Exhibit 10.9


 


LEASE


 


THIS Lease (“Lease”), is entered into
as of the 14th day of December, 2001, by and between GREEN OAK ASSOCIATES, a
Minnesota general partnership (“Landlord”), and MATHSTAR, INC., a Minnesota
corporation (“Tenant”).


 


DEFINITIONS:


 


“Property” - That certain real
property located in the City of Minnetonka, County of Hennepin, State of
Minnesota and legally described on Exhibit ”A” attached hereto and made a
part hereof (the “Land”), including the Building and all other improvements
located thereon.


 


“Building” - That certain office
building containing approximately 60,000 square feet located upon the Land and
commonly described as 5900 Green Oak Drive.


 


“Phase One Premises” – The entire
first floor of the Building.


 


“Phase Two Premises” – One-half of the
second floor of the Building, as shown on Exhibit B.


 


“Phase Three Premises” – One-half of
the second floor of the Building as shown on Exhibit B.


 


“Phase Four Premises” — The entire
third floor of the Building.


 


“Premises” – That portion of the
Building that at any given time has been delivered to Tenant pursuant to
Article 1.


 


WITNESSETH:


 


ARTICLE 1


 


TERM:


 


Tenant and Landlord agree that the
Premises shall be leased in phases as set forth below (collectively referred to
as the “Phases,” individually referred to as a “Phase”).  For and in consideration of the rents,
additional rents, terms, provisions and covenants herein contained, Landlord
hereby lets, leases and demises to Tenant the right to occupy the Premises
commencing on the dates as set forth below:


 


Phase One Premises: January 15, 2002 (“Phase
One Commencement Date”);


 


Phase Two Premises: August 1, 2002;


 


Phase Three Premises: February 1,
2003;


 





















 


Phase Four Premises: May 1, 2003.


 


The term (the “Initial Term”) of this
Lease shall commence on the Phase One Commencement Date and shall expire on the
date that is sixty-three and one half (63 1/2) months after the Phase One
Commencement Date (the “Expiration Date”). 
The Expiration Date shall be subject to adjustment pursuant to the immediately
following paragraph.  The Initial Term
and any extension thereof are herein collectively sometimes referred to as the “Term”
or “Term of this Lease.”


 


Notwithstanding
the foregoing, if Landlord shall be unable to deliver possession of any of the
Phases to Tenant on the date contemplated by Article 2, due to the
possession or occupancy thereof by the prior tenant or subtenant, or others not
lawfully entitled thereto, Landlord shall use good faith efforts to evict such
occupant and to deliver possession of the Premises to Tenant as soon as
reasonably practicable.  Landlord, using
such good faith efforts, shall not in any way be liable for failure to deliver
possession of any part of the Premises to Tenant, but, subject to the provision
at the end of this sentence, the applicable Phase Commencement Date shall be
postponed with respect to the Phase One Premises until the date which is one
(1) month after the date on which Landlord tenders possession of the Phase
One Premises or with respect to the remaining Phases, the date which is two
(2) months after the date which Landlord tenders possession of the
applicable portion of the Premises to Tenant and, if necessary, the Term shall
be automatically extended so as to include a full sixty-three and one half (63
1/2) months (plus any partial month) following the Phase One Commencement Date;
provided, however, if Landlord fails to deliver (a) the Phase One Premises
on or before the Phase One Commencement Date; (b) the Phase Two Premises,
on or before October 1, 2002; (c) the Phase Three Premises, on or
before May 1, 2003; or (d) the Phase Four Premises, on or before
November 1, 2003, then in each such event Landlord agrees that Tenant
shall receive one day free rent on the square footage of the Phase which is not
delivered by the date described above (for example, if the Phase Two Premises
are not delivered until October 3, 2002, Tenant will receive two days of
free rent on the Phase Two Premises only). 
Any delay in delivery of any Phase other than Phase One shall not extend
the Term.


 


The
Initial Term is subject to extension as provided in Article 42 hereof.


 


ARTICLE 2


 


POSSESSION:


 


For the purpose of constructing the
Tenant Improvements (as defined herein), it is the intention of the parties
that Landlord deliver possession of the first floor of the Building
approximately one month prior to the Phase One Commencement Date and each other
Phase approximately two months prior to the respective Phase Commencement Date.


 


Landlord shall use its good faith
efforts to deliver possession of each Phase to Tenant for the purpose of
constructing the Tenant Improvements (as defined herein) and otherwise
preparing the Phase for use by Tenant one month prior to the Phase One
Commencement Date and two months prior to the other applicable Phase
Commencement Date as set forth in Article 1.  The date that possession of each Phase is
actually delivered to Tenant is herein referred to as the 


 


2





















 


“Phase Delivery Date.” 
During the applicable one (1) month or two (2) month period
beginning with each Phase Delivery Date (the “Phase Early Occupancy Period”)
Tenant shall not be required to pay (a) Base Rent for the Phase of the
Premises being delivered, or (b) any amount toward Additional Rent for the
Phase of the Premises being delivered, including but not limited to insurance
and/or operating expenses during the respective Phase Early Occupancy Period,
provided, however, that Tenant shall pay for all utilities consumed in the
Phase during the Phase Early Occupancy Period.


 


Landlord shall cooperate with Tenant
to transfer direct billing, or otherwise establish Tenant as the responsible
billing party for all utilities consumed for each Phase from and after the
respective Phase Delivery Date, to the extent possible prior to Tenant’s
occupancy of all four Phases of the Premises. 
Other than as specifically stated in this Article 2, during each
Phase Early Occupancy Period, Tenant shall abide with all other terms and
conditions of this Lease, including without limitation, insurance obligations
of Tenant.


 


ARTICLE 3


 


BASE RENT:


 


Landlord
reserves, and Tenant shall pay Landlord base rental (“Base Rent”) during the
Initial Term, payable in advance, in monthly installments as set forth below,
commencing on the Phase One Commencement Date and continuing on the first day
of each and every month thereafter for the next succeeding months during the
balance of the Initial Term.


 


	
  Months of the Term

  	
   

  	
  Square Footage

  Schedule

  	
   

  	
  Rent per 

  Square Foot

  	
   

  	
  Monthly 

  Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/15/02 -
  07/31/02

  	
   

  	
  20,000

  	
   

  	
  $

  	
  9.00

  	
   

  	
  $

  	
  15,000.00

  	
   

  
	
  08/01/02 -
  01/31/03

  	
   

  	
  30,000

  	
   

  	
  $

  	
  9.00

  	
   

  	
  $

  	
  22,500.00

  	
   

  
	
  02/01/03 -
  04/30/03

  	
   

  	
  40,000

  	
   

  	
  $

  	
  9.00

  	
   

  	
  $

  	
  30,000.00

  	
   

  
	
  05/01/03 -
  12/31/03

  	
   

  	
  60,000

  	
   

  	
  $

  	
  9.00

  	
   

  	
  $

  	
  45,000.00

  	
   

  
	
  01/01/04 –
  12/31/04

  	
   

  	
  60,000

  	
   

  	
  $

  	
  10.00

  	
   

  	
  $

  	
  50,000.00

  	
   

  
	
  01/01/05
  –12/31/05

  	
   

  	
  60,000

  	
   

  	
  $

  	
  11.00

  	
   

  	
  $

  	
  55,000.00

  	
   

  
	
  01/01/06 –
  04/30/07

  	
   

  	
  60,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  60,000.00

  	
   

  



 


Notwithstanding the foregoing, no Base
Rent shall be due or payable in respect of the first full month of the Initial
Term.  This Lease is a net lease in all
respects.  Except as otherwise expressly
provided in this Lease, the Base Rent shall be absolutely net to Landlord and
Landlord shall be under no obligation or liability to furnish or pay for any of
the repairs, maintenance, real estate taxes, installments of special
assessments, utilities, insurance or for any other expenses which are in any
manner incurred with respect to the Premises or the business conducted thereon,
all of which shall be the sole obligation and liability of the Tenant.


 


3





















 


ARTICLE 4


 


ADDITIONAL RENT; TAXES AND OPERATING EXPENSES:


 


Tenant
shall pay as Additional Rent Tenant’s proportionate share of “Taxes” with
respect to any calendar year which shall be defined as and comprised of:
(i) real estate taxes and annual installments of special assessments due
and payable against the Property, and the Building; (ii) any taxes levied
or assessed, in whole or in part, in lieu of real estate taxes; (iii) any
taxes on the stream of rental income (other than income taxes); (iv) all
other taxes or any other federal, state or local governmental charges on the
Land, the Building or this Lease levied as part of or in lieu of real estate
taxes and assessments; and (v) any sales tax or similar tax assessed or
payable in connection with services provided by Landlord hereunder.  Tenant shall also pay as Additional Rent any
and all Taxes levied or assessed, in whole or in part, based on the value of
Tenant’s personal property in the Premises.


 


Tenant
shall also pay, as Additional Rent, its proportionate share of all “Operating
Expenses” incurred by Landlord during any calendar year.  Subject to the exclusions and limitation
expressly provided below, Operating Expenses shall include Landlord’s costs of
maintaining, repairing and operating the Property and Building including, but
not limited to:


 


1.             janitorial
and window washing expenses;


 


2.             expenses
related to operating, maintaining, repairing and replacing any part of the
Building including landscaping, planters, paving, curbs, sidewalks, roadways,
parking facilities (including all parking lots, garages and ramps), drainage
facilities, machines, equipment and lighting facilities;


 


3.             expenses for
trash and rubbish removal;


 


4.             management
fees in an amount not to exceed 5% of all other “Operating Expenses”;


 


5.             insurance
(which may include, but not be limited to, hazard, plate glass, boiler and
machinery, liability and loss of rent insurance);


 


6.             security
expenses;


 


7.             costs
incurred in renting or purchasing equipment necessary or appropriate for the
smooth operation of the Property or Building;


 


8.             costs of
contesting the value of the Property or Building for real estate taxation
purposes;


 


9.             wages,
salaries and related expenses of all employees engaged in the management,
operation, maintenance or security of the Property or Building (to the extent
such employees are directly involved in such management, operation, maintenance



 


4





















 


or security, as opposed to the
management, operation, maintenance or security of other properties) and the
costs of a management office servicing the building;


 


10.           the cost of
all supplies and materials used in the operation and maintenance of the
Property or Building;


 


11.           light bulbs
and ballasts;


 


12.           the cost of
maintenance and service agreements for the Building and the equipment therein;


 


13.           accounting and
audit costs;


 


14.           the cost of
all utilities, including, without limitation, water, electricity and gas and
the cost of heating, lighting, air conditioning and ventilating the Building;


 


15.           interior and
exterior maintenance expenses including expenses related to maintenance and
replacement of the roofs, foundations and structural portions of the Building
and the electrical, mechanical, plumbing and other systems and facilities
serving the Property or Building;


 


16.           amortization,
on a commercially reasonable basis, of (a) capital improvements and
expenditures made to: (i) reduce operating costs, (ii) comply with
requirements of Landlord’s insurance carrier that are enacted, or first
interpreted to apply to the Property or the Building, after the date of this
Lease, or (iii) comply with any law, rule, regulation or order of any
governmental authority that is enacted, or first interpreted to apply to the
Property or the Building, after the date of this Lease, and (b) other
costs and expenditures which are appropriately accounted for as capital
expenditures.


 


The
amortized cost of capital improvements and expenditures may, at Landlord’s
option, include actual or imputed interest at the rate that Landlord would
reasonably be required to pay to finance the cost of the given capital
improvement.  Landlord’s records
regarding Operating Expenses shall be made available to Tenant, at Landlord’s
place of business, during normal business hours upon request of Tenant.  If the Building does not have one hundred
percent (100%) occupancy during an entire calendar year, then the variable cost
component of “Operating Expenses” (i.e. the component of Operating Expenses
that varies depending upon the occupancy level of the Building) shall be
equitably adjusted so that the total amount of Operating Expenses equals the
total amount which would have been paid or incurred by Landlord had the
Building been one hundred percent (100%) occupied for the entire calendar
year.  In no event shall Landlord be
entitled to receive from Tenant and any other tenants in the Building an aggregate
amount in excess of actual Operating Expenses as a result of the foregoing
provision.


 


Tenant
shall pay with its monthly installment of Base Rent the amount Landlord
reasonably estimates for Tenant’s proportionate share of all Additional Rent
items.  When Landlord has determined the
actual amounts for each such Additional Rent item, Landlord shall advise Tenant
of any additional amounts due from Tenant or any credit due to Tenant.  Within thirty (30) days of Tenant’s
receipt of such statement, Tenant shall pay the additional amount due 


 


5





















 


to Landlord, if any.  Tenant shall provide Landlord with written
notice of any objection that Tenant may have to any Additional Rent item within
one hundred twenty (120) days of the later to occur of (i) the end of the
calendar year in which the Additional Rent items are incurred, or (ii) the
date upon which Landlord provides Tenant a statement of the actual amount of
any Additional Rent item; it being further agreed that in connection with the
foregoing, Landlord shall make available to Tenant, at Landlord’s designated
office and during normal business hours, Landlord’s books and records
maintained with respect to Additional Rent for the applicable calendar
year.  In the event of a failure to
object within such time period, Tenant shall be deemed to waive any further
right to object to such Additional Rent. 
Following Landlord’s review and in the event Landlord agrees with Tenant’s
objection, any overpayment shall be credited against the next Additional Rent
payment due.  If the Term has expired,
any overpayment shall be promptly refunded to Tenant and any underpayment shall
be promptly paid to Landlord.  Landlord
may from time to time adjust the monthly installment of estimated Additional
Rent charges to more accurately reflect Landlord’s current estimate of such
charges.  Landlord presently calculates
Additional Rent based on a calendar year, and Tenant’s obligation for Operating
Expenses and Taxes shall be pro rated on a calendar basis if the calendar year
includes any period of time not within the Term.  Tenant’s proportionate share shall be based
on that portion of the Building that has been delivered to Tenant pursuant to
Article 2 hereof.


