EXHIBIT 10.1 TO UROLOGIX, INC. FORM 8-K DATED SEPTEMBER 9, 2010



Exhibit 10.1


FIRST AMENDED AND RESTATED LEASE


BY AND BETWEEN


PARKERS LAKE I REALTY LLC,
as Landlord,


AND


UROLOGIX, INC.,
as Tenant


DATED: AS OF AUGUST 1, 2010


PROPERTY:          Parkers
Lake Pointe I, 14405
21st Avenue N., Plymouth, MN 55447




Execution Copy






FIRST
AMENDED AND RESTATED LEASE


          This FIRST
AMENDED AND RESTATED LEASE (the “Lease”) is made as of the 1st day
of August, 2010 by and between PARKER LAKE I REALTY LLC, a Delaware limited
liability company (“Landlord”), and UROLOGIX, INC., a Minnesota corporation, with
an address of 14405 21st Avenue N., Suite 111, Plymouth, MN 55447
(“Tenant”). 


RECITALS


          WHEREAS,
Tenant is currently leasing the Premises (as hereinafter defined) pursuant to a
certain Lease dated
January 20, 1992 by and between Parkers Lake Pointe I Limited Partnership (“LP”),
as landlord, and Tenant, as amended by Addendum to Lease Agreement dated
January 20, 1992 by and between LP and Tenant, Addendum to Lease Agreement
dated June 20, 1994 by and between LP and Tenant, Addendum to Lease Agreement
dated April 5, 1995 by and between LP and Tenant, Addendum to Lease Agreement
dated March 7, 1996 by and between LP and Tenant, Addendum to Lease Agreement
dated September 30, 1996 by and between LP and Tenant, Addendum to Lease
Agreement dated November 15, 1996 by and between LP and Tenant, Addendum to
Lease Agreement dated October 31, 1997 by and between LP and Tenant, Amendment
to Lease dated March 12, 1998 by and between Parkers Lake I Realty Corp.,
successor to LP (“Predecessor”) and Tenant, Amendment to Lease dated as
of March 26, 1998 by and between Predecessor and Tenant, Amendment of Lease
Agreement dated October 4, 2002 by and between Predecessor and Tenant, as
affected by Form of Consent to Sublease dated August 14, 2003 by and between
Predecessor, Tenant and Incisive Surgical, Inc., and as amended by Tenth
Amendment to Lease dated October 22, 2007 by and between Landlord, successor to
Predecessor, and Tenant (as amended and assigned, the “Original Lease”);
and


          WHEREAS,
Landlord and Tenant wish to replace, amend and restate, in its entirety, the
Original Lease with this Amended and Restated Lease (the “Lease”), all as set
forth herein.


ARTICLE I

BASIC TERMS


	
  

 	
  

 	
  

 
	
 TENANT:

 	
  

 	
 Urologix,
 Inc., a Minnesota corporation 

 
	
  

 	
  

 	
  

 
	
 TENANT’S NOTICE
 ADDRESS:

 	
  

 	
 The address
 of the Premises 

 
	
  

 	
  

 	
  

 
	
 LANDLORD’S
 NOTICE ADDRESS AND ADDRESS FOR PAYMENT OF RENT:

 	
  

 	
 c/o Great
 Point Investors LLC
Two Center
 Plaza, Suite 410

 Boston, MA 02108
Attn: Joseph A. Versaggi

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 with a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Northmarq
 Real Estate Services LLC

 3500 American Boulevard West, Suite 200

 Bloomington, MN 55431

 Attn: Lisa Dongoske

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Rent payments may be made by wire transfer pursuant to wiring
 instruction provided by Landlord for such purposes. Alternatively, rent
 payments shall be sent to:

 
	
  

 	
  

 	
 (a) by
 regular mail to:

 













	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Parkers Lake
 I Realty LLC

 14577 Collections Center Drive

 Chicago, IL 60693

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b) by
 overnight mail to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Bank of
 America Lockbox Services

 14577 Collections Center Drive

 Chicago, IL 60693

 
	
  

 	
  

 	
  

 
	
 PROPERTY:

 	
  

 	
 Parkers Lake Pointe I, 14405 21st Avenue, Plymouth, MN
 (the “Building”), together with the parking areas, landscaping, walkways and
 other improvements related to the Building, as described on Exhibit A.

 
	
  

 	
  

 	
  

 
	
 PREMISES:

 	
  

 	
 Approximately
 Twenty-Six Thousand Twelve (26,012) rentable square feet (16,471 of which is
 office space and 9,541 of which is warehouse space) located at the Building,
 commonly known as Suite 111, as shown on Exhibit B.

 
	
  

 	
  

 	
  

 
	
 PROPERTY
 RENTABLE AREA:

 	
  

 	
 Approximately Thirty-Nine Thousand Seven Hundred Seventy-Nine
 (39,779) rentable square feet.

 
	
  

 	
  

 	
  

 
	
 TENANT’S PRO
 RATA SHARE:

 	
  

 	
 65.4%

 
	
  

 	
  

 	
  

 
	
 LEASE TERM:

 	
  

 	
 Six (6) years beginning on the Lease Commencement Date and ending on
 the last day of the seventy-second (72nd) full calendar month
 thereafter.

 
	
  

 	
  

 	
  

 
	
 LEASE
 COMMENCEMENT DATE:

 	
  

 	
 August 1, 2010

 
	
  

 	
  

 	
  

 
	
 RENT
 COMMENCEMENT DATE:

 	
  

 	
 December 1,
 2010

 
	
  

 	
  

 	
  

 
	
 BASE RENT
 AND RENT PAYMENT PERIODS:

 	
  

 	
 (a) No Base
 Rent or Additional Rent shall be due, nor shall any such rent accrue, for the
 period commencing on August 1, 2010 through and including November 30, 2010.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b) From
 December 1, 2010 through and including July 31, 2011, eight equal monthly
 payments, each in the amount of $16,257.50;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c) From
 August 1, 2011 through and including July 31, 2012, $198,991.80 per year;
 $16,582.65 per month; and

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d) From
 August 1, 2012 through and including July 31, 2013, $202,971.64 per year;
 $16,914.30 per month;

 


2









	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e) From
 August 1, 2013 through and including July 31, 2014, $207,031.07 per year;
 $17,252.59 per month;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f) From
 August 1, 2014 through and including July 31, 2015, $211,171.69 per year;
 $17,597.64 per month; and

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g) From
 August 1, 2015 through and including July 31, 2016, $215,395.12 per year;
 $17,949.59 per month.

 
	
  

 	
  

 	
  

 
	
 OCCUPANCY
 PERIOD:

 	
  

 	
 The period from the time Tenant first enters the Premises, throughout
 the Lease Term and thereafter as long as Tenant remains in the Premises.

 
	
  

 	
  

 	
  

 
	
 SECURITY
 DEPOSIT:

 	
  

 	
 $13,000 in
 cash, receipt of which is acknowledged.

 
	
  

 	
  

 	
  

 
	
 PERMITTED
 USES:

 	
  

 	
 Subject to applicable zoning, for general office, warehouse,
 research, development and manufacturing of medical devices, and for no other
 purpose whatsoever.

 
	
  

 	
  

 	
  

 
	
 BROKERS:

 	
  

 	
 Northmarq
 Real Estate Services LLC

 3500 American Boulevard West, Suite 200

 Bloomington, MN 55431

 Attn: Chris Garcia

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 and

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Cushman and
 Wakefield

 11095 Viking Dr., #240

 Eden Prairie, MN 55344 

 Attn: Jeff Minea

 
	
  

 	
  

 	
  

 
	
 PARKING
 SPACES:

 	
  

 	
 Eighty-Five
 (85) unreserved spaces

 


ARTICLE
II

LEASE TERM


	
  

 	
  

 
	
 2.1

 	
 LEASE OF
 PREMISES FOR LEASE TERM. 

 


Landlord hereby leases the Premises to Tenant and Tenant leases the
Premises from Landlord for the Lease Term, unless sooner terminated pursuant to
the terms hereof. Landlord and Tenant acknowledge and agree that the Tenant is
currently occupying the Premises pursuant to the terms and conditions of the
Original Lease.


	
  

 	
  

 
	
 2.2

 	
 EXTENSION OPTION.

 


Provided
that Urologix, Inc. is occupying one hundred percent (100%) of the Premises and
is not in Default under this Lease and no event or condition exists which with
notice and/or the expiration of any grace period would constitute a material
default under this Lease, both at the time the option may be exercised, and on the
commencement date of the Extension Term (as hereinafter defined), Landlord
grants to Tenant one (1) option (the “Extension Option”) to extend the term of
this Lease with respect to all of the Premises for an additional period of five
(5) years (the “Extension Term”). The Extension Option may be exercised by
Tenant delivering written notice to Landlord at least nine (9) months, but not
more than twelve (12) months, prior to the expiration date of the Term
(“Tenant’s Extension Notice”). Time is of the essence in the exercise of the
Extension Option.


