**SPECTRUMCOMMERCE CENTER**

 

**LEASE**

 

 

ThisLease is entered into as of April 25, 2003, between SPECTRUM INVESTMENTGROUP, L.L.C., a Minnesota limited liability company (“Lessor”) and MesabaAviation, Inc., a Minnesota corporation (“Tenant”).

 

1.             Definitions.  Inthis Lease:

 

(a)           “BOMA” means Building Owners and Managers Association.

 

(b)           “Building” means that certainoffice/warehouse building, parking ramp, and the surrounding land, driveways,walkways and accessways owned and maintained by Lessor and known as SpectrumCommerce Center, located on the Land in Eagan, Dakota County, Minnesota as setforth on Exhibit A attached hereto.  TheBuilding as currently constructed contains 199,714 rentable square feet and191,463 usable square feet.

 

(c)           “Casualty” means a fire, flood, explosion,tornado, or other cause of damage to or destruction of the Building orPremises.

 

(d)           “Certificate of Occupancy Date” shall mean the date when Lessor shallhave obtained a Certificate of Occupancy (temporary or permanent) from the Cityof Eagan, Minnesota for the Premises permitting legal use of the Premises forthe purposes specified in the Lease; provided that if Lessor has obtained onlya temporary Certificate of Occupancy, Lessor shall remain obligated under theLease to obtain a permanent Certificate of Occupancy as promptly as reasonablypossible and in the interim to renew or extend the temporary Certificate ofOccupancy so that a Certificate of Occupancy is always in full force andeffect.  Tenant agrees to take allnecessary and reasonable actions to cooperate with Lessor in obtaining aCertificate of Occupancy.

 

(e)           “Commencement Date” means:

 

January 1, 2004,subject to extension as provided in Section 5 of this Lease.

 

(f)            “Common Areas” means any halls, lavatories,loading facilities, driveways and grade level open lot parking areas, designedfor the nonexclusive use of the owner and occupants of the Building, and notdesigned or intended for the exclusive use of a single tenant, as designated byLessor from time to time.

 

(g)           “Costs” means the monthly Tax Costs plus themonthly Operating Costs.

 

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(i)            “Operating Costs” means all costs ofmanaging, operating, maintaining and repairing the Property, including allcosts, expenditures, fees and charges for: (A) operation, maintenance andrepair of the Property (including maintenance, repair and replacement of glass,and landscaping and maintenance of the roof covering or membrane); (B)utilities and services (including telecommunications facilities and equipment,recycling programs and trash removal), and associated supplies and materials;(C) compensation (including employment taxes and fringe benefits) for personsat or below the level of the building manager who perform duties in connectionwith the operation, management, maintenance and repair of the Building, suchcompensation to be appropriately allocated for persons who also perform dutiesunrelated to the Building; (D) property (including coverage for earthquake andflood if carried by Lessor), liability, rental income and other insurancerelating to the Property, and expenditures for deductible amounts paid undersuch insurance; (E) licenses, permits and inspections; (F) complying with therequirements of any law, statute, ordinance or governmental rule or regulation orany orders pursuant thereto (collectively “**Laws**”);(G) amortization of capital improvements required to comply with Laws, or whichare intended to reduce Operating Costs or improve the utility, efficiency orcapacity of any Building System, with interest on the unamortized balance arate equal to two hundred basis points over the Prime Rate, as published by TheWall Street Journal, over such useful life as Lessor shall reasonablydetermine; (H) property management fees in an amount equal to three percent “*”of Base Rent and Costs payable to Lessor; (I) a reasonable allowance fordepreciation on machinery and equipment used to maintain the Property on otherpersonal property owned by Lessor in the Property (including window coveringsand carpeting in common areas); (J) the Building’s share of any shared orcommon area maintenance fees and expenses (including costs and expenses ofoperating, managing, owning and maintaining the surface parking lot and thecommon areas of the Project); and (K) any other cost, expenditure fee orcharge, whether or not hereinbefore described, which in accordance with generalaccepted property management practices would be considered an expenses ofmanaging, operating, maintaining and repairing the Property.

 

Operating Costs shall notinclude (i) capital improvements (except as otherwise provided above); (ii)costs of special services rendered to individual tenants (including Tenant) forwhich a special charge is made; (iii) interest and principal payments on loansor indebtedness secured by the Building; (iv) costs of improvements for Tenantor other tenants of the Building; (v) costs for which Lessor is reimbursed byother tenants of the Building other than through payment of tenants’ shares ofincreases in Operating Costs and Taxes; (vi) leasing commissions, attorneys’fees and other expenses incurred in connection with leasing space in theBuilding or enforcing such leases; (vii) depreciation or amortization, otherthan as specifically enumerated in the definition of Operating Costs above;(vii) costs, fines or penalties incurred due to Lessor’s violation of Law;(viii) any costs or expenses associated with the second-level parking lot; and(viv) those exclusions set forth on Exhibit F attached hereto.

 

* Omitted pursuant to a request for confidentialtreatment.

 

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(ii)           “Tax Costs” means all real estate taxes,levies, and charges due and payable, and installments of special assessments(including interest on deferred assessments) assessed, levied or imposed on, orallocated to, the Land and Building and all reasonable attorneys’ fees,consultants’ fees, witness fees, court costs and other expenses of Lessor inconnection with any proceeding to contest these amounts.  Notwithstanding the aforementioned, theamount of special assessments attributable to assessments which are pending orlevied as of the date of this Lease on a pro-rata basis for the Premises willnot exceed the following numbers:

 
| 2003 | $ | “*” |   |
|------|---|---------------|--------|
| 2004 | $ | “*” |   |
| 2005 | $ | “*” |   |
| 2006 | $ | “*” |   |
| 2007 | $ | “*” |   |
| 2008 | $ | “*” |   |
| 2009 | $ | “*” |   |
| 2010 | $ | “*” |   |
| 2011 | $ | “*” |   |
| 2012 | $ | “*” |   |
| 2013 | $ | “*” |   |

 

The above-mentioned limits are based upon a Premises square footage of32,742 at 11.30672008% Tenant’s Share, and the limits will be adjustedaccordingly when the final Premises square footage is established.  If the square footage and limits areadjusted, the Parties will execute an amendment to this Lease to reflect theadjustment.  The above-listed specialassessment costs attributable to the Premises Tax costs for Tenant will be 50%of the amount set forth above, and Lessor will be responsible for the remaining50%.  Tax Costs shall specifically notinclude real estate taxes or other governmental charges on the second-storyparking ramp located above the Premises. 2003 Tax Costs are estimated to be* per usable square foot.  Upon request, Lessor shall furnish Tenantwith Lessor’s calculations of applicable Tax Costs for any year of the LeaseTerm for Tenant’s review.

 

(h)           “Environmental Law” means the ComprehensiveEnvironmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 etseq.), the Hazardous Material Transportation Act (49 U.S.C. § 1801 etseq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901etseq.), the Federal Water Pollution Control Act (33 U.S.C. §1251 etseq.), the Oil Pollution Act of 1990 (P.L. 101-380), theSafe Drinking Water Act (42 U.S.C. § 300(f), etseq.), the ClearAir Act (42 U.S.C. § 7401 etseq.), the Toxic SubstancesControl Act, as amended (15 U.S.C. § 2601 etseq.), the FederalInsecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 etseq.),and OSHA as it relates to Hazardous

 

* Omitted pursuant to a request for confidentialtreatment.

 

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Materials,as such laws have been and hereafter may be amended or supplemented, and anypresent or future Federal, state or local, statutes, rules, regulations, commonlaw rule, ordinances, licenses, permits and interpretations and orders ofregulatory and administrative bodies analogous or related to the above statutesor otherwise related to human health, safety or the environment.

 

(i)            “Exhibit” means an Exhibit attached to andthereby made a part of this Lease.

 

(j)            “Hazardous Substance” shall mean anypollutant, contaminant, chemical, or industrial or hazardous, toxic ordangerous waste, substance or material, defined or regulated as such in (or forpurposes of) any Environmental Law and any other toxic, reactive, or flammablechemicals, including any asbestos, any petroleum (including crude oil or anyfraction), any radioactive substance and any polychlorinated biphenyls or anyconstituent of any such substance or waste, and specifically also includinghydraulic fluids; provided, in the event that any Environmental Law isamended so as to broaden the meaning of any term defined thereby, such broadermeaning shall apply subsequent to the effective date of such amendment; and provided,further, to the extent that the applicable laws of any state establish ameaning for “hazardous material,” “hazardous substance,” “hazardous waste,”“solid waste” or “toxic substance” which is broader than that specified in anyfederal Environmental Law, such broader meaning shall apply.