 


ARTICLE 5


 


COVENANT TO PAY RENT:


 


The
covenants of Tenant to pay the Base Rent and the Additional Rent are each
independent of any other covenant, condition, provision or agreement contained
in this Lease.  All rents are payable to
Landlord without deduction, counterclaim or set-off at:


 


Green Oak Associates


6125 Blue Circle Drive


Minnetonka, Minnesota 55343


Attention: Cyrille E. DeCosse


 


or such other address as Landlord may from time to time
designate in writing.


 


ARTICLE 6


 


UTILITIES:


 


Tenant
shall pay for all utilities consumed on the Premises during the Term,
including, but not limited to, all charges for sewer usage or rental, garbage,
disposal, refuse removal, water, electricity, gas, fuel oil, L.P. gas,
telephone and/or other utility services or energy source furnished to the
Building and Premises.


 


6





















 


ARTICLE 7


 


CARE AND REPAIR OF THE PREMISES (“PREMISES MAINTENANCE”):


 


Tenant
shall, at all times throughout the Term of this Lease and at its sole expense,
keep and maintain the Premises in a clean, safe, sanitary and first class
condition and in compliance with all applicable laws, codes, ordinances, rules
and regulations.  Tenant’s obligations
hereunder regarding the Premises shall include, but not be limited to, the
maintenance and repair and replacement, if necessary, of the heating and air
conditioning fixtures, equipment, and systems, the electrical system, and all
lighting and plumbing fixtures and equipment located within, or exclusively
serving, the Premises, fixtures, motors and machinery; all interior walls, partitions,
doors and windows, including the regular painting thereof; all exterior
entrances, windows, doors and docks and the replacement of all broken
glass.  When used in this provision, the
term “repairs” shall include replacements or renewals when necessary, and all
such repairs made by the Tenant shall be equal in quality and class to the
original work.  The Tenant shall keep and
maintain all portions of the Premises in a clean and orderly condition, free of
accumulation of dirt and rubbish.


 


If Tenant
fails, refuses or neglects to maintain or repair the Premises as required in
this Lease after notice shall have been given Tenant in accordance with
Articles 17 and 32 of this Lease, Landlord may perform such maintenance and/or
make such repairs without liability to Tenant for any loss or damage that may
accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s
business by reason thereof, and upon completion thereof, Tenant shall pay to
Landlord all reasonable costs plus 15% for overhead incurred by Landlord in
making such repairs upon presentation to Tenant of a bill therefor.


 


During
the term of this Lease, Landlord shall, at Landlord’s initial cost and expense
but subject to Article 4 hereof, keep and maintain in good order,
condition and repair, the foundation, exterior walls (except glass or other
breakable materials used in structural portions), roof, foundation, and
structural portions of the Building and the electrical, mechanical, plumbing
and other systems and facilities serving the Building and located outside of
the Premises.


 


Notwithstanding
any provision herein to the contrary, Tenant and Landlord agree that during any
given calendar year, Tenant shall be obligated to pay the first $15,000.00
associated with replacement of all or any portion of the heating, air
conditioning and ventilation system and Landlord shall be responsible for the
remainder of such replacement costs during such year.  The foregoing provision shall relate only to
replacement of portions of the system and not replacement of parts associated
with maintenance of the system.


 


ARTICLE 8


 


SIGNS:


 


Tenant
shall have the right to erect or cause to be erected any signs, notices or
advertisements upon the Premises or affix any such signage thereto which is
visible from the exterior of the Building which comply with applicable law and
the Opus II Declaration of Industrial Standards and Protective Covenants (“Protective
Covenants”) affecting the Premises, a copy of which is attached hereto as
Exhibit D.  In no event, however, shall
Tenant erect any 


 


7





















 


signs on the roof of the Building or
any which by reason of size, weight, location or otherwise, might affect the
structural integrity of the Building. 
Signs placed on the Premises by Tenant shall be removed by it not later
than the expiration of the Term or any sooner termination thereof.  Upon removal of any such signs Tenant shall
repair any damage caused by the existence of such signage or its removal.


 


ARTICLE 9


 


ALTERATIONS, INSTALLATION, FIXTURES;


INITIAL LANDLORD AND TENANT IMPROVEMENTS:


 


Following
the completion of Tenant’s Work, thereafter, Tenant shall not make any
alterations, additions, or improvements in or to the Premises or add, disturb
or in any way change any of the Building’s systems, costing in excess of
$10,000.00 in each instance without prior notice to Landlord, receipt of all
necessary permits and governmental approval and in compliance with the
Protective Covenants.  Tenant shall not
make any structural alterations, additions or improvements, make any changes to
the Building’s systems or make any repair, alteration or replacement to the
roof of the Building without Landlord’s prior written consent, which shall not
be unreasonably withheld or delayed. 
Along with any request for Landlord’s consent Tenant shall furnish to
Landlord the proposed plans and specifications, names and addresses of
contractors, copies of contracts, necessary permits and licenses for the
proposed work, and a performance bond executed by a commercial surety, or other
security reasonably satisfactory to Landlord, in an amount equal to at least
125% of the cost of such alterations, changes, additions or improvements.  In the event alterations are required by any
governmental agency by reason of the particular use and occupancy of the
Premises by Tenant, Tenant shall make such alterations at its own cost and
expense subject to Landlord’s obligations pursuant to Article 7.  Alterations or additions by either Landlord
or Tenant must be built in compliance with all laws, ordinances and
governmental regulations affecting the Premises and each party shall warrant to
the other that all such alterations, additions, or improvements performed by
either Landlord or Tenant shall be in strict compliance with all relevant laws,
ordinances, governmental regulations, and insurance requirements.  The work shall comply with all insurance
requirements and all applicable laws, ordinances, rules and regulations and
shall be constructed in a good and workman-like manner.  All permanently affixed alterations,
installations, physical additions or improvements to the Premises made by
Tenant, including, without limitation, the Initial Tenant Improvements (but
excluding Tenant’s signage, business equipment, furniture, trade fixtures and
other personal property) shall at once become the property of Landlord and
surrendered to Landlord upon the termination of this Lease.  Tenant shall be responsible for all costs
related to improvements or modifications to the Premises required or necessary
to comply with the Americans With Disabilities Act of 1990 (ADA), or similar
statutes.


 


Landlord,
by written notice to Tenant given at the time required consent is granted may
require Tenant, at Tenant’s sole cost and expense, to remove upon expiration or
other termination of this Lease any improvements, additions or installations
installed by Tenant in the Building and repair any damage caused by the
installation and removal of such improvements, additions, or installations.  The only improvements, additions or
installations that Tenant shall remove, or be required to remove, shall be
those specified in such notice. 
Notwithstanding the foregoing provisions of this paragraph, Landlord may
not require Tenant to remove any part of 


 


8





















 


the Initial Tenant Improvements,
structural or otherwise, which are made to the Building or to the non-Building
portions of the Premises.


 


Tenant
agrees to defend and hold Landlord harmless from any and all claims and
liabilities of any kind and description which may arise out of or be connected
in any way with alterations, changes, additions or improvements made by Tenant.


 


Tenant
intends to construct certain improvements to the Premises (“Initial Tenant
Improvements”), which are generally described in Exhibit C hereto.  Landlord approves construction of the Initial
Tenant Improvements substantially in accordance with Exhibit C, subject to
Landlord’s approving the final plans and specifications therefor, which approval
will not be unreasonably withheld or delayed. 
Tenant shall comply with all of the provisions of this Article in
constructing the Initial Tenant Improvements. 
Landlord shall reimburse Tenant for a portion of the cost of the Initial
Tenant Improvements as set forth below in accordance with the provisions of
Exhibit C:


 


	
  Phase

  	
   

  	
  Tenant Improvement Allowance

  
	
   

  	
   

  	
   

  
	
  Phase One Premises

  	
   

  	
  $15.00 per rentable square foot for
  the Phase One Premises;

  
	
   

  	
   

  	
   

  
	
  Phase Two Premises

  	
   

  	
  Amount equal to the product of $.25
  per rentable square foot of Phase Two Premises multiplied by the number of
  months remaining in the Initial Term of the Lease at the time Tenant takes
  occupancy of and commences payment of Base Rent related to the Phase Two
  Premises, minus two months;

  
	
   

  	
   

  	
   

  
	
  Phase Three Premises

  	
   

  	
  Amount equal to the product of $.25
  per rentable square foot of Phase Three Premises multiplied by the number of
  months remaining in the Initial Term of the Lease at the time Tenant takes
  occupancy of and commences payment of Base Rent related to the Phase Three
  Premises, minus two months.

  
	
   

  	
   

  	
   

  
	
  Phase Four Premises

  	
   

  	
  Amount equal to the product of $.25
  per rentable square foot of Phase Four Premises multiplied by the number of
  months remaining in the Initial Term of the Lease at the time Tenant takes
  occupancy of and commences payment of Base Rent related to the Phase Four
  Premises, minus two months.

  



 


Nothing
in this Lease shall be construed as consent on the part of Landlord to subject
Landlord’s estate in the Premises to any lien or liability arising out of any
work performed by Tenant.  Landlord
reserves the right to post notices of nonliability in, on and about the
Premises in connection with any work performed by Tenant.


 


9





















 


ARTICLE 10


 


PREPAID RENT:


 


Base Rent
and Additional Rent due and payable hereunder shall be paid in advance pursuant
to the following schedule:


 


	
  Rent Due Date:

  	
   

  	
  Payment Due

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Upon execution of the Lease:

  	
   

  	
  $390,000.00;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  June 1, 2002

  	
   

  	
  $177,500.00;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  January 1, 2003

  	
   

  	
  $165,000.00; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  March 1, 2003

  	
   

  	
  $310,000.00;

  	
   

  



 


provided, however, Landlord agrees that it shall not
require rent be prepaid as set forth in Items 3 and 4 above, if on the date
that each such payment is due Tenant delivers a statement, certified by Tenant’s
independent public accounting firm, providing that Tenant has a book value
equal to or greater than $5,000,000 and Tenant’s net revenues over the proceeding?? 12 months are equal to or
greater than $10,000,000; provided, however, in connection with the third
payment due hereunder, if on or before March 1, 2003, Tenant delivers the
foregoing statement, Landlord agrees to refund to Tenant the unused portion of
the prepaid rent payment made on January 1, 2003.  All prepaid Base Rent and Additional Rent
amounts shall be applied to the immediately succeeding month’s rent otherwise
due hereunder, and each month thereafter, until applied in full, provided
however, in the event of a default hereunder, Landlord may apply the prepaid
rent in any manner Landlord chooses. 
Notwithstanding any provision herein to the contrary, all prepaid rent
shall be deemed earned upon receipt thereof, and except as provided above, in
no event shall Landlord be obligated to return any of the foregoing payments.


 


ARTICLE 11


 


USE:


 


The
Premises shall be used and occupied by Tenant solely for general office
purposes.  Subject to Landlord’s
obligations hereunder, Tenant shall comply with all applicable laws, ordinances
and governmental regulations affecting the Building and Premises.  The Premises shall not be used in such manner
that, in accordance with any requirement of law or of any public authority,
Landlord shall be obliged on account of the purpose or manner of said use to
make any addition or alteration to or in the Building.  Tenant shall occupy the Premises, conduct its
business and control its agents, employees, invitees and visitors in such a way
as is lawful, does not result in waste, and will not permit or create any
nuisance; and Tenant’s use of the Premises shall conform to the Protective
Covenants affecting the Premises. 
Landlord shall not permit the storage of any type of equipment, property
or materials on the Premises other than those used exclusively by Landlord in
exercising it rights or performing its obligations hereunder and shall not
allow any obstacles, automobiles, containers or other materials to be placed in
the parking lot area of the Premises without the prior written consent of
Tenant.


 


10





















 


ARTICLE 12


 


ACCESS TO THE PREMISES:


 


The
Tenant agrees to permit the Landlord and the authorized representatives of the
Landlord to enter the Premises at all times during Tenant’s usual business
hours, upon reasonable prior notice thereof to Tenant, for the purpose of
inspecting the same and making any necessary repairs to the Premises and
performing any work therein that may be necessary to comply with any laws,
ordinances, rules, regulations or requirements of any public authority or of the
Board of Fire Underwriters or any similar body or that the Landlord may deem
necessary to prevent waste or deterioration in connection with the
Premises.  Nothing herein shall imply any
duty upon the part of the Landlord to do any such work which, under any
provision of this Lease, the Tenant may be required to perform and the
performance thereof by the Landlord shall not constitute a waiver of the Tenant’s
default in failing to perform the same. 
The Landlord may, during the progress of any work in the Premises, keep
and store upon the Premises all necessary materials, tools and equipment and,
except in an emergency, shall coordinate all staging, scheduling and access
with Tenant prior to entry.  The Landlord
shall not in any event be liable for inconvenience, annoyance, disturbance,
loss of business, or other damage of the Tenant by reason of making repairs or
the performance of any work in the Premises, or on account of bringing
materials, supplies and equipment into or through the Premises during the course
thereof and the obligations of the Tenant under this Lease shall not thereby be
affected in any manner whatsoever; provided, however, that Landlord shall use
reasonable efforts to minimize any disturbance or interference with Tenant’s
business.