3








The
annual Base Rent payable for the Extension Term (the “Extension Rental Rate”)
shall be one hundred (100%) percent of the market rental rate for comparable
space in comparable buildings in the general vicinity of the Building (with
respect to age, use, quality and location, but in no event less than the annual
Base Rent in effect during the last twelve (12) months of the then expiring
Term), and which may include a tenant improvement allowance and other lease
concessions, determined as follows:


In
the event Tenant timely exercises the Extension Option in accordance herewith,
within thirty (30) days after Landlord receives notice of Tenant’s exercise of
such Extension Option, Landlord shall notify Tenant in writing of Landlord’s
good faith determination of the Extension Rental Rate (“Landlord’s Extension Term
Rental Notice”). Tenant shall have fifteen (15) days from the date of
Landlord’s Extension Term Rental Notice to either accept or dispute Landlord’s
determination of the Extension Rental Rate. In the event that Tenant disputes
Landlord’s determination of the Extension Rental Rate, Tenant shall so notify
Landlord and advise Landlord of Tenant’s determination of the Extension Rental
Rate. If Landlord and Tenant cannot agree upon the Extension Rental Rate within
thirty (30) days of the date of Landlord’s Extension Term Rental Notice (the
“Negotiation Period”), Landlord and Tenant shall simultaneously exchange, on a
mutually agreeable date and time, within the following fifteen (15) days, on a
date determined by Landlord, statements setting forth each such party’s
conclusion regarding the Extension Rental Rate (each, a “Statement of Rental
Rate”); provided, however, that if one party has not submitted such statement
within forty-five (45) days after the date of Landlord’s Extension Term Rental
Notice, then the determination set forth in the other party’s statement shall
be final and binding upon both parties. If both parties receive the other
party’s statement of the Rental Rate within such time and the lesser of the
two (2) determinations is within five (5%) percent of the higher
determination, then Landlord’s determination shall conclusively be deemed to be
the Extension Rental Rate. If these determinations differ by more than five
(5%) percent, then Landlord and Tenant shall mutually select a real estate professional
with at least ten (10) years’ continuous experience in the business of
appraising or marketing multi-tenant office buildings in the greater
Minneapolis area (the “Valuation Expert”) to resolve the dispute as to the
Extension Rental Rate. If Landlord and Tenant cannot agree upon the designation
of the Valuation Expert within thirty (30) days of the exchange of the
Statements of Rental Rate, either party may apply to the American Arbitration
Association, the Minneapolis Real Estate Board, or any successor thereto, for
the designation of a Valuation Expert. Within ten (10) days of the selection of
the Valuation Expert, Landlord and Tenant shall each submit to the Valuation
Expert a copy of its Statement of Rental Rate, together with any supporting material.
The Valuation Expert shall not perform his own valuation, but rather, shall,
within thirty (30) days after receipt of such submissions, select as the
Extension Rental Rate the submission which the Valuation Expert concludes most
closely and accurately reflects the Extension Rental Rate for the Premises and
the rental rate set forth in that submission shall be the Extension Rental Rate
for such Extension Term (provided, however, that in no event shall the
Extension Rental Rate ever be less than the annual Base Rent for the preceding
twelve (12) months of the Term then expiring). The Valuation Expert shall give
notice of his or her determination to Landlord and Tenant and such decision
shall be final and conclusively binding upon Landlord and Tenant. Each party
shall pay the fees and expenses of any real estate professional such party
retains and such party’s counsel, if any, in connection with any proceeding
under this paragraph, and the party whose determination was determined by the
Valuation Expert not to most accurately and closely reflect the Extension
Rental Rate of the Premises shall pay the fees and expenses of the Valuation
Expert.


At Landlord’s request, Landlord and Tenant shall execute an amendment
to this Lease within thirty (30) days after the determination of the Extension
Rental Rate (in accordance with the procedure set forth above) for the
Extension Term, which amendment shall set forth the Extension Term, the
Extension Rental Rate, and all other terms and conditions for the Extension Term.



4






Except as set forth above, the Extension Term shall be subject to all
of the terms and conditions of this Lease; provided, however, that Tenant shall
have no further extension rights once it has exercised the Extension Option.


The Extension Term annual Base Rent shall be payable in equal monthly
installments in advance on or before the first day of each calendar month
during the Extension Term.


ARTICLE III

RENT


	
  

 	
  

 
	
 3.1

 	
 BASE RENT. 

 


Commencing on the Rent Commencement Date, on the first day of each
calendar month during the Lease Term, Tenant will pay to Landlord the Base Rent
in equal monthly installments, in lawful money of the United States, in advance
and without offset, deduction prior notice or demand. The Base Rent is payable
at Landlord’s Rent Payment Address or at such other place or to such other
person as Landlord may designate in writing from time to time. Payments of Base
Rent for any partial calendar month will be prorated. Base Rent for the first
month of the Term shall be paid on the date hereof.


	
  

 	
  

 
	
 3.2

 	
 ADDITIONAL RENT. 

 


All sums payable by Tenant under this Lease other than Base Rent are
“Additional Rent”; the term “Rent” includes both Base Rent and Additional Rent.
Landlord will estimate in advance and charge to Tenant the following costs (“Total
Operating Costs”), which Tenant will pay with the Base Rent, monthly,
commencing December 1, 2010, except as otherwise set forth herein: (i) all Real
Property Taxes for which Tenant is liable under Article 4, (ii) all utility
costs (to the extent utilities are not separately metered) for which Tenant is
liable under Article 5, (iii) all insurance premiums for which Tenant is liable
under Article 6 (provided that Tenant shall pay all costs of its own insurance
(as required by Section 6.1 hereof) directly to the appropriate insurance
company), and (iv) all Operating Expenses for which Tenant is liable under
Article 7 of this Lease. Landlord may adjust its estimates of Total Operating
Costs at any time based upon Landlord’s experience and reasonable anticipation
of costs. Such adjustments will be effective as of the next Rent payment date
after notice to Tenant (such notice to be accompanied by a written explanation
by Landlord of the justification for such adjustment). 


By the date that is ninety (90) days following the end of each fiscal
year (as established by Landlord) during the Term, Landlord will deliver to
Tenant a statement setting forth, in reasonable detail, the Total Operating
Costs paid or incurred by Landlord during the preceding twelve (12) months and
Tenant’s Pro Rata Share of such expenses (the “Total Operating Cost
Statement”). Within 30 days after Tenant’s receipt of such statement, and
subject to Section 3.4, there will be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be);
provided, however, if a credit is due to Tenant with respect to the last year
of the Term, the amount of such credit shall be refunded to Tenant. As of the
date hereof, Landlord’s “fiscal year” is the calendar year; provided, however,
Landlord reserves the right to change its fiscal year upon prior written notice
to Tenant of such change.


	
  

 	
  

 
	
 3.3

 	
 INTEREST AND LATE CHARGES. 

 


Any Rent due or other amount due to Landlord, if not paid within five
(5) days of the date due, will bear interest from the date due until paid, at
the rate of 15% per year, but not to exceed the highest rate legally permitted;
provided, however, if any amounts so due are not paid when due more than once
during any rolling twelve month period, commencing with the second such late
payment, interest shall begin to accrue on the date that any such amount is
due. In addition, if any installment of Rent due or any other sums due from
Tenant is not received by Landlord within 5 days following the due date, Tenant
will pay to Landlord a late charge equal to 5% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.


5






	
  

 	
  

 
	
 3.4

 	
 AUDIT RIGHTS.

 


At the request of Tenant at any time within sixty (60) days after
Landlord delivers the Total Operating Cost Statement to Tenant, Tenant (at
Tenant’s expense) shall have the right to examine Landlord’s books and records
applicable to Total Operating Costs for such year. Such right to examine
Landlord’s records shall be exercisable: (i) upon reasonable advance notice to
Landlord and at reasonable times during Landlord’s business hours; (ii) only
during the sixty-day period following Tenant’s receipt of Landlord’s statement
of the actual amount of Total Operating Costs for the applicable calendar year;
and (iii) not more than once each calendar year. At Tenant’s option, the audit
may be performed by Tenant’s in house accountant, and if such accountant finds
any inconsistencies between the Total Operating Cost Statement and its review
of Landlord’s books and records, Landlord and Tenant shall discuss and attempt
to resolve any issues raised by such Tenant’s accountant within the thirty (30)
day period following the conclusion of such accountant’s review. If after
thirty (30) days Landlord and Tenant have not resolved such issues, at Tenant’s
option, Tenant, at Tenant’s cost, may engage an independent certified public
accountant (that is not compensated on a contingency basis, and with which
Tenant has not had any business relationship within the five (5) year period
preceding the time of such review, and who has been reasonably approved by
Landlord) to conduct an audit of Total Operating Costs (which shall be
completed within the sixty (60) day time period referenced above, and otherwise
in accordance with the terms hereof). If the audit conducted by such
independent certified public accountant indicates that certain items were
improperly included in Total Operating Costs, then Landlord shall, within
thirty (30) days, refund the overage to Tenant. 


ARTICLE IV

PROPERTY TAXES


	
  

 	
  

 
	
 4.1

 	
 REAL PROPERTY TAXES. 

 


Commencing on the Rent Commencement Date, Tenant will pay Tenant’s Pro
Rata Share of Real Property Taxes allocable to the period commencing on the
Rent Commencement Date and throughout the Term. If Landlord receives a refund
of any Real Property Taxes with respect to which Tenant has paid Tenant’s Pro
Rata Share, Landlord will refund to Tenant Tenant’s Pro Rata Share of such
refund after deducting therefrom all related costs and expenses. “Real Property
Taxes” means taxes, assessments (special, betterment, or otherwise), levies,
fees, rent taxes, excises, impositions, charges, water and sewer rents and
charges, and all other government levies and charges, general and special,
ordinary and extraordinary, foreseen and unforeseen, which are imposed or
levied upon or assessed against the Property or any Rent or other sums payable
by any tenants or occupants thereof. Real Property Taxes include Landlord’s
costs and expenses of review and contesting any Real Property Tax. If at any
time during the Lease Term the present system of ad valorem taxation of real
property is changed by the authority then responsible for the imposition of
taxes in the City of Plymouth, Minnesota, so that in lieu of the whole or any
part of the ad valorem tax on real property, or in lieu of increases therein,
Landlord is assessed a capital levy or other tax on the gross rents received
with respect to the Property or a federal, state, county, municipal, or other
local income, franchise, excise or similar tax, assessment, levy, or charge
(distinct from any now in effect) measured by or based, in whole or in part,
upon gross rents or any similar substitute tax or levy, then all of such taxes,
assessments, levies or charges, to the extent so measured or based, will be
deemed to be a Real Property Tax.


6









	
  

 	
  

 
	
 4.2

 	
 PERSONAL PROPERTY TAXES. 

 


Tenant will pay directly all taxes charged against trade fixtures,
furnishings, equipment, inventory or any other personal property belonging to
Tenant. Tenant will use its best efforts to have personal property taxed
separately from the Property. If any of Tenant’s personal property is taxed
with the Property, Tenant will pay Landlord the taxes for such personal
property within 15 days after Tenant receives a written statement from Landlord
for such personal property taxes.


ARTICLE V

UTILITIES


	
  

 	
  

 
	
 5.1

 	
 UTILITIES. 

 


Tenant will promptly pay, directly to the appropriate supplier, the
cost of all natural gas, heat, cooling, energy, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Premises, together with any related installation or connection charges or
deposits (collectively, “Utility Costs”) incurred during the Occupancy Period.
If any services or utilities are jointly metered with other premises, Landlord
will make a reasonable determination of Tenant’s proportionate share of such
Utility Costs and Tenant will pay such share to Landlord. Landlord reserves the
right to participate in wholesale energy purchase programs and to provide
energy to the Premises through such programs so long as the cost to Tenant is
competitive. 


ARTICLE VI

INSURANCE


	
  

 	
  

 
	
 6.1

 	
 TENANT’S INSURANCE. 

