days in advance of the date on which
Tenant desires to make such assignment or sublease. Tenant shall provide
Landlord with a copy of the proposed assignment or sublease and such information
or written consents as Landlord might request concerning the proposed sublessee
or assignee to allow Landlord to make informed judgments as to the type of use,
financial condition, gross sales, business experience, reputation, operations
and general desirability of the proposed sublessee or assignee or to obtain
credit information from a credit reporting service. Within ten (10) days after
Landlord’s receipt of Tenant’s proposed assignment or sublease and all required
information concerning the proposed sublessee or assignee, Landlord shall have
either of the following options: (i) consent to the proposed assignment or
sublease, and, if the rent due and payable by any assignee or sublessee under
any such permitted assignment or sublease (or a combination of the rent payable
under such assignment or sublease plus any bonus or any other consideration or
any payment incident thereto) exceeds the Base Rent payable under this Lease for
such space, Tenant shall pay to Landlord one-half (1/2) of all such excess rent
and other excess consideration within ten (10) days following receipt thereof by
Tenant; or (ii) refuse, in Landlord’s reasonable discretion and judgment, to
consent to the proposed assignment or sublease, which refusal shall be deemed to
have been exercised unless Landlord gives Tenant written notice providing
otherwise. For purposes of Section 13, Landlord’s consent to any assignment or
subletting will be deemed reasonably withheld if, in Landlord’s good faith
judgment, any one or more of the following apply: (a) either the proposed
transferee, or any affiliate of the proposed transferee, occupies or is
negotiating with Landlord to lease space in the Building or in any other
building owned by Landlord or its related parties and Tenant’s proposal to
assign or sublease the space is for less than 75% of the base rental rate
payable under this Lease; (b) the use of the Premises by the proposed transferee
would, in Landlord’s reasonable judgment, impact the Building or the Project in
a negative manner; (c) if the subject space is only a portion of the Premises
and the physical subdivision of such portion is, or would render the Premises,
not regular in shape with appropriate means of ingress and egress and facilities
suitable for normal renting purposes, or is otherwise not readily divisible from
the Premises; (d) the assignment or subletting would require alteration to the
Building or the Project to comply with applicable Laws; or (e) an uncured
default exists under this Lease at the time Tenant requests consent to the
proposed transfer. In the event of any assignment or sublease, any option or
right of first refusal granted to Tenant shall not be assignable by Tenant to
any assignee or sublessee without Landlord’s prior’ written consent, not to be
unreasonably withheld. 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 and,
to the extent required, any Lender, 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

 

-22-

--------------------------------------------------------------------------------

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. Upon Landlord’s reasonable notice during
Tenant’s normal business hours, Landlord and its Affiliated Parties shall have
the right to access and enter the Premises to inspect the same, to show the
Premises to 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. 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. Landlord agrees to use a
commercially reasonable standard of care (similar to other landlords of
comparable properties in the St. Paul area) when performing its maintenance and
repair obligations under this Lease or when present on the Premises.

 

SECTION 15. INDEMNITY AND WAIVER OF SUBROGATION.

 

A. 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. Subject to
Landlord’s obligation set forth in Section 14 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 or claim 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 or claim 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.

 

-23-

--------------------------------------------------------------------------------

C. Waiver of Subrogation. Notwithstanding anything in this Lease to the
contrary, (i) Landlord hereby waives and releases Tenant and its Affiliated
Parties of and from any and all right of liability, recovery, claim, action or
cause of action, against Tenant or its 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 Tenant and its Affiliated Parties, to the
extent coverable by property insurance (i.e. hazard and all risk insurance, fire
and extended coverage property insurance or equivalent insurance), and (ii)
Tenant hereby waives and releases Landlord and its Affiliated Parties of and
from any and all right of liability, recovery, claim, action or cause of action,
against Landlord or its 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 and its Affiliated Parties, to the extent
coverable by property insurance (i.e. hazard and all risk insurance, fire and
extended coverage property insurance or equivalent insurance), or to the extent
Tenant has elected to or is deemed to self-insure pursuant to Section 11.D. of
this Lease. Notwithstanding the foregoing or anything contained in this Lease to
the contrary, any release or waiver of claims shall not be operative in any case
where the effect of the release or waiver is to invalidate insurance coverage or
invalidate the right of the insured to recover thereunder.