 

(k)           “Land” means Lot 2, Block 1, SpectrumBusiness Park, Dakota County, Minnesota.

 

(l)            “Lessor’s Work” means the responsibility ofLessor to deliver the space in accordance with Exhibits C and C-1, andaccording to the schedule set forth in Exhibit G.

 

(m)          “Lease” means this Lease, all Exhibitsattached to this Lease, and all properly executed amendments, modifications andsupplements to this Lease

 

(n)           “Lease Year” means a period of 12 consecutivemonths commencing on the first day of the first full month of the Term and each12-month period thereafter during the Term.

 

(o)           “Leasehold Improvements” is defined in theWork Letter attached hereto as Exhibit C.

 

(p)           “Legal Requirements” shall mean all presentand future Federal, State, local and City laws, statutes, regulations,ordinances (including Environmental Laws and laws relating to accessibilityand, usability of premises by, disabled individuals) and all covenants,restrictions and conditions now or hereafter of record which may be applicableto Lessor, to Tenant, to the leasing of the Premises by Lessor, to any of theBuilding, to any of the Premises or to the use, manner of use,

 

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occupancy,possession, operation, maintenance, alteration, repair or restoration of any ofthe Premises or the Building by Lessor and Tenant.

 

(q)           “Monthly Rent” or “BaseRent” means the amount to be paid by Tenant in connection with its rental ofthe Premises in accordance with Section 6.

 

(r)            “Phase I” means that part of the Buildingdenoted as such on attached Exhibit A.

 

(s)           “Phase II” means that part of the Buildingdenoted as such on Attached Exhibit A. The Premises are contained within Phase II.

 

(t)            “Phase III” means that portion of theBuilding denoted as such on Exhibit A which may, but need not, beconstructed by Lessor.

 

(u)           “Premises” means that certain portion of the Building consisting ofapproximately 32,742 Usable Square Feet as shown on the drawing attached tothis Lease as Exhibit B.  AtTenant’s option, the final area of the Premises may be adjusted upward up to20% provided such adjustment is completed within thirty (30) days of thesigning of this Lease. If the Premises is adjusted upward, the Parties willexecute an amendment to this Lease and will revise Exhibit B to reflect the adjustment.  The Premises shall be adjacent to theexisting portion of the Building currently being subleased by Tenant.

 

(i)            “Office Space” means that portion of thePremises, finished for office use and designated as such on Exhibit B,subject to adjustment as provided elsewhere herein.

 

(ii)           “Parking Space” means that portion of the Premises located on grade andthe second-level parking deck as designated on Exhibit B.

 

(v)           “Section” means a section of this Lease.

 

(w)          “S.O.C.” means Tenant’s “Systems OperationsCenter.”

 

(x)            “Taking” means acquisition by a publicauthority having the power of eminent domain of all or part of the Land orBuilding by condemnation or conveyance in lieu of condemnation

 

(y)           “Tenant’s Share” means the percentage of thePremises obtained by dividing the Usable Square Feet in the Premises by theUsable Square Feet in the Building, which percentage on the date of this Leaseis estimated to be based on the number of square feet stated in Section 1(b)above and in Exhibit A attached hereto. Tenant’s Share will be modified should Phase III be added to thePremises.

 

(z)            “Tenant’s Work” means the responsibility ofTenant to improve the Premises as outlined in the Work Letter attached heretoas Exhibit C.

 

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(aa)         “Term” means the period of ten (10) years and              zero months, plus any renewal terms, ifexercised, beginning on the Commencement Date, subject to early termination orextension as provided elsewhere in this Lease.

 

(bb)         “Usable Square Feet of the Building” as ofthe date of this Lease means 191,463 square feet.

 

(cc)         “Usable Square Feet of the Premises” meansall space within the demising walls (measured from the inside finish of theoutside walls to the center of tenant division and common area walls) of theOffice Space, but excluding all common areas including, but not limited to, thecommon electrical room, elevator, lobby and stairwell to the parking deck.  Upon completion of Tenant’s Work, Lessorshall calculate the area of the Premises after the demising walls are in placein accordance with ANSI/BOMA Standard 265.1-1996, upon which time Lessor shallformalize the final calculation of the area in a written notification toTenant.  Unless contested by Tenantwithin thirty (30) days of such notice, the area calculation set out in thenotice shall be presumed accurate and final. The rentable/usable factor shall be zero.  In the event Tenant contests the area calculation submitted byLessor, Lessor and Lessor’s architect shall meet with Tenant and Tenant’sarchitect to discuss and negotiate a final mutually agreeable area calculation.

 

(dd)         “Work Letter” means Exhibit C which isattached hereto.

 

2.             Enumeration of Exhibits

 

The Exhibits enumerated in this Section 2 and attached to this Leaseare incorporated herein by this reference and are to be construed as a part ofthis Lease.  Each party agrees toperform any obligations on its part stated in any and all such Exhibits:

 
| Exhibit A.  |   | Site Plan of the Building                          |
|-------------|--------|----------------------------------------------------|
| Exhibit B.  |   | Site Plan of the Premises                          |
| Exhibit C.  |   | Work Letter                                        |
| Exhibit C-1 |   | Spectrum Shell Specifications                      |
| Exhibit D.  |   | Rules and Regulations                              |
| Exhibit E.  |   | Sign Criteria                                      |
| Exhibit F.  |   | Exclusions From and  Credits To Operating Expenses |
| Exhibit G.  |   | Schedule for Delivery of  Lessor’s Work       |

 

3.             Lessor’s Representations and Warranties.

 

As of the date upon which this Lease becomes effective, Lessorrepresents, warrants and covenants to Tenant, agreeing to defend, indemnify,and hold Tenant harmless from any claims, demands, liabilities, causes ofaction, suits, judgments, damages and reasonable expenses arising from Lessor’sbreach, the following:

 

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(a)           The Building and all quasi-public areaswithin the Building (including all toilets) will, at Lessor’s sole expense, asof the Occupancy Date, comply with ADA and other applicable laws, statutes,ordinances, rule or regulations relating to handicapped access.

 

(b)           Lessor has full right and lawful authority toenter into and perform Lessor’s obligations under this lease, that Lessor ownsthe Land and improvements thereon in fee simple, free and clear of all othercontracts, leases, tenancy agreements, restrictions, violations, encumbrancesor defects in title of any nature whatsoever that would restrict the use orenjoyment of Tenant of the Premises.  Solong as no Event of Default shall have occurred and be continuing (subject tothe expiration of any notice or cure period), Tenant shall peaceably andquietly have, hold and enjoy the Premises for the Term, free of any claim orother action by the Lessor or anyone rightfully claiming by, through or underthe Lessor (other than the Tenant) with respect to any matters arising fromLessor’s ownership of the Land and the Building.

 

4.             Premises.

 

Lessor leases the Premises to Tenant, andTenant leases the Premises from Lessor, for the Term, under the terms andconditions of this Lease.

 

5.             Construction

 

(a)           Work Letter. The parties shall pay for and perform their respective obligations asset out in the Work Letter (attached hereto as Exhibit C).  The Premises will be constructed for Tenantin accordance with Exhibit C. All work will be designed, performed, completed and paid for as providedin Exhibit C.

