Exhibit 10.23

TABLE OF CONTENTS

 

         PAGE  

1.

  Premises and Term      1   

2.

  Base Rent, Late Payment Charges and Security Deposit      1   

3.

  Use      2   

4.

  Operating Costs; Additional Rent      2   

5.

  Landlord’s Responsibilities      4   

6.

  Tenant’s Responsibilities      4   

7.

  Alterations; Condition of Premises Upon Expiration      6   

8.

  Signs/Window Coverings      6   

9.

  Inspection      6   

10.

  Utilities      6   

11.

  Assignment and Subletting      7   

12.

  Fire and Casualty Damage      8   

13.

  Liability, Waiver and Release      9   

14.

  Insurance      9   

15.

  Condemnation      10   

16.

  Holding Over      11   

17.

  Quiet Enjoyment      11   

18.

  Events of Default      11   

19.

  Remedies      12   

20.

  Landlord’s Default      13   

21.

  Landlord’s Lien      13   

22.

  Mortgages      14   

23.

  Mechanic’s Liens      14   

24.

  Notices      14   

25.

  Hazardous Substances      14   

26.

  Expense of Enforcement      15   

27.

  Transfer of Landlord’s Interest; Limitation of Liability      15   

28.

  Right of Landlord to Perform      16   

29.

  Miscellaneous      16   

30.

  Force Majeure      17   

31.

  Exhibits      18   

32.

  Right to Terminate      18   

33.

  Right to Extend Term      18   

Exhibit A – Depiction of Premises

Exhibit B – Rules and Regulations

Exhibit C – Form of Commencement Confirmation

Exhibit D – Signage Criteria

Exhibit E – Move-Out Standards

Exhibit F – Work Letter

Exhibit G – Depiction of Bays

Exhibit H – Estoppel Certificate

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

DATA SHEET

 

DATE OF LEASE:    December 20, 2013 LANDLORD:    St. Paul Fire and Marine
Insurance Company, a Minnesota corporation LANDLORD’S ADDRESS FOR RENT:   

St. Paul Fire and Marine Insurance Company

c/o Cushman & Wakefield/NorthMarq Real Estate Services

SDS-12-2659, PO Box 86

Minneapolis, MN 55486-2659

TENANT:    Antares Pharma, Inc., a Delaware corporation TENANT’S ADDRESS:   
Suite 105, 3905 Annapolis Lane North, Plymouth, Minnesota, 55447 PREMISES:   
18,173 rentable square feet, with a clear height of 12 feet, as designated in
Exhibit A. COMMENCEMENT DATE:    The date Landlord tenders possession of the
Premises to Tenant with the Work Substantially Completed, as the Work Letter in
Exhibit F defines those terms. ANTICIPATED COMMENCEMENT DATE:    March 1, 2014.
RENT COMMENCEMENT DATE:    The 211th day after the Commencement Date, subject to
adjustment under the Work Letter. EXPIRATION DATE:    If the Commencement Date
is the first day of the month, the Expiration Date is the day before the 8th
anniversary of the Commencement Date; otherwise, the Expiration Date is the last
day of the month in which the 8th anniversary of the Commencement Date occurs.
TERM:    96 full calendar months, plus, if the Commencement Date is not the
first day of a month, the partial month that begins on the Commencement Date.
The Term begins on the Commencement Date and ends on the Expiration Date, unless
earlier terminated as provided in this Lease. BASE RENT:    Subject to increase
for amortization of the allowance under Section 5 of the Work Letter in Exhibit
F, Base Rent is due under this Lease as follows:

 

Lease

Period

   Annual
Base Rent      Monthly
Base Rent  

Commencement Date – Rent Commencement Date

     none         none   

Rent Commencement Date – end of the 12th calendar month after the Commencement
Date

   $ 186,273       $ 15,523   

Months 13 - 24

   $ 190,930       $ 15,911   

Month 25 - 36

   $ 195,703       $ 16,309   

Month 37 - 48

   $ 200,596       $ 16,717   

Month 49 - 60

   $ 205,611       $ 17,134   

Month 61 - 72

   $ 210,751       $ 17,563   

Month 73 - 84

   $ 216,020       $ 18,002   

Month 85 - 96

   $ 221,420       $ 18,452   

 

  In this table and throughout this Lease, “months” means full calendar months.
If the Commencement Date is not the first day of a month, month 1 is the month
after the month in which the Commencement Date occurs. USE:   Office,
laboratory, research and development, and warehouse.

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

ADDRESSES FOR NOTICES:   Landlord:    with a copy to Landlord’s Managing Agent:
 

St. Paul Fire and Marine Insurance Company

385 Washington Street

St. Paul, Minnesota 55102

Attn: Vice President, Asset Management

  

Cushman & Wakefield/NorthMarq

3500 American Blvd. West, Suite 200

Bloomington, Minnesota 55431

Attn: Vice President, Property Management

  Tenant:    with a copy to Tenant’s Counsel  

Antares Pharma, Inc.

100 Princeton South Suite 300

Ewing, New Jersey 08628

Attn: CFO

  

Morgan Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Attn: Joanne R. Soslow, Esq.

     With an additional copy to Tenant:     

Antares Pharma, Inc.

3905 Annapolis Lane North,

Plymouth, Minnesota, 55447

SECURITY DEPOSIT:   $24,131 PHASE:   Phase IV, Plymouth Business Center, which
consists of 2 buildings with a combined rentable square footage of 84,584.
TENANT’S PROPORTIONATE SHARE:   21.49% of Phase IV, Plymouth Business Center.
BUILDING:   3905 Annapolis Lane North, Plymouth, Minnesota, the building in
which the Premises are located, which building is a part of Phase IV, Plymouth
Business Center. TENANT’S BROKER:   Todd Braufman and Jeff Jones of AREA, LLC
PARKING:   Tenant and its employees and visitors may use 50 parking stalls on a
non-exclusive, unreserved basis in common with the other tenants of the Plymouth
Business Center and their employees and visitors, at no additional cost.
CONTROLLABLE OPERATING COSTS CAP:   “Controllable Operating Costs” means all
Operating Costs other than taxes, utilities, insurance, and snow and ice
removal. With respect to calendar year 2015, “Controllable Operating Costs Cap”
means 105% of the Controllable Operating Costs Tenant would have paid during
2014 had the Term commenced on January 1, 2014. With respect to each calendar
year during the Term after 2015, Controllable Operating Costs Cap means 105% of
the Controllable Operating Costs Cap for the previous calendar year, with the
effect that the Controllable Operating Costs Cap will increase 5% per year on a
cumulative basis.

The information in this Data Sheet is incorporated in and made a part of this
lease agreement.

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

LEASE AGREEMENT

THIS LEASE AGREEMENT (“Lease”) is between Landlord and Tenant as of the Date of
Lease.

W I T N E S E T H:

1. Premises and Term. In consideration of the obligation of Tenant to pay Rent
(as defined in Paragraph 4(g)), and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby leases to Tenant, and Tenant
leases from Landlord, the Premises, together with all rights, privileges,
easements, appurtenances, and immunities belonging to or in any way pertaining
to the Premises. Tenant and Landlord agree that, for all purposes related to
this Lease, the Premises contain the number of rentable square feet of floor
area stated in the Data Sheet, regardless of the actual measurement. By
occupying the Premises, Tenant will be deemed to have accepted the Premises and
to have acknowledged that the Work has been completed and the Premises are in
the condition this Lease requires, except for items of the Work that have not
been fully completed. Tenant and Landlord agree to create a written punchlist,
on or about the Commencement Date, of any items of the Work that remain to be
completed or that need to be repaired. Landlord agrees to fully complete the
Work as promptly after the Commencement Date as is reasonably practicable, and
Tenant agrees to cooperate with Landlord and allow Landlord and its contractors
access to the Premises to do so. If Landlord does not complete the punchlist
work within 30 days after the date of the punchlist, together with any
additional time required to obtain replacement parts, and as otherwise extended
by force majeure, Tenant may give Landlord a written notice that describes in
reasonable detail the remaining incomplete items and states that Tenant intends
to complete those items itself and charge Landlord for doing so if Landlord does
not complete them within 15 days. If Landlord does not complete the remaining
items of the Work within 15 days after Tenant’s notice, as extended by force
majeure, Tenant may complete those items and Landlord will reimburse Tenant for
the reasonable out-of-pocket cost of doing so within 30 days after Tenant
delivers an invoice and reasonable backup documentation. Tenant acknowledges and
agrees that it does not have the right to offset or deduct the cost of any such
work from Rent.

Tenant agrees, within 10 business days after request by the Landlord, to sign
and deliver a “Confirmation of Lease Term” on the form in Exhibit C
acknowledging the Commencement Date, the Rent Commencement Date, and the
Expiration Date. In addition, Tenant agrees, within 10 business days after
request, to sign and deliver an amendment to this Lease that states the amount
of the allowance under Paragraph 5 of the Work Letter and replaces the table of
Base Rent in the Data Sheet with a table of Base Rent that includes amortization
of the allowance in accordance with Paragraph 5 of the Work Letter.

2. Base Rent, Late Payment Charges and Security Deposit.

(a) Base Rent. Tenant agrees to pay to Landlord Base Rent for the Premises, in
advance, without demand, deduction or set off, starting on the Rent Commencement
Date and throughout the rest of the Term, at the rate stated in the Data Sheet,
plus amortization of the allowance under Paragraph 5 of the Work Letter in
Exhibit F. Starting on the Rent Commencement Date, Base Rent is due in monthly
installments without demand on or before the first day of each calendar month.
If the Rent Commencement Date is not the first day of a month, Base Rent for the
month in which the Rent Commencement Date occurs will be pro-rated as of the
Rent Commencement Date at the rate of 1/30th of the monthly Base Rent for each
day and will be payable on the Rent Commencement Date. Tenant agrees to pre-pay
one full month’s Base Rent on the date Tenant signs and delivers this Lease, and
Landlord agrees to credit the prepaid Base Rent against the first installment or
installments of Base Rent that come due.

(b) Late Charge; Interest. If Tenant fails to pay any installment of Rent,
including any amount treated as Additional Rent (as defined in Paragraph 4(g))
of this Lease, or other sums hereunder prior to the date such installment or
other charge becomes delinquent pursuant to Paragraph 18, Tenant shall pay to
Landlord on demand a late charge of $500.00 for each late installment or other
charge after the first occurrence in any calendar year of the Lease to help
defray the additional cost to Landlord for processing such late payments, and
such late charge shall be Additional Rent. In addition to the foregoing, to the
extent Rent is not paid on or before the date the same becomes delinquent
pursuant to Paragraph 18, all unpaid Rent shall accrue interest from the first
day of each month at a rate which is the lesser of (i) 12% per annum; or
(ii) the highest amount permitted by applicable law and such interest shall
constitute Additional Rent and shall be payable with the next installment of
Base Rent falling due. The provision for the payment of such late charge and
interest shall be in addition to all of Landlord’s other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord’s remedies in any manner.

 

1

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

(c) Security Deposit. Tenant agrees to deposit with Landlord on the date hereof
the Security Deposit as stated on the Data Sheet, which Security Deposit shall
be held by Landlord, without interest, as security for the performance of
Tenant’s covenants and obligations under this Lease, it being expressly
understood and agreed that such deposit is not an advance rental deposit or a
measure of Landlord’s damages in case of Tenant’s default and that Landlord has
no obligation to segregate the Security Deposit from any of Landlord’s other
funds. Upon the occurrence of any Event of Default (as defined below) by Tenant,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, apply such Security Deposit to any arrears of Rent or
other payments due Landlord under this Lease, and any other damage, injury,
expense or liability caused by such Event of Default without waiving such Event
of Default, and Tenant shall pay to Landlord on demand the amount so applied in
order to restore the Security Deposit to its original amount, which amount shall
constitute Additional Rent. To the extent that Landlord has not applied the
Security Deposit on account of a failure of Tenant to comply with its
obligations under this Lease, the Security Deposit shall be returned (without
interest) to Tenant within 30 days after the expiration of this Lease and the
full performance of Tenant hereunder.

3. Use. The Premises shall be used only for the Use stated in the Data Sheet and
for such other lawful purposes as may be incidental thereto. Outside storage,
including without limitation, trucks and other vehicles, garbage containers and
outdoor furniture are prohibited without Landlord’s prior written consent.
Except for permits and licenses Landlord must obtain to complete the Base Work
(as the Work Letter defines that term) , Tenant shall, at its own cost and
expense, obtain any and all licenses and permits necessary for Tenant’s Use
prior to the Commencement Date. Tenant shall comply with all governmental laws,
ordinances and regulations applicable to the Use of the Premises, and shall
promptly comply with all governmental orders and directives for the correction,
prevention and abatement of nuisance in or upon, or connected with, the
Premises, all at Tenant’s sole expense. Tenant shall not receive, store or
otherwise handle on the Premises any product, material or merchandise which is
explosive or highly flammable. Tenant will not permit the Premises to be used
for any purpose or in any manner (including without limitation any method of
storage) which would render the insurance on the Building or the property on
which the Phase is located (“Property”) void or the insurance risk more
hazardous or cause the State Board of Insurance or other insurance authority to
disallow any sprinkler credits. If any increase in the fire and extended
coverage insurance premiums paid by Landlord for the Building is directly caused
by Tenant’s use and occupancy of the Premises, then Tenant shall pay to Landlord
the amount of such increase, upon demand, as Additional Rent.