 


Tenant, at its expense, will maintain the following insurance coverages
during the Occupancy Period:


          (a)          Liability
Insurance. Commercial general liability insurance insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury at the Premises, including liability assumed
under contract. Such insurance will name Landlord, its property manager, any
mortgagee, and Great Point Investors LLC, as additional insured under all such
policies. The initial amount of such insurance will be Five Million Dollars
($5,000,000) per occurrence and in the aggregate during the Initial Term. Such
limits may be achieved by a combination of primary and excess or umbrella
policies, and, during the Extension Term, will be subject to periodic increases
reasonably specified by Landlord based upon inflation, increased liability
awards, recommendations of Landlord’s professional insurance advisers, and
other relevant factors. The liability insurance obtained by Tenant under this
Section 6.1 will (i) be primary and (ii) insure Tenant’s obligations to
Landlord under Section 6.4. The amount and coverage of such insurance will not
limit Tenant’s liability nor relieve Tenant of any other obligation under this
Lease. 


          (b)          Worker’s
Compensation Insurance and Employers’ Liability Insurance. Worker’s
Compensation Insurance in the statutory amount and employers’ liability
insurance with limits of not less than Five Hundred Thousand Dollars ($500,000)
each accident for bodily injury by accident and Five Hundred Thousand Dollars
($500,000) each employee for bodily injury by disease covering all employees of
Tenant employed or performing services at the Premises, in order to provide the
statutory benefits required by the laws of the state in which the Premises are
located.


          (c)          Automobile
Liability Insurance. Automobile Liability Insurance on all owned,
non-owned, and hired vehicles used in connection with the Premises, with a
combined single limit per occurrence of not less than One Million Dollars
($1,000,000) for injuries or death of one or more persons or loss or damage to
property.


7





          (d)          Property
Insurance. Property Insurance covering leasehold improvements, trade
fixtures and personalty within the Premises in an amount not less than 100% of
the full replacement cost, without deduction for depreciation, providing
protection against events protected under ISO CP 10 30 Special Form (formerly
“All Risk Coverage”). Landlord shall be named as loss payee under said policy.


          (e)          Business
Interruption Insurance. Business Interruption Insurance providing in the
event of damage or destruction of the Premises an amount sufficient to sustain
Tenant for a period of not less than one year for: (i) the net profit that
would have been realized has Tenant’s business continued; and (ii) such fixed
charges and expenses as must necessarily continue during a total or partial
suspension of business to the extent to which they would have been incurred had
no business interruption occurred, including, but not limited to, interest on
indebtedness of Tenant, salaries of executives, foremen and other employees
under contract, charges under noncancelable contracts, charges for advertising,
legal or other professional services, taxes and rents that may still continue
and insurance premiums.


	
  

 	
  

 
	
 6.2

 	
 LANDLORD’S INSURANCE. 

 


During the Lease Term, Landlord will maintain in effect coverage no
less broad than ISO CP 10 30 Special Form (formerly “all risk”) covering loss
of or damage to the Property in the amount of its replacement value with such
endorsements and deductibles as Landlord determines from time to time. Landlord
will have the right to obtain flood, earthquake, and such other insurance as
Landlord reasonably determines from time to time or is required by any
mortgagee of the Property. Landlord will not insure Tenant’s fixtures or
equipment or leasehold improvements installed or paid by Tenant. Landlord will
obtain commercial general liability insurance in an amount and with coverage
determined by Landlord and written on an “occurrence basis” insuring Landlord
against liability with respect to the Premises and the Property. The policy
obtained by Landlord will not provide primary insurance and will not be
contributory with any liability insurance maintained by Tenant. Landlord may
also maintain a rental income insurance policy, with loss payable to Landlord.
Commencing on the Rent Commencement Date, Tenant will pay Tenant’s Pro Rata
Share of premiums and any deductibles for/in connection with the insurance
policies maintained by Landlord. Any increase in the cost of Landlord’s
insurance due to Tenant’s use or activities at the Premises will be paid by
Tenant to Landlord as Additional Rent.


	
  

 	
  

 
	
 6.3

 	
 GENERAL INSURANCE PROVISIONS.

 


          (a) Any
insurance which Tenant is required to maintain under this Lease will include a
provision which requires the insurance carrier to give Landlord not less than
30 days’ written notice prior to any cancellation or modification of such
coverage.


          (b) Prior
to the earlier of Tenant’s entry into the Premises or the Lease Commencement
Date, Tenant will deliver to Landlord certificate of insurance certifying that
Tenant maintains the insurance required by Section 6.1 and not less than 30
days prior to the expiration or termination of any such insurance, Tenant will
deliver to Landlord renewal certificates therefor. Tenant will provide Landlord
with copies of the policies promptly upon request from time to time. 


          (c) All
insurance policies required under this Lease will be with companies having a
Rating of A-; X or better, as set forth in the most current issue of the Best
Key Rating Guide.




8







          (d) Without
limiting the provisions of Section 6.4, Landlord and Tenant, on behalf of
themselves and their insurers, each hereby waives any and all rights of
recovery against the other, the agents, advisors, employees, members, officers,
directors, partners, trustees, beneficiaries and shareholders of the other and
the agents, advisors, employees, members, officers, directors, partners,
trustees, beneficiaries and shareholders of each of the foregoing
(collectively, “Representatives”), for loss of or damage to its property or the
property of others under its control, to the extent that such loss or damage is
covered by any insurance policy in force (whether or not described in this Lease)
at the time of such loss or damage, or required to be carried under this
Article 6. All property insurance carried by either party will contain a waiver
of subrogation against the other party to the extent such right was waived by
the insured party prior to the occurrence of loss or injury. 


	
  

 	
  

 
	
 6.4

 	
 WAIVER AND INDEMNITY. 

 


(a)      Notwithstanding anything to the
contrary in this Lease, Landlord and Tenant hereby release one another and
their respective partners, officers and employees and property manager from any
and all liability (to the other or anyone claiming through or under them by way
of subrogation or otherwise) for any loss or damage covered by property
insurance or coverable by a customary form of policy of the insurance required
by Section 6.1(a-e) or 6.2, even if such loss or damage shall have been caused
by the fault or negligence of the other party, or anyone for whom such party
may be responsible, provided, however, as set forth above, Tenant’s liability
insurance shall be primary. Further, Landlord will not be liable for any damage
or injury to the person, business (or any loss of income therefrom), goods,
wares, merchandise or other property of Tenant, Tenant’s employees, invitees,
customers or any other person or about the Property, whether such damage or
injury is caused by or results from: (a) fire, steam, electricity, water, gas
or rain; (b) the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures
or any other cause; (c) conditions arising in or about the Property, or from
other sources or places; (d) any curtailment or interruption in utility
services or (e) any act or omission of any other tenant of the Property. Tenant
will give Landlord prompt notice upon the occurrence of any accident or
casualty at the Premises.


(b)      Notwithstanding anything apparently to
the contrary in this Lease, Landlord and its partners, officers and employees
and property manager shall not be liable to Tenant, and Tenant hereby releases
such parties from all damage, compensation or claims from any cause other than
the intentional misconduct of Landlord or its partners, officers or employees
or property manager arising from: loss or damage to personal property or trade
fixtures in the Premises including books, records, files, computer equipment,
computer data, money, securities, negotiable instruments or other papers; lost
business or other consequential damage arising out of interruption in the use
of the Premises; and any criminal act by any person other than Landlord or its
partners, officers or employees.


(c)      Tenant agrees to indemnify, defend and
hold Landlord and its partners, officers and employees and property manager
harmless from and against any claim, loss or expense arising out of (i) injury,
death or property loss or damage occurring in the Premises or arising from the
use or occupancy thereof, except only to the extent caused by the negligent act
or intentional misconduct of Landlord or its partners, officers or employees or
property manager, (ii) the negligence or willful misconduct of Tenant in, upon
or about the Property, or (iii) any breach or default by Tenant under this
Lease. .


(d)      Landlord agrees to indemnify, defend
and hold Tenant and its partners, officers and employees harmless from and
against any claim, loss or expense arising out of any act of negligence of
Landlord, except to the extent caused by the negligent act or intentional
misconduct of Tenant or its partners, officers or employees. This indemnity
does not cover claims arising from the presence or release of Hazardous Materials.



9







ARTICLE VII

OPERATING EXPENSES


	
  

 	
  

 
	
 7.1

 	
 OPERATING EXPENSES. 

 


          Commencing
on the Rent Commencement Date, Tenant will pay Tenant’s Pro Rata Share of all
“Operating Expenses” (as herein defined) allocable to the period commencing on
the Rent Commencement Date and throughout the Term. “Operating Expenses” means
all costs and expenses incurred by Landlord with respect to the ownership, maintenance and
operation of the Property including, but not limited to: maintenance, repair
and replacement of the heating, ventilation, air conditioning (if such HVAC
serves the entire Building, as opposed to tenant space only), plumbing,
electrical, mechanical, utility and safety systems, paving and parking areas,
roads and driveways; maintenance of exterior areas such as gardening and
landscaping, snow removal and signage; maintenance and repair of roof membrane,
flashings, gutters, downspouts, roof drains, skylights and waterproofing;
painting; lighting; cleaning; refuse removal; security; utility services attributable
to the Common Areas (as defined below); Property personnel costs; personal
property taxes; rentals or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the Property; fees
for required licenses and permits; and a property management fee. Operating
Expenses do not include: (a) expenditures for capital improvements except (i)
those which Landlord anticipates will have the effect of reducing current
and/or future Operating Expenses or the rate of increase in Operating Expenses,
and (ii) those required by Legal Requirements or insurance requirements not in
effect at the time the Property was constructed, and in each case amortized
over such reasonable period as Landlord shall determine together with interest
at the “Prime Rate” as published in the Wall
Street Journal, plus 4% per annum (the “Interest Rate”) on the
unamortized balance; (b) debt service under mortgages; (c) costs of restoration
to the extent of net insurance proceeds received by Landlord; (d) leasing
commissions and tenant improvement costs; (e) litigation expenses relating to
disputes with tenants; (f) costs of the Valuation Expert and other real estate
professionals engaged by Landlord under Section 2.2 hereof; and (g) costs for roof
replacement. Notwithstanding the foregoing, if an expenditure for capital
improvements will be included in Operating Expenses as described in (a) above,
at Tenant’s option, Tenant may pay the entire amount of its Pro Rata Share of
such expenditure when such costs are first included in Operating Expenses
(rather than the annual amortized amount as set forth above).