 

(b)           Construction and Work Schedule**. **Lessorand Tenant acknowledge and agree that due to Tenant’s schedule for occupyingthe Premises, the parties must adhere to the work schedule set forth in ExhibitG attached hereto (the “Work Schedule”) in order to allow the parties totimely complete their respective construction obligations.  Accordingly, Lessor shall deliver possessionof the Premises to Tenant completed in accordance with the Work Letter(“Lessor’s Work”) and ready for the installation and completion of Tenant’sWork on or before the dates outlined on the Work Schedule.  If Lessor, at any time, and for any specific“milestone” date (each, a “Milestone Date”) as set forth on the Work Schedule,is late in delivering possession of the Premises in the condition requiredunder, and with the portion of Lessor’s Work to be completed in accordancewith, the Work Letter, by the Milestone Date set forth in the Work Schedule (a“Lessor Delay”), which Lessor Delay results in an actual delay in Tenantperforming Tenant’s work, then Lessor shall be liable for any and all costsincurred by Tenant for storage of materials, escalation of work, the cost ofremobilization of labor forces,

 

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overtime expenses, andother out-of-pocket expenses, which amount shall be limited to:  (i) Tenant’s actual costs relating to suchdelay, including without limitation, the costs set forth herein, or (ii) “*” per month, whichever is less.  Tenant expects that these costs will beminimal should Lessor experience delays prior to June 1, 2003 and,provided that the Lessor makes up for such delays by June 1, 2003, thecosts of delays after June 1, 2003 will also be minimal.  Should, however the Lessor find itself indelay on or after June 1, 2003, the costs of such delay will escalate.  Lessor shall not be liable if any such delayis caused by Tenant, its employees, agents or contractors (including Tenant’sobligation to timely provide plans and specifications as set forth in the WorkLetter) (a “Tenant Delay”).  Inaddition, in the event that any one or more Lessor Delays causes Tenant to beactually delayed, then, in addition to Lessor being liable for Tenant’s costsin connection with such delay as set forth in this Section, the CommencementDate and Tenant’s obligation to pay Rent will be delayed one day for each dayof Lessor Delay.  Lessor and Tenant willfully cooperate, and will cause their respective employees, agents andcontractors to fully cooperate, with each other in coordinating and completingtheir respective construction obligations, including without limitation,coordinating access to the Premises and the Building, storage of materials,scheduling work, and attendance at Tenant’s construction meetings.  During all such construction meetings,Lessor will timely notify Tenant of the existence of any Tenant Delay.

 

6.             Rent.

 

Monthly Rent shall be calculated bymultiplying the Usable Square Feet of the Premises by the following annualrates and dividing by 12.

 
| **Year** |   | **Annual Rate Per  Usable Square  Foot of the  Premises** |              |
|----------|--------|-----------------------------------------------------------|-------------------|
| 1        |   |                                                      | **“*”** |   |
| 2        |   |                                                      | **“*”** |   |
| 3        |   |                                                      | **“*”** |   |
| 4        |   |                                                      | **“*”** |   |
| 5        |   |                                                      | **“*”** |   |
| 6        |   |                                                      | **“*”** |   |
| 7        |   |                                                      | **“*”** |   |
| 8        |   |                                                      | **“*”** |   |
| 9        |   |                                                      | **“*”** |   |
| 10       |   |                                                      | **“*”** |   |

 

Tenant will pay the Monthly Rent to Lessor at1000 Blue Gentian Road, Eagan, MN 55121, or such other place as Lessor maydesignate, in advance on the first day of each month during the

 

* Omitted pursuant to a request for condfidential treatment.

 

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Term without demand, deduction or setoff,except as specifically provided in Sections 7, 11, 17, 26 and 28 hereof.Monthly Rent will begin on the Commencement Date.  If the Term begins on a day other than the first day of a month,the Monthly Rent for that month will be prorated by multiplying the MonthlyRent by the number of days of that month included in the Term and dividing theproduct by the number of days in that month.

 

Any Monthly Rent or other amounts payable byTenant to Lessor under this Lease which are not paid within 10 days afterwritten notice from Lessor (which notice may be delivered by Lessor to Tenantvia E-mail), will bear interest from the date due to the date paid at the rateof 18% per annum or the maximum rate of interest permitted by law, whichever isless, and the interest will be paid to Lessor on demand.  All amounts to be paid by Tenant to Lessorunder this Lease will be deemed to be additional rent for purposes of paymentand collection.  Lessor may from time totime, but no more than twice per calendar year, estimate in good faith Tenant’sShare of Costs for the current year and include such estimate in the monthlyinstallments, and Tenant shall pay such estimated Tenant’s Share of Costs withthe monthly installments.

 

Tenant shall not pay any Security Deposit.  In addition, Tenant shall in no event be responsible for thepayment or reimbursement of any of the following:  (a) any costs of any nature incurred by Lessor in connectionwith obtaining any fee mortgage on the Land or the Building or any otherindebtedness of Lessor, (b) any debt service payments of Lessor,(c) any costs of any nature incurred by Lessor in connection with theacquisition of the Land or in connection with any sale of the Land or anyinterest therein, including transfer or similar taxes and fees, (d) any taxesimposed or based on Lessor’s net income, revenue, receipts of any kind andprofits, franchise, corporate and capital taxes imposed on it, withholdingtaxes payable with respect to payments to Lessor, estate, inheritance andsuccession taxes, and any tax imposed solely because of the nature of Lessor,or (e) any other items listed in Exhibit F hereto.

 

Tenant shall pay Tenant’s Share of Costs during any early occupancyperiod prior to the Commencement Date, but in no event shall Tenant be requiredto pay Monthly Rent during any early occupancy period.

 

7.       Cost Adjustment

 

The Monthly Rent specified in Section 6 ofthis Lease shall be net to Lessor in each year during the Term.  Accordingly, Tenant shall pay, in additionto Monthly Rent, Tenant’s Share, as defined in Section 1(y) above, of Tenant’sCosts, as defined in Section 1(g) above, which may arise or become due duringthe Term, and Tenant shall indemnify and hold Lessor harmless against suchexpenses and obligations.  Tenant shallpay with each monthly installment of Monthly Rent one-twelfth of the annualestimated Tenant’s Share of Costs.

 

Within sixty (60) days after the end of eachcalendar year during the term of this Lease or any renewal or extensionthereof, Lessor shall determine the actual amount of Tenant’s Share of Costs,as defined in Section 1(g) above, payable in such calendar year and deliver awritten certification of the amounts to Tenant (“Statement”). If Tenant hasunderpaid its share of Costs for such calendar year, Tenant shall pay thebalance of the Tenant’s Share of Costs within thirty (30) days after thereceipt of such statement. If Tenant has overpaid its Tenant’s Share of Costs

 

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for such calendar year, Lessor shall either(i) refund the excess, or (ii) credit the excess against the most currentmonthly installment if Tenant’s Share of Costs for the next following calendaryear. A prorata adjustment of the Tenant’s Share of Costs shall be made for afractional calendar year occurring during the term of this Lease or any renewalor extension thereof based upon the number of days of the term of the Leaseduring said calendar year as compared to three hundred sixty-five (365) daysand all additional sums payable by Tenant or credits due Tenant as a result ofthe provisions of this Section shall be adjusted accordingly.  On an annual basis and not more than onetime per year, Tenant shall have the right, at its own expense, and at areasonable time, to audit Lessor’s books relevant to the Operating Expenses andadditional rentals.  Lessor shall maintainfull and complete books and records with respect to Operating Expenses at theBuilding.  If Tenant objects to theamounts set forth in any Statement, Tenant shall notify Lessor in writingwithin sixty (60) days after Tenant’s receipt of the Statement that Tenantdesires to inspect and/or audit Lessor’s books and records.  If Tenant so notifies Lessor, Tenant shallbe entitled to inspect and audit Lessor’s Statement of Operating Expenses andthe underlying books and records, which audit or inspection shall be completedby Tenant within one hundred twenty (120) days after Tenant’s notice to Lessorregarding its objection to the Statement. If Tenant’s audit discloses thatTenant has overpaid its share of Operating Expenses in any calendar year, Lessorshall within thirty (30) days following the completion of the audit, reimburseTenant for the amounts overpaid by Tenant. In addition, if the audit discloses that Tenant has overpaid OperatingExpenses by more than ten percent (10%), concurrently with such reimbursement,Lessor, at its option, shall (i) immediately reimburse to Tenant suchoverpayment or, (ii) allow Tenant to offset such overpayment as credit towardsrent owed, together with any interest at the interest rate set forth in Section6 hereof, from the date of Lessor’s statement through the date of reimbursementto Tenant.  In addition, Lessor shallpay $1,000.00 towards Tenant’s audit costs. If, however, within one hundredfifty (150) days after the receipt of such Statement (i) Tenant and Lessorstill dispute the correctness thereof, specifying the particular respects inwhich the Statement is claimed to be incorrect, and (ii) if such dispute shallnot have been settled by agreement, Lessor and Tenant shall submit the disputeto arbitration within one hundred eighty (180) days after receipt of thestatement.  Pending the determination ofsuch dispute by agreement or arbitration as aforesaid, Tenant shall, withinthirty (30) days after receipt of such statement, pay Tenant’s share inaccordance with Lessor’s statement and such payment shall be without prejudiceto Tenant’s position.  If the disputeshall be determined in Tenant’s favor, Lessor shall forthwith pay Tenant theamount of Tenant’s overpayment of Tenant’s share resulting from compliance withLessor’s Statement.

