Exhibit 10.37


 


LEASE


 


THIS LEASE (this “Lease”)
is made and entered into this 25th day of September, 2009, by and between
Japs-Olson Company, a Delaware corporation (“Landlord”),
and Appliance Recycling Centers of America, Inc., a Minnesota corporation (“Tenant”).


 


RECITALS


 


A.            Landlord and
Tenant are parties to that certain Purchase Agreement dated August 11, 2009
(the “Purchase Agreement”) with respect to certain real property located at 7400
Excelsior Boulevard in the City of St. Louis Park, Hennepin County, Minnesota
and consisting of the parcels of land that are identified on Exhibit A
attached hereto and incorporated herein containing approximately 10.18 acres,
together with all the appurtenant rights, mineral rights, privileges, and
easements belonging thereto (the “Land”), and the
approximately 126,458 square foot building (according to the survey provided by
Tenant pursuant to the Purchase Agreement referenced below) and other
improvements located thereon (the “Improvements”).  The Land and the Improvements are herein
sometimes collectively referred to as the as the “Real
Property”.


 


B.            Upon Closing
(as defined in the Purchase Agreement), Tenant desires to lease from Landlord
the Real Property (subject to the provisions of Section 1.4 below, the “Premises”) in order to conduct its business operations as
set forth in Section 4.1 below).


 


C.            Landlord is
willing to enter into this Lease and allow Tenant to conduct such business, on
the terms, conditions and covenants hereinafter set forth.


 


NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which each party hereby acknowledges, the parties
agree as follows:


 


ARTICLE 1


PREMISES;
AS IS; NET LEASE


 


1.1           Grant; Premises.  In consideration of the full and timely
performance by Tenant of all the terms, conditions and covenants of this Lease,
including timely payment of all Rent (as defined herein, including Base Rent
and additional rent due hereunder), Landlord does hereby lease to Tenant, and
Tenant does hereby lease from Landlord, the Premises.


 


1.2           Site Leased “As Is”.  Tenant takes the Premises in their present
state and condition, “as is” and without any obligation on the part of Landlord
to make any alterations, changes, improvements, repairs or replacements of any
kind whatsoever.  Prior to the date
hereof, Tenant has occupied the Premises as fee owner of the Real Property;
accordingly, Tenant shall take possession of the Premises under the terms of
this Lease with an acknowledgment that the Premises, including all fixtures, equipment
and personal property thereon, are in good repair and working order, and in
clean and tenantable condition, as of the Effective Date.  Landlord makes no covenants, representations
or warranties as to the age, quantity or condition of the Premises, their
value, their fitness for any specific purpose, or the title thereto, and no
such covenants, representations or warranties shall be implied.


 


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1.3           Premises.  Landlord may utilize that portion of the Premises
shown on Exhibit B attached hereto (the “Joint Use
Area”) for parking, storage or other purposes (including without
limitation, leasing to third parties), provided the same does not materially
and adversely affect Tenant’s business operations.  Provided such joint use shall not impose any
costs, expenses, obligations or liabilities on Landlord (except as expressly
set forth in Sections 4.5 and 6.2 below).


 


1.4           Covenant for Quiet Enjoyment.  Landlord warrants that it has full right to
make this Lease, and that during the full term of this Lease, or any extension
thereof, so long as Tenant shall not be in default of any of its obligations
hereunder, and so long as Tenant shall fully keep and perform the covenants and
obligations of this Lease, and pay promptly when due the rentals and other
payments herein covenanted to be made, Tenant shall have and enjoy quiet and
peaceable possession of the Property. 
Tenant’s right of quiet enjoyment shall be subject to Landlord’s right
to construct wetlands and/or drainage ponds upon the Property required by any
applicable governmental unit as part of Landlord’s development of its adjoining
property, provided that such construction does not interfere with or restrict
Tenant’s occupancy during the term of the Lease.  Tenant agrees to subordinate its lease rights
to any such wetland or drainage ponds construction consistent with the
foregoing.


 


1.5           Net Lease.  It is the intention and purpose of the
parties that this Lease shall be an entirely “net lease” to the Landlord, with
no exceptions and with no maintenance obligations of Landlord.  Accordingly, all costs or expenses of
whatever character, nature or kind, general and special, ordinary and
extraordinary, foreseen or unforeseen, that may be necessary with respect to
operation of the said Premises, and Tenant’s authorized use thereof during the
entire term of this Lease, shall be paid by Tenant.  All provisions of this Lease relating to
costs and expenses are to be construed in light of such intention and purpose
to construe this Lease as a “net lease.”


 


ARTICLE 2


TERM


 


2.1           Term; Lease Year.  Tenant shall have and hold the Premises for a
term (as the same may be extended or terminated prior to the expiration
thereof, the “Term”) of approximately five (5) years
commencing on the 25th day of September, 2009 (the “Commencement
Date”) and extending until and including the last day of the month
in which the fifth anniversary of the Commencement Date occurs (the “Expiration Date”). 
Each twelve (12) month period commencing on January 1 and concluding on December
31 is called a “Lease Year.”  The initial calendar year of the term, 2009,
shall be a partial Lease Year, as will the final calendar year of the
Lease.  Tenant shall have the right to
extend the initial Term pursuant to Section 2.2 below.


 


2.2           Renewal Option.  Subject to the
terms and conditions set forth herein, Tenant shall have the option (the “Renewal Option”) to extend the Term of this Lease for an
additional one (1) year period (the “Renewal Term”),
which Renewal Term shall commence as of the Expiration Date and end on the
anniversary of the Expiration Date (the “Renewal Expiration Date”),
provided that this Lease shall not have been previously terminated and that
Tenant shall not be in default in the observance or performance of any of the
terms, covenants or conditions of this Lease and shall not have cured during
any applicable notice period (i) on the date Tenant 


 


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gives Landlord written
notice (the “Renewal Notice”) of Tenant’s
election to exercise the Renewal Option, and (ii) on the Expiration Date.  The Renewal Option shall be exercised with
respect to the entire Premises only and shall be exercisable by Tenant’s
delivery of the Renewal Notice to Landlord at least one (1) year prior to the
Expiration Date.


 


2.3           Renewal Option Terms.   If Tenant exercises
the Renewal Option in accordance with the terms set forth above, the Renewal
Term shall be upon the same terms, covenants and conditions as those contained
in this Lease, except that (i) the monthly Base Rent (as defined in Section 3.1
below) shall be increased to Forty-Seven Thousand Four Hundred Twenty-Two and
No/ 100 Dollars ($47,422.00); (ii) the provisions of Section 2.2 above relative
to Tenant’s right to extend the Term of this Lease shall not be applicable
during the Renewal Term; and (iii) the Expiration Date shall, for the purposes
of the Lease, be defined as the Renewal Expiration Date.


 


ARTICLE 3


 


BASE RENT; ADDITIONAL
RENT; SURRENDER; GUARANTY


 


3.1           Base Rent.  The base rent payable during the term of this
Lease shall be payable in monthly installments of Forty-Two Thousand One
Hundred Fifty-Three and No/100 Dollars ($42,153.00) per month (“Base Rent”) for each month of the Term.  Base Rent for any partial Rent shall be
prorated.


 


3.2           Holding Over.  Should Tenant continue to occupy the Premises
after the expiration or termination of this Lease, whether with or without the
consent of Landlord, such tenancy shall be on a month-to-month basis, and Base
Rent shall be increased to 150% of the Base Rent.