 

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
seventy (270) 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 contained 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 reasonable 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 35.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

 

-24-

--------------------------------------------------------------------------------

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.

 

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.

 

SECTION 17. EMINENT DOMAIN.

 

A. Total Taking. If the entire Premises or the Project are taken by eminent
domain, this Lease shall automatically terminate 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.

 

B. Partial Taking. If part of the Premises or the Project is taken by eminent
domain, Landlord shall have the right to terminate this Lease as of a date
specified by Landlord by giving written notice thereof to Tenant within sixty
(60) days after the date of taking. If Landlord does not elect 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. If at
least twenty percent (20%) of the Premises is taken and Tenant is unable to
reasonably operate its business in the Premises then Tenant may terminate this
Lease by delivering written notice thereof to Landlord within sixty (60) days
after the date of the 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.

 

-25-

--------------------------------------------------------------------------------

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; 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 thirty (30) days after written notice to Tenant, or such longer period as
may be reasonably required, not to exceed an additional forty-five (45) days, if
the nature of cure is such that it cannot be completed within thirty (30) days,
so long as Tenant commenced cure within the initial thirty (30) day period and
thereafter diligently pursues cure to completion; or

 

  (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

 

-26-

--------------------------------------------------------------------------------

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; 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
reasonable 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, and Landlord will
use commercially reasonable efforts to collect such rents. The parties agree
that if Landlord sends two demand letters by an attorney in an effort to collect
delinquent rents, then it will have used commercially reasonable efforts to
collect such rents.

 

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 Base 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 Base 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 as they become due hereunder;

 

(iv) for all reasonable expenses incurred in releasing the Premises, including
market rate 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.

 

At any time after termination or repossession, whether or not Landlord may have
collected any damages pursuant to the foregoing provisions, Landlord shall be
entitled to recover from Tenant, as and for liquidated and agreed upon final
damages for loss of bargain due to Tenant’s Default, and not as a penalty, and
in lieu of the amounts which would thereafter be payable pursuant to the
foregoing provisions (but not in diminution of the amounts payable as provided
above before termination), a sum equal to the present value of the amount by
which the then fair rental value of the Premises is less than the Base Rent,
additional rent and other sums or charges which would

 

-27-

--------------------------------------------------------------------------------

have been payable by Tenant for the unexpired portion of the term of this Lease,
computed utilizing a discount rate equal to the ten (10) year U.S. Treasury Bond
rate (or equivalent if discontinued). Tenant shall promptly pay to Landlord on
demand the amount of such deficiency and all expenses incident thereto
(including without limitation, commissions, reasonable attorneys’ fees and
expenses, and costs of alterations and repairs). If Landlord, after any such
reentry, leases or relets the Premises, then the rent payable under such new
lease shall be conclusive evidence of the fair rental value of the unexpired
portion of the term of this Lease. If this Lease shall be terminated by reason
of bankruptcy or insolvency of Tenant, Landlord shall be entitled to recover
from Tenant or Tenant’s estate, as liquidated damages for loss of bargain and
not as a penalty, the amount determined by the immediately preceding paragraph.

 

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 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
thirty (30) 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
thirty (30) day period and continues beyond the time reasonably necessary to
cure (and Landlord has not commenced cure within the initial thirty (30) day
cure period and thereafter diligently pursued cure to completion), then Landlord
shall be in default under this Lease and 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”). If the default by Landlord is
such as to constructively evict or effectively dispossess Tenant, or
substantially destroy Tenant’s right to quiet enjoyment, Tenant shall have the
right to invoke any and all rights

 