 

8.       Term.

 

TheTerm of this Lease will be ten (10) years and zero months (including anyrenewal terms, if so exercised), beginning on the Commencement Date, subject toearly termination or extension as provided elsewhere in this Lease.

 

9.       Possession.

 

Lessorwill deliver possession of the Premises completed with Lessor’s Work, to Tenanton or before the dates outlined in the Work Schedule (attached hereto asExhibit G), for the purpose of allowing Tenant to complete Tenant’s Work.  Should Lessor delay in delivering possessionof

 

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thePremises to Tenant in accordance with the Work Schedule, Lessor shall be liableto Tenant as set forth in Section 5 of this Lease.  If Tenant Improvements are completed earlier than theCommencement Date, Lessor shall permit Tenant to occupy the Premises for thepurposes of doing business prior to the Commencement Date.  Upon Tenant’s occupancy of the Premises,Tenant shall be bound by all of the terms and conditions of this Lease, exceptfor its obligation to pay Monthly Rent which shall not be payable until theCommencement Date as set forth herein.

 

If Tenant pays the Monthly Rent and othercharges and performs all of Tenant’s obligations under this Lease, Lessorpromises that Tenant may peaceably and quietly possess and enjoy the Premisesunder this Lease.

 

10.          Use.

 

Tenant may use the Premises24 hours per day, 7 days a week, and 365 days per year, for any and all aspectsof its business of operating an airline, its aircraft training business, officeuses and classroom uses, and such other accessory uses and purposes as shall beconsistent with or incidental thereto, including Tenant parking and shuttletransportation by Tenant or its agents of Tenant employees, or for any otherlawful purpose.  Tenant will not commitor permit any act or omission which results in the violation of any law,governmental regulation, or insurance policy of Lessor, relating to theBuilding, or which will increase Lessor’s insurance rates on the Building.  Tenant will not permit any conduct orcondition which may unduly disturb or endanger other occupants of the Building.

 

11.         Care of Premises.

 

Tenant will, at all timesduring the Term and any renewals and extensions, at its sole expense, keep andmaintain the Premises in a clean, safe, sanitary, and good condition, ordinarywear and tear excepted, and in compliance with all applicable laws, codes,ordinances, rules, and regulations. Tenant’s obligations will include but not be limited to the maintenanceand repair, if necessary, of heating, air conditioning and ventilatingfixtures, equipment and systems, all lighting and plumbing fixtures, allinterior walls, partitions and doors within the Premises.

 

IfTenant fails, refuses or neglects to maintain or repair the Premises asrequired in this Lease thirty (30) days after written notice has been given toTenant by Lessor, Lessor may make such repairs without liability toTenant.  Tenant will pay to Lessor allreasonable costs, including reasonable administrative costs, incurred by Lessorin making such repairs upon presentation to Tenant of bill for therepairs.  However, should Lessorinitiate such repairs, Lessor will perform such repairs diligently,professionally, promptly and in good faith so as to minimize and limit anydelay or interruption of Tenant’s business activities, and to avoid loss ordamage to Tenant’s merchandise, fixtures or other property.

 

Lessor will at all times during the Term and any renewals and extensions,at its sole expense, repair, maintain, replace or improve the structuralportions of the Building and Land and access areas, including the walls,foundation, roof, elevators, stairways, plate glass, windows, driveways,parking ramps and sidewalks (other than those specifically required to be madeby Tenant in the Premises) necessary to maintain the Building and land andaccess areas in a safe

 

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and tenantable condition, and in compliance with all applicableFederal, State and City laws, codes, ordinances, rules and regulations.  However, where structural repairs arerequired to be made by reason of the acts of Tenant, the costs will bereimbursed by Tenant and payable by Tenant to Lessor upon thirty (30) daysnotice by Lessor.  Lessor shall keep andmaintain all portions of the Building, common areas (including all Buildingsystems servicing those areas) and the sidewalk and areas adjoining the same inclean, safe and orderly condition, free of accumulation of dirt, rubbish, snow,and ice.

 

In the event that Lessor fails to make repairs or alterations whichLessor is obligated to make pursuant to the terms and conditions of this Lease,and such failure affects the essential services necessary to operate Tenant’sbusiness (including, without limitation, Tenant’s S.O.C.), then Tenant shallhave the right, upon 48 hours’ notice to Lessor, to make any required repairsor perform any required maintenance, at Lessor’s expense; provided, however,that if Lessor, within the foregoing 48-hour period, is diligently,appropriately and effectively effecting such repairs, Tenant shall not beentitled to make any required repairs. In the event that Lessor fails to make repairs or alterations whichLessor is obligated to make pursuant to the terms and conditions of this Lease,and such failure affects the non-essential elements of Tenant’s business, thenTenant shall have the right, upon thirty (30) days’ notice to Lessor, to makeany required repairs or perform any required maintenance, at Lessor’s expense;provided, however, that if Lessor, within the foregoing 30-day period, isdiligently, appropriately and effectively effecting such required repairs ormaintenance, Tenant shall not be entitled to make such required repairs orperform such required maintenance.  Inthe event Lessor fails to reimburse Tenant for such expenditures within ten(10) days after request therefor by Tenant accompanied by evidence detailingsuch expenditures, Tenant shall have the right to set-off any such amountsexpended in connection therewith, together with interest thereon at theinterest rate set forth in Section 6 hereof (18% per annum or the maximum rateof interest permitted by law), against any rent, additional rent or othercharges due under this Lease.

 

Tenant, at its own cost and expense, willenter into a regularly scheduled preventive maintenance and service contractwith a maintenance contractor approved by Lessor for servicing all hot water,heating and air conditioning systems and equipment within the Premises.  The service contract must include allservices suggested by the equipment manufacturer in its operations andmaintenance manual and must become effective within 30 days of the date Tenanttakes possession of the Premises.

 

12.           Building Rules.

 

Rules and Regulations for the Premises andthe Building in effect on the date of this Lease are attached as Exhibit D.  Lessor will have the right to adoptdifferent or additional reasonable rules and regulations, and to rescind oramend the attached rules and regulations, from time to time.  Lessor shall at all times provide Tenantwith advance written notice of any different, additional, rescinded or amendedrules and regulations.  Lessor agreesthat its rules and regulations will be applied in a non-discriminatory manner,consistent with all other tenants in Lessor’s Building.  Tenant will abide by the rules andregulations then in force and will cause Tenant’s employees to observe and complywith them.  No rule change will inhibitTenant’s right to access and operate

 

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in the Premises 24 hours per day, 7 days perweek, and 365 days per year at any time during the Term.

 

13.           Compliancewith Laws.

 

Lessor and Tenant will at all times promptlycomply with all Legal Requirements pertaining to the Premises (for Tenant) andthe Building (for Lessor), and each will bear its own expenses in doingso.  Tenant will pay any taxes or othercharges by any governmental authority on Tenant’s property or trade fixtures inthe Premises or relating to Tenant’s use of the Premises.  Lessor will pay any taxes or other chargesby any governmental authority on Lessor’s property or trade fixtures in theBuilding (outside of the Premises) or relating to Lessor’s leasing of thePremises.

 

The Premises shall not be used in any mannerwhich under any requirement of law or of any public authority would requireLessor to make any addition or alteration to or in the Building.  After the construction of any initialbuilding by Lessor in the Premises, Tenant will be responsible for compliancewith the Americans with Disabilities Act of 1990 as it applies to thePremises.  The Premises shall not beused in any manner which will increase the rates required to be paid for publicliability or for all risk insurance covering the Building.  Tenant shall occupy the Premises, conductits business and control its agents, employees, invitees, and visitors in sucha way as is lawful and reputable and will not permit or create any nuisance,noise, odor, or otherwise interfere with, annoy, or disturb any other Tenant inthe Building in its normal business operations or Lessor in its management ofthe Building.  Outside storage on theLand of any type of equipment, property, or materials owned or used by Tenantor its customers and suppliers is not permitted, except for parking of vehiclesin spaces intended for parking, and except for the rooftop Satellite Dish asallowed by Lessor pursuant to Section 15(b) herein.