 


3.3           Additional Rent.  In addition to Base Rent, Tenant shall pay
additional rent (as set forth in Article 5 below).  Base Rent, additional rent and any other
amounts due Landlord hereunder are sometimes collectively referred to as “Rent”.


 


3.4           Payment of Rent; Late Charge.  Tenant shall pay Base Rent, together with any
monthly additional rent payments due hereunder, to Landlord, without the
necessity for demand, and without setoff or deduction, in advance on the first
business day of each and every month during the term hereof at Landlord’s
address set forth in Article 13 of this Lease, or such other place as Landlord
may from time to time designate in writing. 
If any Rent is not received within five (5) days of the date which it is
due, a “Late Charge” equal to five percent (5%)
of the amount due shall be assessed and be immediately due and payable;
provided once a Late Charge has been assessed, during the next twelve months,
any subsequent Rent payments which are not made on or before the due date shall
incur a Late Charge as of the day immediately following the due date (that is,
the five (5) day grace period shall be available only once in any twelve month
period).  The Late Charge shall be in
addition to, and not in lieu of, “Default Interest”.  Default Interest shall begin to accrue at the
rate of 12% per annum on all outstanding and delinquent Rent as of the date
such Rent becomes delinquent, and shall continue to accrue until paid in full.  Late Charges and Default Interest shall not
be construed as liquidated damages or as limiting Landlord’s remedies in any
manner, but shall instead be additional remedies available to Landlord together
with all of Landlord’s other rights and remedies hereunder, at law or in
equity.


 


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3.5           Tenant to Surrender Premises in
Good Condition.  Upon the
expiration or termination of the term of this Lease, Tenant shall at its own
expense: (a) remove from the Premises all moveable furnishings and other items
of personal property and equipment, (b) repair any damage or injury, and make
any necessary replacements, caused or necessitated by such removal; (c) remove,
in compliance with law, any “hazardous substances” as defined in Section 14.1,
that may be present in, on or under the Premises; (d) remove all alterations
made by Tenant and not consented to by Landlord; and (e) quit and deliver up
the Premises (including all parking areas located on the Land) to Landlord,
peaceably and quietly, in as good order, condition and repair as the same were
on the date this Lease commenced (that is, in their “AS-IS” condition as of the
Effective Date), reasonable wear and tear and casualty excepted; provided
Tenant shall have no obligation to repair or restore any portion of the Real
Estate associated with Landlord’s wetland and drainage ponds construction or
improvements associated therewith.


 


ARTICLE 4


USE;
COMPLIANCE WITH LAWS


 


4.1           Permitted Use.  Subject to all the terms and conditions of
this Lease, Tenant shall use and occupy the Premises only as a shall be used
and occupied by Tenant for the sole business purpose of continuing to conduct
its business operations in the same general manner it is as of the Effective
date (i.e., as a retail and recycling facility for home appliances, warehousing
of inventory and related general office use). Tenant shall not use the Property
for any other purposes without the prior written consent of the Landlord, and
only if such use at all times is in material compliance with all applicable
laws, ordinances and government regulations. 
Tenant shall not in any manner deface or injure the Premises or any part
thereof.  Tenant shall not do anything or
permit anything to be done upon the Premises which would constitute a public or
private nuisance or waste, or would tend unreasonably to disturb occupants of
neighboring properties, or would cause structural injury to the Improvements or
cause the value or usefulness of the Premises or any part thereof to diminish
in any material respect.  Tenant shall
conduct its business in a reputable manner as a quality establishment.


 


4.2           Compliance with Laws.  Tenant shall not use or occupy the Premises
or permit the Premises to be used or occupied contrary to any statute, rule,
order, ordinance, requirement or regulation applicable thereto (including, but
not limited to, “environmental laws” described in Article 14 below) or in a
manner which would violate any certificate of occupancy affecting the same, or
for illegal or immoral purposes.  Tenant
shall observe and comply with all conditions and requirements necessary to
preserve and extend any and all rights, licenses, permits (including but not
limited to zoning variances, special exemptions and nonconforming uses),
privileges, franchises and concessions which are now applicable to the
Premises, or which have been granted to or contracted for by Tenant or Landlord
in connection with any existing or presently contemplated use of the Premises.


 


4.3           Permits and Approvals.  Tenant shall, at its sole cost and expense,
procure any and all necessary permits, certificates, licenses or other
authorizations required for its use of the Premises as set forth in Section 4.1
above.  If the owner of the Premises is
required by law to join in any such application, Landlord shall reasonably
cooperate with Tenant in connection with such application, but at Tenant’s
cost.


 


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4.4           Rules and Regulations.  Tenant shall comply with, and shall cause
Tenant’s employees, contractors to comply with, any reasonable rules and
regulations as may reasonably be adopted by Landlord from time to time and of
which Landlord shall notify Tenant in writing; none of which shall materially
interfere with Tenant’s business operations or cause Tenant to incur material
and unnecessary additional expenses.


 


4.5           Parking Areas.  Landlord and Tenant agree that Landlord will
not be responsible for any loss, theft or damage to vehicles, or the contents
thereof, parked or left in the parking areas of the Premises and Tenant agrees
to so advise its employees, visitors or invitees who may use such parking
areas.  Parking areas shall be utilized
in a reasonable manner to allow for the efficient joint use of the Joint Use
Area as contemplated by Section 1.4 above. 
All responsibility for damage and theft to vehicles and their contents
is assumed by Tenant or Tenant’s partners, trustees, officers, directors,
shareholders, members, beneficiaries, licensees, invitees, or any assignees,
subtenants or assignees’ or subtenants’ agents, employees, contractors,
servants, guests, or independent contractors (collectively, “Tenant Parties”). 
Tenant shall repair or cause to be repaired, at Tenant’s sole cost and
expense, any and all damage to any portion of the Property caused by the use by
Tenant Parties of the driveway or parking areas within the Property.  Landlord shall not be liable to Tenant by
reason of any moratorium, initiative, referendum, statute, regulation or other
governmental action which could in any manner prevent or limit the parking
rights of Tenant hereunder.  Any
governmental charges or surcharges or other monetary obligations imposed
relative to parking rights with respect to the Building shall be considered
assessments and shall be payable by Tenant as set forth in Section 5.1.  Notwithstanding the foregoing, Landlord shall
be liable for any damage caused by its negligent use of the Joint Use Area.


 


ARTICLE 5


ADDITIONAL
RENT; TAXES; UTILITIES


 


5.1           Tenant to Pay Taxes and
Assessments.  As further
consideration for this Lease, Tenant shall pay all real estate taxes, charges
and assessments of every kind and nature which shall be due and payable during
the Term, including all installments of special assessments now or hereafter
levied and interest thereon.  Provided,
however, that regardless of the payment dates for real estate taxes due and
payable in 2009  and in the final Lease Year, and
any installments of special assessments and interest thereon payable therewith,
such taxes and assessments shall be prorated between Landlord and Tenant on a
daily basis to reflect the term of this Lease and any extension or renewal
thereof, and any holdover tenancy.  The
parties agree that any special assessments assessed against the Premises after
the Commencement Date shall be paid in installments spread over the longest
period of time permitted under law. 
Notwithstanding anything to the contrary, in the event that the Premises
are assessed for an improvement requested by Tenant or required solely because
of Tenant’s use of the Property, Tenant shall be solely liable for such
assessment and shall pay such assessment in full prior to the Expiration Date
(or, if Tenant has exercised the Renewal Option, the Renewal Expiration Date).