-28-

--------------------------------------------------------------------------------

and remedies Tenant may have at law and in equity; or the option to exercise any
other rights or remedies which Tenant may have at law or equity. Notwithstanding
the foregoing, the notice and cure period provided to Landlord above shall not
apply to Landlord’s obligation to timely deliver the Premises as required under
this Lease. If Tenant makes any advances because of a default by landlord not
cured within thirty (30) days after notice from Tenant, Landlord is obligated to
repay the full amount of such advances, together with interest on the amount
advanced at the rate of interest set forth in Section 35.I. (12% annum or the
maximum rate of interest permitted by law). No remedy herein or otherwise
conferred upon or reserved to Tenant shall be considered to exclude or suspend
any other remedy but the same shall be cumulative and shall be in addition to
every other remedy given hereunder, or now or hereafter existing at law or in
equity or by statute, and every power and remedy given by this Lease to Tenant
may be exercised from time to time and so often as occasion may arise or as may
be deemed expedient, and no remedy required herein shall supercede the Tenant’s
limitation to deduct more than the Maximum Offset Amount.

 

SECTION 19. NOTICES. All Rent and other payments required to be made by Tenant
shall be payable to Landlord as provided in Section 1.H. and Section 5 of this
Lease, or such other bank account or 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 fifteen (15) days after
written request from Landlord, execute and deliver to Landlord or any Mortgage
holder a Subordination, Non-disturbance and Attornment Agreement from the
existing first mortgage holder against the Project substantially in the form
attached hereto as EXHIBIT G or any certification, instrument or other document
required by Landlord or such Mortgage holder, in form and content as reasonably
required by Landlord or such Mortgage holder and reasonably similar to Exhibit
G. Tenant acknowledges and agrees that its failure to deliver any such statement
in a timely manner after a second notice period of equal duration to the first
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.

 

-29-

--------------------------------------------------------------------------------

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 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 ten (10) 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 Premises are acceptable; (iii) 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;
(iv) the dates through which the Rent and other charges hereunder have been paid
by Tenant; (v) agreeing that Tenant and Landlord will not thereafter modify this
Lease without the prior consent of the Mortgage holder; (vi) Tenant claims no
present charge, lien, or claim or offset against Rent; (vii) the Rent is not and
will not be prepaid for more than one month in advance; (viii) there is no
existing default by reason of some act or omission by Landlord; and (ix) 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 after a second
notice period of equal duration to the first is a Default under this Lease.

 

SECTION 23. LANDLORD’S LIABILITY. Except in case of Fraud, 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 deleted.

 

-30-

--------------------------------------------------------------------------------

SECTION 25. RELOCATION OPTION. Intentionally deleted.

 

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 o’ other similar charge in connection with this Lease, other than a fee due
to Charles Caturia of CB Richard Ellis, which is the responsibility of Landlord.
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.

 

SECTION 27. RIGHT OF FIRST REFUSAL TO PURCHASE THE PROJECT. Landlord hereby
grants Tenant a “Right of First Refusal” to purchase the Project, in accordance
with the following terms and conditions. Landlord agrees that if it decides to
sell the Project during the Lease Term, Landlord shall notify Tenant in writing
that the Project is for sale and shall include the proposed sale price (“Sale
Notice”). Tenant shall have fifteen (15) days after receipt of the Sale Notice
to provide Landlord with written notice of its election to purchase the Project
at the price set forth in the Sale Notice. If Tenant elects to purchase the
Project, then Landlord and Tenant shall enter into a mutually acceptable
purchase agreement within fourteen (14) days, with a closing date scheduled for
no later than one hundred twenty (120) days following the mutual execution of
the purchase agreement. If Tenant elects to not purchase the Project or if
Tenant fails to respond during the fifteen (15) day period, then Landlord shall
have the right to sell the Project to any party for a price not less than the
price offered to Tenant. If Tenant elects to purchase the Project but Landlord
and Tenant are unable to negotiate a mutually acceptable purchase agreement
within the time frame required above, then Landlord may sell the Project to any
party for no less than the purchase price offered to Tenant and under purchase
agreement terms no more favorable to Landlord than the purchase agreement terms
provided by Landlord to Tenant. If Landlord has provided a Sale Notice to Tenant
and Tenant does not elect to purchase the Project for the price set forth in the
Sale Notice, and Landlord elects to sell the Project for a price lower than the
price offered to Tenant, Landlord shall deliver a new Sale Notice to Tenant
which shall include the lower sale price and Tenant shall have ten (10) days
after receipt of the Sale Notice to provide Landlord with written notice of its
election to purchase the Project at the price set forth in the Sale Notice. If
Tenant elects to purchase the Project, then Landlord and Tenant shall enter into
a mutually acceptable purchase agreement within fourteen (14) days, with a
closing date scheduled for no later than one hundred twenty (120) days following
the mutual execution of the purchase agreement.