ARTICLE VIII

USE OF PREMISES


	
  

 	
  

 
	
 8.1

 	
 MANNER OF
 USE. 

 


Tenant will use the Premises only for the Permitted Uses. Tenant will
not cause or permit the Premises to be used in any way which (i) constitutes a
violation of any Legal Requirements (as defined below) or the rules and
regulations (the “Rules and Regulations”) established by Landlord, a copy of
which is attached as Exhibit C, as they may be amended in writing by
Landlord, (ii) annoys or interferes with the rights of tenants of the Property,
or (iii) constitutes a nuisance or waste or will invalidate any insurance
carried by Landlord. Tenant will obtain and pay for all necessary permits, including
a certificate of occupancy, and will promptly take all actions necessary to
comply with all applicable Federal, State or local statutes, ordinances, notes,
regulations, orders, recorded declarations, covenants and requirements
(collectively, “Legal Requirements”) regulating the use by Tenant of the
Premises, including, without limitation, the Occupational Safety and Health Act
and the Americans With Disabilities Act; provided, however, Tenant shall not be
required to make any structural modifications to the Building unless such
modifications are required as a result of Tenant’s particular use of the
Premises.


	
  

 	
  

 
	
 8.2

 	
 ENVIRONMENTAL
 REQUIREMENTS. 

 


          (a)          Definition
of “Hazardous Material”. “Hazardous Material” means any flammable items,
explosives, radioactive materials, oil, hazardous or toxic substances, material
or waste or related materials, including any substances defined as or included
in the definition of “hazardous substances”, “hazardous wastes”, “hazardous
materials” or “toxic substances” now or hereafter regulated under any Legal
Requirements, including without limitation petroleum-based products, paints,
solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar compounds,
and including any different products and materials which are found to have
adverse effects on the environment or the health and safety of persons;
provided, however, “Hazardous Material” does not include any de minimis
quantities of office or other cleaning supplies commonly used in accordance
with Legal Requirements. 


10





          (b)          Tenant’s
Obligations. Tenant will not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or
about the Property by Tenant, its agents, employees, contractors, sublessees or
invitees without (i) the prior written consent of Landlord, and (ii) complying
with all applicable Legal Requirements pertaining to the transportation, storage,
use or disposal of such Hazardous Material (collectively, “Environmental
Laws”), including, but not limited to, obtaining proper permits. Landlord is
entitled to take into account such other factors or facts Landlord deems
reasonably relevant in granting or withholding consent to Tenant’s proposed
activity with respect to Hazardous Material. 


If Tenant’s transportation, storage, use or disposal of Hazardous
Materials results in the contamination of the soil or surface or ground water,
release of a Hazardous Material or loss or damage to person(s) or property or
the violation of any Environmental Law, then Tenant agrees to: (x) notify
Landlord immediately of any contamination, claim of contamination, release,
loss or damage, (y) after consultation with Landlord, clean up the
contamination in full compliance with all Environmental Laws and (z) indemnify,
defend and hold Landlord harmless from and against any claims, suits, causes of
action, costs and fees, including, without limitation, attorney’s fees and
costs, arising from or connected with any such contamination, claim of
contamination, release, loss or damage. Tenant will fully cooperate with
Landlord and provide such documents, affidavits and information as may be
requested by Landlord (A) to comply with any Environmental Law, (B) to comply
with the request of any lender, purchaser or tenant, and/or (C) as otherwise
deemed reasonably necessary by Landlord in its discretion. Tenant will notify
Landlord promptly in the event of any spill or other release of any Hazardous
Material at, in, on, under or about the Premises which is required to be
reported to a governmental authority under any Environmental Law, will promptly
forward to Landlord copies of any notices received by Tenant relating to
alleged violations of any Environmental Law, will promptly pay when due any
fine or assessment against Landlord, Tenant or the Property and remove or bond
any lien filed against the Property relating to any violation of Tenant’s
obligations with respect to Hazardous Material.


          (c)          Landlord’s
Rights. Landlord will have the right, but not the obligation, without in
any way limiting Landlord’s other rights and remedies under this Lease, to
enter upon the Premises, or to take such other actions as it deems necessary or
advisable, to investigate, clean up, remove or remediate any Hazardous Material
or contamination by Hazardous Material present on, in, at, under or emanating
from the Premises or the Property in violation of Tenant’s obligations under
this Lease or under any laws regulating Hazardous Material or that Tenant is
liable under this Lease to clean up, remove or remediate. After prior written
notice to Tenant, and if Landlord has reasonably determined that Tenant is not
satisfactorily negotiating, defending, approving or appealing any such
governmental action or order, Landlord will have the right, at its election, in
its own name or as Tenant’s agent, to negotiate, defend, approve and appeal, at
Tenant’s expense, any action taken or order issued by any governmental agency
or authority against Tenant, Landlord or the Premises or the Property relating
to any Hazardous Material or under any related law or the occurrence of any
event or existence of any condition that would cause a breach of any of the covenants
set forth in this Section 8.2.


If Landlord determines in good faith that a release or other
environmental condition may have occurred during the Occupancy Period, at
Tenant’s cost, Landlord may require an environmental audit of the Premises by a
qualified environmental consultant. Tenant will, at it sole cost and expense,
take all actions recommended in such audit to remediate any environmental
conditions for which it is responsible under this Lease.


	
  

 	
  

 
	
 8.3

 	
 LANDLORD’S
 ACCESS. 

 


Landlord or its agents may enter the Premises, upon 24 hours notice to
Tenant (except in the case of an emergency), to show the Premises to potential
buyers, investors or tenants or other parties, for routine property inspections
and maintenance or for any other purpose Landlord deems reasonably necessary. During the last 9 months of the Lease Term, Landlord may place
customary “For Lease” signs on the Premises.


11







	
  

 	
  

 
	
 8.4

 	
 COMMON
 AREAS. 

 


          (a)          Common
Areas. “Common Areas” means all areas within the Property which are
available for the common use of tenants of the Property and which are not
leased or held for the exclusive use of Tenant or other tenants, including, but
not limited to, parking areas, driveways, sidewalks, access roads, landscaping,
and planted areas. Landlord, from time to time, may change the size, location,
nature, and use of any of the Common Areas, convert Common Areas into leaseable
areas, construct additional parking facilities in the Common Areas, and
increase or decrease Common Area land or facilities so long as Tenant’s use of
the Premises is not materially affected.


          (b)          Use
of Common Areas. Tenant will have the non-exclusive right (in common with
other tenants and all others to whom Landlord has granted or may grant such
rights) to use the Common Areas, including the Parking Spaces, for the purposes
intended, subject to such reasonable rules and regulations as Landlord may
establish or modify from time to time. Tenant agrees to abide by all such rules
and regulations and to use its best efforts to cause others who use the Common
Areas with Tenant’s express or implied permission to abide by the Rules and
Regulations. At any time, Landlord may close any Common Areas to perform any
acts as, in Landlord’s reasonable judgment, are desirable to maintain or
improve the Property. Tenant will not interfere with the rights of Landlord,
other tenants, or any other person entitled to use the Common Areas. 


          (c)          Parking.
Tenant shall be entitled to park in common with other tenants of Landlord, and
receive three and three tenths (3.3) nonreserved, unassigned parking spaces for
every 1,000 square feet of rentable area of the Premises (i.e., eighty-five
(85) spaces as of the date hereof). Tenant agrees not to overburden the parking
facilities, agrees to cooperate with Landlord and other tenants in the use of
parking facilities, and to abide by all rules and regulations regarding the use
of such parking facilities as may now exist, or as may hereinafter be
promulgated by Landlord. Said parking spaces shall be used for parking by
vehicles no larger than full-size passenger automobiles or pick-up trucks,
herein called “Permitted Size Vehicles.” Vehicles other than Permitted Size
Vehicles shall be parked and loaded or unloaded as directed by Landlord.
Landlord reserves the right, in its absolute discretion, to determine whether
parking facilities are becoming overcrowded, and in such event, to allocate
parking spaces among tenants or to designate areas within which Tenant must
park. Landlord further reserves the right to modify, restripe, and otherwise
change the location of drives and parking spaces. Tenant and Tenant’s
employees, visitors and customers assume all responsibility for damage and
theft to vehicles. Tenant shall repair or cause to be repaired, at Tenant’s
sole cost and expense, any and all damage to the buildings on the Property
caused by Tenant’s, or Tenant’s employees’, visitors’ or customers’ use of such
parking areas thereon.


ARTICLE IX

CONDITION AND MAINTENANCE OF PREMISES


	
  

 	
  

 
	
 9.1

 	
 EXISTING
 CONDITIONS. 

 


Tenant is currently occupying the Premises pursuant to the terms of the
Original Lease, and hereby accepts the Property and the Premises in their
present condition, subject to all Legal Requirements. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation as to
the condition of the Property or the suitability of the Property for Tenant’s
intended use, and except as specifically set forth herein, no agreement of
Landlord to alter, remodel, decorate, clean or improve the Premises or Property
(or to provide Tenant with any credit or allowance for the same), have been
made by or on behalf of Landlord or relied upon by Tenant. Tenant represents
and warrants that Tenant has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any broker
with respect thereto. 


12







	
  

 	
  

 
	
 9.2

 	
 LANDLORD’S
 OBLIGATIONS. 

 


Subject to the provisions of Article 10 (Casualty and Condemnation) and
Tenant’s obligation to pay Additional Rent pursuant to Section 3.2, and except
for damage caused by any act or omission of Tenant or Tenant’s employees,
agents, contractors or invitees, Landlord will maintain the Common Areas in
good order, condition and repair and will keep the foundation, roof, building
systems (other than the heating, ventilating and air conditioning system which
serve tenant spaces, which shall be maintained by such tenants), structural
supports and exterior walls of the Property in good order, condition and
repair. Landlord will not be obligated to maintain or repair windows, doors or
plate glass. Tenant will promptly report in writing to Landlord any defective
condition known to it which Landlord is required to repair. Landlord will
repair, at Tenant’s expense, any damage to the Property caused by Tenant’s acts
or omissions which is Landlord’s maintenance responsibility.


	
  

 	
  

 
	
 9.3

 	
 TENANT’S
 OBLIGATIONS. 