4. Operating Costs; Additional Rent.

(a) Operating Costs. Upon demand, Tenant shall pay to Landlord, starting on the
Commencement Date and throughout the Term, Tenant’s proportionate share of
Operating Costs, as defined below, calculated on the basis of Tenant’s
Proportionate Share stated on the Data Sheet, except that Operating Costs in
2015 and each later calendar year will not include any Controllable Operating
Costs that exceed the Controllable Operating Costs Cap for that calendar year.
Tenant agrees to pre-pay one full month’s installment of Tenant’s proportionate
share of Operating Costs on the date Tenant signs and delivers this Lease, and
Landlord agrees to credit the prepaid payment of Operating Costs against the
first installment or installments of Operating Costs that come due.

As used in this Lease, the term “Operating Costs” shall mean any and all
expenses, costs and disbursements of any kind and nature whatsoever incurred by
Landlord in connection with the ownership, management, maintenance, operation
and repair of the Property, the Phase or the Building which Landlord shall pay
or become obligated to pay in respect of a calendar year (regardless of when
such Operating Costs were incurred). Operating Costs shall include, without
limitation, the costs of maintenance, repairs, and, subject to the provisions of
Paragraph 5 hereof, replacements to the Building, including, downspouts,
gutters, painting, sprinkler systems, roof and walls; the costs of maintaining
and repairing parking lots, parking structures and easements; property
management fees, salaries, fringe benefits and related costs payable to
employees of Landlord’s Managing Agent whose duties are connected with the
Property;

 

2

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

insurance costs, all heating and air conditioning costs, electricity, sewer and
water and other utility costs not separately metered to tenants, landscape
maintenance, trash and snow removal, Taxes, as defined in Paragraph 4(e), and
costs and expenses incurred by Landlord in protesting any assessments, levies or
the tax rate, provided, however, that Operating Costs shall not include the
following: (i) costs of alterations of any tenant’s premises, including the
Premises; (ii) costs of curing construction defects to the base Building;
(iii) depreciation; (iv) interest and principal payments on mortgages, and other
debt costs; (v) real estate brokers’ leasing commissions or compensation;
(vi) any cost or expenditure (or portion thereof) for which Landlord is
reimbursed, whether by insurance proceeds or otherwise; (vii) cost of any
service furnished to any other occupant of the Building which Landlord does not
provide to Tenant hereunder; and (viii) the full replacement of (A) roofs,
(B) exterior walls (as defined in Paragraph 5) and (C) foundations.
Notwithstanding anything contained herein to the contrary, any capital
improvements to the Building, including, without limitation, structural repairs
or replacements to the Building, any capital improvements made after the Date of
Lease which are intended to reduce Operating Costs or any capital improvements
which are required under any governmental laws, regulations, or ordinances which
were not applicable to the Building at the time it was constructed, including,
without limitation, the ADA (as defined in Paragraph 5 hereof), shall be
included in Operating Costs.

(b) Estimated Operating Costs. Promptly after the commencement of this Lease and
during January of each year or as soon thereafter as practicable, Landlord shall
give Tenant written notice of its estimate of amounts payable under Paragraph
4(a) for such calendar year. On or before the first day of each month
thereafter, Tenant shall pay to Landlord one/twelfth (1/12th) of such estimated
amounts, provided that if such notice is not given in January, Tenant shall
continue to pay on the basis of the prior year’s estimate until the first day of
the month after the month in which such notice is given, at which time, in
addition to paying the first installment of the estimated amount provided by
Landlord for such year, Tenant shall also pay the difference, if any, between
the current year’s estimate and the previous year’s estimate for the period from
January 1 of such year through the last day of the month in which the notice was
given. If at any time it appears to Landlord that the amounts payable under
Paragraph 4(a) for the then current calendar year will vary from its estimate by
more than five percent (5%), Landlord may, by written notice to Tenant, revise
its estimate for such year, and subsequent payments by Tenant for such year
shall be based upon such revised estimate.

Within ninety (90) days after the end of each calendar year, Landlord shall
deliver to Tenant a summary of the total Operating Costs for the previous
calendar year and Tenant’s proportionate share thereof which shall be based upon
Tenant’s Proportionate Share as stated in the Data Sheet. If such summary shows
an amount due from Tenant that is less than the estimated payments previously
paid by Tenant (the “Excess Amount”), Landlord shall credit the Excess Amount
against Operating Costs next falling due hereunder until the Excess Amount is
exhausted; provided however, that if the summary shows an Excess Amount for the
year in which this Lease expired, the summary shall be accompanied by a refund
of the Excess Amount to Tenant. If such summary shows an amount due from Tenant
that is more than the estimated payments previously paid by Tenant, Tenant shall
pay the deficiency to Landlord, as Additional Rent, within thirty (30) days
after delivery of the summary.

(c) Right to Audit. Tenant or its representatives shall have the right to
examine Landlord’s books and records of Operating Costs during normal business
hours within 60 days following the furnishing of the summary to Tenant. Unless
Tenant takes written exception to any item within 60 days following the
furnishing of the summary to Tenant (which item shall be paid in any event),
such summary shall be considered as final and accepted by Tenant.

(d) Accrual Accounting. If Landlord selects the accrual accounting method rather
than the cash accounting method for operating expense purposes, Operating Costs
shall be deemed to have been paid when such expenses have accrued.

(e) Taxes. Landlord agrees to pay before they become delinquent all taxes,
including, without limitation, real estate taxes, installments of special
assessments and governmental charges of any kind and nature whatsoever, (herein
collectively referred to as “Taxes”) lawfully due and payable with respect to
the Building, the Phase and the Property. In addition, Tenant shall be liable
for all taxes levied or

 

3

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

assessed against personal property, furniture or fixtures placed by Tenant in
the Premises. If any such taxes for which Tenant is liable are levied or
assessed against Landlord or Landlord’s property and if Landlord elects to pay
the same or if the assessed value of Landlord’s property is increased by
inclusion of personal property, furniture or fixtures placed by Tenant in the
Premises, and Landlord elects to pay the taxes based on such increase, Tenant
shall pay to Landlord upon demand that part of such taxes, provided, however,
Landlord shall provide documentation evidencing taxes for which Tenant is
liable.

(f) Change in Method of Taxation. If at any time during the Term, the present
method of taxation shall be changed so that in lieu of the whole or any part of
any Taxes (including personal property taxes described in Paragraph 4(e)
hereof), assessments or governmental charges levied, assessed or imposed on real
estate and the improvements thereon, there shall be levied, assessed or imposed
on Landlord a capital levy or other tax directly on the Rent or any portion
thereof and/or a franchise tax, assessment, levy or charge measured by or based,
in whole or in part, upon such Rent, Landlord’s income or any portion thereof
for the present or any future building or buildings on the Property, then all
such taxes, assessments, levies or charges, or the part thereof so measured or
based, shall be deemed to be included within the term “Taxes” for the purposes
hereof.

(g) Definition of “Rent”. Collectively, all amounts other than Base Rent and
Operating Costs that this Lease obligates Tenant to pay to Landlord or for
Landlord’s benefit, including, without limitation, any costs Tenant owes under
the Work Letter in Exhibit F and any chargebacks for work Landlord performs for
Tenant’s benefit, are, collectively, the “Additional Rent”. All Additional Rent
is due and payable upon demand. Base Rent, Operating Costs, and Additional Rent
are, collectively, “Rent.”

5. Landlord’s Responsibilities. Except for reasonable wear and tear and any
casualty against which Tenant was obligated to insure under this Lease, Landlord
shall maintain all parts of the Building, other than other tenants’ premises and
the Premises, making all necessary repairs and replacements, whether ordinary or
extraordinary, structural or nonstructural, including downspouts, gutters,
irrigation sprinkler system; regularly mow any grass, remove weeds and perform
general landscape maintenance; remove snow and ice; and maintain and repair the
parking lot and driveway areas; provided however, that Landlord shall be
responsible, at its sole cost and expense, for the full replacement of roofs,
exterior walls and foundations and for the compliance with Title III of the
Americans With Disabilities Act of 1990, as amended as of the Date of Lease (the
“ADA”) solely as to the exterior walls of the Premises, including access to the
Building and maintenance of parking. Tenant shall immediately give Landlord
written notice of any defect or need for repairs and Landlord shall take
reasonably prompt action to repair such defects. If Landlord defaults in any of
its obligations under this Section 5 and does not cure the default within 30
days after Tenant gives Landlord written notice of the default, or, if the
default is not reasonably curable within 30 days, within any longer time that is
reasonably necessary to complete the cure, Tenant may give Landlord a second
written notice that describes Landlord’s default in reasonable detail and states
that, if Landlord does not cure the default within 15 days, Tenant intends to
cure the default and charge Landlord for the reasonable cost of the cure. If
Landlord does not cure the default within 15 days after such a second notice, as
extended by force majeure, Tenant may cure the default on Landlord’s behalf and
Landlord will reimburse Tenant for its reasonable out-of-pocket cost of the cure
within 30 days after Tenant delivers a paid invoice with lien waivers for any
lienable work and reasonable backup documentation. Tenant acknowledges and
agrees that it does not have any right to offset or deduct the cost of any such
cure from Rent, but, subject to any other limitation in this Lease, Tenant is
entitled to pursue any other remedy available to enforce Landlord’s obligation
to pay for such cure costs. Landlord’s liability with respect to any defects,
repairs or maintenance for which Landlord is responsible under any of the
provisions of this Lease shall be limited to the cost of such repairs or
maintenance or the curing of such defect. The term “exterior walls” as used in
this Lease does not include windows, glass or plate glass, doors, special store
fronts or office entries. Landlord shall furnish the Building with water (i) for
drinking, lavatory, toilet and sanitary sewer purposes drawn through fixtures
installed by Landlord, (ii) necessary for the operation of the Building’s fire
safety devices, and (iii) if required by the Building’s HVAC system, necessary
for the operation of such system.

6. Tenant’s Responsibilities.

(a) Maintenance of Premises. Tenant shall, at its own cost and expense, keep and
maintain all parts of the Premises (except as provided in Paragraph 5) in good
condition, promptly making all necessary repairs and replacements, including but
not limited to, windows, glass and plate glass, doors, any

 

4

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

special entry, interior walls and finish work, floors and floor covering,
heating and air conditioning systems, electrical systems, dock boards, truck
doors, dock bumpers, dock seals, plumbing work and fixtures, termite and pest
extermination, regular removal of trash and debris and keeping the parking
areas, driveways, alleys and the whole of the Premises in a clean and sanitary
condition, and Tenant shall comply with the ADA with respect to the Premises.
Tenant shall not be obligated to repair any damage caused by fire, tornado or
other casualty covered by the insurance to be maintained by Landlord pursuant to
Paragraph 12(a), except that Tenant shall be obligated to repair all wind damage
to glass unless caused by a tornado.

(b) Damage to Demising Walls. Tenant shall not damage any demising wall or
disturb the integrity and support provided by any demising wall and shall, at
its sole cost and expense, promptly repair any damage or injury to any demising
wall caused by Tenant or its employees, agents or invitees.

(c) Parking. Tenant and its employees, customers and licensees shall have the
nonexclusive right to use, in common with the other parties occupying the Phase,
throughout the Term, 50 parking stalls in the common parking areas (exclusive of
any parking or work load areas designated or to be designated by Landlord for
the exclusive use of Tenant or other tenants occupying or to be occupying other
portions of the Phase), and to use the driveways and alleys adjacent to the
Building, subject to such reasonable rules and regulations as Landlord may from
time to time prescribe.

(d) Preventive Maintenance. Tenant shall, at its own cost and expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating and air conditioning
systems and equipment serving the Premises. The maintenance contractor and the
contract must be approved by Landlord, such approval not to be unreasonably
withheld, conditioned or delayed. The service contract must include all services
suggested by the equipment manufacturer in the operation/maintenance manual and
must become effective (and a copy thereof delivered to Landlord) within sixty
(60) days after the Commencement Date.

(e) Security Measures.

(i) Tenant acknowledges and agrees that the Building is an industrial building,
and, accordingly, the level of security services, if any, provided by Landlord
are only those commonly provided for industrial buildings. Specifically, and
without limitation of the foregoing, Landlord does not provide, and the Rent
payable hereunder does not include, the cost of a guard service, an alarm
service or other security measures.

(ii) Notwithstanding the foregoing, to the extent Landlord provides any security
measures at any time, such security measures are not intended to be and shall
not be treated as a guaranty against crime, property damage, personal or bodily
injury or death. Landlord does not make, and Tenant hereby waives any right to
make a claim that Landlord has made any guaranty or warranty, express or
implied, with respect to security at the Building or the Project or, if any
security measures exist, that the same will prevent the occurrence of and/or the
consequences of criminal or other unlawful activity.

(iii) The parties agree that Landlord shall not be liable to Tenant for any
injury, damage or loss from any cause whatsoever which is caused (A) in whole or
in part arising from any problem, defect, malfunction or failure of any security
measure (if any is provided); or (B) by criminal activity.

(iv) Tenant assumes full responsibility for protecting the Premises from, among
other things, theft, robbery, and pilferage.