 


Without limiting the provisions of Section 5.5 below, or being limited
thereby, Tenant shall pay to Landlord, as additional rent, on a monthly basis
along with each payment of Base Rent, a sum equal to one-twelfth (1/12th) of
the total amount of real estate taxes and installments of special assessments
and other assessment charges and interest (“Taxes”)
due and payable during the 


 


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Lease Year or partial Lease Year in lieu of Tenant’s direct payment of
taxes (provided, if a catch up payment is needed to ensure that the full amount
of funds necessary to pay the Taxes for the current Lease Year is available to
Landlord prior to the due date for such tax payment, Tenant shall promptly make
such payment to Landlord within thirty (30) days of such request).  In the event such amount is not known, Tenant
shall pay one-twelfth (1/12th) of the product of the most recently issued tax
bill multiplied by 1.03, and when the current tax amount becomes known, Tenant
shall immediately pay to Landlord any shortfall between monthly installments
that would have been due were the tax bill known, and those actually paid.  In the event Tenant’s monthly installments
towards the tax bill are greater than that actually owed based on the tax bill,
Landlord shall credit the total amount of the overpayment to the next
installment or installments of Rent coming due. 
Provided that Tenant has paid all monthly tax installments to Landlord
on a timely basis, Landlord will cause the appropriate payment of Taxes to be
made before penalties or interest are assessed or accrue.


 


5.2           Time of Payment of Taxes and
Receipts.  Subject to
the provisions of Section 5.1, Tenant shall be responsible for all Taxes.


 


5.3           Tenant to Pay for Utilities.  Tenant shall fully and promptly pay when due
all utility charges for all services furnished to or upon the Premises during
the full term of this Lease and any holdover tenancy, including, without
limitation, water, gas, electricity, sewage disposal, and telephone tolls.  Under no circumstances shall an interruption
of any or all of said utilities constitute a constructive eviction or be deemed
a default by Landlord under this Lease.


 


5.4           Definition of Rent.  All payments to be made by Tenant under the
Lease, however denominated, shall be considered, and are payable, as Rent.


 


5.5           Compliance with Mortgage.  Notwithstanding anything in this Lease to the
contrary, Tenant agrees to make monthly escrow payments to, or for the benefit
of, any mortgagee or the servicer of such mortgagee (collectively, “Lenders”) for the insurance, real estate taxes (including
any installments of special assessments and other assessment charges and
interest), or other expenses, to the extent that such payments are required
pursuant to any mortgage of record.


 


5.6           Escrow for Insurance.  Without limiting the foregoing, or being
limited thereby, Tenant shall pay to Landlord, as additional rent, on a monthly
basis along with each payment of Base Rent, a sum equal to one-twelfth (1/12th)
of the total amount of insurance premiums for the insurance policy referenced
in Section 6.4 below for coverage applicable during the Term (provided, if a
catch up payment is needed to ensure that the full amount of funds necessary to
pay the insurance policy premium for the current Lease Year is available to
Landlord prior to the due date for such policy premium payment, Tenant shall
promptly make such payment to Landlord upon request).


 


ARTICLE 6


MAINTENANCE;
INDEMNITY; INSURANCE


 


6.1           Maintenance.  During the Term, Tenant shall at all times keep
the entire Premises, including all Improvements and components thereof, in good
and safe condition at its sole cost and expense.  Such obligations shall include without
limitation, the maintenance of the 


 


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structural integrity of the
exterior walls, roof and foundation of the Improvements and all other
components of the Premises (whether structural or non-structural), and all
fixtures and equipment thereon or therein, including without limitation, the HVAC
system, all interior and exterior windows, boilers, and other equipment and
fixtures, and each and every walkway, passageway and parking areas appurtenant
to the Premises, in good repair and safe and working condition, and in full
compliance with all laws, ordinances and regulations then in force, making
whatever replacement may be necessary under the circumstances.  Tenant’s obligations under this Section includes,
but is not limited to, all routine maintenance for all portions of the
Premises, including the painting of all surfaces, clearance of snow,
landscaping, etc., as well as repairing (but not resurfacing; provided that
while Tenant shall have no affirmative obligation to resurface the parking
areas, nor shall Landlord) of the parking areas (including without limitation
the Joint Use Area); all such maintenance (including maintenance of the Joint
Use Area) shall be without contribution from Landlord.


 


6.2           Waiver of Liability.  Landlord shall not be liable to Tenant, or
Tenant’s agents, employees, customers, or invitees, for injury, death or
property damage occurring in, on or about the Premises.  Except for Landlord’s negligence or willful
misconduct, Tenant shall indemnify, protect, defend and hold harmless the
Premises, Landlord and any Lender, Landlord’s partners, trustees, officers,
directors, shareholders, members, employees, beneficiaries, heirs and assigns
(collectively, the “Landlord Parties”)
from and against any and all claims, loss of rents and/or damages, costs,
liens, judgments, penalties, loss of permits, attorneys’ and consultants’ fees,
expenses and/or liabilities arising out of, directly or indirectly, in whole or
in part involving, or in connection with, the occupancy of the Premises by
Tenant, the conduct of Tenant’s business, any act, omission or neglect of
Tenant, Tenant Parties, and out of any default or breach by Tenant in the
performance in a timely manner of any obligation on Tenant’s part to be
performed under this Lease.  The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Landlord or any Landlord Party) litigated and/or
reduced to judgment.  In case any action
or proceeding be brought against Landlord by reason of any of the foregoing
matters, Tenant upon notice from Landlord shall defend the same at Tenant’s
expense by counsel reasonably satisfactory to Landlord and Landlord shall
cooperate with Tenant in such defense. 
Landlord need not have first paid any such claim in order to be so
indemnified.  Tenant’s indemnity
obligations under this Section shall survive the expiration or earlier
termination of the Lease.  Landlord shall
not be liable for, and Tenant hereby waives and releases Landlord from, injury
or damage to the person or goods, wares, merchandise or other property of
Tenant, Tenant’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defect of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or from other sources or places, and regardless of whether the
cause of such damage or injury or the means of repairing the same is accessible
or not.  Notwithstanding Landlord’s
negligence or breach of this Lease, Landlord shall under no circumstances be
liable for injury to Tenant’s business or for any loss of income or profit
therefrom.


 


6.3           General Liability and Related
Insurance.  During the
entire term of this Lease and any extensions or renewals thereof, and any
holdover tenancy Tenant shall obtain and keep in full force and effect, at its
sole cost and expense, a policy of comprehensive public liability 


 


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insurance with respect to
the Premises and the business of Tenant thereon, written on an “occurrence”,
and not a “claims made” basis, by a responsible casualty or indemnity company
authorized to do business in the Property Jurisdiction, under which policy
Landlord and Lenders, if any, shall be named as additional insureds, and with
not less than $2,000,000 single coverage limits for each occurrence of injury
or property damage.  Prior to the
Commencement Date, Tenant shall furnish Landlord with said policy or with a
certificate that said insurance is in effect, which shall state that Landlord
will be notified in writing thirty (30) days prior to any cancellation,
material change or renewal of said insurance. 
If the Premises has a boiler or steam vessel, Tenant shall also place
and carry boiler insurance with such a casualty or indemnity company in an
amount of coverage not less than $1,000,000 per accident, and Tenant shall
comply fully with all applicable laws, ordinances, and regulations with
reference to the operation and inspection of such boiler and steam vessel.  Tenant shall also maintain such other
insurance coverage as Tenant may reasonably conclude are prudent or advisable
based on the use to which Tenant is putting the Premises.  Tenant shall also maintain such other
insurance coverages, in form and amounts acceptable to Lenders, as such Lenders
may reasonably require under any mortgage encumbering the Premises, now or in
the future.