 


Subject to the provisions of Article 10 (Casualty and Condemnation), at
its sole cost and expense, Tenant will keep all portions of the Premises
(including without limitation, all systems and equipment, i.e., HVAC systems,
dock levelers, bumpers, doors and floors including slabs and slab repairs,
crack filling and joint repairs) in good order, condition and repair (including
repainting and refinishing, as needed). If any portion of the Premises or any
system or equipment in the Premises which Tenant is obligated to repair cannot
be fully repaired or restored, Tenant will promptly replace such portion of the
Premises or system or equipment. Tenant will maintain a preventive maintenance
contract providing for the regular inspection and maintenance of the heating
and air conditioning system by a heating and air conditioning contractor, such
contract and contractor to be reasonably approved by Landlord. At Tenant’s
request, Landlord will perform Tenant’s maintenance and repair obligations
under this Section 9.03 and Tenant will reimburse Landlord for all costs
incurred in doing so promptly upon receipt of an invoice from Landlord.
Notwithstanding the above, in the event that, despite Tenant’s maintenance of
the HVAC system as set forth above, an HVAC professional determines that the
HVAC units and equipment serving the Premises require replacement during the
Lease Term, Landlord (notwithstanding any contrary provisions contained herein)
shall replace such HVAC system with the cost thereof to be amortized, at the
Interest Rate, over the lesser of the useful life of such HVAC equipment and
ten (10) years, and paid in equal monthly installment by Tenant to Landlord
with Tenant’s monthly payments of rent hereunder; provided, however, such
annual amortized payment shall not exceed $800.00 (which amount shall be
increased annually by the percentage change in the CPI over the prior twelve
month period), provided that no payments shall be due after the expiration of
the Lease Term. At Tenant’s option, however, Tenant may either replace the HVAC
equipment on its own, or upon replacement thereof, reimburse Landlord for the
cost thereof in one lump sum payment (in which case the $800.00 annual cap
shall not apply), but less such portion of the cost allocable (based on the
useful life of such HVAC system) to the period of time after the expiration of
the Lease Term (provided, however, any such amount shall be paid to Landlord if
the Lease Term in extended beyond the Lease Term set forth in this Lease). 


As used herein, the term “CPI” means the Consumer Price Index
for All Urban Consumers (CPI-U), Minneapolis-St. Paul, MN-WI (1982-84=100), All
Items, as issued by the U.S. Department of Labor, Bureau of Labor Statistics.
If the Department of Labor ceases to issue the CPI, the Landlord may reasonably
select a substitute index or measure of cost of living to calculate the
appropriate cost of living increase.


13









	
  

 	
  

 
	
 9.4

 	
 ALTERATIONS,
 ADDITIONS, AND IMPROVEMENTS.

 


          (a)          Tenant’s
Work. Tenant may not make any installations, alterations, additions, or
improvements or major repairs in or to the Premises without obtaining
Landlord’s prior written consent. All work will be performed in accordance with
plans and specifications approved by Landlord. Tenant will procure all
necessary permits and licenses before undertaking any work on the Premises and
will perform all work in a good and workmanlike manner employing materials of
good quality and in conformity with all applicable Legal Requirements and
insurance requirements. Tenant will (i) employ only contractors reasonably
approved by Landlord, (ii) require all contractors employed by Tenant to carry
worker’s compensation insurance in accordance with statutory requirements and
commercial general liability insurance covering such contractors on or about
the Premises with a combined single limit not less than $3,000,000 and (iii)
submit certificates evidencing such coverage to Landlord prior to the
commencement of any work. Landlord may inspect Tenant’s work at reasonable
times. Tenant will prosecute and complete such work with reasonable diligence and
will provide Landlord with “as built” plans, copies of all construction
contracts and proof of payment for all labor and materials.


          (b)          Tenant
Improvement Allowance. Notwithstanding anything to the contrary contained
herein, provided Tenant is not then in default of any of the terms, conditions,
and covenants of the Lease, Landlord shall contribute up to $185,000.00 (the
“Tenant Improvement Allowance”) toward the cost of the following improvements
to the Premises: new carpeting, painting, installation of new lighting, HVAC
repairs/replacement (the “Tenant Work”), and architectural costs in connection
with such improvements. The Tenant Improvement Allowance may not be used to pay
any costs associated with any water availability charges or sewer availability
charges. If any ADA upgrades are required in connection with the Tenant Work,
Landlord shall be responsible for payment of the cost thereof, provided that
Tenant has notified Landlord of such costs, and Landlord has approved such costs.
In addition, Tenant shall either obtain a second bid for the Tenant Work, or
engage in a value engineering process for its existing plan. If either of these
results in costs savings, such that the cost of the Tenant Work is less than
$185,000, cost savings, up to $50,000.00, shall be equally divided between
Landlord and Tenant; any total costs savings of greater than $50,000.00 shall
be shared $25,000.00 to Tenant, and any remaining to Landlord1. The
Tenant Work shall be performed by Tenant in accordance with the terms and
provisions of this Lease, and in a good and
workmanlike manner by properly qualified and licensed personnel. All such work
shall be diligently prosecuted to completion and shall comply with applicable
laws. Upon Tenant’s presentation to Landlord, from time to time, but in
no event later than May 1, 2011, of true and correct copies of construction
contracts, copies of invoices, lien waivers, and such other documentation
reasonably required by Landlord supporting the charges for completion of such
Tenant Work, Landlord shall reimburse Tenant for the cost of the completed, in
whole or in part, Tenant Work up to the amount of the Tenant Improvement
Allowance. Except as set forth above, Tenant shall not be entitled to a credit
for any portion of the Tenant Improvement Allowance not used. Except as
otherwise set forth herein, all costs of any Tenant Work in excess of the
Tenant Improvement Allowance shall be paid by Tenant promptly when due.


          (c)          No
Liens. Tenant will pay when due all claims for labor and material furnished
to the Premises and keep the Property at all times free from liens for labor
and materials. Tenant will give Landlord at least 20 days’ prior written notice
of the commencement of any work on the Premises, regardless of whether
Landlord’s consent to such work is required. Landlord may record and post
notices of non-responsibility on the Premises.



	
  

 	
  

 
	
 1
 For example, total costs savings of $60,000 shall be shared as follows:
 $25,000 to Tenant, and $35,000 to Landlord.

 


14






	
  

 	
  

 
	
 9.5

 	
 CONDITION
 UPON TERMINATION. 

 


Upon the expiration or termination of the Lease Term, Tenant will
surrender the Premises to Landlord broom clean and in the condition which
Tenant is required to maintain the Premises under this Lease. Tenant will not be obligated to repair any damage which Landlord is
required to repair under Article 10 (Casualty and Condemnation). Landlord may
require Tenant, at its expense, to remove any Tenant alterations, additions or
improvements, as well as any and all signage installed by or for Tenant on the
Premises or the Building, prior to the expiration of the Lease and to restore
the Premises and the Building to their prior condition. With respect to any
alterations, additions or improvements which require Landlord’s approval,
Landlord will specify if Tenant will be required to remove the same at the time
of such approval. Additionally, prior to the expiration or earlier termination
of the Lease Term or Tenant’s right to possession of the Premises, Tenant shall
remove its furniture, equipment, trade fixtures, other items of personal
property from the Premises. If Tenant does not remove any such alterations,
additions, improvements, or items as set forth herein, Tenant shall be
conclusively presumed to have conveyed the same to Landlord free and clear of
any and all liens and security interests without further payment or credit by
Landlord to Tenant; or at Landlord’s sole option, such items shall be deemed
abandoned, in which event Landlord may cause such items to be removed and
disposed of at Tenant’s expense, without notice to Tenant and without
obligation to compensate Tenant, and Landlord shall, prior to returning the
Security Deposit to Tenant pursuant to Section 14.14 hereof, deduct the cost of
such removal and disposal from the Security Deposit, with any costs thereof in
excess of the Security Deposit to be paid by Tenant to Landlord upon demand.


ARTICLE X

CASUALTY AND CONDEMNATION


	
  

 	
  

 
	
 10.1

 	
 DAMAGE TO
 PREMISES.

 


          (a) If the
Premises or the Property shall be damaged by fire or other cause Landlord shall
at its option either (i) undertake to restore such damage with all due
diligence, or (ii) in the event the Premises or the Property are damaged by
fire or other cause to such extent that damage cannot, in Landlord’s sole
judgment, be economically repaired within ninety (90) days after the date of
such damage (taking into account the time necessary to effectuate a
satisfactory settlement with any insurance company and using normal
construction methods without overtime or other premium), terminate this Lease,
by notice given to Tenant within sixty (60) days after the date of the damage.
Any termination hereunder by reason of damage to the Premises shall be
effective as of the date of the damage. Any termination by reason of damage to
the Property but not the Premises shall be effective as of the date notice is
given. This Lease shall, unless terminated by Landlord pursuant to this Section
10.1(a), remain in full force and effect following such damage, and, in the
case of damage to the Premises, the Base Rent and additional rent, prorated to
the extent that the Premises are rendered untenantable, shall be equitably
abated until such repairs are completed.


          (b) The
provisions of this Article 10 will govern the rights and obligations of
Landlord and Tenant in the event of any damage or destruction of or to the
Property. Tenant waives the protection of any statute, code or judicial
decision which grants a tenant the right to terminate a lease in the event of
the damage or destruction of the leased property. 


	
  

 	
  

 
	
 10.2

 	
 CONDEMNATION.
 

 


If more than 20% of the floor area of the Premises or more than 25% of
the parking on the Property is taken by eminent domain, either Landlord or
Tenant may terminate the Lease Term as of the date the condemning authority
takes title or possession, by delivering notice to the other within 10 days
after receipt of written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority takes title or
possession). If neither party terminates the Lease Term, this Lease will remain
in effect as to the portion of the Premises not taken, except that the Base
Rent will be reduced in proportion to the reduction in the floor area of the
Premises. Any condemnation award or payment will be paid to Landlord. Tenant will have no claim against Landlord for the
value of the unexpired lease term or otherwise; provided, however, Tenant may
make a separate claim with the condemning authority for its personal property
and/or moving costs so long as Landlord’s award is not reduced thereby.


15







ARTICLE XI

ASSIGNMENT AND SUBLETTING


	
  

 	
  

 
	
 11.1

 	
 LANDLORD’S
 CONSENT REQUIRED. 