(f) Costs Payable by Tenant. Upon demand by Landlord, Tenant shall pay, as
Additional Rent, the cost and expense of repairing any damage to the Premises
resulting from and/or caused in whole or in part by the negligence or misconduct
of Tenant, its agents, servants, employees, contractors, patrons, customers, or
any other person entering upon the property as a result of Tenant’s business
activities or caused by Tenant’s default hereunder to the extent the cost of
repairing such damage is not reimbursed by the insurance to be maintained by
Landlord under Paragraph 12(a).

 

5

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

7. Alterations; Condition of Premises Upon Expiration. Tenant shall not make any
alterations, additions or improvements to the Premises (including but not
limited to roof and wall penetrations) without the prior written consent of
Landlord. Tenant may, without the consent of Landlord, but at its own cost and
expense and in a good workmanlike manner erect such shelves, bins, machinery and
trade fixtures as it may deem advisable, without altering the basic character of
the Building and without overloading or damaging such Building, and in each case
complying with all applicable governmental laws, ordinances, regulations and
other requirements. Prior to commencing any such alterations, additions or
improvements Tenant shall provide such assurances to Landlord, including,
without limitation, waivers of lien, surety company performance and payment
bonds and/or personal guaranties of persons of substance, as Landlord shall
require to assure payment of the costs thereof and to protect Landlord against
any loss from mechanics’, laborers’, materialmen’s or other liens. All
alterations, additions, installations, improvements and partitions erected by
Tenant, including, without limitation, all telephone and data communications
cabling (“Cabling”), shall be and remain the property of Tenant during the Term
and Tenant shall, unless Landlord otherwise elects as provided below, remove all
alterations, additions, installations, improvements and partitions, including,
without limitation, the Cabling, erected or installed by Tenant and restore the
Premises to the condition required by Exhibit E attached hereto and made a part
hereof by the earliest of (a) the Expiration Date, (b) the date of termination
of this Lease prior to the Expiration Date or (c) the vacating of the Premises
without termination of this Lease (said earliest date may be referred to as the
“Restoration Date”); except that if Landlord so elects, in writing, before the
Restoration Date, such alterations, additions, installations, improvements,
partitions and Cabling (other than trade fixtures and personal property of
Tenant, including but not limited to furniture and fixtures installed by Tenant
including without limitation, work stations and cubicles) will become Landlord’s
property on the Restoration Date and Tenant will deliver them Landlord with the
Premises. All shelves, bins, machinery and trade fixtures installed by Tenant
shall be removed by Tenant by the Restoration Date if required by Landlord, and
upon any such removal Tenant shall restore the Premises to the condition
required by Exhibit E. All such removals and restoration shall be accomplished
in a good and workmanlike manner and shall not damage the primary structural
qualities of the Building.

8. Signs/Window Coverings. All signage visible from the exterior of the Premises
shall, at all times, comply with Exhibit D. Tenant shall not, without the prior
written consent of Landlord, install or affix any window coverings, draperies,
signs, window or door lettering or advertising media of any type on the
Property, the Building or in or on the Premises which are visible from the
exterior of the Building. Tenant shall remove any permitted signs and window
coverings, but not blinds, not later than the Restoration Date. Any such
installations and removals shall be made in such manner as to avoid injury or
defacement of the Building and other improvements, and Tenant shall repair any
injury or defacement, including, without limitation, discoloration caused by
such installation and/or removal.

9. Inspection. Landlord and Landlord’s agents and representatives shall have the
right to enter and inspect the Premises at any reasonable time upon reasonable
notice for the purpose of ascertaining the condition of the Premises or in order
to make such repairs and perform such actions as may be required or permitted to
be made by Landlord under the terms of this Lease. Landlord and Landlord’s
agents and representatives shall have the right to enter the Premises at any
reasonable time upon reasonable notice for the purpose of showing the Premises
to prospective purchasers and/or lenders and, during the period that is nine
(9) months prior to the end of the Term, Landlord and Landlord’s agents shall
have the right to erect a sign on the Premises indicating the Premises are
available for lease.

10. Utilities. Starting on the Commencement Date and throughout the Term, Tenant
shall pay for all water, gas, heat, light, power, telephone, sewer and sprinkler
charges and other utilities and services used in the Premises, together with any
taxes, penalties, surcharges or the like pertaining thereto and shall furnish
and install all replacement electric light bulbs and tubes. Water and sewer
service is not separately metered for the Premises, so Operating Costs include
water and sewer service. As part of the Work, Landlord will install separate
electric and gas, meters for the Premises. Except for water and sewer service,
Tenant will open accounts with all utility providers for all utility services
Tenant needs or desires in Tenant’s name with service starting on the
Commencement Date. Landlord shall not be liable for any interruption or failure
of utility services, communications or data services serving the Building or the
Premises arising from any cause whatsoever except to the extent the interruption
or failure is both (a) caused by the negligence or willful misconduct of
Landlord, its subcontractors or agents and (b) results in personal injury or
property damage that is covered or coverable by a policy of commercial general
liability insurance.

 

6

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

11. Assignment and Subletting.

(a) Assignment and Subletting. Tenant shall not have the right to assign or
pledge this Lease or to sublet the whole or any part of the Premises, whether
voluntarily or by operation of law, or permit the use or occupancy of the
Premises by anyone other than Tenant, without the prior written consent of
Landlord, not to be unreasonably withheld, conditioned or delayed, and such
restrictions shall be binding upon any assignee or subtenant to which Landlord
has consented. The foregoing prohibition includes, without limitation, any
subletting or assignment which would otherwise occur by merger, consolidation,
reorganization, transfer or other change in Tenant’s corporate, partnership or
proprietary structure. Notwithstanding any permitted assignment or subletting,
Tenant shall at all times remain directly, primarily and fully responsible and
liable for the payment of the Rent and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease. Upon the
occurrence of an Event of Default, if the Premises or any part thereof are then
assigned or sublet, Landlord, in addition to any other remedies herein provided
or provided by law, may, at its option, collect directly from any assignee or
subtenant all amounts due and becoming due to Tenant under such assignment or
sublease and apply such amounts against any sums due to Landlord from Tenant
hereunder, and no such collection shall be construed to constitute a novation or
release of Tenant from the further performance of Tenant’s obligations
hereunder. Landlord’s acceptance of any Rent following any assignment or other
transfer prohibited by this Paragraph 11 shall not be deemed to be a consent by
Landlord to such assignment or other transfer (including, without limitation, a
prohibited sublease) nor shall the same be deemed a waiver of any right or
remedy of Landlord hereunder for breach of this Paragraph 11. For the purposes
of this Paragraph 11, Landlord shall be deemed to have acted reasonably if it
withholds its consent to a proposed assignment or sublease if (i) the
creditworthiness of the proposed assignee or sublessee is less than the greater
of (A) Tenant’s net worth as of the date of this Lease; or (B) a net worth of at
least the net worth of tenants to whom Landlord is then in the process of
leasing similar square footage in the Building, it being understood and agreed
that if Landlord is then requiring new tenants of such similar spaces to enhance
their credit by virtue of security deposits, letters of credit or similar
vehicles, Landlord may require that the proposed assignee or sublessee comply
with such credit enhancement requirements; and/or (ii) the assignee or sublessee
is a tenant of Landlord in the Building or a prospective tenant of the Building
then working with Landlord or Landlord’s leasing agent.

If Landlord grants its consent to any sublease or assignment, and the base rent
payable by the assignee or subtenant exceeds the Base Rent then payable under
the Lease, Tenant shall pay Landlord, as Additional Rent (i) 50% of such excess
net of Tenant’s actual costs payable to third parties to obtain such sublease or
assignment and (ii) Landlord’s attorneys’ fees incurred with respect to such
assignment or sublease not to exceed $2,500.00. In addition, Tenant’s option to
extend the Term under Paragraph 32, if it is still in effect, will not be
available to any subtenant or assignee, directly or indirectly. If Tenant
assigns this Lease or sublets all or a portion of the Premises without first
obtaining Landlord’s consent, as required by this Paragraph 11(a), said
assignment or sublease shall be null and void and of no force or effect.
Landlord’s consent to an assignment, sublease or other transfer of any interest
of Tenant in this Lease or in the Premises shall not be deemed to be a consent
to any subsequent assignment, transfer, use or occupation.

Tenant shall, at Tenant’s own cost and expense, discharge in full any
outstanding commission obligation on the part of Landlord with respect to any
commissions which may be due and owing as a result of any proposed assignment or
subletting.

(b) Right of Recapture. Subject to this Section 11(b), without limiting
Landlord’s right to approve of any subtenant or assignee, Landlord shall have
the option, in its sole discretion, in the event of Tenant’s written request for
consent to sublet or assign the Premises, to terminate this Lease, or in the
case of Tenant’s written request for consent to sublet less than the entire
Premises, to recapture the portion of the Premises to be sublet, as of the date
the subletting or assignment is to be effective. The option shall be exercised,
if at all, by Landlord giving Tenant written notice (“Recapture Notice”) thereof
within fifteen

 

7

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

(15) days of Landlord’s receipt of Tenant’s written request for consent to
sublet or assign the Premises or a part thereof. In the event that Landlord
issues a Recapture Notice, Tenant shall have the right to withdraw its consent
request by providing written notice thereof to Landlord within five (5) days
after Tenant’s receipt of Recapture Notice, in which event both Tenant’s request
for consent and Landlord’s Recapture Notice shall be deemed null and void. If
this Lease shall be terminated with respect to the entire Premises pursuant to
this subparagraph, the Term shall end on the date stated in Tenant’s notice as
the effective date of the sublease or assignment as if that date had been the
Expiration Date. If Landlord recaptures only a portion of the Premises under
this subparagraph, the Base Rent during the remainder of the Term shall abate
proportionately based on the Base Rent payable hereunder as of the date
immediately prior to such recapture.

12. Fire and Casualty Damage.

(a) Notice of Casualty. If the Building should be damaged or destroyed by fire,
tornado or other casualty, Tenant shall give immediate oral and written notice
thereof to Landlord’s Managing Agent.

(b) Termination of Lease. If the Building should be damaged or destroyed by
fire, tornado or other casualty, or if it should be so damaged thereby that
rebuilding or repairs cannot in Landlord’s estimation be completed within two
hundred (200) days after the date upon which Landlord is notified by Tenant of
such damage, this Lease shall terminate and Base Rent and Operating Costs shall
be abated during the unexpired portion of this Lease, effective upon the date of
the occurrence of such damage.

(c) Repair of Premises. If the Building should be damaged by any peril covered
by the insurance to be provided by Landlord under Paragraph 14(a), but only to
such extent that rebuilding or repairs can, in Landlord’s estimation, be
completed within two hundred (200) days after the date upon which Landlord is
notified by Tenant of such damage (except that Landlord may elect not to rebuild
if such damage occurs during the last year of the Term), this Lease shall not
terminate, and Landlord shall, at its sole cost and expense, proceed with
reasonable diligence to rebuild and repair the Building to substantially the
condition in which it existed prior to such damage, except that Landlord shall
not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements which may have been placed in, on or
about the Premises by Tenant. If the Premises are untenantable following such
damage, Base Rent and Operating Costs payable hereunder during the period in
which the Premises are untenantable shall be abated. In the event that Landlord
should fail to complete such repairs and rebuilding within two hundred
(200) days after the date upon which Landlord is notified by Tenant of such
damage (unless any such delay is due to changes, deletions or additions in
construction requested by Tenant, strikes, lockouts, casualties, force majeure,
war, terrorism, material or labor shortages, governmental regulation or control
or other causes beyond the reasonable control of Landlord, in which event such
period shall be extended for the amount of time Landlord is so delayed), Tenant
may at its option, upon thirty (30) days prior written notice, terminate this
Lease as Tenant’s exclusive remedy, whereupon all rights and obligations of the
parties to each other under this Lease shall cease and terminate.

(d) Application of Proceeds. Notwithstanding anything herein to the contrary, in
the event the holder of any indebtedness secured by a mortgage or deed of trust
covering the Premises or the Building requires that the insurance proceeds be
applied to such indebtedness, the Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made by any such holder, whereupon all
rights and obligations of the parties to each other under this Lease shall cease
and terminate.

(e) Removal of Personal Property. In the event of any damage to the Building or
the Premises by any peril contemplated by this Paragraph 12, Tenant shall,
promptly after the occurrence of such damage and at its sole cost and expense,
remove from the Premises any personal property on the Premises belonging to any
of Tenant, its agents, employees, contractors, licensees or invitees. Tenant
hereby indemnifies, holds harmless and agrees to defend Landlord from any loss,
liability, damage, judgment, cost or expense, including attorneys’ fees through
all appellate levels arising out of any claim of damage or injury by any of
Tenant, its agents, employees, contractors, licensees or invitees as to itself
or themselves or their respective properties arising as a result of the removal
or failure to remove such

 

8

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

personal property. Landlord and Tenant agree that Landlord shall have no
obligation to secure the Building or the Premises in the event of a casualty and
that the risk of loss, by destruction, theft or otherwise, to the personal
property of Tenant, its agents, employees, contractors, licensees or invitees
shall be borne, as between Landlord and Tenant, entirely by Tenant.