 


Landlord
reserves the right to enter the Premises at any time in the event of an
emergency and at reasonable hours upon reasonable prior notice to Tenant to
exhibit the Premises to prospective purchasers, lenders and to the display “For
Lease” or similar signs on the grounds of the Building and to exhibit the
Premises to prospective tenants during the last year of the Term of this Lease,
as the same may have been extended, all without hindrance or molestation by
Tenant.


 


ARTICLE 13


 


EMINENT DOMAIN:


 


In the
event of any eminent domain or condemnation proceeding or private sale in lieu
thereof in respect to the Premises during the term thereof, the following
provisions shall apply:


 


a.             If the whole
of the Premises shall be acquired or condemned by eminent domain for any public
or quasi-public use or purpose, then the term of this Lease shall cease and
terminate as of the date possession shall be taken in such proceeding and all
rentals shall be paid up to that date.


 


b.             If any part
constituting less than the whole of the Premises shall be acquired or condemned
as aforesaid, and in the event that such partial taking or condemnation shall
materially affect the Premises so as to render the Premises unsuitable for the
business of the Tenant, in the reasonable opinion of Tenant, then the term of
this 


 


11





















 


Lease shall cease and terminate as of
the date possession shall be taken by the condemning authority and rent shall
be paid to the date of such termination.


 


In the
event of a partial taking or condemnation of the Premises which shall not
materially affect the Premises so as to render the Premises unsuitable for the
business of the Tenant, in the reasonable opinion of the Tenant, this Lease
shall continue in full force and effect but with a proportionate abatement of
the Base Rent and Additional Rent based on the portion, if any, of the Premises
taken.  Landlord reserves the right, at
its option, to restore the Building and the Premises to substantially the same
condition as they were prior to such condemnation.  In such event, Landlord shall give written
notice to Tenant, within thirty (30) days following the date possession
shall be taken by the condemning authority, of Landlord’s intention to
restore.  Upon Landlord’s notice of
election to restore, Landlord shall commence restoration and shall restore the
Building and the Premises with reasonable promptness, subject to delays beyond
Landlord’s control and delays in the making of condemnation or sale proceeds
adjustments by Landlord.  Tenant shall
have no right to terminate this Lease except as herein provided.  Upon completion of such restoration, the rent
shall be adjusted based upon the portion, if any, of the Premises restored.


 


c.             In the event
of any condemnation or taking as aforesaid, whether whole or partial, the
Tenant shall not be entitled to any part of the award paid for such
condemnation of the Premises, and Landlord is to receive the full amount of
such award; Tenant hereby expressly waiving any right to claim to any part
thereof.


 


d.             Although all
damages in the event of any condemnation of the Premises shall belong to the
Landlord, whether such damages are awarded as compensation for diminution in
value of the leasehold or to the fee of the Premises, Tenant shall have the
right to claim and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or recoverable by
Tenant in Tenant’s own right on account of any and all damage to Tenant’s
business by reason of the condemnation and for or on account of any cost or
loss to which Tenant might be put in removing Tenant’s merchandise, furniture,
fixtures and equipment.  However, Tenant
shall have no claim against Landlord or make any claim with the condemning
authority for the loss of its leasehold estate, any unexpired term or loss of
any possible renewal or extension of said Lease or loss of any possible value
of said Lease, any unexpired term renewal or extension of said Lease.


 


ARTICLE 14


 


DAMAGE OR DESTRUCTION:


 


In the
event of any damage or destruction too the Premises by fire or other cause
during the term hereof, the following provisions shall apply:


 


12





















 


a.             If the
Building is damaged by fire or any other cause to such extent that the cost of
restoration, as reasonably estimated by Landlord, will equal or exceed fifty
percent (50%) of the replacement value of the Building (exclusive of
foundations) just prior to the occurrence of the damage, then Landlord may, no
later than the sixtieth (60th) day following the damage, give Tenant
written notice of Landlord’s election to terminate this Lease.


 


b.             If the
Premises are not suitable as a result of said damage for the purposes for which
they are demised hereunder or if, in the reasonable opinion of Tenant,
restoration cannot be completed within one hundred eighty (180) days following
the casualty, then Tenant may, no later than the sixtieth (60th) day
following the damage, give Landlord a written notice of election to terminate
this Lease.


 


c.             If during
the last year of the Initial Term or Option Term (unless in the case of the
Initial Term or first Option Term this Lease has been, or is within
twenty (20) days after the date of damage, extended for the next Option
Term) the Building shall be destroyed or so damaged by fire or other insured
casualty as to render more than fifty percent (50%) thereof untenantable,
either Landlord or Tenant may, at its option, by written notice to the other
party given within thirty (30) days after such damage or destruction,
terminate this Lease effective a date not more than thirty (30) days after
the date of such notice.


 


d.             If the cost
of restoration as reasonably estimated by Landlord shall amount to less than
fifty percent (50%) of said replacement value of the Building, or if, despite
the cost, neither Landlord nor Tenant elects to terminate this Lease, Landlord
shall restore the Building and the Premises with reasonable promptness, subject
to delays beyond Landlord’s control and delays in the making of insurance
adjustments by Landlord.  Landlord shall
not be responsible for restoring or repairing leasehold improvements of the
Tenant, except to the extent recovered insurance proceeds are sufficient to do
so.


 


e.             In the event
any of the elections to terminate are appropriately exercised, this Lease shall
be deemed to terminate on the date of the receipt of the notice of election and
all rents shall be paid up to that date. 
Tenant shall have no claim against Landlord for the value of any unexpired
term of this Lease.


 


f.              In any case
where damage to the Building shall materially affect the Premises so as to
render them unsuitable in whole or in part for the purposes for which they are
demised hereunder, then, unless such destruction was wholly or partially caused
by the gross negligence of Tenant, its employees, contractors or licensees, a
portion of the Base Rent and Additional Rent based upon the amount of the
extent which the Premises is rendered unsuitable shall be abated until repaired
or restored.  If the destruction or
damage was wholly or partially caused by gross negligence of Tenant as
aforesaid and if Landlord shall elect to rebuild, the Base Rent and additional
rent shall not abate and the Tenant shall remain liable for the same; provided,
however, Tenant shall receive a credit for any proceeds of rent loss insurance
actually paid to Landlord, less the reasonable cost and expenses, 


 


13





















 


including, without limitation,
reasonable attorneys fees, incurred by Landlord in collecting the same.


 


g.             Tenant will
reimburse Landlord for the portion of any loss which is deductible under
Landlord’s policy of casualty insurance (up to the maximum deductible under
such policy provided for in this Lease), which amount shall not exceed $5,000,
unless such loss is the result of Landlord’s gross negligence or willful acts
or omissions.


 


ARTICLE 15


 


CASUALTY INSURANCE:


 


a.             Tenant shall
keep all of its machinery, equipment, furniture, fixtures, leasehold improvements
and other property under the care, custody, or control of Tenant and business
interests which may be located in, upon, or about the Premises insured for the
benefit of Tenant in an amount equal to one hundred percent (100%) of the full
insurable value thereof on a replacement cost basis against loss or damage by
fire and such other risk or risks of a similar or dissimilar nature as are now,
or may in the future be, customarily covered under so-called “all risk” fire
and extended coverage insurance, including, but without limiting the generality
of the foregoing, windstorms, hail, explosions, vandalism, theft, malicious
mischief, civil commotion, and such other coverage as Tenant may deem
appropriate or necessary.  Tenant agrees
that such policy or policies of insurance shall permit releases of liability as
provided herein and/or waiver of subrogation clause as to Landlord.


 


Tenant
hereby waives and releases all claims, liabilities and causes of action against
Landlord and its agents, servants and employees for loss or damage to, or
destruction of, any of the machinery, equipment, furniture, fixtures, leasehold
improvements and other property, whether that of Tenant or of others in, upon
or about the Premises resulting from fire, explosion or the other perils
included in standard extended coverage insurance notwithstanding that such
loss, claim, expense or damage may have been caused by the negligence (but not
gross negligence or willful acts) of Landlord, its agents or employees, and
Tenant agrees to look to the insurance coverage only in the event of such
loss.  Landlord hereby waives and
releases all claims, liabilities and causes of action against Tenant and its
agents, servants and employees for loss or damage to, or destruction of all or
a portion of the Premises resulting from fire, explosion or other perils
included in standard extended coverage insurance notwithstanding that such
loss, claim, expense or damage may have been caused by the negligence (but not
gross negligence or willful acts) of Tenant, its agents or employees, and
Landlord agrees to look to the insurance coverage only in the event of such
loss.


 


b.             If Tenant
installs any electrical equipment that overloads the power lines to the
Building or its wiring, Tenant shall, at its own expense, make whatever changes



 


14





















 


are necessary to comply with the
requirements of the insurance underwriter, insurance rating bureau and
governmental authorities having jurisdiction.


 


ARTICLE 16


 


PUBLIC LIABILITY INSURANCE:


 


Tenant
shall, during the term hereof, keep in full force and effect, at its expense, a
policy or policies of public liability insurance with respect to the Premises
and the business of Tenant in amounts no less than $2,000,000.00 per occurrence
naming the Landlord and any mortgagees designated by Landlord as additional
insureds.  The insurance shall include
contractual liability coverage specifically insuring Tenant’s indemnity
obligations hereunder, shall cover the entire Premises, including sidewalks and
parking lot areas within the Premises, and shall be issued by insurance
companies licensed to do business in Minnesota with a Best’s Insurance Rating
of A+V or better.  The policies shall
provide for at least thirty (30) days’ prior written notice to Landlord
and any mortgagees named therein, in the event of cancellation or any material
change.  Copies or certificates of the
policy or policies shall be delivered to Landlord prior to the commencement of
the Term and copies or certificates of renewal of the policy or policies shall
be delivered to Landlord no later than thirty (30) days prior to the
expiration date of the policy or policies then in force.


 


ARTICLE 17


 


DEFAULT OF TENANT/LANDLORD:


 


a.             In the event
of any failure of Tenant to pay any rental due hereunder within ten (10)
days of when due, or any failure to perform any other terms, conditions or
covenants of this Lease to be observed or performed by Tenant for more than
thirty (30) days after written notice of such failure shall have been
given to Tenant (or such longer period as may be reasonably required if such
failure is not reasonably capable of being cured within thirty (30) days
so long as Tenant is diligently and in good faith proceeding to cure the same),
or any report required to be furnished to Landlord pursuant to the terms of
this Lease is false or misleading in any material respect, or if Tenant shall
become bankrupt or insolvent or file any debtor proceedings or any person shall
take or have against Tenant in any court pursuant to any statute either of the
United States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant’s property and such proceeding is not dismissed within
sixty (60) days of filing, or if Tenant makes an assignment for the
benefit of creditors, or petitions for or enters into an arrangement, or if
Tenant shall suffer this Lease to be taken under any writ of execution, then in
any such event Tenant shall be in default hereunder, and Landlord, in addition
to their rights of remedies it may have, shall have the right to reenter the
property in accordance with applicable law and remove all persons and property
from the Premises and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of Tenant, all
without being guilty of 


 


15





















 


trespass or becoming liable for any
loss or damage which may be occasioned thereby.


 


b.             Should
Landlord elect to re-enter the Demised Premises as herein provided, or should
it take possession of the Premises pursuant to legal proceedings or pursuant to
any notice provided for by law, it may either terminate this Lease or it may
from time to time, without terminating this Lease, make such reasonable
alterations and repairs as may be required in order to relet the Premises and
relet the Premises or any part thereof upon such term or terms (which may be
for a term extending beyond the term of this Lease) and at such rental or
rentals and upon such other terms and conditions as Landlord in its reasonable
business discretion may deem advisable. 
Upon each such subletting all rentals received by the Landlord from such
reletting shall be applied first to the payment of any indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any costs
and expenses of such reletting, including reasonable brokerage fees and
reasonable attorney’s fees and reasonable out-of-pocket costs of such
alterations and repairs; third, to the payment of the rent due and unpaid
payment of future rent as the same may become due and payable hereunder.  If such rentals received from such reletting during
any month is less than that to be paid during that month by Tenant hereunder,
Tenant, upon demand, shall pay any such deficiency to Landlord.  No such re-entry or taking possession of the
Premises by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention be given to Tenant, or
unless the termination thereof be decreed by a court of competent
jurisdiction.  Notwithstanding any such
reletting without termination, Landlord may at any time after such re-entry and
reletting elect to terminate this Lease for any such breach.  In addition to any other remedies it may
have, it may recover from Tenant all damages it may incur by reason of such
breach, including the cost of recovering the Premises, reasonable attorney’s
fees, and including, upon termination hereof, the present worth at the time of
such termination of the excess, if any, of the amount of rent and charges
equivalent to rent reserved in this Lease for the remainder of the stated term
over the then reasonable rental value of the Premises for the remainder of the
stated term, all of which amounts shall be immediately due and payable from
Tenant to Landlord.


 


c.             Landlord
may, at its option, instead of exercising any other rights or remedies
available to it in this Lease or otherwise by law, statute or equity, spend
such money as is reasonably necessary to cure any default of Tenant herein and
the amount so spent and costs incurred, including attorney’s fees, in curing
such default, shall be paid by Tenant as Additional Rent upon demand.


 


d.             In the event
suit shall be brought for recovery of possession of the Premises, for the
recovery of rent or any other amount due under the provisions of this Lease, or
because of the breach of any other covenant herein contained on the part of
Tenant to be kept or performed and a judgment is entered in favor of Landlord,
Tenant shall pay to Landlord all expenses incurred therefor, including
reasonable 


 


16





















 


attorney’s fees, together with
interest on all such expenses at the rate of twelve percent (12%) per annum
from the date incurred to the date paid.