 


Except as otherwise set forth herein, Tenant will not assign or
transfer this Lease or sublease the Premises or any part thereof or interest
therein, or mortgage, pledge or hypothecate its leasehold interest, without
Landlord’s prior written consent, which will not be unreasonably withheld.
Unless Tenant is a publicly traded company, a transfer of a controlling
interest in Tenant will be deemed an assignment of this Lease. Any attempted
transfer without consent will be void and constitute a non-curable Event of
Default under this Lease (as defined below). Tenant’s request for consent will
include the details of the proposed sublease or assignment, including the name,
business and financial condition of the prospective transferee, financial
details of the proposed transaction (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord deems relevant. Landlord will have the right to
withhold consent, in its reasonable business judgment, or to grant consent,
based on the following factors: (i) the business of the proposed assignee or
subtenant and the proposed use of the Premises; (ii) the net worth and
financial condition of the proposed assignee or subtenant; (iii) Tenant’s
compliance with all of its obligations under this Lease; and (iv) such other
factors as Landlord may reasonably deem relevant. Tenant will promptly furnish
to Landlord copies of all transaction documentation.


	
  

 	
  

 
	
 11.2

 	
 PERMITTED
 TRANSFERS.

 


Notwithstanding the prohibitions set forth above, Tenant may, without
Landlord’s consent, assign its interest in this Lease or sublet the Premises to
any of the following (any such party a “Permitted Assignee”): (i) any one or
more present or future corporations or other business entities which directly
or through one or more intermediaries controls, is controlled by, or is under
common control with Tenant (each a “Tenant Affiliate”), but only for
such period as such Tenant Affiliate continues to control, be controlled by or
remains under common control with Tenant (for purposes hereof, “control” means
ownership of not less than eighty percent (80%) of all of the legal and
equitable interest in any other business entity); (ii) any entity with which
Tenant may merge or consolidate, or (iii) any entity to which Tenant may sell
all or substantially all the ownership interests in Tenant (e.g., capital
stock, partnership or membership interests, etc.), so long as (A) the principal
purpose of such assignment or sublease is not the acquisition of Tenant’s
interest in this Lease (except if such assignment or sublease is made for a
valid intracorporate business purpose to an entity with which is under common
control with Tenant) and is not made to circumvent the provisions of this
section, (B) any such assignee or sublessee shall have a net worth, determined
in accordance with generally accepted accounting principles, consistently
applied, after giving effect to such assignment or sublease equal to or greater
than Tenant’s net worth, as so determined, on the date hereof, (C) the Tenant
named herein shall remain liable for all obligations of Tenant under this
Lease, (D) prior to such assignment, such assignee shall enter into a written
agreement with Landlord agreeing to be directly bound to Landlord under the
terms of this Lease, and (E) Tenant provides at least thirty (30) days’ prior
written notice to Landlord of such assignment or sublease and copies of any
relevant documentation relating to same, including, but not limited to copies
of such assignment, the assignee’s financial statements, and such other
documents as are necessary to permit Landlord to determine that such assignment
is to a Permitted Assignee.


16








	
  

 	
  

 
	
 11.3

 	
 OFFER TO
 TERMINATE. 

 


If Tenant desires to assign this Lease or sublease all or any part of
the Premises, Tenant will notify Landlord, and Landlord for a period of 30 days
will have the right to terminate the Lease Term. If Tenant desires to sublease
only a portion of the Premises, and such portion is subdividable (with any
costs paid by Tenant), then the right to terminate may be exercised with
respect to only that portion of the Premises to be subleased. If Landlord
elects not to terminate the Lease Term as provided in this Section 11.3, Tenant
shall pay to Landlord 100% of any net profits received by Tenant from any
assignment of this Lease or sublet of the Premises. The terms of this Section
11.3 shall not apply to an assignment of the Lease to a Permitted Assignee. 


	
  

 	
  

 
	
 11.4

 	
 NO RELEASE
 OF TENANT. 

 


Notwithstanding any assignment or subletting, Tenant will at all times
remain fully responsible and primarily liable for the payment of Rent and
compliance with all of Tenant’s obligations under this Lease. Consent to one
transfer will not be deemed a consent to any subsequent transfer or a waiver of
the obligation to obtain consent on subsequent occasions. If Tenant’s assignee
or transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the assignee or transferee. 


ARTICLE XII 

DEFAULTS AND REMEDIES


	
  

 	
  

 
	
 12.1

 	
 COVENANTS
 AND CONDITIONS. 

 


Tenant’s performance of each of Tenant’s obligations under this Lease
is a condition as well as a covenant. Tenant’s right to continue in possession
of the Premises is conditioned upon such performance. Time is of the essence in
the performance by Tenant of all covenants and conditions. 


	
  

 	
  

 
	
 12.2

 	
 DEFAULTS. 

 


Each of the following constitutes an “Event of Default” under this
Lease: 


          (a) Tenant
fails to pay Rent or any other sum payable to Landlord under this Lease within
5 days after it is due; 


          (b) Tenant
fails to perform any of Tenant’s other obligations under this Lease and such
failure continues for a period of 30 days after notice from Landlord; provided
that if more than 30 days are reasonably required to complete such performance,
Tenant will not be in default if Tenant commences such performance within the
30 day period and thereafter diligently pursues its completion; 


          (c) Tenant
abandons the Premises; or 


          (d) Tenant
becomes insolvent or bankrupt, has a receiver or trustee appointed for any part
of its property, makes an assignment for the benefit of its creditors, or any proceeding
is commenced either by Tenant or against it under any bankruptcy or insolvency
laws, which proceeding is not dismissed within 60 days; provided, however, if a
court of competent jurisdiction determines that any of the acts described in
this subsection (d) is not an Event of Default under this Lease, and a trustee
is appointed to take possession (or if Tenant remains a debtor in possession)
and such trustee or Tenant assigns, subleases, or transfers Tenant’s interest
hereunder, then Landlord will receive, as Additional Rent, the excess, if any,
of the rent (or any other consideration) paid in connection with such
assignment, transfer or sublease over the rent payable by Tenant under this
Lease. 


17









	
  

 	
  

 
	
 12.3

 	
 REMEDIES. 

 


On the occurrence of an Event of Default, Landlord may, at any time
thereafter, with or without notice or demand, and without limiting Landlord in
the exercise of any right or remedy which Landlord may have: 


          (a)
Terminate the Lease Term by written notice to Tenant. Tenant will then
immediately quit and surrender the Premises to Landlord, but Tenant will remain
liable as hereinafter provided. Following termination, without prejudice to
other remedies Landlord may have by reason of Tenant’s default or of such
termination, Landlord may (i) peaceably reenter the Premises upon voluntary
surrender by Tenant or remove Tenant therefrom and any other persons occupying
the Premises, using such legal proceedings as may be available; (ii) repossess
the Premises or relet the Premises or any part thereof for such term (which may
be for a term extending beyond the Lease Term), at such rental and upon such
other terms and conditions as Landlord in Landlord’s sole discretion
determines, with the right to make alterations and repairs to the Premises; and
(iii) remove all personal property therefrom. 


          The amount
of damages Tenant will pay to Landlord following termination will include all
Rent unpaid up to the termination of the Lease Term, the value of any free or
reduced rent provided for in this Lease, costs and expenses incurred by
Landlord due to such Event of Default and, in addition, Tenant will pay to
Landlord as damages, at the election of Landlord (if Landlord shall elect
subsection (y) below, it may cease such election at any time), either (x) the
amount, discounted to present value (at the then Federal Reserve Bank discount
rate) by which, at the time of the termination of the Lease Term or of Tenant’s
right to possession (or at any time thereafter if Landlord initially elects
damages under subsection (y) below), (i) the aggregate of the Rent and other
charges projected over the period commencing with such termination and ending
on the expiration date of this Lease exceeds (ii) the aggregate projected
rental value of the Premises for such period; or (y) amounts equal to the Rent
and other charges which would have been payable by Tenant had the Lease Term or
Tenant’s right to possession not been so terminated, payable upon the due dates
therefor specified herein following such termination and until the expiration
date of this Lease, provided, however, that if Landlord re-lets the Premises
during such period, Landlord will credit Tenant with the net rents received by
Landlord from such re-letting, such net rents to be determined by first
deducting from the gross rents received from such re-letting the expenses
incurred or paid by Landlord in terminating this Lease, and the reasonable
expenses of re-letting, including, without limitation, altering and preparing
the Premises for new tenants, brokers’ commissions and legal fees, it being
understood that any such reletting may be for a period equal to or shorter or
longer than the remaining Lease Term; and provided, further, that in no event
(i) will Tenant be entitled to receive any excess of such net rents over the
sums payable by Tenant to Landlord hereunder or (ii) will Tenant be entitled in
any suit for the collection of damages pursuant to this subsection (y) to a
credit in respect of any net rents from a re-letting except to the extent that
such net rents are actually received by Landlord prior to the commencement of
such suit. 


          If the
Premises or any part thereof are re-let in combination with other space, then
proper apportionment on a square foot area basis will be made of the rent
received from such re-letting and of the expenses of re-letting. In calculating
the Rent and other charges under subsection (x) above, there will be included,
in addition to the Rent, other considerations agreed to be paid or performed by
Tenant, on the assumption that all such considerations would have remained
constant for the balance of the full Lease Term hereby granted. Landlord may
re-let the Premises or any part thereof for such rent and on such terms as it
determines (including the right to re-let the Premises for a greater or lesser
term than the Lease Term, the right to re-let the Premises as part of a larger
area and the right to change the character or use made of the Premises).
Landlord will use reasonable efforts to relet the Premises and otherwise to
mitigate Tenant’s damages upon redelivery of the Premises to Landlord. Suit or
suits for the recovery of damages, or any installments thereof, may be brought
by Landlord from time to time at its election, and nothing contained herein will
be deemed to require Landlord to postpone suit until the date when the Lease
Term would have expired if it had not been terminated hereunder. 


18





          (b)
Maintain Tenant’s right to possession, in which case this Lease will continue
in effect whether or not Tenant has abandoned the Premises. In such event,
Landlord will be entitled to enforce all of Landlord’s rights and remedies
under this Lease, including the right to recover the Rent as it becomes due. 


          (c) Pursue
any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the state in which the Property is located. 


	
  

 	
  

 
	
 12.4

 	
 DAMAGES. 

 


On any termination, Landlord’s damages will include all costs and fees,
including reasonable attorneys’ fees that Landlord incurs in connection with
any bankruptcy court or other court proceeding with respect to the Lease, the
obtaining of relief from any stay in bankruptcy restraining any action to evict
Tenant, or the pursuing of any action with respect to Landlord’s right to
possession of the Premises. All such damages suffered (apart from Rent payable
hereunder) will constitute pecuniary damages which will be paid to Landlord
prior to assumption of the Lease by Tenant or any successor to Tenant in any
bankruptcy or other proceedings. 