13. Liability, Waiver and Release.

(a) No Liability. Landlord shall not be liable for and Tenant will indemnify and
hold Landlord harmless from any loss, liability, claims, suits, costs and
expenses, including attorneys’ fees, arising out of any claim of injury or
damage on or about the Premises arising from any cause whatsoever other than
Landlord’s gross negligence or willful misconduct. Landlord shall not be liable
to Tenant or Tenant’s agents, employees, contractors, licensees or invitees for
any damage to persons or property arising from any cause whatsoever except
Landlord’s gross negligence or willful misconduct and Tenant assumes all risks
of damage to such persons or property. Landlord shall not be liable or
responsible for any loss or damage to any property or person occasioned by any
cause whatever except Landlord’s willful acts or gross negligence.

(b) Waiver and Release. Except as provided below, each of Landlord and Tenant
agrees to rely entirely upon its own property insurance with respect to any
damage, loss or injury to its property.

Each of Landlord and Tenant hereby releases the other and the other party’s
directors, officers, employees, agents and others acting on the other party’s
behalf (collectively, the “released parties”) from all claims and all liability
or responsibility to the releasing party and to any person claiming through or
under the releasing party, by way of subrogation or otherwise, for any loss or
damage to the releasing party’s business or property caused by fire or other
peril, even if such fire or other peril was caused in whole or in part by the
negligence or other act or omission of one or more of the released parties.
Notwithstanding the foregoing, the release from liability and waiver or
subrogation provided for shall (i) only be effective to the extent that the loss
or damage to the releasing party’s business or property is actually covered by
insurance; and (ii) not apply to the extent of any deductible (or deductibles)
applying under such insurance.

14. Insurance.

(a) Landlord’s Insurance. Landlord shall maintain in effect at all times during
the Term a policy or policies of insurance insuring the Building against loss or
damage by fire, explosion or other insurable hazards and contingencies for the
full replacement value. Landlord shall not insure any personal property of
Tenant or any additional improvements which Tenant may construct or install on
the Premises. Landlord may self-insure the exposures described above. Subject to
the provisions of Paragraphs 12(b), 12(c) and 12(d), such insurance shall be for
the sole benefit of Landlord and under its sole control.

(b) Tenant’s Insurance.

(i) Tenant shall, at its sole cost and expense, maintain in effect at all times
during the Term a commercial general liability insurance policy, on an
“occurrence” rather than on a “claims made” basis, with a total combined policy
limit of at least $2,000,000.00. The policy shall include, but not be limited
to, coverages for Bodily Injury, Property Damage, Personal Injury and
Contractual Liability (applying to this Lease), or an equivalent form (or forms)
affording coverage at least as broad. Landlord and Landlord’s Managing Agent
shall be named as Additional Insureds under the policy.

(ii) Tenant shall, at its sole cost and expense, maintain in effect at all times
during the Term, a policy or polices of insurance covering all of Tenant’s
improvements, fixtures, inventory and other personal property in the Premises
against loss by fire and other hazards covered by an “all-risk” form of policy,
in an amount equal to the full replacement cost thereof, without deduction for
physical depreciation. Such insurance shall include Valuable papers and

 

9

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

Records coverage providing for the Reproduction Costs measure of recovery and
coverage for damage to Electronic Data Processing Equipment and Media, including
coverage of the perils of mechanical breakdown and electronic disturbance.

(iii) Tenant shall, at its sole cost and expense, maintain in effect at all
times during the Term, a policy of insurance covering business interruption for
a period of at least 365 days.

(iv) If the use of the Premises by Tenant increases the premium rate for
insurance carried by Landlord on the Building, Tenant shall pay Landlord, upon
demand, as Additional Rent, the amount of such premium increase.

(v) Tenant, upon actual knowledge or receipt of written notice by Landlord,
shall not carry any stock of goods, inventory, or Hazardous Substances (as
defined in this Lease) or do anything in or about the Premises which will in any
way impair or invalidate the obligation of the insurer under any policy of
insurance required by this Lease.

(vi) Insurance policies required by this Paragraph 14(b) shall be in a form
reasonably acceptable to Landlord, with an insurer or insurers having a Best
rating of A-,X or better and qualified to do business in the State of Minnesota,
and shall require at least thirty (30) days prior written notice to Landlord
(and, if requested by Landlord, Landlord’s mortgagee(s)), of termination,
cancellation, non-renewal or material alteration. The liability insurance under
subparagraph 14(b)(i) shall be primary with respect to Landlord and its agents
and not participating with any other available insurance.

Prior to the Commencement Date, on each anniversary of the Commencement Date,
and at such other times as Landlord may reasonably request, Tenant shall deliver
to Landlord a certificate evidencing such policies, or other evidence reasonably
satisfactory to Landlord, confirming (A) the terms of the insurance, and
(B) that the policies are in full force and effect. If Tenant has a blanket
insurance policy providing coverage for several properties of Tenant, including
the Premises, Landlord will accept a certificate of such insurance, provided:

 

  (1) the certificate states the amounts of insurance and types of coverage;

 

  (2) the amounts are at least equal to the amounts that would be required in
this Lease; and

 

  (3) the policy complies with the other requirements in this Lease.

15. Condemnation.

(a) Total Taking. If the whole or any substantial part of the Building is taken
for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof and the taking would prevent or materially interfere with the use of the
Premises or the Building for the purpose of which they are being used, this
Lease shall terminate and the Base Rent and Operating Costs shall be abated
during the unexpired portion of this Lease effective when the physical taking of
the Property shall occur.

(b) Partial Taking. If part of the Premises shall be taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this Lease
is not terminated as provided in the subparagraph above, this Lease shall not
terminate but the Base Rent and Operating Costs payable hereunder during the
unexpired portion of this Lease shall be reduced to such extent as may be fair
and reasonable under all of the circumstances.

(c) Awards. In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings, provided that Tenant shall not be
entitled to receive any award for Tenant’s loss of its leasehold interest or
other property which would have become the property of Landlord upon termination
of this Lease; the right to such award being hereby assigned to Landlord.

 

10

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

16. Holding Over. Tenant will, at the termination of this Lease by lapse of time
or otherwise, yield up immediate possession to Landlord. If Tenant retains
possession of the Premises or any part thereof after such termination, then,
subject to the last sentence of this Paragraph, such holding over shall
constitute creation of a month to month tenancy, upon the terms and conditions
of this Lease; provided, however, that the monthly rental for such holding over
shall, in addition to all other sums which are to be paid by Tenant hereunder,
whether or not as Additional Rent, be equal to one-hundred fifty percent
(150%) of the Rent being paid monthly to Landlord under this Lease immediately
prior to such termination. In addition to and not in limitation of the
foregoing, Tenant shall also pay to Landlord all damages sustained by Landlord
resulting from retention of possession by Tenant, including the loss of any
proposed subsequent tenant for any portion of the Premises. The provisions of
this Paragraph shall not constitute a waiver by Landlord of any right of
re-entry as herein set forth; nor shall receipt of any rent or other sums or any
other act in apparent affirmance of the tenancy operate (a) as an extension of
the Term; (b) a waiver of Landlord’s right to terminate Tenant’s right to
possession of the Premises; or (c) a waiver of the right to terminate this Lease
for a breach of any of the terms, covenants, or obligations herein on Tenant’s
part to be performed.

17. Quiet Enjoyment. Landlord covenants that it now has, or will acquire before
Tenant takes possession of the Premises, insurable title to the Premises.
Landlord represents and warrants that it has full right and authority to enter
into this Lease and that Tenant, upon paying the Rent and performing its other
covenants and agreements under this Lease, shall peaceably and quietly have,
hold and enjoy the Premises for the Term, subject to the terms and provisions of
this Lease.

18. Events of Default. Each of the following events shall be deemed to be an
“Event of Default” by Tenant under this Lease:

(a) Tenant shall fail to pay any installment or other payment of Rent required
herein when due, and such failure shall continue for a period of 5 days after
receipt of notice from Landlord, provided, however, that Landlord shall not be
required to give any such notice more than once within any twelve (12) month
period, and if Tenant defaults in paying Rent, each subsequent default within 12
months will be an Event of Default without notice;

(b) Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors; or a
receiver or trustee shall be appointed for all or substantially all of the
assets of Tenant;

(c) Tenant shall file a petition under any section or chapter of the federal
bankruptcy laws, or under any similar law or statute of the United States or any
State, including, without limitation, a liquidation, rehabilitation or other
insolvency statute, whether now or hereafter in effect; or an order for relief
shall be entered against Tenant in any such bankruptcy or insolvency proceedings
filed against Tenant thereunder or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder;

(d) Tenant shall vacate or abandon all or a substantial portion of the Premises;
provided however, that such vacation or abandonment shall not constitute a
default hereunder unless, in Landlord’s reasonable estimation, Tenant has failed
to comply with its obligations to maintain the Premises as required under this
Lease;

(e) Tenant shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 22 hereof;

(f) Tenant fails to provide evidence of insurance in accordance with Paragraph
14(b) within 5 days after written notice of the default, or Tenant fails to
insure in accordance with Paragraph 14(b);

(g) Tenant shall fail to comply with any term, provision or covenant of this
Lease (other than the foregoing in this Paragraph 18), and shall not cure such
failure within twenty (20) days after written notice thereof from Landlord to
Tenant.

 

11

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

19. Remedies. Upon the occurrence of any of such Event of Default described in
Paragraph 18 hereof, Landlord shall have the option to pursue any one or more of
the following remedies without any further written notice or demand.

(a) Landlord may, at its election, terminate this Lease or terminate Tenant’s
right to possession only, without terminating the Lease;

(b) Upon any termination of this Lease, whether by lapse of time or otherwise,
or upon any termination of Tenant’s right to possession without termination of
this Lease, Tenant shall surrender possession and vacate the Premises
immediately and deliver possession thereof to Landlord, and Tenant hereby grants
to Landlord full and free license to enter into and upon the Premises in such
event with or without process of law and to repossess Landlord of the Premises
as of Landlord’s former estate and to expel or remove Tenant and any others who
may be occupying or within the Premises and to alter all locks and other
security devices at the Premises and to remove any and all property therefrom,
without being deemed in any manner guilty of trespass, eviction or forcible
entry or detainer, and without incurring any liability for any damage resulting
therefrom. Tenant hereby waives any right to claim damage for such re-entry and
expulsion, and such entry and possession shall not terminate this Lease or
release Tenant, in whole or in part, from any obligation, including Tenant’s
obligation to pay all Rent payable by Tenant hereunder, for the Term or any
other right given to Landlord hereunder or by operation of law;

(c) Landlord may, but need not, relet the Premises or any part thereof for such
Rent and upon such terms as Landlord, in its sole discretion, shall determine
(including the right to relet the Premises as part of a larger area and the
right to change the character or the use made of the Premises), and Landlord
shall not be required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant about such reletting. In any such case, Landlord
may make repairs, alterations and additions in or to the Premises, and
redecorate the same to the extent Landlord deems necessary or desirable, in its
sole discretion. All Rent and other sums received by Landlord from any such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs and expenses of such alterations and repairs; third, to the payment of
Landlord’s expenses of reletting, including, without limitation, broker’s
commissions, reasonable attorney fees and lease inducements, such as moving or
leasehold improvement allowances; fourth, to the payment of Rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future Rent as the same may become due and payable hereunder. If such
Rent and other sums received from such reletting during any month be less than
the Rent to be paid during said month by Tenant hereunder, Tenant shall pay such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly.
Notwithstanding any such re-entry by Landlord, Landlord may at any time
hereafter elect to terminate this Lease for such previous breach.

(d) Tenant acknowledges that the damages Landlord would incur in connection with
terminating this Lease following a default by Tenant would be difficult to
estimate or ascertain. Therefore, Tenant agrees that, in the event Landlord
elects to terminate this Lease, Landlord may, in addition to other remedies
available at law or in equity, declare all Rent payable under this Lease
immediately due and payable and recover from Tenant, as liquidated damages, and
not as a penalty, an amount equal to the sum of the following: (i) all unpaid
Rent that is payable by Tenant hereunder and that accrues through the effective
date of termination; plus (ii) the cost of repairs, alterations and/or
redecoration of the Premises that Landlord determines are necessary, in
landlord’s sole discretion; plus (iii) a sum of money equal to the entire amount
of Rent that would be payable under the Lease for the lesser of (A) the three
(3) year period commencing upon the effective date of termination, or (B) the
period commencing upon the effective date of termination and ending upon the
original date of the expiration of the Term, which amount shall be immediately
due and payable upon demand, but which amount shall be discounted to present
value using a discount rate equal to the discount rate of the Federal Reserve
Bank of Minneapolis as of the date of termination plus one percent (1%); plus
(iv) to the extent not included in the calculation of Rent payable pursuant to
subparagraph (ii) above, a sum of money equal to the remaining principal balance
of the original cost of any leasing commissions and leasehold improvements in
the Premises paid for by Landlord

 

12

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

on the effective date of termination, together with interest at a rate of twelve
percent (12%) per annum amortized over the entire Term, assuming amortization
based upon equal monthly payments of principal and interest. For purposes of
calculating the amount of Rent that would be payable under the Lease for the
period succeeding the effective date of termination, such Rent shall be computed
on the basis of the average monthly amount of Rent accruing during the
twenty-four (24) month period immediately preceding the default to which such
termination relates (exclusive of any months in which Tenant received “free” or
abated Base Rent concessions); provided, however, if the default occurs prior to
the expiration of the first twenty-four (24) months of the Lease, then the Rent
shall be computed on the basis of the average monthly amount of Rent accruing
during all months preceding the month in which said default occurred (exclusive
of any months in which Tenant received “free” or abated Base Rent concessions).