 


e.             Tenant
hereby expressly waives any and all rights of redemption granted by or under
any present or future laws in the event of Tenant being evicted or dispossessed
for any cause, or in the event of Landlord obtaining possession of the Premises
by reason of the violation by Tenant of any of the covenants or conditions of
this Lease, or otherwise.  Tenant also
waives any demand for possession of the Premises and any demand for payment of
rent and any notice of intent to re-enter the Premises, or of intent to
terminate this Lease, other than the notices above provided in this Article,
and waives any and every other notice or demand prescribed by any applicable
statutes or laws.


 


f.              Should
Landlord be in default under its obligations under this Lease, Landlord shall
have reasonable and adequate time in which to cure the same after written
notice to Landlord by Tenant, provided Landlord, within thirty (30) days
after receipt of such notice from Tenant, diligently and in good faith
commences, and thereafter continues, to cure such default.


 


If
Landlord defaults in the performance of any of its covenants hereunder beyond
any applicable notice and/or cure period, Tenant may, but without obligation,
cure the default and bring an action to recover the reasonable costs and
related expenses thereof together with interest thereon from the date of
advance by Tenant at the rate of twelve percent (12%) per annum; provided,
however, in no event shall Tenant have right to deduct or set off the amount
thereof against the Base Rent, Additional Rent or any other charges to be paid
by Tenant hereunder.


 


g.             No remedy
herein or elsewhere in this Lease or otherwise by law, statute or equity,
conferred upon or reserved to Landlord or Tenant shall be exclusive of any
other remedy, but shall be cumulative and may be exercised from time to time
and as often as the occasion may arise.


 


ARTICLE 18


 


COVENANTS TO HOLD HARMLESS:


 


Tenant
shall hold harmless Landlord from any liability for damages resulting from a
breach by Tenant of its obligations under this Lease and, except to the extent
the liability for damage or loss is caused by the negligence or willful
misconduct of Landlord, its agents or employees, from any liability for damages
to any person or property in or upon the Premises and the Premises, including
the person and the property of Tenant and its employees and all persons in the
Building at its or their invitation or sufferance, and from all damages
resulting from Tenant’s failure to perform the covenants of this Lease.  All property kept, maintained or stored on
the Premises shall be so kept, maintained or stored at the sole risk of
Tenant.  Tenant agrees to pay all sums of
money in respect of any labor, service, materials, supplies or equipment
furnished or alleged to have been furnished to Tenant in or about the Premises,
and not furnished on order of Landlord, which may be secured by any Mechanic’s,
Materialmen’s or other lien to


 


17





















 


be discharged at the time performance
of any obligation secured thereby matures, provided that Tenant may contest
such lien, but if such lien is reduced to final judgment and if such judgment
or process thereon is not stayed, or if stayed and said stay expires, then and
in each such event, Tenant shall forthwith pay and discharge said
judgment.  Landlord shall have the right
to post and maintain on the Premises notices of non-responsibility under the
laws of the State of Minnesota.


 


Landlord
shall hold Tenant harmless from any liability for damages resulting from a
breach by Landlord of its obligations under this Lease, including but not
limited to, failure to repair, and for any damage or loss which is caused by
the negligence or willful misconduct of Landlord, its agents or employees.


 


ARTICLE 19


 


NON-LIABILITY:


 


Subject
to the terms and conditions of this Lease, including Articles 7, 15 and 18
hereof, Landlord shall not be liable for damage to any property of Tenant or of
others located on the Premises, nor for the loss of or damage to any property
of Tenant or of others by theft or otherwise. 
Except to the extent caused by the negligence or willful misconduct of
Landlord, its agents or employees, or Landlord’s failure to perform its repair
obligations hereunder following notice, Landlord shall not be liable for any
injury or damage to persons or property resulting from fire, explosion, any
injury or damage to persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or snow, or leaks from any part
of the Premises or from the pipes, appliances, or plumbing works, or from the
roof, street or subsurface or from any other place or by dampness or by any such
damage caused by persons in the Premises, occupants of adjacent property, of
the buildings, or the public, or caused by operations in construction of any
private, public or quasi-public work. 
Landlord shall not be liable for any latent or patent defects in the
Premises.  All property of Tenant kept or
stored on the Premises shall be so kept or stored at the risk of Tenant only
and Tenant shall hold Landlord harmless from any claims arising out of damage
to the same, including subrogation claims by Tenant’s insurance carrier.


 


ARTICLE 20


 


SUBORDINATION:


 


This
Lease shall be subordinated to any mortgages that may now exist or that may
hereafter be placed upon the Premises and to any and all advances made
thereunder, and to the interest upon the indebtedness evidenced by such
mortgages, and to all renewals, replacements and extensions thereof.  Landlord acknowledges that the Premises are
currently subject to a mortgage with Farm Bureau Life Insurance Company of
Michigan.  Landlord shall use reasonable
efforts to obtain a Subordination, Nondisturbance and Attornment (SNDA)
Agreement executed on behalf of Landlord, Tenant and such mortgagee in form and
substance reasonably acceptable to Tenant. 
In the event of execution by Landlord after the date of this Lease of
any such mortgage, renewal, replacement or extension, Tenant agrees to execute
a subordination agreement with the holder thereof which agreement shall provide
that:


 


18





















 


a.             Such holder
shall not disturb the possession and other rights of Tenant under this Lease so
long as Tenant is not in default hereunder,


 


b.             In the event
of acquisition of title to the Premises by such holder, such holder shall
accept the Tenant as Tenant of the Premises under the terms and conditions of
this Lease and shall perform all the obligations of Landlord hereunder, and


 


c.             The Tenant
shall recognize such holder as Landlord hereunder.


 


Tenant
shall, within fifteen (15) days following receipt of a written request
from Landlord therefor, execute and deliver to Landlord or to any proposed
holder of a mortgage or trust deed, or to any proposed purchaser of the
Premises, a certificate in recordable form, certifying that this Lease is in
full force and effect, and that there are no offsets against rent nor known
defenses to Tenant’s performance under this Lease, or setting forth any such
offsets or defenses claimed by Tenant as the case may be.


 


ARTICLE 21


 


ASSIGNMENT OR SUBLETTING:


 


Tenant
agrees to use and occupy the Premises throughout the entire term hereof for no
purpose or purposes other than those herein specified in the manner and to
substantially the extent now intended, and, except as otherwise expressly
provided in this Article with respect to Affiliates (as defined herein), not to
transfer or assign this Lease or sublet said Premises, or any part thereof
whether by voluntary act, operation of law, or otherwise, without obtaining the
prior written consent of Landlord in each instance.  Tenant shall seek such consent of Landlord by
a written request therefor, setting forth such information as Landlord may deem
reasonably necessary.  Landlord agrees
not to withhold or delay consent unreasonably. 
Landlord shall not be deemed to be acting unreasonably if its mortgagee
has a right to provide or withhold consent and refuses to consent.  Consent by Landlord to any assignment of this
Lease or to any subletting of the Premises shall not be a waiver of Landlord’s
rights under this Article as to any subsequent assignment or subletting.  Landlord’s rights to assign this Lease are
and shall remain unqualified.  No such
assignment or subleasing shall relieve the Tenant from any of Tenant’s
obligations in this Lease contained, nor shall any assignment or sublease or
other transfer of this Lease be effective unless the assignee, subtenant or
transferee, shall at the time of such assignment, sublease or transfer, assume
in writing for the benefit of Landlord, its successors or assigns, all of the
terms, covenants and conditions of this Lease thereafter to be performed by
Tenant and shall agree in writing to be bound thereby.  Should Tenant assign or sublease in
accordance with the terms of this Lease to a non-affiliate third party, fifty
percent (50%) of the excess of any subrent or assignment consideration received
by Tenant over the Base Rent payable by Tenant under this Lease (after Tenant
has recouped its costs and expenses of obtaining such subtenant or assignee)
shall be forwarded to and retained by Landlord, which increase shall be in
addition to the Base Rent and Additional Rent due Landlord under this Lease.


 


If Tenant
is a corporation (other than a corporation whose shares are publicly traded), a
limited liability entity, or a partnership, any transfer or series of transfers
of the ownership 


 


19





















 


interests of Tenant which results in
more than 50% of such interests being held other than as held on the date of
this Lease shall be deemed an assignment of this Lease which shall require
Landlord’s consent, which consent shall not be unreasonably withheld.


 


ARTICLE 22


 


ATTORNMENT:


 


In the
event of a sale or assignment of Landlord’s interest in the Premises or the
Building in which the Premises are located, or this Lease, or if the Premises
come into custody or possession of a mortgagee or any other party whether
because of a mortgage foreclosure, or otherwise, Tenant shall attorn to such
assignee or other party and recognize such party as Landlord hereunder;
provided, however, Tenant’s peaceable possession will not be disturbed so long
as Tenant faithfully performs its obligations under this Lease.  Tenant shall execute, on demand, any
attornment agreement required by any such party to be executed, containing such
provisions and such other provisions as such party may require.


 


ARTICLE 23


 


NOVATION IN THE EVENT OF SALE:


 


In the
event of the sale of the Premises, Landlord shall be and hereby is relieved of
all of the covenants and obligations created hereby accruing from and after the
date of sale, and such sale shall result automatically in the purchaser
assuming and agreeing to carry out all the covenants and obligations of
Landlord herein.  Notwithstanding the
foregoing provisions of this Article, Landlord, in the event of a sale of the
Premises, shall cause to be included in the agreement of sale and purchase a
covenant whereby the purchaser of the Premises assumes and agrees to carry out
all of the covenants and obligations of Landlord herein.


 


The
Tenant agrees at any time and from time to time upon not less than
thirty (30) days prior written request by the Landlord to execute,
acknowledge and deliver to the Landlord a statement in writing certifying that
this Lease is unmodified and in full force and effect or in full force and
effect as modified and stating the modifications; that Landlord is not, to
Tenant’s knowledge, in default hereunder or specifically stating any alleged
defaults; the amount of the Base Rent and the dates through which the Base Rent
and Additional Rent items have been paid; and certifying to such other matters
as Landlord may reasonably request. 
Landlord and any such other party to whom the certificate is addressed
shall have the right to rely on such certificate.


 


ARTICLE 24


 


SUCCESSORS AND ASSIGNS:


 


The
terms, covenants and conditions hereof shall be binding upon and inure to the
successors and assigns of the parties hereto.


 


20





















 


ARTICLE 25


 


REMOVAL OF FIXTURES:


 


At the
end of the Term and in accordance with Article 29, Tenant will promptly
remove at the sole cost and expense of Tenant all fixtures and equipment
installed by Tenant simultaneously with vacating the Premises and Tenant will
promptly repair any damage caused by such installation or removal at the sole
cost and expense of Tenant.


 


ARTICLE 26


 


QUIET ENJOYMENT:


 


Landlord
warrants that it has full right to execute and to perform this Lease and to
grant the estate demised, and that Landlord shall defend Tenant’s right, upon
payment of the rents and other amounts due and the performance of all the
terms, conditions, covenant and agreements on Tenant’s part to be observed and
performed under this Lease, to peaceably and quietly enjoy the Premises for the
uses permitted hereunder, subject, nevertheless, to the terms and conditions of
this Lease.


 


ARTICLE 27


 


RECORDING:


 


Upon the
request of Landlord or Tenant, the other party shall join in the execution of
the Memorandum lease for the purposes of recordation.  Said Memorandum lease shall describe the
parties, the Premises and the term of the Lease and shall incorporate this
Lease by reference.  The cost of
recording shall be borne by the party requesting same.


 


ARTICLE 28


 


OVERDUE PAYMENTS:


 


All
monies due under this Lease from Tenant to Landlord shall be due within
ten (10) days following receipt of an invoice therefor, except for Base
Rent which shall be due on or before the first day of each month in advance
without notice and if not paid within five (5) business days of when due
on more than one (1) occasions in any twelve (12) month period, shall
result in the imposition of a service charge for such subsequent late payment
in the same twelve (12) month period in the amount of twelve percent (12%)
of the amount due.


 


ARTICLE 29


 


SURRENDER:


 


On the
Expiration Date or upon the termination hereof upon a day other than the
Expiration Date, Tenant shall peaceably surrender the Premises broom-clean in
good order, condition and repair, reasonable wear and tear, fire and other
insured casualty and Acts of God excepted. 
On or before the Expiration Date or upon termination of this Lease on a
day other than 


 


21





















 


the Expiration Date, Tenant shall, at
its expense, remove all trade fixtures, personal property and equipment and
signs from the Premises and any property not removed shall be deemed to have
been abandoned.  Any damage caused in the
removal of such items shall be repaired by Tenant, at its expense.  All alterations, additions, improvements and
fixtures (other than trade fixtures, computer equipment, personal property and
business equipment) which shall have been made or installed by Landlord or
Tenant upon the Premises and all floor covering so installed shall remain upon
and be surrendered with the Premises as a part thereof, without disturbance,
molestation or injury, and without charge, at the expiration or termination of
this Lease.  If the Premises is not
surrendered on the Expiration Date or the date of termination, Tenant shall
indemnify Landlord against loss or liability, claims, without limitation, made
by any succeeding Tenant founded on such delay. 
Tenant shall promptly surrender all keys for the Premises to Landlord at
the place then fixed for payment of rent and shall inform Landlord of
combinations of any locks and safes on the Premises.


 


ARTICLE 30


 


HOLDING OVER:


 


In the
event of a holding over by Tenant after expiration or termination of this Lease
without the consent in writing of Landlord, Tenant shall be deemed a Tenant at
sufferance and shall pay rent for such occupancy at the rate of one hundred
fifty percent (150%) of the last-current aggregate Base and Additional Rent,
prorated for the entire holdover period, plus all attorney’s fees and expenses
incurred by Landlord in enforcing its rights hereunder, plus any other damages
occasioned by such holding over.  Except
as otherwise agreed in writing, any holding over with the written consent of
Landlord shall constitute a month-to-month tenancy.