	
  

 	
  

 
	
 12.5

 	
 CUMULATIVE
 REMEDIES. 

 


Except as otherwise expressly provided herein, any and all rights and
remedies which Landlord may have under this Lease and at law and equity are
cumulative and will not be deemed inconsistent with each other, and any two or
more of all such rights and remedies may be exercised at the same time to the
greatest extent permitted by law. 


ARTICLE XIII 

PROTECTION OF LENDERS


	
  

 	
  

 
	
 13.1

 	
 SUBORDINATION.
 

 


This Lease shall be automatically subordinated to any Mortgage
encumbering the Property. Landlord shall use commercially reasonable efforts to
provide to Tenant an instrument in commercially reasonable form providing that
the ground lessor, mortgagor or beneficiary of such Mortgage agrees that in the
event of the foreclosure or termination of such Mortgage, this Lease and the
rights of Tenant hereunder will continue in full force and effect so long as
Tenant continues to comply with all its obligations hereunder. “Mortgage”
includes any mortgage, deed of trust or ground lease, together with any
amendments, additional advances, restatements, modifications or consolidations
of such instrument. If any ground lessor, beneficiary or mortgagee elects to
have this Lease prior to the lien of its Mortgage and gives written notice
thereof to Tenant, this Lease will be deemed prior to such Mortgage whether
this Lease is dated prior or subsequent to the date of said Mortgage or the
date of recording thereof. 


	
  

 	
  

 
	
 13.2

 	
 ATTORNMENT. 

 


If Landlord’s interest in the Property is acquired by any ground
lessor, beneficiary, mortgagee, or purchaser at a foreclosure sale, Tenant will
attorn to the transferee of or successor to Landlord’s interest in the Property
and recognize such transferee or successor as successor Landlord under this
Lease. Tenant waives the protection of any statute or rule of law which gives
Tenant any right to terminate this Lease or surrender possession of the
Premises upon the transfer of Landlord’s interest. 



19







	
  

 	
  

 
	
 13.3

 	
 ESTOPPEL
 CERTIFICATES. 

 


Within 10 days after Landlord’s request, Tenant will execute,
acknowledge and deliver to Landlord a written statement certifying: (i) that
none of the terms or provisions of this Lease have been changed (or if they have been changed, stating how they have been changed); (ii) that
this Lease has not been canceled or terminated; (iii) the amount of and the
last date of payment of the Base Rent and other charges, and the time period
covered by such payment; (iv) that Landlord is not in default under this Lease
(or if Landlord is claimed to be in default, setting forth such default in
reasonable detail); and (v) such other information with respect to Tenant or
this Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Property may require. Landlord may deliver any
such statement by Tenant to any prospective purchaser or encumbrancer of the
Property, and such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct. If Tenant does not deliver such statement to
Landlord within such 10 day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon (and Tenant will be
estopped from denying): (i) that the terms and provisions of this Lease have
not been changed except as otherwise represented by Landlord; (ii) that this
Lease has not been canceled or terminated except as otherwise represented by
Landlord; (iii) that not more than one month’s Base Rent or other charges have
been paid in advance; and (iv) that Landlord is not in default under this
Lease. 


	
  

 	
  

 
	
 13.4

 	
 TENANT’S
 FINANCIAL CONDITION. 

 


If at any time during the Term Tenant is not a publically traded
company whose financial statements are publically available, within 10 days
after request from Landlord no more than once in any rolling twelve month
period year, Tenant will deliver to Landlord Tenant’s financial statements
(audited, if available) for the most recent two fiscal years. Such financial
statements may be delivered to Landlord’s mortgagees and lenders and prospective
mortgagees, lenders and purchasers. Landlord shall exercise commercially
reasonable efforts to keep all non-public financial statements confidential to
Landlord and such mortgagees or prospective purchasers and their respective
attorneys, accountants and representatives, and Landlord will use them only in
connection with the Property and this Lease. 


ARTICLE XIV 

MISCELLANEOUS PROVISIONS


	
  

 	
  

 
	
 14.1

 	
 COVENANT OF
 QUIET ENJOYMENT. 

 


Tenant on paying the Rent and performing its obligations hereunder will
peacefully and quietly have, hold and enjoy the Premises throughout the Lease
Term without any manner of hindrance from Landlord, subject however to all the
terms and provisions hereof. 


	
  

 	
  

 
	
 14.2

 	
 LANDLORD’S
 LIABILITY. 

 


The obligations of this Lease run with the land, and this Lease will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. No owner of the Property will be liable
under this Lease except for breaches of Landlord’s obligations occurring while
it is owner of the Property. The obligations of Landlord will be binding upon
the assets of Landlord which comprise the Property but not upon other assets of
Landlord. No individual Representative will be personally liable under this
Lease or any other instrument, transaction or undertaking contemplated hereby. 


	
  

 	
  

 
	
 14.3

 	
 NOTICE TO
 LANDLORD. 

 


Tenant will give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any Mortgage encumbering the Property whose name
and address have been furnished to Tenant. Landlord will not be in default
under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within 30 days after receipt of
Tenant’s notice or such longer period as may be required to diligently complete
such matter. If Landlord (or such ground lessor, mortgagee or beneficiary)
cannot perform any of its obligations due to events beyond its reasonable
control, the time provided for performing such obligations will be extended by a period of time equal
to the duration of such events. Events beyond Landlord’s reasonable control
include, but are not limited to, acts of God, war, civil commotion, labor
disputes, strikes, fire, flood or other casualty or weather conditions,
shortages of labor or material, and Legal Requirements. 


20







	
  

 	
  

 
	
 14.4

 	
 HOLDING
 OVER. 

 


If Tenant does not vacate the Premises upon the expiration or earlier
termination of this Lease, (i) Tenant will indemnify Landlord against all
damages, costs, liabilities and expenses, including attorneys’ fees, which
Landlord incurs on account of Tenant’s failure to vacate, and (ii) the Base
Rent will increase to 150% of the Base Rent then in effect and Tenant’s
obligation to pay Additional Rent will continue. Any holdover by Tenant does
not constitute an extension of the Lease or recognition by Landlord of any
right of Tenant to remain in the Premises. 


	
  

 	
  

 
	
 14.5

 	
 LANDLORD’S
 CONSENT. 

 


Tenant will pay Landlord its reasonable fees and expenses incurred in
connection with any act by Tenant which requires Landlord’s consent or approval
under this Lease. 


	
  

 	
  

 
	
 14.6

 	
 LANDLORD’S
 RIGHT TO CURE. 

 


If Tenant defaults in the performance of any obligation under this Lease,
Landlord will have the right (but is not required) to perform such obligation
and, if necessary, to enter upon the Premises. All costs incurred by Landlord
(together with interest at the rate of 15% per year but not to exceed the
highest legal rate) will be deemed to be Additional Rent under this Lease and
will be payable to Landlord immediately on demand. Landlord may exercise the
foregoing rights without waiving any of its other rights or releasing Tenant
from any of its obligations under this Lease. 


	
  

 	
  

 
	
 14.7

 	
 INTERPRETATION.
 

 


The captions of the Articles or Sections of this Lease are not a part
of the terms or provisions of this Lease. Whenever required by the context of
this Lease, the singular includes the plural and the plural includes the singular.
The masculine, feminine and neuter genders each include the other. In any
provision relating to the conduct, acts or omissions of Tenant, the term
“Tenant” includes Tenant’s agents, employees, contractors, invitees, successors
or others using the Premises with Tenant’s express or implied permission. This
Lease does not, and nothing contained herein, will create a partnership or
other joint venture between Landlord and Tenant. A determination by a court of
competent jurisdiction that any provision of this Lease or any part thereof is
illegal or unenforceable will not invalidate the remainder of such provision,
which will remain in full force and effect. 


	
  

 	
  

 
	
 14.8

 	
 INCORPORATION
 OF PRIOR AGREEMENTS; MODIFICATIONS. 

 


This Lease is the only agreement between the parties pertaining to the
lease of the Premises. All amendments to this Lease must be in writing and
signed by all parties. Any other attempted amendment will be void. 


	
  

 	
  

 
	
 14.9

 	
 NOTICES. 

 


All notices, requests and other communications required or permitted
under this Lease will be in writing and personally delivered or sent by a
national overnight delivery service which maintains delivery records. Notices
will be delivered to Tenant’s Notice Address or to Landlord’s Notice Address,
as appropriate. All notices will be effective upon delivery (or refusal to
accept delivery). Either party may change its notice address upon written
notice to the other party. 


21









	
  

 	
  

 
	
 14.10

 	
 WAIVERS. 

 


All waivers will be in writing and signed by the waiving party.
Landlord’s failure to enforce any provision of this Lease or its acceptance of
Rent is not a waiver and will not prevent Landlord from enforcing that
provision or any other provision of this Lease in the future. No statement on a
payment check from Tenant or in a letter accompanying a payment check will be
binding on Landlord. Landlord may, with or without notice to Tenant, negotiate
such check without being bound by to the conditions of such statement. 


	
  

 	
  

 
	
 14.11

 	
 BINDING
 EFFECT; CHOICE OF LAW. 

 


This Lease will bind any party who legally acquires any rights or
interest in this Lease from Landlord or Tenant, provided that Landlord will
have no obligation to Tenant’s successor unless the rights or interests of
Tenant’s successor are acquired in accordance with the terms of this Lease. The
laws of the state in which the Property is located govern this Lease. The
parties hereto waive trial by jury in any action, proceeding or counterclaim
brought by any party(ies) against any other party(ies) on any matter arising
out of or in any way connected with this Lease or the relationship of the
parties hereunder. 


	
  

 	
  

 
	
 14.12

 	
 EXECUTION OF
 LEASE. 

 


This Lease may be executed in counterparts and, when all counterpart
documents are executed, the counterparts will constitute a single binding
instrument. Landlord’s delivery of this Lease to Tenant is not deemed to be an
offer to lease and will not be binding upon either party until executed and
delivered by both parties. 


	
  

 	
  

 
	
 14.13

 	
 SURVIVAL. 

 


All representations and warranties of Landlord and Tenant, Tenant’s
indemnity under Section 6.4, the provisions of Section 8.2 and all obligations
of Tenant to pay Additional Rent hereunder, shall survive the termination of
this Lease. 


	
  

 	
  

 
	
 14.14

 	
 SECURITY
 DEPOSIT. 