 


6.4           Casualty Insurance.  At Tenant’s sole cost and expense as provided
for in Section 5.7, Landlord will maintain property insurance on the
Improvements (exclusive of Tenant’s personal property interests that may be
located therein) on an “occurrence” basis and not a “claims made” basis, under
an “all risk” form of fire insurance policy, with full extended coverage
endorsements added, and in accordance with the requirements of any mortgage
encumbering the Real Property from time to time.


 


6.5           Worker’s Compensation Insurance.  Tenant shall maintain at all times any worker’s
compensation insurance coverage as may be required by law and, upon request,
shall present a certificate of such insurance to Landlord.


 


6.6           Loss of Income Insurance;
Business Interruption Insurance.  Tenant shall maintain loss-of-income and
extra-expense insurance in such amounts as will reimburse Tenant for direct or
indirect loss of earnings attributable to all perils commonly insured against
by prudent tenants or attributable to prevention of access to or use of the
Premises as a result of such perils.


 


6.7           Form of Policies.  The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease.  Such insurance
shall (a) (except Workers’ Compensation) name Landlord, and any other party it
reasonably so specifies, as an additional insured; (b) specifically cover the
liability assumed by Tenant under this Lease, including, but not limited to,
Tenant’s obligations to indemnify Landlord under this Lease; (c) be issued by
an insurance company having a rating of not less than A-1X in Best’s Insurance
Guide or which is otherwise acceptable to Landlord and licensed to do business
in the Property Jurisdiction; (d) be primary insurance as to all claims
thereunder and provide that any insurance carried by Landlord is excess and is
non-contributing with any insurance requirement of Tenant; (e) provide that
said insurance shall not be canceled, expire or coverage changed unless thirty
(30) days’ prior written notice shall have been given to Landlord and any
Lender and any landlord of an underlying ground or master lease; and (f) contain
a cross-liability endorsement or severability of interest clause acceptable to
Landlord.  Tenant shall deliver said
policy or policies or certificates thereof to Landlord on or before the Lease 


 


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commencement date and at
least thirty (30) days before the expiration dates thereof.  In the event Tenant shall fail to procure
such insurance, or to deliver such policies or certificate, Landlord may, at
its option, procure such policies for the account of Tenant, and the cost
thereof shall be paid to Landlord as additional rent ten (10) days after
delivery to Tenant of bills therefor.


 


6.8           Subrogation of Claims.  Landlord and Tenant hereby waive any and all
claims and causes of action against each other based on the destruction of or
damage to the Premises or the contents thereof as a result of any cause that is
to be insured pursuant to this Article 5, and agree that their respective
insurers shall be bound by this waiver, even if such loss or damage was caused
by the fault or negligence of the other party or anyone for whom the other
party may be responsible.


 


6.9           Damage Not to Terminate Lease.  Except as set forth below, should any
building, structure or other improvement upon the Premises be damaged or
destroyed by any cause, such damage or destruction shall not effect a
cancellation of this Lease, effect any reduction or abatement of rent, or
release Tenant from liability for the full performance of all of the covenants
of this Lease, past, present or future, except as expressly provided for
herein.


 


6.10         Rebuilding after Damage. In case the
Improvements shall be materially damaged or destroyed by fire or other casualty
such that Tenant is unable to make reasonable use of the Premises, Landlord may
elect to repair, restore or rebuild the Improvements by notice to Tenant given
with twenty (20) days of the casualty event, and shall complete the same as
rapidly as possible, but in any event not later than ninety (90) days after
such damage or destruction.  In
connection with such repair, Landlord shall not be required to expend any sums
in excess of insurance proceeds actually received by Landlord.  In the event the Improvements are so
materially damaged and destroyed and Landlord elects not to repair, restore or
rebuild the Improvements and as a result Tenant is not able to make reasonable
use of the Premises, Tenant may terminate this Lease as of the later of the
date of the casualty or the date Tenant no longer makes productive use of the
Premises.


 


ARTICLE 7


ALTERATIONS;
CONSTRUCTION STANDARDS


 


7.1           Alterations.  Tenant may, at its sole cost and expense,
expand, alter, remodel or enlarge any now or hereafter existing improvement,
provided that it has first secured the written consent of Landlord to the plans
and specifications therefor and further provided that any such work shall be in
accordance with the provisions of Section 7.2. 
Any leasehold improvements made by Tenant, and any fixtures (except
trade fixtures) installed on the Premises by Tenant, shall be the property of
Landlord from and after the time of their construction or installation;
provided, however, that Landlord may require that any or all leasehold
improvements be removed by the expiration or earlier termination of this Lease,
notwithstanding that the installation of such leasehold improvements may have
been consented to by Landlord.  Every
alteration shall comply with all building codes and other applicable regulations.  In no event shall Landlord’s approval of any
alteration serve as a representation or warranty by Landlord regarding the
fitness or adequacy of such leasehold improvement, including, without
limitation, any warranty that such improvement complies with any code or
regulation.


 


9

















 


7.2           Construction Standards.  Any such work, and any rebuilding and
restoration under Article 5 or 9 with a cost in excess of $25,000 for any
single improvement, or $50,000 annually, shall be constructed and installed
according to plans and specifications prepared by Tenant’s architect or agent,
and approved in writing by Landlord.  In
all of the foregoing construction and installation described in the preceding
sentence whether or not approved by Landlord, Tenant shall be bound by and do
all of the following:


 


(a)           Complete said construction
and installation as rapidly as practical and pay for all labor performed and
materials furnished, when due and payable;


 


(b)           Keep the Premises free and
clear of all liens for labor performed and materials furnished, and defend, at
its sole cost and expense, each and every lien asserted or filed against the
Premises or any part thereof, and pay each and every judgment made or given
against said Premises, or any part thereof, on account of any such lien;


 


(c)           Indemnify and save Landlord
harmless from and against any and every claim, demand, action, cause of action,
or charge, including reasonable attorneys’ fees incurred by Landlord, arising
out of or connected with or alleged to arise out of or to be connected with any
act or omission of Tenant, or any agent, employee, contractor or sub-contractor
in or about the Premises, or connected with the assertion or filing of any lien
against said Premises;


 


(d)           Procure, or cause its
general contractor to procure, before entering onto the Premises, and maintain
in full force until all work is fully completed, a policy of builder’s risk
insurance covering the completed value of any work to be performed, and a
policy of indemnity insurance written by a casualty or indemnity company
authorized to do business in the Property Jurisdiction, indemnifying Landlord
against all liability for injury arising out of, or in any way connected with,
or alleged to arise out of or in any way be connected with any said work, with
not less than $1,000,000 single coverage limits for each occurrence of injury
or property damage.  In connection with
all said work on the Premises, Tenant or its contractors shall procure and
maintain in force such workers’ compensation or other insurance as may be
required by the laws of the Property Jurisdiction, fully protecting
Landlord.  Landlord and Landlord’s
mortgagee shall be named as an additional insured under said policies, and said
policies, or certificates evidencing that such insurance is in effect, shall be
delivered by Tenant to Landlord prior to any contractor’s commencement of work
on the Premises.  Said policies or
certificates shall state that Landlord will be notified in writing thirty (30)
days prior to any cancellation, material change or renewal of any such
insurance;


 


7.3           Landlord’s Consent.  Landlord shall not unreasonably withhold or
delay its consent to a proposed alteration, or the plans and specifications
therefor, if no substantial change in use of the Premises is contemplated and
the value of the Premises is likely to be enhanced thereby.