 

SECTION 28. RIGHT OF FIRST OFFER TO LEASE. After the original Lease up of the
Project, Tenant shall have the right of first offer (“Right of First Offer”) to
lease the approximately 12,500 square foot space contiguous to the Premises as
depicted on Exhibits A and C attached hereto (the “Expansion Space”) as it
becomes available during the term of the Lease. Landlord shall provide Tenant
with written notice of the availability of the Expansion Space, and Tenant shall
have ten (10) days from receipt of Landlord’s availability notice within which
to forward written notice to Landlord of Tenant’s irrevocable intent to lease
that part of the Expansion Space described in Landlord’s availability notice
with a term commencing no later than the earlier of (i) thirty (30) days
following the date of Tenant’s notice, or (ii) the date the Expansion Space
actually becomes available, and expiring coterminous with the term of this Lease
(except in the last thirty-six (36) months of the Initial Term as provided
below). In the event that Tenant fails to exercise its rights described herein,
Tenant’s rights shall be null and void as to the occupancy included in
Landlord’s notice, but the first offer to Lease set forth herein shall again be
effective after the space is re-leased and then vacated. In the event that
Tenant’s notice of its election to exercise its Right of First Offer is
exercised in the last thirty-six (36) months of the Lease Term (as extended
pursuant to Section 4.(b) herein), then Tenant’s notice shall also include
Tenant’s notice of its election to exercise either its first or second Option
set forth in Section 4.(b) of this Lease. Tenant and Landlord agree that the
expiration and renewal of an existing tenant’s lease shall not trigger Tenant’s

 

-31-

--------------------------------------------------------------------------------

right under this section, and a condition of Tenant’s rights shall be that
Tenant is not in default under Section 18 of this Lease and that this Lease is
in full force and effect. If Tenant exercises its Right of First Offer as set
forth herein, the Base Rental Rate shall be the rate then in effect on the
existing Premises, and Landlord shall provide an improvement allowance (payable
in accordance with the terms and conditions set forth in Section 12.D.(2)(iii)
herein) based on the following schedule for modifications to the Expansion
Space.

 

Lease Months

--------------------------------------------------------------------------------

  

Per Square Foot Allowance

Amount (Expansion Space)

--------------------------------------------------------------------------------

1-12

   $ 27.00

13-24

   $ 24.00

25-36

   $ 21.00

37-48

   $ 18.00

49-60

   $ 15.00

61-72

   $ 12.00

73-84

   $ 9.00

85-96

   $ 0.00

97-108

   $ 0.00

109-120

   $ 0.00

 

SECTION 29. EXPANSION RIGHT. In addition to the Right of First Offer set forth
in Section 28 of this Lease, Tenant shall have the option to lease the Expansion
Space (“Expansion Right”) for a term commencing between lease month forty-eight
(48) and lease month sixty (60) (as determined by Landlord) and expiring
conterminous with the term of the Lease. Tenant shall exercise its Expansion
Right, if at all, by forwarding to Landlord written notice indicating its intent
to exercise its Expansion Right on or before the expiration of lease month forty
two (42). Within fifteen (15) days of Tenant’s notice, Landlord will notify
Tenant as to the date the premises will be available, and Landlord will provide
Tenant with an allowance of up to twenty and no/100 dollars ($20.00) per
rentable square foot (payable in accordance with the terms and conditions set
forth in Section 12.D.(2)(iii) herein), which allowance may be applied towards
improvements to the Expansion Space or the Premises. The Base Rental Rate for
the Expansion Space shall be the same rate then in effect on the existing
Premises, and Tenant’s Proportionate Share of Operating Expenses shall be
adjusted to reflect the Expansion Space. If Landlord has leased the Expansion
Space to more than one tenant, then Tenant shall have the right to lease the
Expansion Space in increments equal to those leased to other tenants by
Landlord.