 

Upon Tenant’s occupancy onthe Certificate of Occupancy Date, and during all times during the Term and anyrenewals and extensions thereof, Lessor shall be responsible for maintainingthe Building and all quasi-public areas within the Building (including alltoilets) in compliance with the Americans with Disabilities Act of 1990 andother applicable laws, statutes, ordinances, rule or regulations relating tohandicapped access.  Lessor shall notmanage or utilize the Building, or allow the Building to be utilized, in anymanner which will increase the rates required to be paid by Tenant for publicliability or for all risk insurance covering the Premises; provided, however,that in no event shall the foregoing limit or restrict Lessor’s ability tolease Building space, however if such leasing or management of the buildingresults in increased insurance costs to Tenant, Lessor shall pay or beresponsible for Tenant’s increased insurance cost overages as reasonablyincurred by Tenant.  Lessor shallmaintain the Building in compliance with applicable laws, statutes, ordinances,rule or regulations, and conduct its business and control its agents,employees, invitees, and visitors in such a way as is lawful and reputable andwill not permit or create any nuisance, noise, odor, or otherwise interferewith, annoy, or disturb Tenant and its business operations, or any other tenantin the Building.

 

14.           Hazardous Substances and EnvironmentalMatters.

 

a.     Lessor Generally

 

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As of the date upon which this Lease becomes effective, Lessorrepresents, warrants and covenants to Tenant, the following:

 

(i)            To the best ofLessor’s actual knowledge, with no duty of further independent investigation,the Land does not contain, and there is not located on or about the Land, anyHazardous Materials.  No part of theLand is currently used, or has previously been used, for the use, storage,treatment, production, manufacture, generation, transportation, release ordisposal of Hazardous Materials. Lessor has not received any complaint, order,summons, citation, notice of violation, directive, letter or othercommunication from any governmental authority or other person with regard toair emissions, water discharges, noise emissions or Hazardous Materials, or anyother environmental, health or safety matters affecting the Land, or anyportion thereof.  Lessor has compliedsince its ownership of the Land with all Environmental Laws affecting the Land,including notification requirements relating to the release of HazardousMaterials.

 

(ii)           To the best of Lessor’s actual knowledge,with no duty of further independent investigation, there are no written claimspending or threatened, and Lessor knows of no basis for any such claim, againstLessor, or the Land, or any portion thereof, by any governmental authority orother Person relating to any Hazardous Material or pursuant to anyEnvironmental Law, whether for enforcement, clean-up, removal, remediation,assertion of liability, cost recovery, compensation, contribution, recovery ofdamages, injunction or other equitable relief or otherwise.

 

(iii)          To the best of Lessor’s actual knowledge,with no duty of further independent investigation, Lessor has not knowinglyundertaken, permitted, authorized or suffered the presence, or suspectedpresence, use, manufacture, handling, generation, storage, treatment,discharge, release, burial or disposal on, under or about the Land of anyHazardous Material, except in compliance with Environmental Laws, or thetransportation to or from the Land, of any Hazardous Material in violation ofany Environmental Laws.

 

(iv)          Lessor will retain the obligation to keep theBuilding free of Hazardous Substances. Lessor agrees that (a) no activity will be conducted in or around the Buildingthat will produce any Hazardous Substance, except for activities which are partof the ordinary course of Lessor’s business or that of its Tenants (the“Permitted Activities”), provided the Permitted Activities are conducted inaccordance with all Environmental Laws; (b) the Building and building groundswill not be used for storage of any Hazardous Substances, except for temporarystorage of materials used in the Permitted Activities (the “PermittedMaterials”), provided the

 

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PermittedMaterials are properly stored in a manner and location meeting allEnvironmental Laws; (c) no portion of the Building or Land will be used byLessor as a landfill or a dump; (d) Lessor will not permit any Hazardous Substancesto be brought onto the Building or Land, except for Permitted Materials, and ifso brought or found, Lessor will immediately remove them, with proper disposal,and will undertake all required cleanup procedures under the EnvironmentalLaws.

 

(v)           Except as to any matter caused by Tenant’sactions or failure to act, if, at any time during the Term of this Lease: 1.)the Building and Land are found to contain the presence of HazardousSubstances; or 2.) the Building and Land are found to be contaminated orsubject to Conditions prohibited in this Lease, as a direct or indirect resultof any preexisting condition prior to the occupancy of the Premises by Tenant;or 3.) Lessor breaches the above listed Hazardous Substance and environmentalrepresentations and warranties as set forth in this Section; or 4.) there isany condition or violation of Environmental Laws by Lessor during the LeaseTerm or as a direct or indirect result of any condition or violation takingplace after the termination of the Lease Term or Tenant’s occupancy of theproperty, Lessor shall indemnify and hold Tenant harmless from and against anyand all actions, damages, penalties, fines, claims, demands, liens, suits,liabilities, costs (including cleaning-up costs), judgments and expenses(including, but not limited to, attorneys’, consultants’ and experts’ fees andexpenses) and obligations of any kind and nature suffered by or assertedagainst Tenant arising therefrom, which indemnification shall survive thetermination or expiration of this Lease.

 

b.             Tenant Generally

 

Tenant agrees that (a) noactivity will be conducted on the Premises that will produce any HazardousSubstance, except for activities which are part of the ordinary course ofTenant’s business (the “Permitted Activities”), provided the PermittedActivities are conducted in accordance with all Environmental Laws and havebeen approved in advance in writing by Lessor; (b) the Premises will not beused for storage of any Hazardous Substances, except for temporary storage ofmaterials used in the Permitted Activities (the “Permitted Materials”),provided the Permitted Materials are properly stored in a manner and locationmeeting all Environmental Laws and approved in advance in writing by Lessor;(c) no portion of the Premises or Land will be used by Tenant as a landfill ora dump; (d) Tenant will not install any underground tanks of any type; (e)Tenant will not cause any surface or subsurface conditions to exist or comeinto existence that constitute, or with the passage of time may constitute, apublic or private nuisance; (f) Tenant will not permit any Hazardous Substancesto be brought onto the Premises, except for Permitted Materials, and if sobrought or found, Tenant will immediately remove them, with proper disposal,and will undertake all required cleanup procedures under the EnvironmentalLaws.  If, at any time during or afterthe

 

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Term of this Lease, thePremises are found to be contaminated due to Tenant’s activity during the Termof this Lease, or if, during the Term of this Lease, Tenant causes Conditionsprohibited in this Section 14(b), Tenant will indemnify and hold Lessorharmless from all claims, demands, actions, liabilities, costs, expenses,damages and obligations of any nature arising from or as a result of the use ofthe Premises by Tenant.  The foregoingindemnification will survive the termination or expiration of this Lease.

 

15.           Specific Tenant Installations Outside thePremises.

 

a.             Sign Installation.

 

Tenant will have the rightto install, at its sole cost and expense, exterior and/or interior buildingsignage subject to Lessor’s and the City of Eagan’s approval, which will not beunreasonably withheld or delayed. Tenant’s signage shall conform to applicable and reasonable BuildingStandard Signage as set out in Exhibit E or as otherwise approved inadvance by Lessor.

 

b.             Satellite Dish and Radio Antenna Installation.

 

(i)      Satellite Dishes:  During theTerm of this Lease, Tenant, at its sole cost and expense, shall have the rightto install one or more Satellite Dishes of no more than 12 feet in diameter,weighing no more than 4,000 pounds. Lessor understands and agrees that the Satellite Dishes are absolutelynecessary and essential to Tenant’s operations, and that Tenant requiresspecific directional and operational specifications for its SatelliteDishes.  Tenant understands and agreesthat Lessor, while agreeing to accommodate Tenant’s Satellite Dish requirements,wishes to preserve the aesthetics of the Building.  Accordingly, Tenant will, assuming such location will allow theSatellite Dishes to operate properly, locate any Satellite Dishes in thefollowing order of priority:

 

1.)    In the area behind the Premises on top of the Pan Am hydraulic rooms;

 

2.)    In the area behind the Premises in an area reasonably designated byLessor; or

 

3.)    On the rear portion of the roof of the Building in an area reasonablydesignated by Lessor.