 


Landlord acknowledges that it is currently holding the Security
Deposit. Landlord may, at its option, apply all or part of the Security Deposit
to any unpaid Rent or other charges due from Tenant, cure any other defaults of
Tenant, or compensate Landlord for any loss or damage which Landlord may suffer
due to Tenant’s default. If Landlord uses any part of the Security Deposit,
Tenant will restore the Security Deposit to its full amount within 10 days
after Landlord’s request. No interest will be paid on the Security Deposit, no
trust relationship is created herein between Landlord and Tenant with respect
to the Security Deposit, and the Security Deposit may be commingled with other
funds of Landlord. Upon expiration or termination of this Lease not resulting
from Tenant’s default and after Tenant has vacated the Premises in the manner
required by this Lease, Landlord will pay to Tenant any balance of the Security
Deposit not applied pursuant to this Section. 


	
  

 	
  

 
	
 14.15

 	
 ACTS OF GOD.
 

 


In any case where either party hereto is required to do any act, delays
caused by or resulting from Acts of God, war, civil commotion, fire, flood or
other casualty, labor difficulties, shortages of labor, materials or equipment,
government regulations, unusually severe weather, or other causes beyond such
party’s reasonable control, shall not be counted in determining the time during
which work shall be completed, whether such time be designated by a fixed date,
a fixed time or a “reasonable time”, and such time shall be deemed to be
extended by the period of such delay. Notwithstanding the foregoing, the
preceding sentences
shall not apply to Tenant’s obligations to pay Rent or any other amount due
hereunder, or with respect to Tenant’s obligations to carry insurance
hereunder. 


22







	
  

 	
  

 
	
 14.16

 	
 EXISTING
 LEASE. 

 


As set forth in the Recitals to this Lease, this Lease amends and
restates, in its entirety, the Original Lease. Notwithstanding the foregoing,
and although this Lease is effective as of the date hereof, the Original Lease
shall continue to govern Tenant’s leasing of the Premises until 11:59 p.m. on
July 31, 2010, at which time the Original Lease shall be of no further force
and effect and shall be replaced in its entirety by this Lease. 


	
  

 	
  

 
	
 14.17

 	
 NO OTHER
 BROKERS. 

 


Landlord and Tenant each represent and warrant to the other that the
Brokers are the only agents, brokers, finders or other parties with whom it has
dealt who may be entitled to any commission or fee with respect to this Lease
or the Premises or the Property. Landlord and Tenant each agree to indemnify and
hold the other party harmless from any claim, demand, cost or liability,
including, without limitation, attorneys’ fees and expenses, asserted by any
party other than the Brokers based upon dealings with that party. 


	
  

 	
  

 
	
 14.18

 	
 LEGAL COSTS.
 

 


In any enforcement proceeding brought by either party with respect to
this Lease, the non-prevailing party will pay to the prevailing party in such
proceeding all costs, including reasonable attorneys’ fees and court costs,
incurred by such other party with respect to said proceeding and any appeals
therefrom. 


	
  

 	
  

 
	
 14.19

 	
 ADDITIONAL
 PROVISIONS. 

 



The exhibits,
if any, attached hereto, are incorporated herein by reference. 


SIGNATURES FOLLOW ON NEXT PAGE


23





Signed on
September 9, 2010, but effective as of August 1, 2010 


LANDLORD: 


PARKERS LAKE I
REALTY LLC, a Delaware limited liability company 


	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ Andrew
 G. LeStage



 	
  

 
	
  

 	
 Name: Andrew
 G. LeStage

 	
  

 
	
  

 	
 Title:
 Treasurer

 	
  

 



Signed on
August ___, 2010, but effective as of August 1, 2010 


TENANT: 


UROLOGIX,
INC., a Minnesota corporation 


	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ Brian J.
 Smrdel



 	
  

 
	
  

 	
 Name: Brian
 J. Smrdel

 	
  

 
	
  

 	
 Title: Chief
 Financial Officer

 	
  

 


24





EXHIBIT A 

THE PROPERTY


Lot 85, Block
1, Except the West 43.50 feet of said Lot 85, Cimarron East, according to the
plant thereof on file or of record in the Office of the Registrar of Titles in
and for Hennepin County, Minnesota. 


Parcel 2: 


Easement for
common driveway as set forth in Easement Agreement dated December 11, 1986,
filed January 7, 1987, as Document Number 1791098, Office of Registrar of
Titles, Hennepin County, Minnesota. 


Parcel 3: 


Easement for
storm sewer, water main and driveway purposes as set forth in Appurtenant
Easement dated June 27, 1988, filed July 5, 1988 as Document Number 1942047, as
amended by First Amendment to Appurtenant Easement dated January 13, 1989,
filed January 17, 1989 as Document Number 1988599, Office of Registrar of
Titles, Hennepin County, Minnesota. 


A - 1





EXHIBIT B 

THE PREMISES


[illustration of plan of premises]


B - 1





EXHIBIT C 

RULES AND REGULATIONS


1.      No sign, placard, picture,
advertisement, name, notice or sun screening shall be inscribed, displayed,
printed or affixed on or to any part of the outside or inside of the Building
without the written consent of Landlord first had and obtained and in the
absence thereof, Landlord shall have the right to remove any such sign,
placard, picture, advertisement, name or notice without notice to and at the
expense of Tenant. All approved signs of lettering on doors shall be printed,
painted, affixed or inscribed at the sole risk and expense of Tenant by a
licensed contractor approved by Landlord and subject to all laws, ordinances
rules, regulations and recommendations of all governmental and
quasi-governmental authorities having jurisdiction thereover and all insurance
companies and fire rating agencies which insure the Building. Tenant shall not
place anything or allow anything to be placed near the glass of any window,
door, partition or wall which may appear unsightly from outside the Premises. Landlord
may specify a Building standard window covering for all exterior windows. 


2.      All parking shall be within the
property boundaries of the Property and within marked parking spaces. There
should be no on-street parking and at no time shall any Tenant obstruct any
driveways or loading areas intended for the use of other tenants, their
employees, agents, customers and invitees. The driveways and parking areas at
the Property are for the joint and non-exclusive use of Landlord’s tenants,
their employees, agents, customers and invitees, unless specifically marked to
the contrary. In the event Tenant, its agents, customers and/or invitees use a
disproportionate portion of the parking areas, Landlord shall have the right to
restrict Tenant, its agents, customers and/or invitees to certain parking
areas. Tenant shall not permit any fleet trucks to park overnight in the
Property’s parking areas without Landlord’s prior written approval. 


3.      Unless specifically approved by
Landlord in writing, no materials, supplies or equipment shall be stored
anywhere in, on or about the Building except inside the Premises. Trash
receptacles may not be placed in the service areas except by Landlord. If
Landlord does not supply trash receptacles, Tenant shall furnish its own
receptacles, and shall place such receptacles in a location designated by
Landlord. 


4.      No additional locks, other than
Landlord approved entry systems, shall be placed on the doors of the Premises
by Tenant nor shall any existing locks be changed unless Landlord is
immediately furnished with two keys thereto. Landlord will, without charge,
furnish Tenant with two keys for each lock on the entrance doors to the
Premises when Tenant assumes possession, with the understanding that at the
termination or expiration of the Term of this Lease the keys to the Premises
shall be returned to Landlord. 


5.      Tenant will refer all contractors,
contractor’s representatives and installation technicians rendering any service
on or to the Premises for Tenant to Landlord for its approval and supervision
before performance of any service. This provision shall apply to all work
performed in the Building, including, but not limited to, installation of
electrical devices and attachments and installations of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment or any other
portion of the Building. 


6.      No Tenant shall at any time occupy or
allow any person to occupy any part of the Premises or the Property as sleeping
or lodging quarters. 


7.      Tenant shall not place, install or
operate on the Premises or in any part of the Property, any engine, stove or
machinery, or conduct mechanical operations or cook thereon or therein, or
place or use in or about the Premises any explosives, gasoline, kerosene, oil,
acids, caustics or any other flammable, explosive or Hazardous Material without
the prior written consent of Landlord. The foregoing shall not prohibit the use
of microwave ovens. 


C - 1





8.      Windows facing the Building exterior shall
at all times be wholly clear and uncovered (except for such blinds or curtains
or other window coverings Landlord may provide or approve) so that a full
unobstructed view of the interior of the Premises may be had from outside the
Building. 


9.      The sidewalks, parking lots and exits
shall not be obstructed by Tenant, its employees, agents, contractors,
subtenants or assigns or used for any purpose other than for ingress to and
egress from the Premises. 


10.     Tenant shall not use, keep or permit to be
used or kept any foul or noxious gas or substance in the Premises, or permit or
suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of
noise, odors and vibrations, or interfere in any way with other Tenants or
those having business in the Building, nor shall any animals or birds be
brought in or kept in or about the Premises or the Building. 


11.    Landlord reserves the right to exclude or
expel from the Property any person who, in the judgment of Landlord, is
intoxicated or under the influence of liquor or drugs, or who may in any manner
do any act in violation of any law or any rule or regulations of the Property. 


12.     Landlord shall have the right, exercisable
after notice and without liability to Tenant, to change the name of the
Building and street address of the Building of which the Premises are a part;
provided, however, if Landlord makes such change(s), Landlord shall compensate
Tenant for its reasonable expenses incurred in connection with such change
(i.e., the cost of reasonable quantities of new stationary). 


13.     Tenant shall not disturb, solicit or
canvass any occupant of the Building and shall cooperate to prevent same. 


14.     Without the prior written consent of
Landlord, Tenant shall not use the name of the Building or Property in
connection with or in promoting or advertising the business of Tenant except as
Tenant’s address. 


15.     Landlord shall have the right to control
and operate the common areas of the Property, the public facilities thereof, as
well as the facilities furnished for the common use of all Tenants, in such
manner as it deems appropriate. 


16.     No satellite dish, radio, television or
other aerial or equipment of any kind may be placed or installed on the roof or
on any exterior wall of the Premises or on the grounds or common areas of the
Property without the prior written consent of Landlord in each instance. Any
equipment so installed without such written consent shall be at the sole risk
of Tenant and shall be subject to removal without notice at any time and Tenant
shall pay to Landlord, on demand, as additional rent, the cost of any damages
occasioned thereby including, but not limited to, the cost to replace any warranty
voided or diminished by such installation and the cost of removal and repairs. 


17.     Landlord shall have the right from time to
time to modify, add to or delete any of these rules and regulations at
Landlord’s reasonable discretion, provided that any changes are uniformly
applied to all Tenants. 


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