 

SECTION 30. PARKING. Landlord agrees to provide 3.5 parking spaces per 1,000
square feet of the Premises for Tenant’s use on a non-exclusive basis during the
term of the Lease.

 

SECTION 31. SATELLITE DISH. Tenant shall have the right, subject to all
applicable federal, state, local or municipal laws, building codes, rules,
regulations or ordinances governing the Project, and subject to the terms of
this Section 31 and the other terms of this Lease, to install a satellite dish
or antenna (“Satellite Dish”) on the exterior roof of the Building in which the
Premises is located in such location as is mutually agreeable to Landlord and
Tenant. Prior to installation, Tenant shall submit to Landlord for approval
(which approval shall not be unreasonably withheld, conditioned, or delayed) all
plans, drawings and specifications for the installation of the Satellite Dish.
Tenant shall be responsible at its sole expense for obtaining any and all
necessary permits, licenses or approvals from governmental authorities having
jurisdiction over the Project or the Satellite Dish. All costs associated with
the installation, operation (including without limitation, electrical service),
maintenance, repair and removal of the Satellite Dish shall be borne by Tenant.
The Satellite Dish shall remain the personal property of Tenant during the Lease
Term and shall not be deemed a fixture and Tenant shall be responsible at its
sole expense for insuring the same with full replacement cost coverage.

 

-32-

--------------------------------------------------------------------------------

All installation, maintenance, repair or removal work shall be performed by
qualified and insured individuals or contractors in a good and workmanlike
manner and in a manner so as not to invalidate any guarantee or warranty
relating to the roof over the building in which the Premises is located, and
Tenant agrees to hold harmless, indemnify and defend Landlord from any and all
loss, costs (including reasonable attorneys’ fees), liability, damages or claims
asserted against or incurred by Landlord relative to the performance of such
work or a breach of the foregoing covenants of Tenant. Landlord may require
Tenant to remove the Satellite Dish or upon Tenant’s vacating or abandoning the
Premises or Landlord’s eviction of Tenant from the Premises, and in any event,
Tenant shall remove the Satellite Dish promptly upon termination of this Lease.
Tenant shall repair any damage to the roof arising from installation or removal
of the Satellite Dish and shall hold harmless and indemnify Landlord against
costs of same. If the operation of the Satellite Dish from time to time causes
interference with any other satellite dish or antenna or electronic equipment
(including, without limitation, telephones, televisions, computers or
communication equipment) of other tenants or occupants of the Project operating
as of the date hereof and such interference cannot reasonably be resolved within
fifteen (15) days, then Tenant shall remove the Satellite Dish within
forty-eight (48) hours of Landlord’s written request, or make such adjustments
as are necessary to halt further interference. Likewise, if Landlord places or
allows to be placed any antenna electronic equipment of other tenants or
occupants of the Project after Tenant’s initial installation of its Satellite
Dish that causes interference with the Satellite Dish, Landlord shall, upon
receipt of written notice, require the owner of the interfering equipment to (i)
eliminate such interference within three (3) days or (ii) cease operating the
interfering equipment.

 

SECTION 32. STORAGE SPACE. To the extent available, Tenant may lease storage
space in the area marked Potential Storage Space on Exhibit A for $6.00 per
square foot plus Tenant’s Proportionate Share of Operating Expenses for the
storage space area. The location, duration, square foot area of the storage
space shall be mutually agreed to by Landlord and Tenant.