 


7.4           Landlord’s Oversight of
Improvements.  Landlord
shall have the right to inspect any leasehold improvements as they are being
constructed or once completed.  In no
event shall Landlord’s inspection or oversight of a leasehold improvement serve
as a representation or warranty by Landlord regarding the fitness or adequacy
of such leasehold 


 


10

















 


improvement, including,
without limitation, any warranty that such improvement complies with any code
or regulation.


 


ARTICLE 8


ASSIGNMENT
AND SUBLETTING; ENCUMBRANCES


 


8.1           No Assignment of Tenant’s
Interest.  Tenant shall not mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, this Lease or any
interest hereunder.  Without the prior
written consent of Landlord, Tenant may not assign, sublet, or otherwise
transfer its interest in the Premises or this Lease by operation of law or
otherwise, or permit the use of the Premises by any persons other than Tenant
and its employees (any of the foregoing are hereinafter sometimes referred to
collectively as “Transfers”).


 


Any Transfer made without
Landlord’s prior written consent shall (which may be conditioned or withheld in
its sole but reasonable business judgment and without limiting the foregoing,
subject to its Lender’s approval and consent), at Landlord’s option, be null,
void and of no effect, and shall, at Landlord’s option, constitute a Default by
Tenant under this Lease.  Notwithstanding
anything to the contrary, no Transfer, whether or not consented to by Landlord
shall release the named Tenant from its obligations hereunder.  Landlord reserves the right to direct the
Tenant to terminate the Lease Agreement dated April 29, 2009 between it and the
City of St. Louis Park with respect to the Joint Use Area (the “Joint Use Area Lease”) in accordance with the termination
provisions set forth therein.  Until such
termination Tenant shall be entitled to the rent due thereunder and such Joint
Use Area Lease shall be considered a valid sublease, subject to the terms of
this Lease.  After such termination,
Landlord may choose to enter into a generally similar agreement with the City
of St. Louis Park or any other third party, or otherwise utilize or lease the
Joint Use Area as provided for in Section 1.3 above,  in its sole and absolute discretion and
Landlord shall be entitled to any and all rents resulting therefrom.


 


8.2           Landlord May Assign.  Landlord’s right to assign this Lease or sell
or convey the Premises, subject to this Lease, are and shall remain
unqualified.  Upon any said assignment,
sale or conveyance and provided the Landlord’s purchaser assumes all
obligations hereunder, Landlord shall thereupon be entirely freed of all
obligations of the Landlord hereunder accruing thereafter and shall not be
subject to any liability resulting from any act or omission or event occurring
after said assignment, sale or conveyance.


 


8.3           Tenant to Place No Mortgage.  Tenant shall not at any time during the term
of this Lease place, suffer or allow any mortgage or similar security
instrument upon its leasehold interest created hereby, even though Landlord’s
title is superior to said mortgage or instrument.


 


8.4           Landlord May Place Mortgage.  Landlord shall have the unrestricted right at
any time during the full term of this Lease to place any mortgage or similar
security instrument upon the Landlord’s interest in the Premises.


 


8.5           Other Liens Prohibited.  Tenant shall not cause, suffer or acquiesce
in the attachment of any other liens or encumbrances, including without
limitation, any mechanic’s or materialmen’s liens, judgment liens, tax liens or
liens for the cost of environmental remediation, to the Premises or the
Landlord’s or Tenant’s interest therein.


 


11
















 


ARTICLE
9


LANDLORD’S
CURATIVE RIGHTS


 


9.1           Landlord May Pay Taxes, Liens,
etc.  In the event Tenant shall fail
or neglect at the times and as herein provided to pay any tax, charge or
assessment against the Premises, or to pay any lien or judgment against or
affecting the Premises, or to provide and pay for any insurance, or to make any
other payment which it is the obligation of Tenant to pay under the terms of
this Lease, when due and payable, then in addition to all other remedies
provided by this Lease or as now or hereafter provided by law, Landlord may, at
its option, upon fifteen (15) days notice, pay any such judgment, tax, charge
or assessment, or procure such insurance or pay the premiums therefor, and pay
any other amount herein required to be paid by Tenant.  The amount or amounts so paid and interest
thereon as hereinafter provided shall thereupon be immediately due and payable
by Tenant to Landlord, as additional Rent hereunder.


 


9.2           Tenant May Contest Taxes, etc.  Tenant, however, shall not be required to
pay, remove or discharge any tax, assessments, tax lien, or any materialmen’s
or mechanics’ lien or judgment against the Premises so long as Tenant shall in
good faith contest the same or the validity thereof by appropriate legal
proceedings, and so long as Landlord’s title and rights are not in any manner
impaired or jeopardized thereby, provided Tenant deposits with Landlord
sufficient funds or other security acceptable to Landlord to protect Landlord
and the Premises.  Pending any such legal
proceedings, Landlord shall not pay, remove or discharge the tax, assessment,
tax lien, materialmen’s or mechanics’ lien or judgment thereby contested unless
its title or rights are being impaired or jeopardized by such delay or by such
contest, in which event Landlord may use any such deposits to pay and discharge
the same.


 


9.3           Tenant to Furnish Receipts.  Upon demand by Landlord, Tenant shall
promptly furnish to Landlord receipts or other satisfactory evidence showing
that Tenant has fully and promptly paid and discharged all charges, premiums,
or any other payments required to be made by Tenant under the terms of this
Lease.


 


9.4           Landlord’s Right to Enter
Premises.  Landlord,
and its authorized agents or attorney, shall have the right, but not be obligated
to enter the Premises: (a) at any time in an emergency, and (b) upon prior
notice to Tenant at other reasonable times during normal business hours to
inspect, and to make such repairs, improvements and/or alterations in and to
the Premises as Landlord may reasonably deem necessary under the circumstances,
and there shall be no abatement of rents or any liability on the part of
Landlord for any inconvenience, annoyance, or injury to business resulting
therefrom, provided that Landlord shall use its best efforts to minimize
interference with Tenant’s business and occupancy of the Premises.


 


ARTICLE
10


CONDEMNATION


 


10.1         Condemnation.  In the event the Premises or any part thereof
shall at any time during the term of this Lease be condemned and taken by right
of eminent domain, the damages allowed therefor (whether or not the same be
specifically apportioned by the Court or the Commissioner, or by any other body
making or supervising such condemnation, and regardless of such apportionment,
if any) shall be the sole property of Landlord, except that Tenant shall be
entitled to any separate award for Tenant’s relocation expenses as defined by
applicable law; 


 


12

















 


provided in no event shall any award made to Tenant have the effect of
diminishing the award made to Landlord.