 

Lessor’sapproval and designation of Satellite installation locations shall not beunreasonably withheld or delayed. Installation of such Satellite Dishes shall be subject to approval bythe City of Eagan and compliance with City codes and requirements.  In addition, should such Satellite Dishes beinstalled on the Building rooftop, Tenant agrees to use Lessor’s structuralengineer and Lessor’s roof manufacturer to ensure that any alteration to theroof will be in compliance with the rooftop warranty issued to Lessor by theroof

 

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manufacturer.  Upon Commencement of this Lease and duringthe Term of this Lease, Tenant shall have the right to install up to two (2)Satellite Dishes at no additional rent to Lessor for such Satellite Dishes, nomatter if the Satellite Dishes are installed upon the roof of the Building orupon any other portion of the Building, including the walls, ground or parkingareas.   Beyond the initial two (2)Satellite Dishes, Tenant, at its sole cost and expense, shall have the ongoingright to add additional Satellite Dishes as essential for its operations at alocation approved by Lessor, which approval shall not be unreasonably withheldor delayed, in accordance with the order of location priority set forth aboveand subject to City approval and codes. In the event Tenant must add additional Satellite Dishes in excess ofthe initial two (2) rent-free Satellite Dishes, and if such additionalSatellite Dishes are installed on or around the Building ground area at alocation that results in the loss of available parking stalls, then Tenantshall pay Lessor for the number of parking stalls utilized for placement of theSatellite Dishes at a rental amount equal to eighty percent (80%) of the thenprevailing rate for parking stalls on the second level of the Building.  This rental payment requirement shall notapply if such additional Satellite Dishes can be reasonably installed at anylocation that does not remove parking space(s).  For any Satellite Dishes installed on the Building rooftop duringthe Term of this Lease, Tenant will at all times have, upon reasonable noticeto Lessor (except no notice is required in the case of an emergencycircumstance), ongoing access to the rooftop to allow for access, repair andadjustment to the rooftop Satellite Dishes. For any Satellite Dishes installed during the Term of this Lease onBuilding locations other than the Building rooftop, Tenant will at all timeshave an ongoing right, without notice to Lessor, to access the Satellite Dishesfor necessary repair and adjustment.

 

(ii)Radio Antennas:  Upon Commencement andduring the Term of this Lease, Tenant, shall have the right to utilize the four(4) Radio Antenna currently utilized by Tenant and located on the adjacent PanAm facility, and Tenant, at its sole cost and expense, shall have the right toinstall six (6) Radio Antennas, which shall be no more than 10 feet high, uponthe rear portion of the roof of the Building at a location approved by Lessor,keeping in mind the aesthetics of the Building, which approval shall not beunreasonably withheld or delayed. Tenant shall pay no additional rent to Lessor for such RadioAntennas.  Installation of such RadioAntennas shall be subject to approval by the City of Eagan and compliance withCity codes and requirements.  Lessorunderstands and agrees that the Antennae are absolutely necessary and essentialto Tenant’s operations, and that Tenant requires specific placementspecifications for its Radio Antennas, specifically such antennae need to be onthe rooftop, free from any other structures that may block or interfere withAntennae signals.  During the Term ofthis Lease, upon reasonable notice to Lessor (except no notice is required inthe case of an emergency circumstance), Tenant will at all times have ongoing accessto the roof to allow for necessary access, repair and adjustment to the RadioAntennas.  In

 

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theevent of repair or installation of the Radio Antennas, Tenant agrees to useLessor’s structural engineer, or a structural engineer approved by the roofmanufacturer to ensure that any alteration to the roof will be in compliancewith the rooftop warranty issued to Lessor by the roof manufacturer.   Tenant, at its sole cost and expense, shallhave the ongoing right to add additional Antennas as essential for itsoperations upon the rear portion of the roof of the Building at a locationapproved by Lessor, keeping in mind the aesthetics of the Building, whichapproval shall not be unreasonably withheld or delayed.  Tenant shall pay to Lessor as additionalrent hereunder the sum of $100.00 per month for each Radio Antenna installed inexcess of the six (6) Antennae that are allowed to be installed as describedherein.

 

c.             Concrete Patio.

 

Tenant shall have the rightto construct at its sole cost and expense a concrete patio adjacent to theexterior to the Premises for exclusive use by Tenant’s employees of a squarefootage of no more than 800 square feet at a location contiguous to Tenant’sPremises and in the rear of the Building. Installation of such patio shall be subject to approval by the City ofEagan and compliance with City code and requirements.  Tenant shall pay no additional rent for such patio.

 

d.             On-Site Equipment.

 

During the Term and renewalTerms of this Lease, Tenant shall have the right to install electrical, HVAC,computer servers, and other operating equipment essential, as of the date ofthis Lease, for its entire operations (the “On-Site Equipment”), including butnot limited to S.O.C. and data center functions, at a location adjacent to therear of the Premises and, except as required by Code, no more than fifteen (15)feet from the rear of the Premises, (outside the Premises) of no more than3,000 square feet.  Such On-siteEquipment installation shall be at Tenant’s sole cost and expense, at alocation approved by Lessor, which approval shall not be unreasonably withheldor delayed.  The area encompassed byOn-Site Equipment as initially installed as of the Commencement Date, even ifless than the 3,000 square feet allowed hereunder, is herein defined to be the“Initial On-Site Installation.”  Inaddition, such installation of such equipment shall be subject to approval bythe City of Eagan and in compliance with City Codes and requirements.  During the Term of this Lease, Tenant willat all times have, upon reasonable notice to Lessor (except no notice isrequired in the case of an emergency circumstance), ongoing and open access toOn-Site Equipment to allow for access, adjustment or repair of suchequipment.  Tenant shall pay noadditional rent for such usage.  Tenantshall have the ongoing right to add equipment as essential for its operationswith approval by Lessor, which approval shall not be unreasonably withheld ordelayed.  In the event Tenant must addadditional On-Site Equipment in excess of the Initial On-Site Installation andif such additional On-Site Equipment needs to be installed on or around theBuilding ground area at a location that results in the loss of available parkingstalls, then Tenant shall pay Lessor for the number of parking stalls utilizedfor placement of the additional On-Site Equipment at a rental amount equal toeighty percent

 

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(80%) of the then prevailingrate for parking stalls on the second level of the Building.  This rental payment requirement shall notapply if such additional On-Site Equipment can be reasonably installed at anyBuilding location that does not remove parking space(s).

 

16.           Alterations.

 

After completion of the Building and thePremises, Lessor will have no obligation to do any redecorating or remodelingor to make any repairs or alterations, except to the extent of Lessor’sobligations pursuant to Sections 11 and 13 herein and its obligation tomaintain all common areas and the Building.

 

Tenant will not make any alterations,additions or improvements in or to the Premises without first obtaining thewritten consent of Lessor, which will not be unreasonably withheld or delayed;provided, however, that the consent of Lessor shall not be required for anynon-structural improvements that are less than $100,000.00.  Tenant will secure Lessor’s prior writtenapproval of any contractor or subcontractor who is to perform work on thePremises at Tenant’s request.  Allalterations by Tenant will be constructed with new materials, in a good andworkmanlike manner, and in compliance with the plans and specificationsapproved by Lessor, which will not be unreasonably withheld or delayed, and allapplicable laws, ordinances, rules, orders, regulations, or other requirementsof governmental authorities.  Lessorshall oversee all work.  Tenant will payfor any labor, services, materials, supplies or equipment furnished or allegedto have been furnished by Tenant in or about the Premises, and Tenant, withinten (10) days of being notified by Lessor of the filing of any mechanic’s,materialmen’s or other lien against the Premises resulting from Tenant’sfailure to make such payment, will pay and discharge such mechanic’s,materialmen’s or other lien against the Premises resulting from Tenant’sfailure to make such payment, or will contest the lien and deposit withLessor’s Title Company cash equal to 150% of the amount of the lien.  If, after a 12 month period the contestedlien is not resolved, Lessor may access the deposited sum submitted by Tenantto pay for and/or resolve the lien.  Ifthe lien is reduced to final judgment, Tenant will discharge the judgment and Lessorwill return the cash deposited by Tenant. Lessor may post notices of nonresponsibility on the Premises as providedby law.