 


ARTICLE 31


 


CONSENTS BY LANDLORD:


 


Whenever
a provision is made under this Lease for securing the consent or approval by
Landlord or Tenant, such consent or approval shall only be in writing and shall
not be unreasonably withheld or delayed.


 


ARTICLE 32


 


NOTICES:


 


All
notices to be given in connection with this Lease shall be in writing and
delivered personally, sent by facsimile or sent by a nationally recognized
overnight courier service or registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:


 


	
  If to Tenant:

  	
   

  	
  MathStar, Inc.

  
	
   

  	
   

  	
  5900 Green Oak Drive

  
	
   

  	
   

  	
  Minnetonka, MN 55343

  
	
   

  	
   

  	
  Attn: Bryon Bequette

  



 


22





















 


	
  with a copy to:

  	
   

  	
  Winthrop & Weinstine, P.A.

  
	
   

  	
   

  	
  3000 Dain Rauscher Plaza

  
	
   

  	
   

  	
  60 South Sixth Street

  
	
   

  	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
   

  	
  Attn: James W. Dierking

  
	
   

  	
   

  	
   

  
	
  If to Landlord:

  	
   

  	
  Green Oak Associates

  
	
   

  	
   

  	
  6125 Blue Circle Drive

  
	
   

  	
   

  	
  Minnetonka, Minnesota 55343

  
	
   

  	
   

  	
  Attention: Cyrille E. DeCosse

  
	
   

  	
   

  	
  Facsimile: 952-933-9089

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Gray, Plant, Mooty, Mooty &
  Bennett, P.A.

  
	
   

  	
   

  	
  3400 City Center

  
	
   

  	
   

  	
  33 South Sixth Street

  
	
   

  	
   

  	
  Minneapolis, Minnesota 55402

  
	
   

  	
   

  	
  Attention: Laura J. Schoenbauer

  
	
   

  	
   

  	
  Facsimile: 612-333-0066

  



 


Notice sent by personal delivery shall
be deemed given when received by the parties set forth above or by an
authorized agent at the addresses set forth above, as evidenced by signed
delivery receipt.  Notices sent by
courier shall be deemed to have been given to the party to whom it is sent on
the date the same is received or rejected as evidenced by the receipt of a
nationally recognized overnight courier showing delivery or attempted delivery
for next day service to such party at its then current address for the giving
of notices.  Notices sent by facsimile
shall be deemed to have been given on the date transmitted and received as
evidenced by facsimile confirmation of successful transmission.  Notices sent by mail shall be deemed to have
been given to or served upon the party to whom it is addressed on the date the
same is received or rejected, as evidenced by return receipt, if sent in the
United States registered or certified mail, return receipt requested, postage
prepaid, properly addressed in the manner above provided.  Either party hereto may change such party’s
address for the service of notice hereunder by written notice of said change to
the other party hereto, in the manner above specified.


 


ARTICLE 33


 


FINANCIAL STATEMENTS:


 


Within
fifteen (15) days after the receipt of a written request by Landlord, from
time to time, Tenant shall deliver to Landlord a complete copy of audited
financial statements for Tenant prepared in accordance with generally accepted
principles of accounting consistently applied, for its then two (2) most
recent fiscal years, including, but not limited to, its balance sheet,
statement of income, notes to its financial statements, and the certification
of its auditor as to the same.  Landlord
shall receive and maintain all such financial statements in strict confidence,
provided Landlord shall have the right to deliver such financial statements to
prospective buyers and lenders of the Property.


 


23





















 


ARTICLE 34


 


INTENT OF PARTIES:


 


Subject
to the terms of Section 4 hereof, Tenant acknowledges and agrees that Base
Rent shall be absolutely net to Landlord so that this Lease shall yield net to
Landlord the Base Rent specified in Article III in each year of the term
and that except as expressly provided in this Lease, all Real Estate Taxes,
insurance premiums, utility charges, maintenance, repair and replacement
expenses, all expenses related to compliance with laws, and all other costs,
fees, charges, expenses, reimbursements and obligations of every kind and
nature whatsoever relating to the Premises which may arise or become due during
the term or by reason of events occurring during the term shall be paid or
discharged by Tenant as Additional Rent without previous demand therefor and
without any right of setoff or deduction whatsoever, as additional rent.


 


ARTICLE 35


 


GENERAL:


 


a.             The Lease
does not create the relationship of principal agent or of partnership or of
joint venture or of any association between Landlord and Tenant, the sole
relationship between the parties hereto being that of Landlord and Tenant.


 


No waiver
of any default of Tenant or Landlord hereunder shall be implied from any
omission by the other party to take any action on account of such default if
such default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and that only
for the time and to the extent therein stated. 
One or more waivers by Landlord or Tenant shall not then be construed as
a waiver of a subsequent breach of the same covenant, term or condition.  The consent to or approval by Landlord or
Tenant of any act requiring consent or approval shall not waive or render
unnecessary Landlord’s or Tenant’s consent to or approval of any subsequent
similar act by the other party shall be construed to be both a covenant and a
condition.  No action required or
permitted to be taken by or on behalf of Landlord under the terms or provisions
of this Lease shall be deemed to constitute an eviction or disturbance of
Tenant’s possession of the Premises.  All
preliminary negotiations are merged into and incorporated in this Lease.  The laws of the State of Minnesota shall
govern the validity, performance and enforcement of this Lease.


 


b.             This Lease
and the Exhibits attached hereto and forming a part hereof, constitute the
entire agreement between Landlord and Tenant affecting the Premises.  Any other agreements, subsequent alterations,
amendments, changes or additions to this Lease shall be binding upon Landlord
and Tenant only when reduced to writing and executed by the parties.


 


c.             If any
agreement, covenant or condition of this Lease or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such agreement, covenant or
condition to persons or circumstances other than those as to which it is held 


 


24





















 


invalid or unenforceable, shall not be
affected thereby and each agreement, covenant or condition of this Lease shall
be valid and be enforced to the fullest extent permitted by law.


 


d.             Time is of
the essence of this Lease and in the performance of all of the agreements
contained herein.


 


e.             This Lease
shall be governed by and construed in accordance with the laws of the State of
Minnesota.


 


f.              The
headings contained herein are for convenience only, and are not a part of this
Lease.


 


g.             The parties
agree that the provisions of this Lease have been negotiated between them and
that no provision hereof shall be construed against either Landlord or Tenant
as a result of its having drafted it.


 


ARTICLE 36


 


COMPLIANCE WITH LAWS,


HAZARDOUS MATERIAL:


 


a.             Tenant
covenants through the Lease Term, at Tenant’s sole cost and expense, promptly
to comply with all laws and ordinances and the orders, rules and regulations
and requirements of all federal, state and municipal governments and
appropriate departments, commission, boards, and officers thereof, and the
orders, rules and regulations of the Board of Fire Underwriters where the
Premises are situated, or any other body now or hereafter having jurisdiction over
the Premises, whether or not the same require structural repairs or
alterations, which may be applicable to the materials introduced into the
Premises by Tenant, or arising out of Tenant’s use or manner of use of the
Premises.  Tenant will likewise observe
and comply with the requirements of all policies of public liability, fire and
all other policies of insurance at any time in force with respect to the
building and improvements on the Premises and the equipment thereof.


 


b.             In the event
any Hazardous Material (as hereinafter defined) is brought or caused to be
brought into or onto, the Building or the Premises by Tenant, Tenant shall
handle any such material in compliance with all applicable federal, state
and/or local regulations.  For purposes
of this Article, “Hazardous Material” means and includes any hazardous, toxic
or dangerous waste, substance or material defined as such in (or for purposes
of) the Comprehensive Environmental Response, Compensation, and Liability Act,
any so-called “Superfund” or “Superlien” law, or any federal, state or local
statute, law, ordinance, code, rule, regulation, order decree regulating,
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or materials, as now or at any
time hereafter in effect.  Tenant shall
submit to Landlord on an annual basis copies of its approved hazardous
materials communication plan, OSHA monitoring plan, and permits required by the
Resource Recovery and 


 


25





















 


Conservation Act of 1976, if Tenant is
required to prepare, file or obtain any such plans or permits.  Tenant will indemnify and hold harmless
Landlord from any losses, liabilities, damages, costs or expenses (including
reasonable attorneys’ fees) which Landlord may suffer or incur as a result of
Tenant’s introduction into or onto the Building or Premises of any Hazardous
Material.  This Article shall survive the
expiration or sooner termination of this Lease.


 


c.             Landlord represents
that to its actual knowledge without having made any investigation, that no
asbestos or other Hazardous Materials are unlawfully located on the Premises as
of the date hereof.  Landlord will
indemnify and hold harmless Tenant from any losses, liabilities, damages, costs
or expenses (including reasonable attorneys’ fees) which Tenant may suffer or
incur as a result of the presence as of the date hereof of any Hazardous
Materials in the Building or the Premises, in violation of current laws.


 


d.             This Article
shall survive the expiration or sooner termination of this Lease.


 


ARTICLE 37


 


CAPTIONS:


 


The
captions are inserted only as a matter of convenience and for reference, and in
no way define, limit or describe the scope of this Lease nor the intent or any
provision thereof.


 


ARTICLE 38


 


ATTACHMENTS:


 


See
Exhibits A - D which are attached hereto and made a part hereof.


 


	
  Exhibit

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Legal Description

  
	
  Exhibit B

  	
   

  	
  Description of Phase Two Premises
  and Phase Three Premises

  
	
  Exhibit C

  	
   

  	
  Description of Initial Tenant
  Improvements

  
	
  Exhibit D

  	
   

  	
  Protective Covenants

  



 


ARTICLE 39


 


SUBMISSION:


 


Submission
of this instrument to Tenant or proposed Tenant or his agents or attorneys for
examination, review, consideration or signature does not constitute or imply an
offer to lease reservation of space, or option to lease, and this instrument
shall have no binding legal effect until execution hereof by both
Landlord/Owner and Tenant or its agents.


 


26





















 


ARTICLE 40


 


REPRESENTATION:


 


It is
agreed that United Properties and Dan Wicker (“collectively “Landlord’s Broker”)
are representing Landlord in connection with this Lease, and Welsh Companies
and Bill Ritter (collectively “Tenant’s Broker”) are representing Tenant in
connection with this Lease.  Landlord
shall pay any fee or commission due Landlord’s Broker pursuant to a separate
agreement between them.  Landlord also
will pay a commission of $3.00 per square foot to Tenant’s Broker, due and
payable as follows:


 


	
  $

  	
  30,000.00

  	
   

  	
  Upon execution of the Lease

  
	
   

  	
   

  	
   

  
	
  $

  	
  30,000.00

  	
   

  	
  On the Commencement Date for the
  Phase One Premises and payment of rent for said Premises

  
	
   

  	
   

  	
   

  
	
  $

  	
  30,000.00

  	
   

  	
  On the Commencement Date for the
  Phase Two Premises and payment of rent for said Premises

  
	
   

  	
   

  	
   

  
	
  $

  	
  30,000.00

  	
   

  	
  On the Commencement Date for the
  Phase Three Premises and payment of rent for said Premises

  
	
   

  	
   

  	
   

  
	
  $

  	
  60,000.00

  	
   

  	
  On the Commencement Date for the
  Phase Four Premises by Tenant and payment of rent for said Premises

  



 


Landlord agrees that upon occupancy of
the Phase One Premises by Tenant, Landlord agrees to deposit the remaining
commission due hereunder to Tenant’s Broker into an escrow account, which
amount shall be paid to Tenant’s Broker as provided above.


 


Landlord
agrees to indemnify Tenant against and hold it harmless from, all liabilities
arising from any claim for a fee or commission by Landlord’s Broker, Tenant’s
Broker, or any other agent or broker (including, without limitation, court
costs and reasonable counsel fees in connection therewith) arising out of
Landlord’s acts.  Tenant agrees to
indemnify Landlord against and hold it harmless from, all liabilities arising
from any claim for a fee or commission by Tenant’s Broker (other than with
respect to the amount payable by Landlord as provided in the immediately
preceding paragraph) or any other agent or broker (including, without
limitation, court costs and reasonable counsel fees in connection therewith)
arising out of Tenant’s acts.


 


ARTICLE 41


 


CONDITION OF PREMISES:


 


Tenant
acknowledges that it has made all inspections of and investigations with
respect to the Premises as it desires and except for Landlord’s obligations
hereunder, is leasing the Premises in their “as is” condition “with all faults”
on the date hereof, without any representation or warranty by or on behalf of
Landlord as to the condition of the Premises or their fitness for any
particular use.


 


27





















 


ARTICLE 42


 


EXTENSION OPTIONS:


 


Tenant
shall have the right to extend the term of this Lease for two (2)
additional terms of three (3) years each (each such 3-year period, an “Option
Term”) by giving written notice of such extension to Landlord not more than
two (2) years nor less than nine (9) months days prior to the expiration of the Initial
Term or the first Option Term, as applicable, of this Lease, time being of the
essence hereof; provided that, at the date of expiration of the Initial Term
this Lease shall be in full force and effect and no material or monetary
default by Tenant shall exist after expiration of the applicable cure period
following notice.  If Tenant shall give
notice to Landlord of its election to extend the term of this Lease for an
Option Term but a material or monetary default (after written notice and
expiration of applicable cure period) shall exist on the date of the expiration
of the Initial Term or the first Option Term, as applicable, Landlord, at its
option, may extend the term of this Lease for the applicable Option Term.  The Lease for each Option Term shall be on
the same terms, covenants and conditions contained in this Lease except that
the Base Rent for each Option Term shall be equal to the Market Rent for the
Premises determined as of the commencement of the applicable Option Term.