 


10.2         Rent after Condemnation;
Termination.  If the
whole of the Premises be condemned and taken, Rent hereunder shall cease from
the time Tenant shall be deprived of possession of the Premises, and this Lease
shall thereupon terminate and Landlord shall refund to Tenant any prepaid and
unearned rent.  If a part, but not the
whole, of the Premises be so taken or condemned, then this Lease and all of its
provisions shall continue in full force and effect as to the remainder of the
Premises not so taken until the expiration of the full Term of this Lease,
except that the Base Rent to be paid by Tenant may be adjusted as provided in Section
10.3, if the provisions of said paragraph are applicable; provided,
nonetheless, that in the event of a partial condemnation and taking which
materially and substantially interferes with the operation of Tenant’s
business, Tenant shall have the right, by notice given to Landlord not later
than sixty (60) days following the date Tenant shall be deprived of possession
of a portion of the Premises, to terminate this Lease, and upon the giving of
such notice, this Lease shall terminate as of the date specified in the
notice.  Any Rents and other amounts and
obligations due hereunder shall be apportioned as of said date.


 


10.3         Abatement after Material Taking.  In the event of a partial condemnation and
taking which materially and substantially interferes with the operation of
Tenant’s business, and Tenant does not terminate this Lease as herein provided,
Base Rent for the Premises shall (in the absence of agreement by the parties)
be equitably abated based on application to the appropriate District Court.


 


ARTICLE
11


DEFAULT;
REMEDIES


 


11.1         Non payment of Rent; Defaults.  The occurrence of any one or more of the
following matters constitutes a default (“Default”) by
Tenant under this Lease:


 


(i)            Any failure by Tenant to pay
any Rent, including without limitation, base rent, and additional costs within
five (5) days of when due under this Lease, or any part thereof.


 


(ii)           Any violation or default by
Tenant of any of the other covenants, agreements, stipulations or conditions
herein, or in any other agreements between Landlord and Tenant relating to the
Premises, and such violation or default shall continue for a period of thirty
(30) days after written notice from Landlord of such violation or default.


 


(iii)          Any commencement by, or
against Tenant of any proceedings under a bankruptcy, receivership, insolvency
or similar type of action.


 


(iv)          Any commencement by, or against Tenant of any
proceedings under a bankruptcy, receivership, insolvency or similar type of
action provided that Tenant shall have sixty (60) days to cause the dismissal
of any such involuntary proceeding.


 


(v)           Abandonment or vacation of any substantial portion of
the Premises by Tenant for a period of more than thirty (30) days.


 


13

















 


(vi)          Any Default otherwise
defined hereunder.


 


11.2         Landlord’s Remedies Upon Default;
Survival.  Upon the
occurrence of a Default, Landlord shall have the remedies set forth herein,
which shall not be exclusive but shall be cumulative and shall be in addition
to any other remedies set forth in the Lease or that are now or hereafter allowed
by law.  The terms of this Article 14
shall survive the termination of this Lease.


 


(i)            If Tenant shall have vacated
the Premises, Landlord may, to the extent permitted by law, without terminating
this Lease, change the locks on the doors to the Premises and exclude Tenant
therefrom.


 


(ii)           Landlord may, upon notice to
Tenant, terminate this Lease, or without notice to Tenant re-enter the Premises
without terminating this Lease.  No
re-entry or taking possession of the Premises by Landlord shall be construed as
an election on its part to terminate this Lease unless a notice of such
intention is given to Tenant (all other demands and notices of forfeiture or
other similar notices being hereby expressly waived by Tenant).  Upon the service of any such notice of
termination, the term of this Lease shall automatically terminate.  Should Landlord at any time terminate this
Lease for any breach, in addition to any other remedies it may have, it may
recover from Tenant all damages it may incur by reason of such breach,
including the cost of recovering the Premises, reasonable attorneys’ fees, and
the value at the time of such termination of any rent reserved in this Lease
for the remainder of the term over the then reasonable rental value of the
Premises for the remainder of such term, discounted to present value at an
assumed interest rate of five percent (5%), all of which amount shall be
immediately due and payable from Tenant to Landlord.


 


(iii)          Landlord may require that,
upon any termination of the Lease or Tenant’s right to possession without
termination of this Lease, Tenant shall immediately surrender possession of the
Premises to Landlord, vacate the same and remove all effects therefrom except
those that may not be removed under other provisions of this Lease.  If Tenant fails to surrender possession and
vacate as aforesaid, Landlord may forthwith re-enter the Premises and expel and
remove Tenant and any other persons and property therefrom, without being
deemed guilty of trespass, eviction, conversion or forcible entry and without
thereby waiving Landlord’s rights to rent or any other rights given Landlord
under this Lease or at law or in equity. 
If Tenant does not remove its property from the Premises as required by
this Lease, Landlord may either declare such property abandoned and dispose of
the same in any reasonable manner without liability to Tenant or any other
party, or remove any or all of such effects in any manner it shall choose and
store the same without liability to Tenant. 
Tenant shall pay Landlord on demand any expenses incurred in such
removal and storage for any length of time during which the same shall be in
Landlord’s possession or in storage.


 


(iv)          Landlord can continue this
Lease in full force and effect, and the Lease will continue in effect as long
as Landlord does not terminate Tenant’s right to possession, and Landlord shall
have the right to collect all Rent when due. 
After Tenant’s right to possession is terminated Landlord may enter the
Premises and may make such improvements, alterations and


 


14

















 


repairs
as it shall determine may be reasonably necessary to relet the Premises and
Landlord may (but shall not be required to) relet the same or any part thereof
upon such terms and conditions as Landlord in its sole discretion may deem
advisable.  Upon any reletting, all
rentals received by Landlord from such reletting shall be applied as follows:
first, to the payment of any indebtedness other than rent or other charges due
under this Lease from Tenant to Landlord; second, to the payment of any costs
and expenses of such reletting, including brokerage fees, reasonable attorneys’
fees and costs of such improvements, alterations and repairs; and third, to the
payment of Rent.  In no event shall
Tenant be entitled to receive any surplus of any sums received by Landlord on a
reletting in excess of the rental and other charges payable hereunder.  If such rentals and other charges received
from such reletting during any month are less than those to be paid during that
month by Tenant, Tenant shall pay any such deficiency to Landlord upon
demand.  No act by Landlord allowed by
this Section shall terminate this Lease unless Landlord has notified Tenant
that Landlord elects to terminate this Lease.


 


11.3         Landlord’s Right to Cure.  In the event of any Default by Tenant beyond
any applicable cure period by Tenant (provide no cure period shall apply in the
event an emergency necessitates immediate action by Landlord), Landlord may
immediately or at any time thereafter, without notice, cure such breach for the
account and at the expense of Tenant.  If
Landlord at any time by reason of such breach, is compelled to pay, or elects
to pay, any sum of money or do any act which requires the payment of any sum of
money or is compelled to incur any expense, including reasonable attorneys
fees, in instituting or prosecuting any action or proceeding to enforce
Landlord’s rights hereunder, the sum or sums so paid by Landlord together all
with interest thereon at the Default Rate, or the maximum permitted by law,
from the date of payment thereof, shall be deemed to be Rent hereunder and
shall be due from Tenant to Landlord on the first day of the month following
the payment of such respective sums or expenses.