(e) Any and all property which may be removed from the Premises by Landlord
pursuant to the authority of the Lease or of law, to which Tenant is or may be
entitled, may be handled, removed and stored, as the case may be, by or at the
direction of Landlord at the risk, cost and expense of Tenant, and Landlord
shall in no event be responsible for the value, preservation or safekeeping
thereof. Tenant shall pay to Landlord, upon demand, any and all expenses
incurred in such removal and all storage charges against such property so long
as the same shall be in Landlord’s possession or under Landlord’s control. Any
such property of Tenant not retaken by Tenant from storage within thirty
(30) days after removal from the Premises shall, at Landlord’s option, be deemed
conveyed by Tenant to Landlord under this Lease as by a bill of sale without
further payment or credit by Landlord to Tenant.

(f) Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any Rent due to Landlord hereunder or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. No act or thing done by the Landlord or its agents during the Term
shall be deemed a termination of this Lease or an acceptance of the surrender of
the Premises, and no agreement to terminate this Lease or accept a surrender of
said Premises shall be valid unless in writing signed by Landlord. No waiver by
Landlord of any violation or breach of any of the terms, provisions and
covenants herein contained shall be deemed or construed to constitute a waiver
of any other violation or breach of any of the terms, provisions and covenants
herein contained. Landlord’s acceptance of the payment of Rent or other payments
hereunder after the occurrence of an Event of Default shall not be construed as
a waiver of such default, unless Landlord so notifies Tenant in writing.
Forbearance by Landlord to enforce one or more of the remedies herein provided
upon an Event of Default shall not be deemed or construed to constitute a waiver
of such default or of Landlord’s right to enforce any such remedies with respect
to such default or any subsequent default.

20. Landlord’s Default. In the event Landlord fails to keep and perform any of
the terms, covenants, conditions, agreements or provisions of this Lease, Tenant
shall give written notice to Landlord and send a copy of such notice to the
holder of any mortgage whose address Tenant has been notified of in writing.
Landlord shall have a period of thirty (30) days after receipt of such notice to
cure such default; provided, however, if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for its performance, then
Landlord shall not be deemed in default if it commences performance within the
thirty (30) day period, or as soon after that as is practicable, and thereafter
diligently pursues the cure to completion.

21. Landlord’s Lien. Landlord reserves (and Tenant hereby grants to Landlord) a
security interest in all fixtures, equipment, personal property (tangible and
intangible, including, without limitation, accounts) of Tenant now or hereafter
located in or on the Premises (the “Collateral”) to secure all sums due from and
all obligations to be performed by Tenant hereunder, which lien and security
interest may be enforced by Landlord in any manner provided by law, including,
without limitation, under and in accordance with the Uniform Commercial Code, as
enacted in the State of Minnesota (the “UCC”), including without limitation the
right to sell the property described in this Paragraph at public or private sale
upon ten (10) days prior written notice to Tenant, which sale and the timing
thereof shall be deemed commercially reasonable. Tenant hereby authorizes
Landlord to file such financing statements, assignments, and other documents
covering the Collateral, including Proceeds (as defined in the UCC), as Lender
may reasonably determine is required in order to create, evidence, perfect,
maintain or continue its security interest in the Collateral (including
additional Collateral acquired by Tenant after the date hereof).

 

13

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

22. Mortgages. This Lease is and shall be subject and subordinate to any
mortgage(s) now or at any time hereafter constituting a lien or charge upon the
Property or the Premises, provided, however, that if the holder of any such
mortgage elects to have Tenant’s interest in this Lease superior to any such
instrument, then by notice to Tenant from such holder, this Lease shall be
deemed superior to such lien, whether this Lease was executed before or after
said mortgage. Tenant shall at any time hereafter on demand execute any
instruments, releases or other documents which may be required by any mortgagee
for the purpose of subjecting and subordinating this Lease to the lien of any
such mortgage.

23. Mechanic’s Liens. Tenant shall keep the Premises and the Property free from
any mechanics’, materialmen’s, contractors’ or other liens arising from, or any
claims for damages growing out of, any work performed, materials furnished or
obligations incurred by or on behalf of Tenant. If such a lien is filed against
the Premises or the Property or any portion thereof as a result of work
performed, materials furnished or obligations incurred by or on behalf of
Tenant, Tenant, at its sole cost and expense, shall cause such lien to be
removed within five (5) calendar days after Tenant becomes aware of the filing
of such lien. Tenant hereby agrees to defend and indemnify Landlord and to hold
Landlord harmless from and against any such lien or claim or action thereon, and
shall reimburse Landlord, as Additional Rent for Landlord’s costs of suit and
all attorneys’ fees and costs incurred in connection with the removal of any
such lien, claim or action. Landlord hereby reserves the right, at any time and
from time to time during the construction of the Premises or any subsequent
alteration to enter onto the Premises and post and review notices in accordance
with Minn. Stat. §514.06, as the same may be amended.

24. Notices. All Rent payments, bills, statements, notices or communications,
required or desired to be given hereunder shall be in writing and shall be
deemed effective and received (a) upon personal delivery; (b) five (5) days
after deposit in the United States mail, certified mail, return receipt
requested, postage prepaid; or (c) one (1) business day after deposit with a
national overnight air courier, fees prepaid, to Landlord or Tenant, as the case
may be, at the notice or Rent payment addresses for each party stated on the
Data Sheet. Either party may designate an additional or another address upon
giving written notice to the other party at the address for notices for such
party stated on the Data Sheet pursuant to this Paragraph. Any return of any
access cards or keys or other similar devices shall be made to Landlord’s
Managing Agent, at the address stated on the Data Sheet or such other address as
may be provided pursuant to this Paragraph. Landlord’s Managing Agent shall give
and receive notices in the manner prescribed by this Paragraph, and a copy of
all notices given to Landlord shall be given to Landlord’s Managing Agent in the
manner prescribed by this Paragraph. For the purposes of this Lease, “business
day” shall mean a day which is not a Saturday, a Sunday or a legal holiday of
the State of Minnesota.

If and when included within the term “Landlord,” as used in this instrument,
there are more than one person, firm or corporation, all shall jointly arrange
among themselves for their joint execution of such a notice specifying some
individual at some specific address for the receipt of notices and payments to
Landlord; if and when included within the term “Tenant,” as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant. All parties
included within the terms “Landlord” and “Tenant,” respectively, shall be bound
by notices given in accordance with the provisions of this paragraph to the same
effect as if each had received such notice.

25. Hazardous Substances. Tenant shall at all times comply with all applicable
local, state and federal laws, ordinances and regulations relating to Hazardous
Substances. “Hazardous Substances” means (1) any oil, petroleum product,
flammable substances, explosives, radioactive materials, hazardous wastes or
substances, toxic wastes or substances, infectious wastes or substances or any
other wastes, materials or pollutants that (A) pose a hazard to the Premises,
Building or Property or to persons on or about the Premises, Building or
Property or (B) cause the Premises, Building or Property to be in violation of
any hazardous materials laws; (2) asbestos in any form which, urea-formaldehyde
foam insulation, transformers or other equipment that contains dielectric fluid
containing polychlorinated biphenyl, or radon gas; (3) any chemical, materials
or substance defined as or included in the definition of “hazardous substances,”
“hazardous wastes,” “hazardous materials,” “extremely hazardous waste,”
“restricted hazardous waste,” “infectious waste,” or “toxic substances,” or
words of similar import under any applicable local, state or federal law or
under the regulations adopted or publications promulgated pursuant thereto,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et seq.;
the Hazardous Materials Transportation Act, as amended, 42 U.S.C. §§ 6901, et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §§ 1251, et
seq.;

 

14

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

(4) any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority or may or could pose a hazard
to the health and safety of the occupants of the Premises, Building or Property
or the owners and/or occupants of property adjacent to or surrounding the
Property, or any other person or entity coming upon the Property or adjacent
property; and (5) any other chemical, material or substance that may or could
pose a hazard to the environment. Tenant shall not: (i) use the Premises,
Building or Property for the storage of Hazardous Substances except for such
activities that are part of the course of tenant’s ordinary business (the
“Permitted Activities”); provided, such Permitted Activities are conducted in
accordance with all applicable laws, orders, regulations and ordinances and have
been approved in advance in writing by Landlord; (ii) use the Premises, Building
or Property as a landfill or dump; or (iii) install any underground tanks of any
type at the Property. Tenant shall at its own expense maintain in effect any and
all permits, licenses or other governmental approvals, if any, required for
Tenant’s use of the Premises and require the same of any subtenants. Tenant
shall make and cause any subtenant to make all disclosures required of Tenant by
any laws, and shall comply and cause subtenant to comply with all orders
concerning Tenant’s use of the Premises issued by any governmental authority
having jurisdiction over the Premises and take all action required by such
governmental authorities to bring the Tenant’s activities on the Premises into
compliance with all environmental and other laws, rules, regulations and
ordinances affecting the Premises. If at any time Tenant shall become aware, or
have reasonable cause to believe, that any Hazardous Substance has been released
or has otherwise come to be located on or beneath the Property, Tenant shall
give written notice of that condition to Landlord immediately after Tenant
becomes so aware. Tenant shall be responsible for, and shall indemnify, defend
and hold Landlord harmless from and against, all environmental claims, demands,
damages and liabilities, including, without limitation, court costs and
reasonable attorney fees, if any, arising out of, or in connection with, the
generation, storage, disposal or other presence of any Hazardous Substance in,
on or about the Premises, Building or Property during the Term or that Tenant or
its subtenants caused or permitted. The indemnification provided by this
Paragraph shall survive the termination of this Lease.

26. Expense of Enforcement. Tenant shall pay Landlord, upon demand therefor, for
all costs and reasonable attorneys’ fees and expenses incurred by Landlord in
seeking enforcement against Tenant, any assignee or sublessee of Tenant, or any
guarantor of Tenant’s obligations under this Lease, of Tenant’s or such party’s
obligations under this Lease, including, without limitation, the collection of
Rent and the termination of Tenant’s right to possession of the Premises,
provided, however, Landlord shall provide documents evidencing such alleged
expenses and enforcement sought was for rights, duties or obligations actually
owed to Landlord by Tenant. Such payment shall constitute Additional Rent
payable in accordance with Paragraph 4. Notwithstanding the foregoing, if
Landlord commences any action against Tenant, including, without limitation, an
action in unlawful detainer, which action settles at or prior to any trial in
connection therewith, Landlord shall be entitled to recover from Tenant
Landlord’s reasonable attorneys’ fees and disbursements and the same shall be
payable by Tenant to Landlord with the next installment of Rent falling due and
shall constitute Additional Rent hereunder.

27. Transfer of Landlord’s Interest; Limitation of Liability.

(a) Transfer of Landlord’s Interest. The term “Landlord” shall mean only the
owner, at any time of the Property, and in the event of the transfer by such
owner of its interest in the Property, such owner’s grantee or successor shall
upon such transfer, become “Landlord” under this Lease. If any owner transfers
its interest in the Premises or the Property or any portion thereof, other than
a transfer for security purposes, such owner shall automatically be relieved of
any and all obligations and liabilities on the part of such owner as “Landlord”
accruing after the date of such transfer, including, without limitation, such
owner’s obligation to return the Security Deposit following assignment or
transfer thereof to such owner’s transferee.

(b) Limitation of Landlord’s Liability. If Landlord is ever adjudged by any
court to be liable to Tenant, Tenant specifically agrees to look solely to
Landlord’s interest in the Phase for the recovery of any judgment from Landlord,
it being agreed that none of Landlord, its directors, officers, shareholders,
managing agents, employees or agents shall be personally liable for any such
judgment. In no event shall Landlord ever be liable to Tenant, Tenant’s agents,
servants or employees, or to any person or entity claiming by or through Tenant,
for any consequential, indirect, special or similar types of damages.

 

15

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

28. Right of Landlord to Perform. If Tenant shall fail to pay any sum of money
other than Rent required to be paid by it under this Lease, or shall fail to
perform any other act on its part to be performed under this Lease, Landlord
may, but shall not be so obligated, and without waiving or releasing Tenant from
any obligations of Tenant, after the end of the fifth calendar day after
notifying Tenant of Tenant’s obligation to perform, make any such payment or
perform any such other act on Tenant’s part to be made or performed; provided,
however, that in the event of emergency, Landlord shall have the right to
perform Tenant’s obligations prior to the expiration of the five-day period
specified above. If Landlord performs Tenant’s obligations pursuant to this
Paragraph, Landlord shall have the right to use the Security Deposit to pay such
expenses, or pay such expenses directly and reimburse itself from the Security
Deposit or to the extent the cost of such performance exceeds the Security
Deposit, Landlord may pay for the cost of such performance from its own funds,
or from a combination of the Security Deposit and its own funds and all such
amounts shall be repaid to Landlord by Tenant as Additional Rent, payable with
the next installment of Base Rent falling due.

29. Miscellaneous.

(a) Gender; etc. Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, unless the context otherwise requires.