 


Within
thirty (30) days after receipt by Landlord of Tenant’s notice exercising
Tenant’s right to extend the term of this Lease for the Option Term, as
provided above, Landlord shall give Tenant notice of Landlord’s determination
of the Market Rent (as herein defined) for the Premises.  If Tenant disagrees with Landlord’s
determination of the Market Rent for the Premises, Tenant shall give notice to
Landlord within thirty (30) days after the date of Landlord’s notice, time
being of the essence.  Upon receipt of
such notice, Landlord and Tenant shall for a period of thirty (30) days or
such longer period on which Landlord and Tenant may agree (the “Negotiation
Period”) negotiate in good faith in an attempt to reach agreement upon the
Market Rent for the Premises.  If at the
end of the Negotiation Period, Landlord and Tenant are unable to agree upon the
Market Rent for the Premises, then the Market Rent for the applicable Option
Term shall be determined by appraisal, made by a Board consisting of three reputable
real estate appraisers, each of whom shall be a Member of the American
Institute of Real Estate Appraisers with the designation of “MAI,” shall be
experienced in the appraisal of commercial real estate in Hennepin County,
Minnesota, and shall have no Disqualifying Interest (as defined herein).  One appraiser shall be appointed by Landlord
or its representative and one appraiser shall be appointed by Tenant or its
representative.  The third appraiser
shall be appointed by the first two appraisers. 
If the first two appraisers are unable to agree on a third appraiser
within thirty (30) days after the appointment of the second appraiser, or
if either party refuses or neglects to appoint an appraiser as herein provided
within twenty (20) days after the appointment of the first appraiser, then
such third appraiser or such second appraiser whose appointment was not made as
aforesaid shall be appointed by the then President of the Minnesota chapter of
the American Institute of Real Estate Appraisers or such successor body
hereafter constituted exercising similar functions, unless such President shall
have a direct or indirect financial or other business interest in or in common
with any of the parties hereto (a “Disqualifying Interest”), in which case the
third appraiser or such other appraiser whose appointment was not made as
aforesaid shall be appointed by the then next highest ranking officer of the
Minnesota chapter of the American Institute of Real Estate Appraisers or such
successor body who shall not have a disqualifying interest.  If the Market Rent determination of 


 


28





















 


at least two of the appraisers shall
be identical in amount, that amount shall be final and binding on both Landlord
and Tenant.  If the determinations of all
three appraisers shall be different, the Market Rent shall be the average of
the two determinations which are closest to each other.


 


If the
Market Rent for the Leased Premises for the Option Term has not been agreed to
by Landlord and Tenant or determined by the Board as hereinabove provided by
the expiration of the Initial Term or immediately prior Option Term, as
applicable, pending resolution of such dispute, Annual Base Rent during the
period the dispute remains unresolved shall be payable as set forth in Landlord’s
notice.  Within fourteen (14) days
after resolution of such dispute, the amounts paid by Tenant shall be adjusted
by payment to the appropriate party such that all amounts paid equal amounts
properly due as determined by the Board. 
Landlord and Tenant shall each act promptly and diligently in causing
determinations to be made under this Article. 
Landlord and Tenant shall share equally the costs and expenses of the
Board.  For purposes of this Lease the
term “Market Rent” means the annual amount of rent determined as of the
commencement of the Option Term, exclusive of operating costs and other items
of additional rent, that a willing tenant would pay and a willing landlord
would accept in “as is - where is” condition, assuming a lease containing the
same terms and conditions as those contained in this Lease, taking into account
that Landlord will not be providing any leasehold improvements or paying any
leasing commissions and that Tenant will not be paying any leasing commissions
or incurring any relocation expenses. 
The rights of Tenant under this Article shall not be severed from this
Lease or separately sold, assigned or otherwise transferred, and shall expire
not later than the expiration or earlier termination of this Lease.


 


If Tenant
exercises the Option Term, Landlord agrees to pay a tenant improvement
allowance to Tenant for improvements to the Premises in the amount equal to
$15.00 per rentable square foot of the Premises minus the amount of the tenant
improvement allowance previously paid to Tenant under Article 9
hereof.  Such tenant improvement
allowance shall be paid pursuant to Exhibit C attached hereto and
incorporated herein.


 


ARTICLE 43


 


CONTINGENCY:


 


This
lease is contingent on Landlord obtaining the termination, effective a date no
later than December 20, 2001, and otherwise on terms and conditions
acceptable to Landlord in its sole discretion, of the existing lease (“Existing
Lease”) covering the Premises between it and Creative Publishing International,
Inc. (“CPI”) and the existing subleases (“Existing Subleases”) between CPI and
Lightning Rod Software (“LRS”) and LRS and Dialogic, Inc.  If termination of either the Existing Lease
or the Existing Subleases has not been obtained on or before such date, this
Lease shall terminate and neither Landlord nor Tenant shall have further rights
or obligations hereunder.


 


29





















 


IN WITNESS WHEREOF, the Landlord and
the Tenant have caused these presents to be executed in form and manner
sufficient to bind them at law, as of the day and year first above written.


 


	
  Tenant:

  	
   

  	
  Landlord:

  
	
   

  	
   

  	
   

  
	
  MATHSTAR, INC.,

  	
   

  	
  GREEN OAK
  ASSOCIATES,

  
	
  a Minnesota
  corporation

  	
   

  	
  a Minnesota general
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Bryon Bequette

  	
   

  	
  By:

  	
  /s/ Cyrill DeCosse

  	
   

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  	
   

  	
   

  	
  Its: General Partner

  
							



 


30





















 


EXHIBIT A


 


Legal
Description


 


Hennepin County, Minnesota:


 


That part of Lot 3, Block 14, Opus 2
Fourth Addition, according to the recorded plat thereof, lying Northerly of the
following described line: Beginning at a point on that particular West line of
said Lot 3 having a record dimension of 755.05 feet, distant 725.05 feet
Southerly from the Northwest corner of said Lot 3; thence Easterly, parallel
with the North line of said Lot 3, a distance of 460.46 feet to the Easterly
line of said Lot 3 and there terminating; EXCEPT the South 0.48 feet of the
above described property.


 


A-1





















 


EXHIBIT B


 


Description
of Phase Two Premises and Phase Three Premises


 


Second Floor, 5900 Green Oak Drive, Minnetonka, MN [Floor
Plan]


 





 


 


B-1





















 


EXHIBIT C


 


WORK AGREEMENT


 


THIS
AGREEMENT (the “Agreement”) made as of the       day
of December, 2001, between Green Oak Associates, a Minnesota general
partnership (“Landlord”), and Mathstar, Inc., a Minnesota corporation (“Tenant”).  The parties hereby acknowledge that they are
parties to that certain Lease Agreement dated December     ,
2001 (the “Lease”).


 


1.             The Work.  Under the Lease, Tenant has agreed to accept
the Premises “as is,” without any obligations for the performance of
improvements or other work by Landlord, and Tenant desires to perform certain
improvements thereto (the “Work”).  Such
Work shall be in accordance with the provisions of this Agreement, and to the
extent not expressly inconsistent herewith, in accordance with the provisions
of the Lease.  Performance of the Work
shall not serve to abate or extend the time for the commencement of Rent under
the Lease.


 


2.             Cost of the Work.  Except as provided hereinafter,
Tenant shall pay all costs (the “Costs of the Work”) associated with the Work
whatsoever, including without limitation, all permits, inspection fees, fees of
space planners, architects, engineers, contractors and other consultants,
utility connections, the cost of all labor and materials, bonds, insurance, and
any structural or mechanical work, additional HVAC equipment or sprinkler heads,
or modifications to any building mechanical, electrical, plumbing or other
systems and equipment or relocation of any existing sprinkler heads, either
within or outside the Premises required as a result of the layout, design, or
construction of the Work.


 


Of the
Costs of the Work, Landlord shall reimburse Tenant the amount set forth in the
Lease (the “Improvement Allowance”).  The
Improvement Allowance shall be funded by Landlord within thirty (30) days
after the Work has been completed in accordance with the “Space Plan” and “Working
Drawings” approved by Landlord in writing in accordance with the provisions
hereof, and Tenant has submitted all invoices, lien waivers, affidavits of
payment, and such other evidence as Landlord may reasonably require showing
that the cost of the Work has been paid for and that no mechanic’s, materialmen’s
or other such liens have been or may be filed against the Property or the
Premises.


 


Notwithstanding
the foregoing, during construction of improvements on the Phase One Premises
and the Phase Two Premises, of the Cost of the Work, Landlord agrees to pay the
Improvement Allowance directly to the contractor after the Work has been
completed in accordance with the “Space Plan” and “Working Drawings” approved
by Landlord in writing in accordance with the provisions hereof, and Tenant has
submitted all invoices, lien waivers for any Costs of Work in excess of
Improvement Allowance, affidavits of payment for any Costs of Work in excess of
Improvement Allowance, and other evidence as Landlord may reasonably require
showing that the Cost of the Work has been paid for and that no mechanic’s,
materialmen’s or other liens have been or may be filed against the Property or
the Premises.


 


C-1





















 


3.             Space Plan and Specifications.


 


A.            No later than ninety (90) days prior to the
commencement date for each phase, Tenant shall submit two (2) sets of a “Space
Plan” (as described in Section 16 of this Agreement) to Landlord for
approval.


 


B.            Landlord shall, within ten (10) days after receipt
thereof, either approve said Space Plan, or disapprove the same advising Tenant
in writing of the reasons for such disapproval. 
In the event Landlord disapproves said Space Plan, Tenant shall modify
the same, taking into account the reasons given by Landlord for said
disapproval, and shall submit two sets of the revised Space Plan to Landlord
within ten (10) days after receipt of Landlord’s initial disapproval.


 


4.             Working Drawings.


 


A.            No later than ten (10) days after receipt of
Landlord’s approval of the Space Plan, Tenant shall submit to Landlord for
approval two (2) sets of “Working Drawings” (as defined in Section 16
of this Agreement).


 


B.            Landlord shall, within ten (10) working days after
receipt thereof, either approve the Working Drawings or disapprove the same,
advising Tenant of the reasons for disapproval. 
If Landlord disapproves of the Working Drawings, Tenant shall modify and
submit revised Working Drawings, taking into account the reasons given by Landlord
for disapproval, within five (5) days after receipt of Landlord’s initial
disapproval.


 


5.             Landlord’s Approval.  Landlord shall not unreasonably
withhold approval of any Space Plans or Working Drawings submitted hereunder
(or changes thereto pursuant to Section 7 below) if they provide for a
customary office layout, with finishes and materials generally conforming to
building standard finishes and materials currently being used by Landlord at
the Property, are compatible with the Property’s shell and core construction,
and if no modifications will be required for the Property electrical, heating,
air-conditioning, ventilation, plumbing, fire protection, life safety, or other
systems or equipment, and will not require any structural modifications to the
Property, whether required by heavy loads or otherwise.


 


6.             Space Planners, Architects, Engineers.  The Space
Plan, Working Drawings, and the Work shall be prepared and performed by Jafvert
Mueller Architects, Inc. (for the Work to the Phase One Premises).  Landlord shall have the right to approve any
space planners, architects, or engineers which Tenant hires in connection with
any Work to the Phase Two Premises, Phase Three Premises, and Phase Four
Premises, which consent shall not be unreasonably withheld.


 


7.             Change Orders.  No material changes, modifications,
alterations or additions to the approved Space Plan or Working Drawings may be
made without the prior written consent of the Landlord after the written
request therefor by Tenant.  In the event
that the Premises are not constructed in accordance with said approved Space
Plan and Working Drawings, then Tenant shall not be permitted to occupy the
Premises until the Premises reasonably comply in all respects with said
approved Space Plan and Working Drawings; in such case, the Rent shall
nevertheless commence to accrue and be payable as otherwise provided in the
Amendment.


 


C-2





















 


8.             Compliance.  Tenant’s Work shall comply in all respects
with the following: (a) the Building Code of the City and State in which
the Building is located and State, County, City or other laws, codes,
ordinances and regulations, as each may apply according to the rulings of the
controlling public official, agent or other such person, (b) applicable
standards of the National Board of Fire Underwriters and National Electrical
Code, and (c) building material manufacturer’s specifications.


 


9.             Guarantees.  Each contractor, subcontractor and supplier
participating in Tenant’s Work shall guarantee that the portion thereof for
which he is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of
completion thereof.  Every such
contractor, subcontractor and supplier shall be responsible for the replacement
or repair, without any additional charge, of all work done or furnished in
accordance with its contract which shall become defective within one (1)
year after completion thereof.  The
correction of such work shall include, without additional charge, all
additional expenses and damages in connection with such removal or replacement
of all or any part of Tenant’s Work and/or the Property and/or common areas, or
work which may be damaged or disturbed thereby. 
All such warranties or guarantees as to materials or workmanship of or
with respect to Tenant’s Work shall be contained in the contract or subcontract
which shall be written such that said warranties or guarantees shall inure to
the benefit of both Landlord and Tenant, as their respective interests may
appear, and can be directly enforced by either. 
Tenant covenants to give Landlord any assignment or other assurances
necessary to effect such right of direct enforcement.  Copies of all contracts and subcontracts shall
be furnished to Landlord promptly after the same are entered.