 


ARTICLE
12


SUBORDINATION;
ESTOPPEL


 


12.1         Subordination.  This Lease is subject and subordinate to the
lien of any mortgage which may now or hereafter encumber the Premises.  In confirmation of such subordination, Tenant
shall, at Landlord’s request from time to time, promptly execute any
certificate or other document reasonably requested by the holder of the
mortgage.  Tenant agrees that in the
event that any proceedings are brought for the foreclosure of any mortgage, Tenant
shall immediately and automatically attorn to the purchaser at such foreclosure
sale, as the landlord under this Lease, and Tenant waives the provisions of any
statute or rule of law, now or hereafter in effect, which may give or purport
to give Tenant any right to terminate or otherwise adversely affect this Lease
or the obligations of Tenant hereunder in the event that any such foreclosure
proceeding is prosecuted or completed. 
Notwithstanding anything to the contrary in this Article, so long as Tenant
is not in default under this Lease, this Lease shall remain in full force and
effect and the holder of the Mortgage and any purchaser at foreclosure sale
thereof shall not disturb Tenant’s rights and/or possession hereunder.


 


12.2         Estoppel Certificates.  Tenant agrees at any time and from time to
time, upon not less than ten (10) days prior written notice by Landlord, to
execute, acknowledge and deliver to Landlord or a party designated by Landlord
an estoppel statement in the form reasonably 


 


15

















 


requested by Landlord, and including such other matters relating to
this Lease as may reasonably be requested. 
Any such statement delivered pursuant thereto may be relied upon by
Landlord, any prospective purchaser of the Premises, any mortgagee or prospective
mortgagee of the Premises or of Landlord’s interest, or any prospective
assignee of any such mortgagee.


 


ARTICLE
13


NOTICES


 


Any notice required or
permitted hereunder shall be given by personal delivery upon an authorized
representative of a party hereto; or if mailed by United States registered or
certified mail return receipt requested, postage prepaid; or if transmitted by
e-mail (in “pdf” format), with a copy sent by U.S. Mail as provided above; or
if deposited cost paid with a nationally recognized, reputable, overnight
courier, properly addressed as follows:


 


	
  If to Landlord:

  	
  Japs-Olson Company

  
	
   

  	
  7500 Excelsior
  Boulevard

  
	
   

  	
  St. Louis Park,
  Minnesota 55426

  
	
   

  	
  Attention: Gary
  Petrangelo

  
	
   

  	
  e-mail address:
  gpetrang@japsolson.com

  
	
   

  	
   

  
	
  With a copy to:

  	
  Leonard, Street and
  Deinard

  
	
   

  	
  Professional
  Association

  
	
   

  	
  150 South Fifth Street;
  Suite 2300

  
	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
  Attention: Morris
  Sherman

  
	
   

  	
  e-mail address:
  morris.sherman@leonard.com

  
	
   

  	
   

  
	
  If to Tenant:

  	
  Appliance Recycling
  Centers of America, Inc.

  
	
   

  	
  7400 Excelsior
  Boulevard

  
	
   

  	
  St. Louis Park,
  Minnesota 55426

  
	
   

  	
  Attention: Jack Cameron

  
	
   

  	
  e-mail address:
  jcameron@arcainc.com

  
	
   

  	
   

  
	
  With a copy to:

  	
  Mackall Crounse &
  Moore, PLC

  
	
   

  	
  1400 AT&T Tower

  
	
   

  	
  901 Marquette Avenue

  
	
   

  	
  Minneapolis, Minnesota
  55402

  
	
   

  	
  Attention: William J.
  O’Brien

  
	
   

  	
  e-mail address:
  wjo@mcmlaw.com

  



 


Notices shall be deemed
effective on the earlier of the date of receipt or the date of deposit, as
aforesaid; provided, however, that if notice is given by deposit, the time for
response to any notice by the other party shall commence to run one business
day after any such deposit.  Any party
may change its address for the service of notice by giving notice of such
change ten (10) days prior to the effective date of such change.


 


16

















 


ARTICLE
14


ENVIRONMENTAL
PROVISIONS


 


14.1         Definitions.  For the purposes of this Lease, the term “environmental laws” means, collectively, all applicable
laws, ordinances, and regulations (including consent decrees and administrative
orders) relating to public health and safety and protection of the environment,
including but not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act (“CERCLA”), 42
U.S.C. §9601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C.
§1801, et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §6901, et seq., and any other applicable
federal, state or local law, regulation, ordinance or requirement (including
consent decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic, or dangerous waste,
substance or material, all as amended and modified from time to time.  For purposes of this
Lease, the term “hazardous material” means:  (a) “hazardous substances” or “toxic
substances” as those terms are defined by CERCLA, or any other environmental
law, (b) “hazardous wastes,” as that term is defined by RCRA; (c) any pollutant
or contaminant or hazardous, dangerous, or toxic chemicals, materials, or
substances within the meaning of any environmental law; (d) crude oil or any
fraction of it that is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (e) any
radioactive material, including any source, special nuclear, or by-product
material as defined at 42 U.S.C. §2011, et seq., as amended to and after this
date; (f) asbestos in any form or condition; and (g) polychlorinated biphenyls
(PCBs) or substances or compounds containing PCBs.


 


14.2         Tenant’s Compliance With Law and
Environmental Matters.  To
the best of Tenant’s actual knowledge, and except as disclosed in a Phase I
Environmental Site Assessment Report dated August 22, 2002 issued by SECOR
International Incorporated, the Premises contain no hazardous material, except
in compliance with all environmental laws. 
Tenant represents, warrants and covenants to Landlord that during the
term of this Lease Tenant will cause the Premises at all times to be and remain
in compliance with all environmental laws except any portion of the Joint Use
Area where Landlord or its employees, agents, contractors or invitees has
caused any environmental issues.  Tenant
agrees to obtain and keep in effect all governmental permits and approvals
relating to the use or operation of the Premises required by applicable
environmental laws, and Tenant agrees to comply with the terms of the same.


 


14.3         Tenant’s Use of Hazardous
Materials.  Tenant
represents, warrants and covenants to Landlord that Tenant will not cause or
permit to occur any generation, manufacture, storage, treatment,
transportation, release, or disposal of hazardous material on, in, under, about
or from the Premises except in quantities required for the conduct of Tenant’s business
and pursuant to handling practices permitted by applicable law (including, but
not limited to, all environmental laws). 
If Tenant or any one of its employees, agents, contractors, suppliers or
invitees causes, contributes to or aggravates any release or disposal of any
hazardous material on, in, under or about the Premises, Tenant, at its own cost
and expense, will immediately take such action as is necessary to detain the
spread of and remove the hazardous material to the reasonable satisfaction of
Landlord and the appropriate governmental authorities.


 


14.4         Notification and Cure.  Tenant represents, warrants and covenants to
Landlord that Tenant will immediately notify Landlord and provide copies upon
receipt of all written complaints, claims, citations, demands, inquiries,
reports, or notices relating to compliance with 


 


17

















 


environmental laws.  Tenant will,
at its sole cost, promptly cure and have dismissed with prejudice any such
actions.  Tenant will keep the Premises
free of any lien imposed pursuant to any environmental laws.


 


14.5         Investigation by Landlord.  Landlord shall have the right at all
reasonable times during normal business hours and from time to time to conduct
environmental audits of the Premises, and Tenant will cooperate in the conduct
of those audits.  The audits will be
conducted by a consultant of Landlord’s choosing, and if any hazardous material
(other than quantities handled as permitted by law) is detected or if a
violation of any of Tenant’s warranties, representations, or covenants
contained in this Article is discovered, the fees and expenses of such
consultant will be borne by Tenant and will be paid as additional rent under
this Lease on demand by Landlord.