(b) Binding Effect. The terms, provisions and covenants and conditions contained
in this Lease shall apply to, inure to the benefit of, and be binding upon, the
parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein expressly provided.
Tenant agrees to furnish promptly upon demand, a corporate resolution, proof of
due authorization by partners, or other appropriate documentation evidencing the
due authorization of Tenant to enter into this Lease. Nothing herein contained
shall give any other tenant in the Building any enforceable rights either
against Landlord or Tenant as a result of the covenants and obligations of
either party stated herein.

(c) Captions. The captions inserted in this Lease are for convenience only and
in no way define, limit or otherwise describe the scope or intent of this Lease,
or any provision hereof, or in any way affect the interpretation of this Lease.

(d) Estoppel. Tenant agrees from time to time within 10 days after request of
Landlord, to deliver to landlord, or Landlord’s designee an estoppel certificate
in a form on substantially the same form as set forth in Exhibit H or on any
other reasonable form. It is understood and agreed that Tenant’s obligation to
furnish such estoppel certificates in a timely fashion is a material inducement
for Landlord’s execution of this Lease, and that, if Tenant fails timely to
deliver any estoppel certificate contemplated by this subparagraph (d), Tenant
shall be liable to Landlord for all losses incurred by Landlord as a result of
such failure, including, without limitation, attorneys’ fees and court costs
through all appellate levels.

(e) Amendment. This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.

(f) Survival of Obligations. All obligations of Tenant and Landlord hereunder
not fully performed as of the expiration or earlier termination of the Term
shall survive the expiration or earlier termination of the Term, including
without limitation, with respect to Tenant all payment obligations with respect
to Operating Costs and all obligations concerning the condition of the Premises,
and with respect to Landlord reimbursement of the Security Deposit. Upon the
expiration or earlier termination of the Term, Tenant shall pay to Landlord the
amount reasonably estimated by an appropriate contractor that is necessary
(i) to the extent Tenant has not completed repairing and restoring the Premises
in accordance with Paragraph 7 and Exhibit E, the amount necessary to complete
the repair and restoration; and (ii) to discharge Tenant’s obligation for
Operating Costs or other amounts due Landlord. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant, with Tenant
being liable for any additional costs upon demand by Landlord, or with any
excess to be returned to Tenant after all such obligations have been determined
and satisfied. Any security deposit held by Landlord shall be credited against
the amount payable by Tenant under this subparagraph.

 

16

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

(g) Joint and Several. If there be more than one Tenant, the obligations
hereunder imposed upon Tenant shall be joint and several.

(h) Brokers. Tenant represents and warrants that it has dealt with no broker,
agent or other person in connection with this transaction or that no broker,
agent or other person brought about this transaction, other than Tenant’s
Broker, if any, listed on the Data Sheet, and Tenant agrees to defend, indemnify
and hold Landlord harmless from and against any claims by any other broker,
agent or other person claiming a commission or other form of compensation by
virtue of having dealt with Tenant with regard to this leasing transaction.

(i) Severability. If any clause or provision of this Lease is illegal, invalid
or unenforceable under present or future laws effective during the Term, then
and in that event, it is the intention of the parties hereto that the remainder
of this Lease shall not be affected thereby, and it is also the intention of the
parties to this Lease that in lieu of each clause or provision of this Lease
that is illegal, invalid or unenforceable, there be added as a part of this
Lease a clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid and
enforceable.

(j) Offer to Lease. Because the Premises are on the open market and are
currently being shown, this Lease shall be treated as an offer and shall not be
valid or binding unless and until accepted by Landlord in writing.

(k) Waiver of Jury Trial; Jurisdiction. EACH OF LANDLORD AND TENANT HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS LEASE. At the
option of Landlord, this Lease shall be enforced in any United States District
Court for the Federal District of Minnesota or state court of the State of
Minnesota sitting in Hennepin County, Minnesota, and Tenant consents to the
jurisdiction and venue of any such court and waives any argument that venue in
such forums is not proper or convenient.

(l) Complete Agreement. This Lease contains all of the agreements and
understandings relating to the leasing of the Premises and the obligations of
Landlord and Tenant in connection with such leasing. Landlord has not made, and
Tenant is not relying upon, any warranties or representations, promises or
statements made by Landlord or any agent of landlord, except as expressly stated
herein. This Lease supersedes any and all prior agreements and understandings
between Landlord and Tenant and alone expresses the agreement of the parties.

(m) Governing Law. This Lease, the rights of the parties hereunder and the
interpretation hereof shall be governed by, and construed in accordance with,
the internal laws of the State of Minnesota, without giving effect to conflict
of laws principles thereof.

(n) Construction. The parties agree that counsel for both parties have reviewed
this Agreement. Accordingly, neither party shall be deemed to have drafted this
Agreement and it shall not be construed against either party by virtue of the
drafting thereof in the event of a dispute.

(o) Time of Essence. Time shall be of the essence with respect to this Lease and
each and every provision hereof.

30. Force Majeure. If either party shall be delayed in the performance or unable
to perform any of such party’s obligations under this Lease because of a “force
majeure” event (which shall mean any event beyond the reasonable control of
Landlord or Tenant (as applicable) including, without limitation, labor
disputes, civil commotion, terrorism, war, war-like operations, invasion,
rebellion, hostilities, military power, sabotage, governmental regulations or
controls, fire or other casualty, inability to obtain materials, utilities, or
services, inclement weather or other act of God), then, in any such case, the
obligated party shall not be subject to any liability to the other party. Either
party’s delay in performance or failure to perform under this Lease as a result
of any force majeure event shall not affect the validity of this Lease or any
obligation of the other party hereunder. The terms of this Paragraph shall not
apply to either party’s financial obligations under this Lease or Tenant’s
obligation to obtain and maintain the insurance required herein, provided,
however, that the terms of this Paragraph shall not supersede any abatement of
rent to which Tenant may be entitled.

 

17

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

31. Exhibits. Exhibits A, B, C, D, E, F, G, and H are part of this Lease.

32. Right to Terminate. If Tenant’s business has grown to the point that it
needs more space than the Premises, Tenant may give Landlord notice, during the
58th month of the Term, that it desires to expand into additional space in the
Building. Tenant’s notice must specify how many of the additional bays in the
Building shown in Exhibit G Tenant desires to expand into for the rest of the
Term. Tenant must request at least 2 additional bays that are contiguous to each
other. Landlord will respond within 30 days with an offer of the particular bay
or bays that are then available, if any, that best satisfy Tenant’s request, and
Landlord will state the Base Rent Landlord desires for the expansion space for
the remainder of the Term, but Landlord is not required to offer any space to
Tenant that will leave Landlord with a single vacant bay or that will leave
Landlord with two non separate vacant spaces in the Building. Tenant may accept
Landlord’s offer by written notice within 10 business days after it receives
Landlord’s offer. If Landlord does not offer Tenant at least two bays that are
contiguous to each other, or if Landlord requests a Base Rent per square foot
for the expansion space that is more than the Base Rent per square foot Tenant
owes during the same period for the original Premises, Tenant may terminate this
Lease effective on the last day of the 67th month by written notice to Landlord
within 30 business days after Tenant receives Landlord’s offer. Tenant is not
obligated to accept an offer Landlord makes, but Tenant may not terminate this
Lease under this Paragraph unless Landlord’s offer does not satisfy the criteria
in the preceding sentence.

If Tenant exercises its option to terminate under this Paragraph, the Term will
expire on the last day of the 67th month of the Term with the same effect as if
that were the originally-scheduled Expiration Date, and Tenant must pay Landlord
a termination fee equal to all of Landlord’s transaction costs for this Lease
that remain unamortized at the end of the 67th month of the Term, including the
cost of the Work, broker commissions, legal fees, and the allowance under
Paragraph 5 of the Work Letter in Exhibit F, using straight-line amortization
over the initial Term plus 8% annual interest, plus 2 months’ gross rent. If
Tenant delivers a termination notice, Landlord will invoice Tenant for the
unamortized transaction costs and the 2 months’ gross rent and Tenant must pay
the invoice within 30 days. If Tenant does not pay the termination payment
before the end of the 67th month of the Term, Tenant’s right to possession of
the Premises will end on the last day of the 67th month of the Term, but this
Lease will remain unterminated and Tenant will remain obligated to continue to
pay monthly Base Rent and Operating Costs until it pays the termination payment
in full, with no credit against the termination payment for the additional
monthly rent payments that come due after the 67th month of the Term.

33. Right to Extend Term. Landlord grants Tenant a one-time option to extend the
Term on the following terms:

(a) Tenant may not exercise the option at any time it is in default under this
Lease; and

(b) Tenant must give Landlord written notice that it is exercising its option to
extend the Term at least 9 months before the initial Term is scheduled to
expire, time being of the essence. It Tenant does not give Landlord an extension
notice at least 9 months before the end of this initial Term, Tenant waives its
right to extend the Term.

If Tenant delivers an extension notice at least 9 months before the initial Term
ends:

(i) the Term will be extended for 5 years;

(ii) Base Rent for the Premises during the extension Term will be the “Market
Base Rent”, as this Paragraph defines that term, for the extension Term,
determined 9 months before the end of the initial Term; and

(iii) all of the other terms and conditions of this Lease will continue to apply
during the extension Term.

 

18

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

Within 15 days after Landlord’s request, Tenant agrees to sign and deliver to
Landlord any supplement or amendment Landlord requests to evidence the extension
of the Term under this Paragraph and the Base Rent during the extension Term.
Tenant’s rights under this Paragraph may not be severed from this Lease or
separately sold, assigned, or otherwise transferred, and will expire on the
expiration or earlier termination of this Lease or Tenant’s right to possession
of the Premises. No assignee, sublessee, or successor to Tenant’s interests in
this Lease may exercise the extension option under this Paragraph except a
Permitted Transferee.

“Market Base Rent” means the Base Rent Landlord would receive by renting similar
space in Plymouth Business Center, or that the owner of similar class
office/showroom properties in the city of Plymouth would receive, taking into
consideration all concessions being offered in the market, including free rent,
moving allowances, and tenant improvement allowances and the fact that Landlord
will not incur leasing downtime. If Tenant delivers an extension notice,
Landlord will deliver to Tenant, by the later of 9 months before the end of the
initial Term or fifteen (15) days after Landlord receives the extension notice,
Landlord’s determination of the Market Base Rent for the extension term. If
Tenant does not agree with Landlord’s Market Base Rent Notice, Tenant must
notify Landlord in writing within 15 days it receives Market Base Rent Notice
that Tenant disagrees with Landlord’s determination of Market Base Rent. If
Tenant does so, Landlord and Tenant will, for the next 15 days, negotiate in
good faith to attempt to agree on the Market Base Rent for the extension term.
If Landlord and Tenant do not agree on the Market Base Rent within 15 days,
Tenant may rescind its extension notice by written notice to Landlord within 20
days after Tenant first notified Landlord that it disagreed with Landlord’s
determination of Market Base Rent, in which case the Term will expire on the
originally-scheduled expiration date. If Tenant does not give Landlord written
notice that it disagrees with Landlord’s determination of Market Base Rent
within 15 days after Landlord first delivers its determination of Market Base
Rent, or if Tenant does not give Landlord written notice that it is rescinding
the extension of the Term under the preceding sentence, Tenant will be deemed to
have agreed to Landlord’s determination of Market Base Rent and to have waived
its right to rescind its extension notice, and Landlord and Tenant will, within
15 days, sign and deliver an amendment to this Lease that confirms that the Term
has been extended for 5 years at a Base Rent equal to the Market Base Rent in
Landlord’s Market Base Rent notice.

Signature Pages Follow

 

19

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

IN WITNESS WHEREOF, the parties have executed this Lease as of the Date of
Lease.

 

Landlord:

St. Paul Fire and Marine Insurance Company

By:   /s/ Michael D. Elnicky Name:   MICHAEL D. ELNICKY Title:   ASSET MANAGER

 

20

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

Signature Page to Lease

 

Tenant:

Antares Pharma, Inc.

By:

  /s/ Patrick Madsen

Name:

  PATRICK MADSEN

Title:

  VP AND GENERAL MANAGER

 

21

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

EXHIBIT A

DEPICTION OF PREMISES

 

A-1

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

EXHIBIT B

RULES AND REGULATIONS FOR

PLYMOUTH BUSINESS CENTER

1. The sidewalks, passages and stairways, if any, shall not be obstructed by
Tenant or used for any purpose other than for ingress to and egress from the
Premises. The passages, entrances, stairways, if any, balconies, if any, and
roof are not for the use of the general public, and Landlord shall in all cases
retain the right to control and prevent access thereto of all persons whose
presence in the judgment of Landlord shall be prejudicial to the safety,
character, reputation and interests to the Building and its tenants; provided
that nothing herein contained shall be construed to prevent such access to
person with whom Tenant normally deals in the ordinary course of its business
unless such persons are engaged in illegal activities. Tenant and its employees
shall not go upon the roof of the Building without the written consent of the
Landlord.

2. The sashes, sash doors, windows, glass lights and any lights or skylights
that reflect or admit light into halls, from the building exterior or other
places into the building shall not be covered or obstructed. Any curtains,
blinds, shades, or screens attached or hung to any of the prior mentioned areas
must have prior approval of Landlord. Landlord will provide standard window
coverings on exterior windows and other glass if appropriate.