 


10.           Performance.


 


A.            Tenant’s Work shall be commenced after Landlord
approves the Working Drawings, and shall thereafter be diligently prosecuted to
completion, subject to delays for reasons beyond Tenant’s control (except
financial matters).  All Work shall
conform with the Working Drawings approved by Landlord in writing, and Landlord
may periodically inspect the Work for such compliance.  Tenant’s Work shall be coordinated under
Landlord’s direction with the work being done or to be performed for or by
other tenants in the Property so that Tenant’s Work will not interfere with or
delay the completion of any other construction work in the Property.


 


B.            Tenant’s Work shall be performed in a thoroughly safe,
first-class and workmanlike manner in conformity with the approved Space Plan
and Working Drawings, and shall be in good and usable condition at the date of
completion.


 


C.            Tenant shall be required to obtain and pay for all
necessary permits and/or fees with respect to Tenant’s Work, and the same shall
be shown to Landlord prior to commencement of the Work.


 


D.            Each contractor and subcontractor shall be required to
obtain prior written approval from Landlord for any space outside Tenant’s Premises
within the Property, which such contractor or subcontractor desires to use for
storage, handling, and moving of his materials and equipment, as well as for
the location of any facilities for his personnel.


 


C-3





















 


E.             The contractors and subcontractors shall be required to
remove from the Premises and dispose of, at least once a week and more
frequently as Landlord may direct, all debris and rubbish caused by or
resulting from the construction.  Upon
completion of Tenant’s Work, the contractors and subcontractors shall remove
all surplus materials, debris and rubbish of whatever kind remaining within the
Property which has been brought in or created by the contractors and
subcontractors in the performance of Tenant’s Work.  If any contractor or subcontractor shall
neglect, refuse or fail to remove any such debris, rubbish, surplus material or
temporary structures within two (2) days after notice to Tenant from
Landlord with respect thereto, Landlord may cause the same to be removed by
contract or otherwise as Landlord may determine expedient, and charge the cost
thereof to Tenant as additional Rent under the Lease.


 


F.             Tenant shall obtain and furnish Landlord all approvals
with respect to electrical, water and telephone work as may be required by the
respective company supplying the service. 
Tenant shall obtain utility service, including meter, from the utility
company supplying service, unless Landlord elects to supply service and/or
meters.


 


G.            Landlord’s acceptance of Tenant’s Work as being
complete in accordance with the approved Space Plan and Working Drawings shall
be subject to Landlord’s inspection and written approval.


 


H.            Tenant shall, at its cost and expense construct,
purchase, install and perform any and all items of Tenant’s Work, stock its
merchandise and employ its personnel so as to obtain any governmentally
required certificate of occupancy and to occupy the Premises as soon as
possible, and in all cases on or before the date required therefor hereunder or
under the Amendment.


 


I.              If an expansion joint occurs within the Premises,
Tenant shall install finish floor covering to or covering such joint in a
workmanlike manner, and Landlord shall not accept responsibility for any finish
floor covering applied to or installed over the expansion joint.


 


J.             Copies of “as built” drawings shall be provided to
Landlord no later than thirty (30) days after completion of the Work,
provided that such drawings are actually obtained by Tenant.


 


K.            Landlord’s approval of Tenant’s plans and
specifications, and Landlord’s recommendations or approvals concerning
contractors, subcontractors, space planners, engineers or architects, shall not
be deemed a warranty as to the quality or adequacy of the Work, or the design
thereof, or of its compliance with Laws, codes and other legal requirements.


 


L.             Tenant shall conduct its labor relations and relations
with employees so as to avoid strikes, picketing and boycotts of, on or about
the Premises or Property.  If any employees
strike, or if picket lines or boycotts or other visible activities
objectionable to Landlord are established, conducted, or carried out against
Tenant, its employees, agents, contractors, subcontractors or suppliers, in or
about the Premises or Property, Tenant shall immediately close the Premises and
remove or cause to be removed all such employees, agents, contractors,
subcontractors and suppliers until the dispute has been settled.


 


C-4





















 


M.           Landlord shall not be responsible for any disturbance
or deficiency created in the air conditioning or other mechanical, electrical
or structural facilities within the Property or Premises as a result of the
Work.  If such disturbances or
deficiencies result, Tenant shall correct the same and restore the services to
Landlord’s reasonable satisfaction, within a reasonable time.


 


N.            If performance of the Work shall require that
additional services or facilities (including without limitation, extra or
after-hours elevator usage or cleaning services) be provided, Tenant shall pay
Landlord’s reasonable charges therefor.


 


O.            Tenant’s contractors shall comply with the rules of the
Property and Landlord’s requirements respecting the hours of availability of
elevators and manner of handling materials, equipment and debris.  Demolition must be performed after 6:00 p.m.
on weekends.  Deliver of materials,
equipment and removal of debris must be arranged to avoid any inconvenience or
annoyance to other occupants.  The Work
and all cleaning in the Premises must be controlled to prevent dirt, dust or
other matter from infiltrating into adjacent tenant or mechanical areas.


 


P.             Landlord may impose reasonable additional requirements
from time to time in order to ensure that the Work, and the construction
thereof does not disturb or interfere with any other tenants of the Property,
or their visitors, contractors or agents, not interfere with the efficient,
safe and secure operation of the Property.


 


11.           Insurance.  All contractors and subcontractors shall
carry Worker’s Compensation Insurance covering all of their respective
employees in the statutory amounts. 
Employer’s Liability Insurance in the amount of at least $500,000 per
occurrence, and comprehensive general liability insurance of at least
$3,000,000 combined single limit for bodily injury, death, or property damage;
and the policies therefor shall cover Landlord and Tenant as additional
insureds, as well as the contractor or subcontractor.  Tenant shall carry builder’s risk insurance
coverage respecting the construction and improvements to be made by Tenant, in
the amount of the anticipated cost of construction of the Work (or any
guaranteed maximum price).  All insurance
carriers hereunder shall be rated at least A and X in Best’s Insurance
Guide.  Certificates for all such
insurance shall be delivered to Landlord before the construction is commenced
or contractors’ equipment is moved onto the Property.  All policies of insurance must require that
the carrier give Landlord twenty (20) days’ advance written notice of any
cancellation or reduction in the amounts of insurance.  In the event that during the course of Tenant’s
Work any damage shall occur to the construction and improvements being made by
Tenant, then Tenant shall repair the same at Tenant’s cost.


 


12.           Liens.  Tenant shall keep the Property and the
Premises free from any mechanic’s, materialmen’s or similar liens or other such
encumbrances in connection with the Work, and shall indemnify and hold Landlord
harmless from and against any claims, liabilities, judgments, or costs
(including attorneys’ fees) arising in connection therewith.  Tenant shall give Landlord notice of at least
twenty (20) days prior to the commencement of the Work (or such additional
time as may be necessary under applicable laws), to afford Landlord the
opportunity of posting and recording appropriate notices of
non-responsibility.  Tenant shall remove
any such lien or encumbrance by bond or otherwise within thirty (30) days
after written notice by Landlord, and if Tenant shall fail to do so, Landlord
may pay the amount necessary to remove such lien or encumbrance, without being
responsible for investigating the validity thereof.  The amount paid 


 


C-5





















 


shall be deemed additional rent under the Lease payable
upon demand, without limitation as to other remedies available to Landlord
under the Lease.  Nothing contained
herein shall authorize Tenant to do any act which shall subject Landlord’s
title to the Property or the Premises to any liens or encumbrances whether
claimed by operation of law or express or implied contract.  Any claim to a lien or encumbrance upon the
Property or the Premises arising in connection with the Work shall be null and
void, or at Landlord’s option shall attach only against Tenant’s interest in
the Premises and shall in all respects be subordinate to Landlord’s title to
the Property and the Premises.


 


13.           Indemnity.  Tenant shall indemnify, defend and hold
harmless Landlord (and Landlord’s principals, partners, agents, trustees,
beneficiaries, offices, employees and affiliates) from and against any claims,
demands, losses, damages, injuries, liabilities, expenses, judgments, liens,
encumbrances, orders and awards, together with attorneys’ fees and litigation
expenses arising out of or in connection with the Work, or Tenant’s failure to
comply with the provisions hereof or any failure by Tenant’s contractors,
subcontractors or their employees to comply with the provisions hereof, except
to the extent caused by Landlord’s intentional or negligent acts.


 


14.           Certain Definitions.


 


A.            “Space Plan” herein means a preliminary floor plan,
drawn to scale, showing: (1) demising walls, corridor doors, interior
partition walls and interior doors, including any special walls, glass
partitions or special corridor doors, (2) any restrooms, kitchens,
computer rooms, file rooms and other special purpose rooms, and any sinks or
other plumbing facilities, or other special facilities or equipment, (3) any
communications system, indicating telephone and computer outlet locations, and
(4) any other details or features required to reasonably delineate the
Work to be performed.


 


B.            “Working Drawings” herein means fully dimensioned
architectural construction drawings and specifications, and any required
engineering drawings (including mechanical, electrical, plumbing,
air-conditioning, ventilation and heating), and shall include any applicable
items described above for the Space Plan, and if applicable: (1) electrical
outlet locations, circuits and anticipated usage therefor, (2) reflected
ceiling plan, including lighting, switching and any special ceiling
specifications, (3) duct locations for heating, ventilating and
air-conditioning equipment, (4) details of all millwork,
(5) dimensions of all equipment and cabinets to be built in,
(6) furniture plan showing details of space occupancy, (7) keying
schedule, (8) lighting arrangement, (9) location of print machines,
equipment in lunch rooms, concentrated file and library loadings and any other
equipment or systems (with brand names wherever possible) which require special
consideration relative to air-conditioning, ventilation, electrical, plumbing,
structural, fire protection, life—fire-safety system, or mechanical systems,
(10) special heating, ventilating and air conditioning equipment and
requirements, (11) weight and location of heavy equipment, and anticipated
loads for special usage rooms, (12) demolition plan, (13) partition
construction plan, (14) type and color of floor and wall coverings, wall
paint and any other finishes, and any other details or features required to
completely delineate the Work to be performed.


 


15.           Incorporated Into Lease; Default.  THE PARTIES
AGREE THAT THE PROVISIONS OF THIS AGREEMENT ARE HEREBY INCORPORATED BY THIS 


 


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REFERENCE INTO THE AMENDMENT FULLY AS THOUGH SET FORTH
THEREIN.  In the event of any express
inconsistencies between the Lease and this Agreement, the latter shall govern and
control.  If Tenant shall default under
this Agreement, Landlord may order that all Work being performed in the
Premises be stopped immediately, and that no further deliveries to the Premises
be made, until such default is cured, without limitation as to Landlord’s other
remedies.  Any amounts payable by Tenant
to Landlord hereunder shall be paid as additional rent under the Lease.  Any default by the other party hereunder
shall constitute a default under the Lease and shall be subject to the remedies
and other provisions applicable thereto under the Lease.  If Tenant shall default under the Lease or
this Agreement and fail to cure the same within the time permitted for cure
under the Lease, at Landlord’s option, all amounts paid or incurred by Landlord
towards the Improvement Allowance shall become immediately due and payable as
additional rent under the Lease.


 


[Preliminary Floor Plan]


 


C-7





















 


EXHIBIT D


 


DECLARATION


OF


INDUSTRIAL STANDARDS


AND PROTECTIVE COVENANTS


 


THIS DECLARATION, Made this 8th day of
April, 1982, by RAUENHORST CORPORATION, a Minnesota corporation, with its
principal place of business at 2200 Northwestern Financial Center, 7900
Xerxes Avenue South, Minneapolis, Minnesota 55431 (hereinafter called “Declarer”).


 


WHEREAS, Declarer is the owner of the
premises lying and being in the County of Hennepin, State of Minnesota,
described on Exhibit ”A,” attached hereto and incorporated herein by
reference (“Premises”), and is the owner of other property located in the
recorded plat of Opus 2 Fourth Addition (“Other Property”).


 


WHEREAS, Declarer is desirous of
subjecting said Premises to the conditions, covenants, restrictions and
reservations hereinafter set forth to insure development, improvement and use
of the Premises acceptance to Declarer so as to:


 


(a)           Protect
Declarer’s Other Property from unacceptable development, improvement and use.


 


(b)           Guard against
erection thereon of structures built of materials unacceptable to Declarer or
which are unattractive to Declarer in appearance or design.


 


(c)           Insure
development of the Premises in a form adequate and reasonable to Declarer.


 


(d)           Provide
adequate off-street parking space and loading facilities, sign controls and
setbacks; and, in general, to provide a development that will promote the
general welfare of the Other Property.


 


(Paragraphs (a), (b), (c) and (d),
above, are sometimes hereinafter collectively called “Criteria Standards.”)


 


NOW, THEREFORE, Declarer hereby declares that the
Premises shall be developed in accordance with the following standards and
guidelines and in line with the aforementioned Criteria Standards, and shall
apply to and bind each and every owner and successor in interest thereof, and
are imposed upon the Premises as a servitude in favor of Declarer only for the
benefit of Declarer and such assignee of the Declarer as shall be given the
right to enforce the provisions hereof by written instrument recorded in the
Office of the Registrar of Titles, 


 


D-1





















 


Hennepin County, Minnesota, but only if such assignment
specifically gives the assignee the right to enforce this Declaration.  Mere purchase of the Premises or any of the
Other Property shall confer no right to enforce the provisions hereof.  Further, such conditions, covenants,
restrictions and reservations shall operate as covenants passing with the title
to said Premises, and are as follows:


 


ARTICLE
I.  DEFINITION OF TERMS.  The following terms and words as
used in the context herein shall be defined as follows:


 


(a)           Building Site
shall mean any lot, or portion thereof, or two or more contiguous lots, or
portions thereof, or a parcel of land upon which an industrial or commercial
building or buildings and appurtenant structures may be erected in conformance
with the requirements of this Declaration.