 

All alterations, additions and improvementsto the Premises made at Lessor’s or Tenant’s expense, except movable officefurniture and Tenant’s movable trade fixtures and equipment, will become theproperty of Lessor upon installation and will be surrendered with the Premisesupon termination of this Lease unless Lessor elects otherwise in writing.  Tenant will not be required to remove anyimprovements that are attached to the Building that are part of the originalTenant’s work or any subsequent alterations approved by Lessor.

 

17.           Utilities and Service.

 

Lessor will provide mains and conduits tosupply water, gas, electricity and (if there is a sink or drain within thePremises) sanitary sewer services to the Premises in accordance with buildingstandard specifications set out in the Work Letter.  Tenant will pay all charges for sewer usage, garbage disposal,and janitorial services for the Premises, refuse removal, water, electricity,gas,

 

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heating, air conditioning and ventilationcosts, telephone, and any other utility services furnished to the Premisesduring the Term which are not a part of the Operating Costs.  If any of such services are furnished byLessor, the cost of all such services furnished by Lessor will be a part of theOperating Costs.  Lessor will not beliable for any loss or damage resulting from any temporary interruption ofthese services due to repairs, alterations or improvements, or any variation,interruption or failure of these services due to governmental controls,unavailability of energy, or any other cause beyond Lessors control, unlesssuch unavailability is caused by the gross negligence or willful misconduct ofLessor or Lessor’s employees, agents or contractors.  No such interruption or failure of these services will be deemedas an eviction of Tenant or will relieve Tenant from any of its obligationsunder this Lease, however Tenant will have the right to rent payment abatementor set-off due to such interruption, failure or unavailability caused by thegross negligence or willful misconduct of Lessor or Lessor’s employees, agentsor contractors from the date of such interruption through the date such serviceis restored.

 

18.           Parking.

 

Tenant shall have the right, during the Term,and at no additional cost during the Term, to the unrestricted use of a minimumof 150 unreserved open-air grade parking stalls in the surface lots behind andin front of the Building, closest to the Premises.  Tenant will also have the use of twelve (12) parking stalls inthe designated parking ramp above the Premises on the second level of theBuilding 24 hours per day, free of charge throughout the Term of the Lease.Tenant agrees that pilots, flight crew or other airport personnel who areemployed by Tenant will not park on the Premises while they are working at theairport or are in-flight, however Tenant’s employees who are permanentlyofficed at the Premises, including but not limited to Tenant’s corporateexecutive officers, senior management, and management employees, shall beallowed to park on the Premises when temporarily working off-site.  Tenant agrees not to store vehicles used forflight operations at the Premises.  IfTenant increases the Usable Square Footage of the Premises pursuant to Section36 hereof, Tenant shall be entitled to utilize additional open-air parkingspaces on a proportionate basis.

 

19.           Entry by Lessor.

 

Lessor and its agents and contractors andmortgagees will have the right to enter the Premises at reasonable times forinspecting, cleaning, repairing, or exhibiting the Premises, but Lessor shallonly enter the Premises upon 24 hour notice to Tenant, unless such entrance tothe Premises is due to an emergency situation.

 

20.           Subordination.

 

Lessor represents that, except for themortgage in favor of Bank of America, there are no other mortgages on theBuilding as of the date hereof. At the request of any mortgagee or ground lessor,this Lease will be subject and subordinate to any mortgage or ground leasewhich may now or hereafter encumber the Building, and Tenant will execute,acknowledge and deliver to Lessor any document reasonably requested by Lessorto evidence the subordination.  Suchsubordination is on the condition that Tenant’s right of possession of thePremises as provided in this Lease will not be disturbed by the mortgagee orground lessor so long as Tenant is not in

 

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default (subject to the expiration of anyapplicable notice or cure period) under this Lease.  If the interest of Lessor is transferred to any party by reasonof foreclosure of a mortgage or cancellation of a ground lease, or by deliveryof a deed in lieu of foreclosure or cancellation, Tenant will immediately andautomatically attorn to such party. Tenant agrees that upon notification by Lessor or any mortgagee orground lessor of the election of a mortgagee or ground lessor to subordinateits interest in the Premises to this Lease, this Lease will become prior to themortgage or ground lease.  Lessor shallutilize its best efforts to deliver to Tenant a subordination agreement fromthe existing mortgagee within thirty (30) days following execution of thisLease by both parties hereto, which subordination agreement shall contain thenon-disturbance provisions required under this Section.

 

21.           EstoppelCertificates/Memo of Lease.

 

Within twenty (20) days after written requestfrom Lessor, Tenant will execute, acknowledge and deliver to Lessor a documentfurnished by Lessor, which document may be relied upon by Lessor and anyprospective purchaser or mortgagee of the Building, stating (a) that this Leaseis unmodified and is in full force and effect (or if modified, that the Leaseis in full force and effect as modified and stating the modifications), (b) thedates to which rent and other charges have been paid, (c) the current MonthlyRent, (d) the dates on which the Term begins and ends, (e) that Tenant hasaccepted the Premises, (f) the Lessor is not, to the best of Tenant’sknowledge, in default under this Lease, or, if Lessor is in default, specifyingany such default, and (g) including such other information relating to thisLease.  In the event that Tenant failsto furnish such document within said twenty (20) days, the Lessor shall bedeemed authorized by this Lease to execute such document in good faith onTenant’s behalf and in Tenant’s name and stead, and this Lease shall constitutean irrevocable power of attorney in favor of Lessor for that limited purpose.

 

Tenant and Lessor shallexecute, deliver and record, file or register from time to time all suchinstruments as may be required by any present or future law in order toevidence the respective interests of Lessor and Tenant in any of the Premises,and shall cause, at Tenant’s request and sole expense, a memorandum of thisLease, and any supplement hereto or to such other instrument, if any, as may beappropriate, to be recorded, filed or registered and re-recorded, refiled orre-registered in such manner and in such places as may be required by anypresent or future law in order to publish notice and protect the validity orpriority of this Lease.  If a memorandumof this Lease cannot be recorded, filed or registered, this Lease shall berecorded, filed or registered at Tenant’s sole expense.

 

22.           Waiverof Claims and Assumption of Risks.

 

Lessor and Tenant release each other from anyliability for loss or damage by fire or other casualty coverable by a standardform of “all risk” insurance policy, whether or not the loss of damage resultedfrom the negligence of the other, its agents or employees.  Each party will use reasonable efforts toobtain policies of insurance which provide that this release will not adverselyaffect the rights of the insured under the policies.  The releases in this Section will be effective whether or not theloss was actually covered by insurance. Tenant assumes all risk of loss or damage of Tenant’s property within thePremises, including any loss or damage caused by

 

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water leakage, fire, windstorm, explosion,theft, act of any other tenant, or other cause, unless such loss or damage iscaused by the gross negligence or willful misconduct of Lessor or Lessor’semployees, agents or contractors. Lessor will not be liable to Tenant, or its employees, for loss of ordamage to any property in the Premises, unless such loss or damage is caused bythe gross negligence or willful misconduct of Lessor or Lessor’s employees,agents or contractors.  Tenant shall notrelease Lessor from any liability for loss or damage as a result of any breachof Lessor’s representations and warranties as set forth in Sections 3 and 14herein.

 

23.           Indemnification.

 

Tenant will indemnify Lessor and its agentsand employees against all claims, demands and actions, and all related costsand expenses (including reasonable attorneys’ fees) for injury, death,disability or illness of any person, or damage to property, occurring in thePremises or arising out of Tenant’s use of the Premises, except to the extentcaused by the willful misconduct or negligence of Lessor or someone acting onits behalf.  Lessor will indemnifyTenant and its agents and employees against all claims, demands and actions,and all related costs and expenses (including reasonable attorneys’ fees) forinjury, death, disability or illness of any person, or damage to property,occurring in the Building as defined herein (not including the Premises) orarising out of Lessor’s use or maintenance of the Building (not including thePremises), except to the extent caused by the willful misconduct or negligenceof Tenant or someone acting on its behalf. Lessor will further indemnify Tenant and its agents and employees forany claims, demands and actions and all related costs and expenses (includingreasonable attorney’s fees) relating to any breach of Lessor’s representationsand warranties as set forth in the Lease.