3. In case of invasion, riot, public excitement or other commotion, Landlord
reserves the right to prevent access to the Building during the continuance of
same. Landlord shall in no case be liable for damages for the admission or
exclusion of any person to or from the Building. Landlord has the right to
evacuate the Building in the event of an emergency or catastrophe.

4. Two door keys for doors to leased premises that are operated by keyed locks,
rather than security cards, shall be furnished at the commencement of lease by
Landlord. Tenant shall not alter any exterior lock, or install new or additional
locks or bolts, on any door without the prior written approval of Landlord. In
the event such alteration or installation is approved by Landlord, Tenant shall
supply Landlord with a key or card key for any such lock or bolt.

5. All deliveries, including intracompany deliveries, must be made via service
entrances. Tenant agrees to adhere to floor loading maximum levels as stated by
Landlord. All damage done to the Building by the delivery or removal of such
items, or by reason of their presence in the Building, shall be paid to Landlord
upon demand by Tenant and shall constitute Additional Rent under the Lease.

6. Parking area and parking policies will be established by Landlord, and Tenant
agrees to adhere to said policies. UPON A COMPLAINT BY TENANT AND OTHER TENANTS
OF THE BUILDING AND AT ANY OTHER TIME, Landlord reserves the right to IMPLEMENT
AND institute new parking policies as they are determined to benefit overall
Building operations. Tenant agrees to leave no cars, vans or other vehicles
overnight or over any weekend in any parking area. Tenant further agrees that
its employees will not park in the visitor parking areas at any time.

7. If Tenant desires signal, communication, alarm or other utility or service
connection installed or changed, the same shall be made at the expense of
Tenant, with approval and under direction of Landlord, it being understood and
agreed that (a) no audible alarm shall be installed unless specifically approved
in writing by Landlord prior to installation; and (b) only Tenant shall be
obligated to respond to such signal, communication, alarm or other utility or
service connection, and none of Landlord, Landlord’s Managing Agent or other
employee, agent or contractor of Landlord shall, under any circumstances have
any obligation to Tenant or others to respond to such alarm or be liable to
Tenant or any party claiming by or through Tenant for any failure to do so. Any
installations, and the boring or cutting for wires, shall be made at the sole
cost and expense of Tenant and under control and direction of Landlord. Landlord
retains in all cases the right to require (x) the installation and use of such
electrical-protecting devices that prevents the transmission of excessive
current or electricity into or transmission of excessive current or electricity
into or through the Building (y) the changing of wires and of their installation
and arrangement underground or otherwise as Landlord may direct, and
(z) compliance on the part of all using or seeking access to such wires with
such rules as Landlord may establish relating thereto. All such wires used by
Tenant must be clearly tagged at the distribution boards and junction box and
elsewhere in the Building, with (h) the number of the Premises to which said
wires lead, (i) the purpose for which said wires are used and (j) the name of
the company operating same.

 

B-1

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

Tenant agrees to instruct all approved communication, and computer and other
cabling installers to attach cable in wire hangers from the deck or in any
designated building floor or ceiling system cable location. Tenant will not
allow installers to lay any cabling on top of the suspended layer ceiling
system.

8. Tenant shall give Landlord prompt notice of all accidents to or defects in
air conditioning equipment, plumbing, electrical facilities or any part of
appurtenances of the Premises.

9. Tenant assumes full responsibility for protecting its space from theft,
robbery, and pilferage, which includes keeping doors locked and other means of
entry to the space closed and secured. Landlord shall be in no way responsible
to Tenant, its agents, employees, licensees, contractors or invitees for any
loss of property from the Premises or public areas or for any damages to any
property thereon from any cause whatsoever.

10. Tenant shall not install or operate machinery or any mechanical devices of a
nature not directly related to Tenant’s ordinary use of the Premises without the
prior written permission of the Landlord. Tenant shall not place in or move
about the Premises any safe or other heavy article which, in Landlord’s
reasonable opinion may damage the Premises (including the slab) or overload the
floor of the Premises, shall not mark on or drive nails, screw or drill into the
partitions, woodwork or plaster (except as may be incidental to the hanging of
wall decorations) and shall not in any way deface the Premises or any part
thereof.

11. No person or contractor not employed by Landlord shall be used to perform
window washing, decorating, repair or other work in the leased Premises without
the express written consent of Landlord.

12. The directories of the Building shall be used exclusively for the display of
the name and location only of the tenants of the Building, including Tenant, and
will be provided at the expense of Landlord. Any additional names requested by
Tenant to be displayed in the directories must be approved by Landlord and, if
approved, will be provided at the sole expense of Tenant.

13. Tenant shall not and shall ensure that its agents, servants, employees,
licensees, contractors or invitees shall not:

(a) enter into or upon the roof of the Building or any storage, electrical or
telephone closet, or heating, ventilation, air-conditioning, mechanical or
elevator machinery housing areas;

(b) sweep or throw any dirt or other substance into ANY passageway, sidewalk or
parking area;

(c) bring in or keep in or about the Premises any firearms, vehicles,
motorcycles or animals of any kind;

(d) deposit any trash, refuse or other substance of any kind within or out of
the Building, except in the refuse containers provided therefor;

(e) permit the operation any device that may produce an odor, cause music,
vibrations of air waves to be heard or felt outside the Premises, or which may
emit electrical waves that shall impair radio, television or any other form of
communication system; or

(f) permit the carrying of a lighted cigar, cigarette, pipe or any other lighted
smoking equipment or permit smoking of cigarettes, cigars or pipes (i) in the
common areas of the Building, including, without limitation, restrooms, except
common areas which have been designated by Landlord in writing as smoking areas;
or (ii) within ten (10) yards of any door leading into the Building or any
building comprising a part thereof.

 

B-2

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

14. Tenant will not install any radio or television antennas or receptor dish or
any device on the roof or grounds without the prior written approval of
Landlord. Tenant understands that rentals are charged for roof space in the
event any roof installation is approved in writing by Landlord. Landlord
reserves the right to require removal of any approved installed device in the
event it is necessary to do so in Landlord’s opinion.

15. No sign, light, name placard, poster advertisement or notice visible from
the exterior of any demised premises, shall be placed, inscribed, painted or
affixed by Tenant on any part of the Building without the prior written approval
of Landlord. All signs or letterings on doors, or otherwise, approved by
Landlord shall be inscribed, painted or affixed at the sole cost and expense of
Tenant, by a person approved by Landlord.

16. The toilet rooms, toilet, urinals, wash bowls and water apparatus shall not
be used for any purpose other than those for which they were constructed or
installed, and no sweeping, rubbish, chemicals or other unsuitable substances
shall be thrown or placed therein. Tenant shall bear the expense of repairing
and cleaning up any breakage, stoppage or damage resulting from violation(s) of
this rule by Tenant or its agents, servants, employees, invitees, licensees or
visitors.

17. Tenant must have Landlord’s prior written consent before using the name of
the Building and/or pictures of the Building in advertising or other publicity.

18. Tenant shall not make any room-to-room canvass to solicit business from
other tenants in the Building, and shall not exhibit, sell or offer to sell,
use, rent or exchange in or from the Premises unless ordinarily embraced within
Tenant’s use of the Premises specified herein.

19. Tenant shall not do any cooking in the Premises, except that Tenant may
install a microwave oven and coffee makers for the use of its employees in the
Premises. Under no circumstances shall Tenant install or use any hot plates.

20. No portion of Tenant’s area or any other part of the Building shall at any
time be used or occupied as sleeping or lodging quarters.

21. Landlord has the right to enact trash removal and trash recycling rules and
regulations as necessary to control trash removal costs or as required by the
laws of the State of Minnesota and/or the United States of America. Tenant
agrees to adhere to such trash removal regulations and to any and all
modifications thereof issued by Landlord from time to time.

22. Tenant will refer all contractors, contractors’ representatives and
installation technicians rendering any service to Tenant to Landlord for
Landlord’s approval and supervision before performance of any contractual
service. This provision shall apply to any work performed in the Building
including installations of electrical and electronic devices and attachments and
installations of any nature affecting floors, walls, woodwork, trim, windows,
ceilings, equipment or any other physical portion of the Building.

23. Tenant shall not permit picketing or other union activity involving its
employees in the Building except in those locations and subject to time and
other limitations as to which Landlord may give prior written consent.

24. Tenant shall not conduct, or permit to be conducted on or from the Premises,
any auction of Tenant’s personal property, any liquidation sale, any
going-out-of-business sale or other similar activity.

25. Landlord reserves the right to rescind, make reasonable amendments,
modifications and additions to the rules and regulations heretofore set forth,
and to make additional reasonable rules and regulations, as in Landlord’s sole
judgment may from time-to-time be needed for the safety, care, cleanliness and
preservation of good order of the Building. Landlord shall not be responsible
for any violation of the foregoing rules and regulations by other tenants of the
Building and shall have no obligation to enforce the same against other tenants.

 

B-3

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

EXHIBIT C

FORM OF COMMENCEMENT CONFIRMATION

[Date]

 

Tenant Name:    Antares Pharma, Inc. Address:   

Suite             ,             Annapolis Lane

Plymouth, Minnesota 55447

The undersigned hereby confirms to St. Paul Fire and Marine Insurance Company
(“Landlord”) that the following are the respective dates required to be
specified with regard to the Data Sheet of that certain Lease dated December
    , 2013 between the undersigned, as tenant, and Landlord, as landlord, for
the Premises described therein, and the undersigned hereby accepts the Premises.

Commencement Date:             , 2014.

Month 1:             , 2014.

Rent Commencement Date:             , 2014.

Expiration Date:             , 2022.

Antares Pharma, Inc.

 

By:

      Name:       Title:    

Accepted and agreed to this     day of             , 2014.

St. Paul Fire and Marine Insurance Company

 

By:

      Name:       Title:    

 

C-1

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

EXHIBIT D

PLYMOUTH BUSINESS CENTER

SIGNAGE CRITERIA

FRONT ENTRANCE DOOR

White Vinyl Applied Letters Only

“2 Maximum Height

Helvetica Letters

Two or Three Lines Only

Logos, Script, or Color Variations

REAR OVERHEAD DOOR

Black Vinyl Applied Letters Only

6” Maximum Height

Helvetica Letters

One or Two Lines Only

No Logos, Script, or Color Variations

REAR ENTRANCE/HOLLOW METAL DOOR

Black Vinyl Applied Letters Only

2# Maximum Height

Helvetica Letters

Two or Three Lines Only

No Logos, Script, or Color Variations

FRONT OVERHEAD SIGN

Freeway Exposure (mounted below wallpack lighting)

4’ x 8’ Black Acrylic Background Panel

White or Gray Copy Only

Logo Reproduction Permitted

Non-Freeway Exposure (mounted adjacent to entrance door)

2.5’ x 3.5’ Black Acrylic Background Panel

White or Gray copy Only

Logo Reproduction Permitted

EMPLOYEE ENTRANCE DOOR

Black Vinyl Applied Letters Only

2# Maximum Height

Helvetica Letters

Two or Three Lines Only

No Logos, Script, or Color Variations

 

 

NOTE:

Signage must meet Landlord approval prior to installation.

Signage contractor must obtain permit from City if required.

 

D-1

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

EXHIBIT E

MOVE-OUT STANDARDS

Not later than the Restoration Date (as defined in the Lease), Tenant shall
deliver the Premises to Landlord in the same condition as they were upon
delivery of possession thereto under this Lease, reasonable wear and tear
excepted, and shall deliver all keys to Landlord. Before delivery of the
Premises to Landlord, Tenant shall remove all of its personal property and all
alterations, additions, installations, improvements, partitions, Cabling and
trade fixtures, all as and to the extent provided in Paragraph 7 of this Lease.
If Tenant fails to remove its personal property and fixtures upon the expiration
of this Lease, the same shall be deemed abandoned and shall become the property
of the Landlord.

The Tenant shall, on the Restoration Date, place the Premises in a condition
that shall include, but is not limited to, the following:

 

1.    Lights:    Office and warehouse lights will be fully operational with all
bulbs functioning. 2.    Dock Levelers & Roll Up Doors:    All dock levelers and
roll-up doors will be In good working condition. 3.    Dock Seals:    All dock
seals will be free of tears and any broken backboards repaired. 4.   
Warehouse Floor:    The warehouse floor will swept with no racking bolts or
other protrusions left in floor. Cracks will be repaired with an epoxy or
polymer. 5.    Equipment & Wiring:    Unless otherwise specified by Landlord, in
writing, all equipment and wiring shall be removed and the Premises returned to
original condition, including, without limitation, removal of air lines,
junction boxes, conduit, etc.). 6.    Walls:    Sheetrock (drywall) damage
should be patched and fire-taped so that there are no holes in either office or
warehouse. 7.    Roof:    Any tenant-installed equipment must be removed and
roof penetrations properly repaired by a licensed roofing contractor selected or
approved by Landlord. Active leaks resulting from Tenant installed equipment or
otherwise due to negligence of Tenant must be fixed and latest Landlord
maintenance and repairs recommendation must have been followed. 8.    Signs:   
All exterior signs must be removed and holes patched and paint touched up as
necessary. All window signs should likewise be removed. 9.   
Heating & Air Conditioning System:    A written report from a licensed HVAC
contractor within the last three months stating that all evaporative coolers
within the Premises are operational and safe and in good and safe operating
condition. 10.    Overall Cleanliness:    Clean windows, sanitize bathroom(s),
vacuum carpet, and remove any and all debris from office and warehouse. Remove
all pallets and debris from exterior premises. 11.    Upon Completion:   
Contact Landlord’s property manager to coordinate date of turning off power,
turning in keys, and obtaining final Landlord inspection of Premises.