 


14.6         Breach by Tenant.  If Tenant breaches or fails to comply with
any of the foregoing warranties, representations, and covenants, Landlord may
cause the removal (or other cleanup acceptable to Landlord) of any hazardous
material released or exacerbated by Tenant from the Premises.  The costs of such hazardous material removal
and any other cleanup (including transportation and storage costs) will be
additional rent under this Lease, whether or not a court or administrative agency
has ordered the cleanup, due and payable on Landlord’s demand.  Tenant hereby grants Landlord, its employees,
agents and contractors, access to the Premises to remove or otherwise clean up
any hazardous material.  Landlord,
however, has no affirmative obligation to remove or otherwise clean up any
hazardous material, from the Premises, and nothing in this Lease will be
construed as creating any such obligation.


 


14.7         Indemnification.  Tenant represents, warrants and covenants to
Landlord that Tenant shall indemnify, defend, and hold the Premises, Landlord,
and all Landlord Parties free and harmless from and against all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential
damages), disbursements, or expenses of any kind (including attorneys’ and
experts’ fees and expenses and fees and expenses incurred in investigating,
defending, or prosecuting any litigation, claim, or proceeding) that may at any
time be imposed upon, incurred by, asserted, or awarded against Landlord or any
of them in connection with or arising from or out of:  (a) any hazardous material on, in, under, or
affecting all or any portion of the Premises that was caused by Tenant’s
occupancy of the Premises; (b) any misrepresentation, inaccuracy, or breach of
any warranty, covenant, or agreement contained or referred to in this Article; (c)
any violation or claim of violation by Tenant, its employees, agents,
contractors, suppliers or invitees of any environmental law during the Term of
this Lease; or (d) the imposition of any lien against the Premises for the
recovery of any costs for environmental cleanup or other response costs
relating to the release or threatened release of hazardous material used and
released by Tenant.


 


This
indemnification is the continuing obligation of Tenant and shall survive
termination of this Lease.  Tenant, its
successors, and assigns waive, release, and agree not to make any claim or
bring any cost recovery action against Landlord or any Landlord Party under
CERCLA or any state equivalent or any similar law now existing or enacted after
this date.


 


18

















 


ARTICLE
15


MISCELLANEOUS


 


15.1         Time is of Essence.  Whenever any payment is to be made under this
Lease by Tenant at or within a specified time, or whenever any act is to be
done under this Lease by either party at or within a stated time, time is of
the essence.


 


15.2         No Recording.  Neither party shall record this Lease without
the prior written consent of the other.


 


15.3         Captions.  The captions and headings herein are for
convenience and reference only and do not limit or construe the provisions
hereof.


 


15.4         Severability.  If any term, condition, covenant, agreement
or provision of this Lease, or the application thereof to any circumstance
shall, to any extent, be held by a court of competent jurisdiction or by any
authorized governmental authority to be invalid, void or unenforceable, the
remainder of this Lease shall not be affected by such holding, and the
remaining terms, conditions, covenants, agreements and provisions hereof shall
continue in and be accorded full force and effect.


 


15.5         Entire Agreement.  This Lease represents the entire agreement
between the parties hereto with respect to the Premises, and there are no
agreements, understandings or undertakings relating to said subject matter
except as set forth herein, and all prior negotiations and writings between the
parties and their representatives, attorneys, brokers and agents are superseded
hereby and thereby.


 


15.6         Modifications.  This Lease may not be amended, modified or
supplemented except by a writing, executed by the party against whom such
amendment, modification or supplement is sought to be enforced.


 


15.7         No Continuing Waiver.  No waiver of any term, condition, covenant or
remedy hereunder or delay in the enforcement of any remedy hereunder in any one
instance shall be deemed to be a waiver of any other term, condition, covenant
or remedy in such instance or of such waived or delayed term, condition,
covenant or remedy in any other instance.


 


15.8         Binding.  All of the terms, conditions, covenants,
agreements and provisions of this Lease shall be construed as covenants running
with the land and shall inure to the benefit of and be binding upon the parties
hereto and upon their respective personal representatives, heirs, successors
and permitted assigns.


 


15.9         Collection; Attorney’s Fees.  In the event Tenant defaults in its
obligations to pay Rent or any other sum due and payable hereunder, Landlord
shall be entitled to reimbursement from Tenant for all of Landlord’s costs of
collection (including reasonable attorney’s fees), regardless of whether or not
a suit has been commenced.  In the event
any action is brought by Landlord or Tenant to enforce any other provision of
this Lease, the prevailing party shall be entitled to an award of its costs and
reasonable attorney’s fees. 
Notwithstanding anything to the contrary, Tenant agrees to look solely
to Landlord’s interest in the Premises for the recovery of any judgment from
Landlord, it being agreed that Landlord or its directors, 


 


19

















 


officers or shareholders (if Landlord is a corporation), shall never be
personally liable for any such judgment.


 


15.10       Governing Law.  This Lease shall be governed by the laws of
the State of Minnesota.


 


15.11       Brokerage Commission.  Landlord and Tenant each warrants to the
other that, in connection with this Lease, they have dealt with no broker,
finder, or similar person.  Landlord will
indemnify, defend and hold harmless Tenant against any claim made by any broker
or other agent or for a commission or fee based on acts or agreements of
Seller.  Tenant will indemnify, defend
and hold harmless Landlord against any claim made by any agent or broker for a
commission or fee based on acts or agreements of Tenant.


 


15.12       Counterparts; Delivery by E-mail.  This Lease may be executed in two or more
counterparts, each of which shall be an original and all of which shall constitute
one Lease.  Delivery of an executed copy
of this Lease by e-mail (in “pdf” format) shall be deemed delivery of the
executed original.


 


15.13       Severability of Provisions.  If any term or provision of this Lease is
illegal or invalid for any reason, such illegality or invalidity shall not
affect the validity or enforceability of the remainder of this Lease.


 


15.14       Required Insurance: Business
Interruption; and Personal Property.  Tenant acknowledges and agrees that this
Lease does not provide Tenant any relief from its obligations to pay Rent in
the event of an interruption of utilities, services and various other
circumstances (regardless of cause), accordingly, Tenant covenants and agrees
to procure and maintain, at its sole cost and expense, adequate and appropriate
“business interruption” insurance with respect to its business risks and
obligations related thereto.  Tenant
acknowledges and agrees that under the terms of Lease, it is responsible for
any damage or destruction of its personal property, trade fixtures or other
assets which it owns and accordingly, covenants and agrees to procure and
maintain, at its sole cost and expense, adequate and appropriate property
insurance.


 


[Signature page follows.]


 


20

















 


IN
WITNESS WHEREOF, the parties have executed this instrument as of the day and
year first above written.


 


 


	
   

  	
  APPLIANCE RECYCLING
  CENTERS OF AMERICA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Hausback

  
	
   

  	
  Name:

  	
  Peter Hausback

  
	
   

  	
  Its:

  	
  EVP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JAPS-OLSON COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W Beddor

  
	
   

  	
  Name:

  	
  Michael W Beddor

  
	
   

  	
  Its:

  	
  CEO

  



 


21

















 


EXHIBIT A


 


REAL PROPERTY


 


Tract D, Registered Land Survey No. 1674, Files of
Registrar of Titles, County of Hennepin, State of Minnesota.


 


Being registered land as is evidenced by Certificate
of No. 830574.


 

















 


EXHIBIT B


 


DEPICTION OF JOINT USE AREA


 


[See attached.]