 

SECTION 33. FIRST RIGHT OF OFFER TO LEASE SPACE IN ADJACANT LAND AREA. Landlord
may elect, in its sole discretion, to consider building either (i) a
build-to-lease project for a particular prospective tenant (“BTL Project”) or
(ii) a speculative building project (“Spec Project”), on the land west of the
Premises designated as the “Adjacent Land Area” on Exhibit A attached hereto
(the “Adjacent Land Area”). During the term of the Lease, Tenant shall have the
first option to lease space constructed by Landlord on the Adjacent Land Area
under the terms and conditions set forth below. Tenant and Landlord agree that a
condition of Tenant’s rights under this Section 33 shall be that Tenant is not
in default under Section 18 of this Lease, that this Lease is in full force and
effect and that Tenant’s then current financial condition is sufficient to allow
Landlord to underwrite the project in accordance with customary industry
standards.

 

With respect to a BTL Project, Landlord shall provide written notice to Tenant
indicating the terms set forth in any bona-fide build-to-lease proposal that
Landlord receives (including, but not limited to, the proposed square footage,
lease term, tenant improvements and commencement date). Tenant shall have
fourteen (14) days to provide Landlord with irrevocable notice of its intent to
lease the entire area indicated in Landlord’s notice under the same terms and
conditions set forth in Landlord’s notice, and Landlord and Tenant agree to
immediately enter into a lease agreement under the same terms and conditions set
forth in Landlord’s notice. In the event that Tenant does not exercise its
rights under this paragraph, then Landlord may proceed with its proposed BTL
Project, and Tenant’s first right of offer shall be null and void; provided,
however, if Landlord does not commence construction of the BTL Project set forth
in Landlord’s notice within six (6) months of Landlord’s notice date (subject to
delays caused by Force Majeure), then Tenant’s first right of offer shall be
reinstated.

 

-33-

--------------------------------------------------------------------------------

With respect to a Spec Project (or a BTL Project with a speculative component),
Landlord shall provide written notice to Tenant indicating Landlord’s intent to
construct a Spec Project and detailing the market lease terms for the project
(including, but not limited to, minimum and maximum square footage, lease rates,
term, tenant improvements and commencement date). Tenant shall have fourteen
(14) days to provide Landlord with irrevocable notice of its intent to lease the
space indicated in Landlord’s notice under the same terms and conditions set
forth in Landlord’s notice, and Landlord and Tenant agree to immediately enter
into a lease agreement under the same terms and conditions set forth in
Landlord’s notice. In the event that Tenant does not exercise its rights set
forth in this paragraph, then Landlord may proceed with its proposed Spec
Building, and Tenant’s first right of offer shall be null and void; provided,
however, if Landlord does not commence construction of the Spec Project set
forth in Landlord’s notice within six (6) months of Landlord’s notice date
(subject to delays caused by Force Majeure), then Tenant’s first right of offer
shall be reinstated.

 

SECTION 34. DEVELOPMENT OF ADJACANT LAND AREA. Landlord hereby acknowledges and
agrees that during the Lease Term the development of the Adjacent Land Area will
be limited to office space, office showroom space, office/flex space or office
warehouse space, and that any building constructed on the Adjacent Land Area
will be constructed of building materials of quality equal to or better than
those included in the Building.

 

SECTION 35. 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 hereby notifies Tenant that CSM
Corporation, a Minnesota corporation, has been appointed to act as the agent in
the management and operation 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 Delaware, (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. 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.

 

E. 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.

 

-34-

--------------------------------------------------------------------------------

F. 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.

 

G. 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.

 

H. 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.

 

I. 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 owning 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.

 

J. 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.

 

K. Amendment. This Lease may not be altered, waived, amended, or extended except
by an instrument in writing signed by Landlord and Tenant.

 

L. 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.

 

M. Review. 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.

 

-35-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective the
day and year first above written.

 

LANDLORD

  TENANT CSM INVESTORS II, INC.   SECURE COMPUTING CORPORATION

BY:

 

 

--------------------------------------------------------------------------------

 

BY:

 

 

--------------------------------------------------------------------------------

Print Name

 

 

--------------------------------------------------------------------------------

 

Print Name

 

 

--------------------------------------------------------------------------------

Print Title:

 

 

--------------------------------------------------------------------------------

 

Print Title:

 

 

--------------------------------------------------------------------------------

 

206125 - LEASING/PROPERYMGMT-SECURE COMPUTING LEASE AGREEMENT FOR MIDWAY OF

 

-36-