 

E-1

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

EXHIBIT F

WORK LETTER

1. Tenant’s Initial Plans; the Base Work. Tenant desires Landlord to perform
certain leasehold improvement work in the Premises in substantial accordance
with the plan or plans/working drawings prepared by RJM Construction in
conjunction with Mohagen Hansen Architectural Group dated November 11, 2013 (the
“Plan Date”), a copy of which is attached hereto as Schedule 1 (the “Working
Drawings”). The work shown in the Working Drawings is the “Base Work.”

All plans, drawings, specifications and other details describing any Additional
Work (as defined in Paragraph 4 of this Work Letter) which have been or are
hereafter furnished by or on behalf of Tenant shall be subject to Landlord’s
approval, which Landlord agrees shall not be unreasonably withheld, conditioned
or delayed. Neither Landlord’s approval of the Base Work and any Additional
Work, the Working Drawings, or any other plans, drawings, specifications or
other items associated with the Base Work or any Additional Work, nor Landlord’s
performance, supervision or monitoring of any of such Base Work or Additional
Work, is a warranty by Landlord that the design is adequate for Tenant’s
intended use of the Premises.

The Base Work includes nine (9) new roof-top HVAC units, and Tenant will re-use
two existing roof-top HVAC units. Landlord represents that the two re-used HVAC
units are less than 5 years old and are in good working order. If Tenant has a
qualified HVAC servicer do quarterly maintenance and repairs throughout the
initial Term but either of the two re-used HVAC units must be replaced within 5
years after the Commencement Date, as determined by a qualified independent HVAC
engineer, Landlord agrees to replace that unit or those two units at Landlord’s
cost.

2. Performance of the Work. Landlord, at its expense, will complete the Base
Work using Landlord’s building standard materials, quantities and procedures
(“Building Standards”), except as expressly stated or shown otherwise in the
Working Drawings. Tenant agrees to pay the cost of any Approved Additional Work.
To the extent Tenant requests any change to the Working Drawings, the parties
will proceed in accordance with the procedures set forth in Paragraph 4 of this
Work Letter.

Landlord agrees to complete the Base Work and any Approved Additional Work in
accordance with the Working Drawings and this Work Letter and in material
compliance with all applicable laws, ordinances, rules and regulations. Landlord
will pay for any permits or certificates for the Base Work and Tenant will pay
for any permits or certificates required for any Approved Additional Work.

3. Substantial Completion. Landlord agrees to Substantially Complete the Base
Work before the Anticipated Commencement Date of March 1, 2014, subject to
(a) force majeure delays (as defined in Paragraph 30 of the Lease); (b) Tenant
Delays (as defined and described in this Paragraph); and (c) Requested Delays
(as defined and described in Paragraph 4 of this Work Letter; force majeure
Delays, Tenant Delays and Requested Delays may are, collectively, “Delays”). All
Delays shall be calculated on a business day for day basis unless otherwise
expressly stated in the applicable TEO (as defined in Paragraph 4 below).

The Base Work and any Approved Additional Work are, collectively, the “Work”.
The Work will be “Substantially Completed” when both (i) Landlord’s general
contractor issues a written certificate to Landlord and Tenant certifying that
the Work has been substantially completed (i.e., completed except for
“punchlist” items listed in such contractor’s certificate) in substantial
compliance with the Working Drawings; and (ii) Landlord has obtained and
delivered to Tenant a preliminary certificate of occupancy for the Premises. If
the Work is not Substantially Complete on or before the Anticipated Commencement
Date Landlord agrees to use all reasonable efforts to complete the Work as soon
after that date as is practicable. If the Work is not Substantially Completed on
the Anticipated Commencement Date by reason, either wholly or partly because of
any delay attributable to Tenant (“Tenant Delays”), including without
limitation, (i) Tenant’s failure to timely comply with this Work Letter,
(ii) Tenant’s requirements for special work or materials, finishes, or
installations other than as set forth in the Working Drawings or Building
Standards or Tenant’s requirements for special construction staging or phasing;
or (iii) the performance of any work in the Premises by any person, firm or
corporation employed by or on behalf of Tenant, or any failure to complete or
delay in completion of such work; or (iv) any other act or omission of Tenant,
the Rent

 

F-1

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

Commencement Date will not be extended beyond the 211th day after the
Anticipated Commencement Date for any of such Tenant Delays. If the Commencement
Date does not occur on or before June 1, 2014, as extended by any Tenant Delays,
Tenant may terminate this Lease upon written notice to Landlord before the
Commencement Date occurs, except that if Tenant delivers a termination notice
under this sentence, Landlord may nullify the termination by causing the
Commencement Date to occur within 5 business days, in which case this Lease will
remain in full force and effect. If the Commencement Date does not occur on or
before June 1, 2014, as extended by delays other than Tenant Delays, Landlord
may terminate this Lease upon written notice to Tenant before the Commencement
Date occurs.

Effective upon the completion of the Work, Landlord assigns to Tenant the right
to enforce all manufacturer’s and contractors’ warranties that cover the Work
(including, without limitation warranties covering HVAC units), to the extent
they are transferrable, but Landlord retains the right to also enforce those
warranties on its own behalf, and agrees, upon request, to make reasonable
efforts to enforce them on Tenant’s behalf to the extent Tenant is unable to do
so directly.

4. Additional Work. Tenant may hire outside consultants in connection with the
design and construction of the Base Work and any Additional Work, at Tenant’s
sole cost, and Tenant agrees to cause any such consultants it hires to work in
cooperation with Landlord’s contractor and architect. Upon Tenant’s request and
submission by Tenant (at Tenant’s sole cost and expense) of the necessary
information and/or plans and specifications for work other than the Base Work
(any such work, including, without limitation, change orders to the Base Work,
is “Additional Work”) and the approval by Landlord of such Additional Work under
Paragraph 1 of this Work Letter (the “Approved Additional Work”), which approval
Landlord agrees not to unreasonably withhold or delay, Landlord will complete
the Approved Additional Work, at Tenant’s sole cost and expense, subject,
however, to the following provisions of this Paragraph.

Before commencing any Approved Additional Work, Landlord will submit to Tenant a
written statement of the cost and timing of the Approved Additional Work, and
will specify the number of business days by which the Approved Additional Work
will extend the Commencement Date. Concurrently, Landlord will also submit to
Tenant a proposed tenant extra order (the “TEO”) for the Approved Additional
Work, including the extension of the Commencement Date and the cost of the
Approved Additional Work on Landlord’s standard form. Tenant agrees to either
(i) give Landlord written notice that Tenant does not desire to proceed with the
TEO; or (ii) sign and deliver the TEO to Landlord and pay Landlord the entire
cost of the Approved Additional Work within 5 business days to confirm. Any
extension of the Commencement Date Tenant approves by signing a TEO is a
“Requested Delay”. If Tenant does not sign and deliver a TEO, or does not pay
the entire cost of the Approved Additional Work within such 5 business days,
Landlord has no obligation to do any of the Approved Additional Work the TEO
describes.

5. Allowance. In addition to construction the Base Work at Landlord’s cost,
Landlord agrees to pay Tenant an allowance of up to $100,000 to be used to pay
Tenant’s transaction management fees, project management fees, Tenant’s moving
costs, and the cost of any Approved Additional Work. The actual amount of the
allowance that Landlord pays will be amortized over the initial Term with
interest at 8% per year, and Tenant will pay monthly Base Rent during the
initial Term in the amounts in stated in the table of Base Rent in the Data
Sheet plus the monthly amount of the amortization of the allowance over the
initial Term plus 8% annual interest.

6. Lease Provisions. To the extent anything in this Work Letter conflicts with
anything else in this Lease, this Work Letter controls. All amounts Tenant owes
under this Work Letter are Additional Rent.

 

F-2

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

SCHEDULE 1

to Exhibit F

COPIES OF INITIAL PLAN

Type description of Initial Plans on this cover sheet and attach copies of such
plans after this page.

 

F-1-1

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

EXHIBIT G

Depiction of Bays in the Building

 

F-1-2

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

EXHIBIT H

ESTOPPEL CERTIFICATE

                                                      (“Landlord”)

                                              (“Buyer”)

                                                      (“Lender”)

 

Re: Lease dated:                                          
                                   

Tenant:                                          
                                                                        

Amendments to the Lease:                                         
                                             

Premises area: approximately                                      rentable
square feet

Suite number:                                          
                                                                    

Property:                                          
                                         
                                           

Tenant hereby certifies to Landlord, Buyer, and Lender, as of the date of this
Estoppel Certificate, as follows:

1. An accurate and complete copy of the Lease (including all addenda, riders,
amendments, supplements, and other modifications) is attached to this Estoppel
Certificate as Schedule 1. The Lease constitutes the entire agreement between
Landlord and Tenant with respect to the Premises and the Lease has not been
modified, changed, altered or amended in any respect except as shown on Schedule
1.

2. The Lease is in full force and effect.

3. Tenant has accepted the Premises, is in possession of the Premises, and is
occupying the Premises for the conduct of its business. Landlord has completed
all improvements the Lease obligates it construct, and Tenant has accepted all
such improvements. Landlord has paid in full any tenant improvement allowance or
other allowance the Lease obligates it to pay to Tenant.

4. Tenant has not entered into any sublease, assignment or other agreement
transferring any of its interest in the Lease or the Premises. The term of the
Lease commenced on             , 20    and, excluding any option or renewal term
that Tenant has not yet exercised, will end on             , 20    .

5. Except as set forth in section(s)         of the Lease, Tenant has no option
to extend or renew the term of the Lease. Tenant has no option to expand the
Premises, no right with respect to the purchase of all or any part of the
Premises or the Property, and no other interest in the Premises or the Property
other than as the tenant under the Lease.

6. Current base monthly rent under the Lease is $        , which has been paid
through and including             , 20    . Tenant’s percentage of operating
expenses, real estate taxes and other pass-through expenses is     %. Tenant has
not paid rent for more than one month in advance. Tenant is not currently
disputing the computation of any rent, additional rent or other sums payable
pursuant to the Lease.

7. To Tenant’s knowledge, there are no offsets, deductions or credits against
the payment of rents or other charges Tenant owes under the Lease. Tenant has no
claim against Landlord for any security or other refundable deposit except for a
security deposit in the amount of $        .

8. Tenant has neither given nor received any written notice of default under the
Lease. To Tenant’s knowledge, there exists no uncured breach or default by
Landlord or Tenant under the Lease, nor any state of facts nor any condition
that, with notice, the passage of time, or both, would result in a breach or
default on the part of either Landlord or Tenant, and Tenant has no claims or
causes of action against Landlord, except as follows:

 

 

 

 

 

 

F-1-3

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

9. No actions, whether voluntary or otherwise, are pending against Tenant under
the bankruptcy laws of the United States or any state and there are no claims or
actions pending against Tenant which if decided against Tenant would materially
and adversely affect Tenant’s financial condition or Tenant’s ability to perform
the tenant’s obligations under the Lease.

10. To Tenant’s knowledge, the use, maintenance and operation of the Premises
complies with and will at all times comply with, all applicable federal, state,
county or local statutes, laws, rules and regulations of any governmental
authorities relating to environmental, health or safety matters (“Environmental
Laws”). Tenant has not used, and does not plan to use, the Premises for any
activities which, directly or indirectly, involve the use, generation,
treatment, storage, transportation or disposal of any petroleum product or any
toxic or hazardous chemical, material, substance, pollutant or waste, except as
expressly permitted by the Lease. Tenant has not received any notices, written
or oral, of violation of any Environmental Law or of any allegation which, if
true, would contradict anything contained herein, and there are no writs,
injunctions, decrees, orders or judgments outstanding, and no lawsuits, claims,
proceedings or investigations pending or threatened relating to the use,
maintenance or operation of the Premises, nor is Tenant aware of a basis for any
such proceeding.

11. [Tenant acknowledges that Buyer intends to assign to Lender its right, title
and interest in the Lease and to the rents due under the Lease and that Buyer
will collect such rents or payments, as the case may be, provided no event of
default has occurred under the Loan. Tenant agrees to pay all rents or payments
and other amounts due under the Lease directly to Lender upon receipt of written
demand by Lender. Notwithstanding the collateral assignment of the Lease to
Lender, and any collection of rents or payments pursuant to such assignment by
Lender, Lender shall have no obligation to perform the landlord’s obligations
under the Lease unless and until Lender assumes such obligations in writing. At
the Lender’s option, Tenant agrees that the Lease will be subject and
subordinate to the lien and provisions of Lender’s mortgage and Tenant will
attorn to and accept all performances by Lender.]

12. The address for notices to Tenant set forth in the Lease is currently
correct.

Tenant acknowledges that Landlord has requested this Estoppel Certificate [in
connection with the potential sale of the Property to Buyer, to be financed by a
loan from Lender, and that Buyer and Lender will rely on this Estoppel
Certificate in closing on the purchase and financing of the Property.]

Dated             , 20    

 

 

By:

   

Name:

   

Title:

   

 

F-1-4