 


(b)           Declarer shall
mean Rauenhorst Corporation, its successors and assigns.


 


(c)           Improvements
shall mean and include all construction necessary to erect a building and other
improvements or the Premises for a use permitted by the zoning ordinances of
the City of Minnetonka, and shall include the building, parking areas, loading
areas, driveways, sidewalks, fences, lawns, landscaping and lighting.


 


(d)           Owner shall
mean the party or parties, their heirs, successors or assigns who are in title
or claim title to any part or parcel of the Premises.


 


(e)           Street shall
mean a right-of-way dedicated to the public or in respect to which an easement
has been granted to the public.


 


ARTICLE II.  PERMITTED
USES AND PERFORMANCE STANDARDS.


 


(a)           No noxious or offensive trades, services or activities
shall be conducted on the Premises, nor shall anything be done thereon which
may be or become an annoyance or nuisance to Declarer by reason at unsightliness
or excessive emission of odors, fumes, smoke, vibration, dirt, dust, glare,
waste or noise.


 


(b)           Without otherwise limiting the provisions of
paragraph (a) above, or of any other term or condition of this
Declaration, the permitted uses shall be light industrial, offices, research,
assembling or processing, jobbing, wholesaling and uses ordinarily incidental
to the operation of a permitted principal use. 
All uses shall comply with the zoning ordinances of the City of
Minnetonka, Minnesota.  Said zoning
ordinances shall govern if inconsistent herewith to the extent actually
inconsistent.  If not inconsistent
herewith, the standards herein contained shall be considered as requirements in
addition to said zoning ordinances.  The
Premises shall not be used for the following purposes:


 


Auto
salvage yard; used material yard or any type of exposed open sales or storage
of materials, or any use which would create an excessive amount of sewage or a
quality of sewage which would cause a disposal problem; or for manufacture,
storage or sale of explosives or similar dangerous products.


 


D-2





















 


ARTICLE
III.  PERFORMANCE STANDARDS.  Declarer, on the basis of
the-experience of others, has learned that to set measured minimum or maximum
standards for control of noise, vibration, dirt, dust, smoke, odor, glare and
waste within an industrial area is difficult if not impossible.  Therefore, in order to protect its interest
in the Other Property and to enable Declarer to orderly develop the Other
Property, complete architectural and engineering plans for any proposed
Improvement to be constructed on the Premises shall be submitted by Owner to
Declarer prior to commencement of any development or construction of any
Improvement on the Premises.  Such plans
shall contain the items and information required by Articles IV, V, VI and
VII hereof, and shall contain sufficient engineering data to enable Declarer to
determine whether or not the proposed Improvement will operate within “safe
limits” of noise, vibration, dirt, dust, smoke, odor, glare and waste.


 


ARTICLE
IV.  OFF-STREET PARKING AND LOADING.


 


(a)           Adequate off-street parking shall be provided by Owner
for customers and employees.


 


(b)           Off-street loading space shall be provided and such
space shall not be part of the area allocated as required for off-street
parking space.


 


(c)           Truck loading and receiving areas shall not be on the
street side of any building; provided, however, as applies in the case of other
restraints, Declarer reserves the right to review and permit such areas on the
street side of any building where the facilities are so screened as to be
acceptable to Declarer.


 


(d)           All off-street parking, driveways and loading areas
shall be properly surfaced to control dust and properly graded to assure proper
drainage.


 


(e)           No parking shall be permitted on a side yard abutting a
dedicated public street without the written approval of Declarer.


 


(f)            From and after the date a building is constructed on a
Building Site, Owner or Owners of such Building Site shall maintain adequate
on-site parking spaces and loading facilities to serve the needs of each such
Building Site, taking into account the building or buildings located or to be
located thereon, and the use made or to be made thereof, and shall keep such
parking areas, driveways and loading areas surfaced with asphalt or concrete
and properly kept and maintained at all times.


 


(g)           No on-street parking or loading will be permitted.


 


ARTICLE
V.  LANDSCAPING, OUTSIDE STORAGE AND MAINTENANCE.


 


(a)           Sites occupied by a building shall be landscaped in
accordance with a plan approved by Declarer. 
Such landscaping shall include sodding, planting of trees, shrubs and
other customary landscape treatment, and, if required by Declarer, an
underground sprinkling system.


 


D-3





















 


(b)           The landscape development, having once been installed
in accordance with an approved plan, shall be kept and maintained in a neat and
adequate condition, which shall include lawns mowed, edges trimmed, and trees
and shrubs kept in good condition and appearance.


 


(c)           The approved plan for landscaping a Building Site may
not be altered substantially without submitting a revised plan to Declarer for
approval.


 


(d)           The Premises shall at all times be kept free from
debris, paper, excessive leaves, branches and trash of all kinds.


 


(e)           Outside storage of materials, equipment and products
shall be prohibited except as approved by Declarer.


 


(f)            Nothing shall be done on any Building Site that
interferes with the natural drainage of surface waters.


 


ARTICLE
VI.  SIGNS – ADVERTISING SPACE.  Declarer
recognizes there is need for signs advertising the identity of Owner and the
business conducted on the Premises.  It
is further recognized that acceptable standards for such signs may change from
time to time.  In order to allow for such
change, all requests for signs to be located on the Premises shall be submitted
to Declarer for approval.  Declarer shall
consider any such application in light of the Criteria Standards set forth
herein and other appropriate data, and shall either approve the proposed signs
as submitted or require that the proposal be altered so that any signs
constructed in connection therewith shall be such as to fulfill the said
criteria Standards.  In the event
Declarer does not disapprove any such sign proposals within thirty (30)
days after submission, said approval shall be deemed to have been given;
provided, however, that no sign located an the Premises subject hereto shall:


 


(a)           Be what is known as an advertising sign advertising
businesses or products other than those sold, manufactured or warehoused on the
Premises on which the sign is located.


 


(b)           Have in use any flashing, pulsating or rotating light
or lights.


 


(c)           Be located on a rooftop.


 


(d)           Violate any ordinances of the City of Minnetonka.


 


ARTICLE
VII.  PLANS AND BUILDINGS.


 


(a)           No improvements shall be erected, placed or altered on
the Premises until the building or other alteration plans, specifications,
including front elevations and/or architect’s rendering, and a site plan
showing the location of such Improvement on the Premises, including parking,
loading and landscape plans, have been submitted to and approved, in writing,
by Declarer as to conformity and harmony with existing and planned structures
on the Other Property, and as to location of the Improvements on the Building
Site, giving due regard to the anticipated use thereof as may affect adjoining
structures, use and operations, and as to location of the Improvements with
respect to topography, grade and finished ground elevation, and as to 


 


D-4





















 


fulfilling the purposes and Criteria Standards herein
contained; provided, however, that Declarer shall not be liable to anyone in
damages or otherwise who has submitted plans for approval or to anyone by
reason of mistake in judgment, negligence or nonfeasance of itself, its agents
or employees, arising out of or in connection with the approval or disapproval
of any such plans or any action or inaction in connection with this
Declaration.  Likewise, any person, firm
or corporation that submits plans to Declarer for approval, or becomes an
Owner, agrees not to bring any action or suit to recover any damages or other
relief against Declarer.  Declarer shall
not unreasonably withhold approval of any plans submitted pursuant hereto;
provided, however, that failure to meet the Criteria Standards or the standards
contained herein shall be grounds for Declarer’s reasonable disapproval of any
such plans.  Failure of Declarer to
disapprove any plans within thirty (30) days after submission of said
plans to it shall be deemed to be approved thereof.  All construction work shall, upon approval of
plans by Declarer, be carried on with dispatch, and upon completion thereof the
site shall be landscaped promptly.


 


(b)           All improvements shall be constructed in conformity
with the existing building codes of the City of Minnetonka.


 


(c)           All building plans shall be prepared by an architect
duly licensed under the then existing registration laws of the State of
Minnesota.


 


(d)           Any building erected on the Premises shall be of
concrete masonry construction, its equivalent or better.  The architectural treatment on the sides of buildings
facing a street shall be one or more of the following:


 


(1)           Face brick.


 


(2)           Architectural
pre-cast concrete panel.


 


(3)           Pre-finished
curtain wall construction in conjunction with face brick.


 


(4)           Other
materials when approved by Declarer in writing.


 


(5)           All buildings
shall be constructed so as to screen all electrical and mechanical equipment on
the roof or to secure all such equipment mounted at ground level by screening
approved by Declarer.


 


(6)           All exterior
lighting fixtures and standards shall be provided by Owner and shall comply
with the overall lighting plan of Declarer and shall be subject to approval by
Declarer.


 


ARTICLE
VIII.  UNDERGROUND ELECTRICAL FACILITIES.  No building or
structure located on the Premises shall be served by other than underground
electric and telephone distribution facilities. 
Poles, wires or other aboveground electric or telephone distribution
facilities may be temporarily installed during construction of buildings or
structures, in emergencies or during construction or repair of the underground
system.  For the protection of
underground cables and facilities, the grade or contour of the land above and
adjacent to said facilities shall not hereafter be substantially increased,
decreased or otherwise changed or altered without the written consent of the
utility company providing such service.


 


D-5





















 


ARTICLE
IX.  EASEMENTS.  Declarer reserves, for itself, its successors
and assigns, a permanent easement over, upon, under and across the easements as
shown on the plat of said Premises for the carrying of utilities, water or
sewage and the maintenance of such facilities, and Declarer is hereby given the
power and authority to execute deeds or other necessary documents releasing or
conveying any such rights that it may deem advisable or necessary.


 


ARTICLE
X.  ENFORCEMENT.


 


(a)           Whenever approval of Declarer is required, Declarer
shall take action within thirty (30) days after receipt of the request and
all plans, specifications or other documents required to be submitted for
approval.  If not approved, specified
written objections shall be mailed or delivered to the applicant within
thirty (30) days, otherwise the request shall be deemed to have been
granted.  All requests for approval or
applications for variance of the within conditions shall be submitted, in
writing, by certified mail to Declarer at 2200 Northwestern Financial Center,
7900 Xerxes Avenue South, Minneapolis, Minnesota 55431, Attention: Legal
Division.


 


(b)           Each of the conditions, covenants, restrictions and
reservations contained herein shall continue and inure to the benefit of
Declarer, and its assigns (as limited herein), for a period of twenty (20)
years from the date of filing for record, and shall be automatically extended
in their entirety for successive periods of ten (10) years unless Declarer
executes, acknowledges and files for record an appropriate instrument, in
writing, terminating and releasing the requirements of this Declaration.


 


(c)           The standards set forth herein shall be enforceable by
Declarer, and its assigns (as limited herein), for the maximum period allowed
by law and shall be enforceable by:


 


(1)           Injunctive
relief, prohibitive or mandatory, to prevent breach of or to enforce
performance or observance of these standards and requirements; or


 


(2)           Money judgment
for damages by reason of the breach of these standards; or


 


(3)           Both (1) and
(2) above.


 


(d)           Failure of Declarer to enforce any provisions of the
standards and requirements contained herein upon the violation thereof shall in
no event be deemed to be a waiver of the rights to do so as to any subsequent
violation.


 


(e)           Declarer may grant variances from the strict
application of the provisions of these standards and requirements in cases
where, by reason of extraordinary and exceptional conditions of any site or
circumstances, strict application of any standard would result in peculiar and
practical difficulties or exceptional or undue hardship upon the owner of any
Building Site, or where otherwise deemed appropriate by Declarer.


 


D-6





















 


(f)            Invalidation of any of the provisions of these
standards and requirements, whether by Court Order or otherwise, shall in no
way affect any of the other provisions which shall remain in full force and
effect.


 


IN TESTIMONY WHEREOF, Declarer has
caused these presents to be executed the day and year first above written.


 


	
   

  	
   

  	
  RAUENHORST CORPORATION 

  (Declarer)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gene Haugland

  
	
   

  	
   

  	
  Its: President - Real Estate
  Division

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  And:

  	
  /s/ Robert C. Perkins

  
	
   

  	
   

  	
  Its: Assistant Secretary

  
				



 


 


	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF HENNEPIN

  	
  )

  



 


 


The foregoing instrument was
acknowledged before me this 8th day of April, 1982, by Gene Haugland, President
- Real Estate Division, and by Robert C. Perkins, Assistant Secretary, of
Rauenhorst Corporation, a Minnesota corporation, on behalf of the corporation.


 


 


	
   

  	
  /s/ Irene V. Anderson

  
	
   

  	
  Notary Public

  



 


INSTRUMENT PREPARED BY:


JAMES L. TUCKER


2200 Northwestern Financial Center


7900 Xerxes Avenue South


Minneapolis, Minnesota 55431


 


D-7





















 


EXHIBIT “A”


to


DECLARATION


OF
INDUSTRIAL STANDARDS


AND


PROTECTIVE
COVENANTS


 


The parcel of land situated in the City of Minnetonka,
County of Hennepin, State of Minnesota, sometimes referred to in the attached
Declaration of Industrial Standards and Protective Covenants as the “Premises,”
is described as follows, to-wit:


 


That part of Lot 3, Block 14, Opus 2
Fourth Addition, according to the recorded plat thereof, lying Northerly of the
following described line: Beginning at a point on that particular West line of
said Lot 3 having a record dimension of 755.05 feet, distant 725.05 feet
Southerly from the Northwest corner of said Lot 3; thence Easterly, parallel
with the North line of said Lot 3, a distance of 460.46 feet to the Easterly
line of said Lot 3 and there terminating; EXCEPT the South 0.48 feet of the
above described property.


 


A-1