 

24.           Insurance.

 

Beginning on the Commencement Date (or upon occupancy of the Premises, ifearlier), Tenant will keep public liability insurance in force at itsexpense by an insurer and policy acceptable to Lessor in its reasonableopinion.  The policy will name Lessorand its mortgagee as additional insured, for limits of at least $3,000,000combined single limit for bodily injuries or death, and for propertydamage.  Tenant will carry fire and “allrisk” coverage insurance for Tenant’s property and the Premises.  Prior to Tenant’s occupancy of the Premises,Tenant will deliver to Lessor the liability and casualty policies orcertificates by the insurer showing this coverage to be in effect with premiumspaid.  The insurance will provide thatLessor will be notified in writing 30 days prior to cancellation of, change in(so as to result in noncompliance with the insurance requirements hereunder),or failure to renew, the insurance.

 

Throughout the period duringwhich Lessor is performing work under the terms of the Work Letter, Lessorshall carry or cause to be carried for the benefit of Lessor and Tenant suchinsurance as is customarily carried by prudent builders of improvements similarto the Lessor’s work in similar locations. Lessor shall pay the premiums for the insurance policies required bythis subparagraph as the same become due and payable. Lessor shall deliver toTenant, within fifteen (15) days of commencing the work pursuant to the termsof the Work Letter, a certificate of Lessor or Lessor’s insurance agent settingforth the particulars as to all such insurance policies, that all premiums duethereon have been paid and that the same are in full force and effect.  Not later than fifteen (15) days prior tothe expiration date of each of the insurance

 

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policies required hereby,Lessor shall deliver to Tenant a certified copy of a renewal policy or policiesmarked “premium paid” or accompanied by other evidence of payment of premiumsatisfactory to Tenant.

 

In addition, Lessor shall, at its cost and expense, cause the following insurance coverage to be provided and kept in force without lapse at any time and for any reason during the Term of this Lease:

 

(i)    All Risk Insurance coverage policies covering the Premises and Building against loss or damage by lightning, water leakage, fire, windstorm, explosion, theft, or act of any other tenant, in an amount equal to 100% of the full replacement value thereof (excluding foundations and excavation costs), which names Tenant as an additional insured and Loss Payee and which includes an endorsement waiving the right of subrogation. Notwithstanding anything contained in this Lease to the contrary, regardless of whether or not Lessor causes the required insurance covering losses for such causes to be provided and kept in force and regardless of whether or not Tenant, its agents, employees, contractors or others under the control of Tenant cause such damages, Lessor shall be responsible for repairing all damages to the Premises and Building (excluding Tenant’s property as outlined in Section 22 herein) caused by lightning, water leakage, fire, windstorm, explosion, theft, act of any other tenant and such risks as are customarily included in “Special Form” or All Risk coverage endorsements to policies covering property similar to the Premises and Building.

 

(ii)   Commercial General Liability/Public Liability coverage on an “Occurrence Form” basis with limits of at least $3,000,000 Each Occurrence, and $3,000,000 General Aggregate for all claims arising out of Bodily Injury and Personal Injury, and Property Damage Liability.

 

(iii)   Workers Compensation and Employer’s Liability coverage covering all employees, contractors and subcontractors of Lessor, as applicable, working in the State of Minnesota under the statutory provisions of the Minnesota Workers Compensation Act.

 

Each insurance policy to becarried under this subparagraph shall contain a provision whereby the insurer(i) agrees that such policy shall not be canceled or modified, and shall notfail to be renewed, without at least thirty (30)  days’ prior written notice to Tenant, (ii) waives any right toclaim any premiums and commissions against Tenant, (iii) provides that Tenantis permitted to make payments to effect the confirmation of such policy uponnotice of cancellation due to nonpayment of premiums, and (iv) waives allrights of subrogation against Tenant. In the event any insurance policy shall contain breach of warranty provisions,such policy shall provide that with respect to the interests of Tenant, suchinsurance policy shall not be invalidated by and shall insure Tenant regardlessof (A) any act, failure to act or negligence of or violation of warranties,declarations or conditions contained in such policy by any named insured, or(B) any change in title to or ownership of the Leased Premises.

 

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In no event, however, shall Lessor berequired to insure the flight simulators or other trade fixtures and equipmentinstalled or kept in the Premises by Tenant, regardless of whether the same areowned by Tenant or a third party.

 

All insurance policies shall be issued by aninsurer admitted to do, and lawfully doing, business in the State of Minnesotawith an A.M. Best rating of A- or better.

 

25.           Assignmentand Subletting.

 

Tenant will have the continuing right toassign this Lease or sublet all or part of the Premises at any time withLessor’s prior written consent, which consent shall not be unreasonablywithheld or delayed.  If Tenant receivesa bona fide offer for an assignment of Tenant’s interest under this Lease or tosublease all or part of the Premises, and Tenant wishes to accept the offer,Tenant may request Lessor’s consent in writing, enclosing a copy of theoffer.  Other than as specifically setforth herein, Tenant will not compensate Lessor for allowing the assignment orsublease.  In the case of a proposedassignment or sublease of all of the Premises, Lessor may terminate this Lease,conditioned on execution of a new lease between Lessor and the party making theoffer on the same terms as the offer to Tenant.  In the case of a proposed sublease for less than all of thePremises, Lessor may amend this Lease to exclude the portion of the Premises tobe subleased, either conditioned on execution of a new lease between Lessor andthe party making the offer on the same terms as in the offer to Tenant.

 

Lessor shall have the right to receive anyprofit made in such assignment or subletting. As used herein the term “profit” shall mean any increased rent payableby such assignee or subtenant above the Monthly Rent but less all transactioncosts of the assignment or sublease incurred by Tenant, including but notlimited to, tenant improvements or other costs of construction paid by Tenant,as well as any brokerage commissions incurred by Tenant.

 

The provisions of this Section will bebinding on Tenant and any assignee or subtenant of Tenant and will apply to allportions of the Premises remaining subject to this Lease and to each request byTenant, or its assignee or subtenant, for Lessor’s consent to a further orsubsequent assignment or subletting.

 

If Lessor consents to one or more assignmentsor subleases, Tenant will still remain liable for all obligations of the Tenantunder this Lease, unless Lessor releases Tenant and terminates this Leasepursuant to a proposed assignment or sublease of all the Premises conditionedon execution of a new lease between Lessor and the party making the offer onthe same terms as the offer to Tenant.

 

Lessor’s interest in this Lease will befreely assignable and the obligations of the Lessor arising or accruing underthis Lease after an assignment will be enforceable only against the assignee.

 

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26.           Damage or Destruction.

 

a. Casualty.

 

If the Premises or Building is damaged byCasualty, the damage (excluding damage to Building paid for by Tenant or tradefixtures, equipment or personal property of Tenant) will be promptly repairedby Lessor at its expense to a condition as near as reasonably possible to thecondition prior to the Casualty.

 

b. Major Casualty.

 

If more than 25% of the total Square Feet inthe Building is rendered untenantable and directly affects Tenant’s businessoperations and/or use of the Premises, or if more than 25% of the total SquareFeet in the Premises is rendered untenantable or unusable for Tenant’s intendedpurposes, such damage or casualty shall be considered to be a “Major Casualty.” Within thirty (30) days of the date of the Major Casualty, Lessor shallprovide Tenant its good-faith written estimate for the time necessary torestore the Premises.   If the repairscannot be completed within two hundred forty (240) days after the date of theMajor Casualty, either party may terminate this Lease by giving written noticeto the other party within ten (10) days of the written estimate, whichtermination shall be effective as of the date set forth in the notice. If thisLease is not terminated, Lessor will begin repairs within 60 days after theMajor Casualty and complete the repairs within 240 days, subject to acts ofGod; strikes and other matters not within the control of Lessor.  If Lessor fails to begin, proceed orcomplete the repairs as required, Tenant may terminate this Lease by givingwritten notice to Lessor.  If Lessordoes not begin or complete the repairs within 30 days after Tenant’s notice,Tenant may terminate this Lease by written notice to Lessor within 5 days afterexpiration of the foregoing 30 day period. If this Lease is terminated because of the Major Casualty, rents andother payments will be prorated as of the date of Major Casualty and will beproportionately refunded to Tenant or paid to Lessor, as the case may be,during any period in which the Premises or any portion of the Premises is madeuntenantable or made unusable for Tenant’s intended purposes, as a result ofthe Major Casualty, the Monthly Rent will be abated for the period of timeuntenantable or unusable for Tenant’s intended purposes in the Premises.

 

27.           EminentDomain.

 

If there is a taking of 25% or more of thePremises or 25% or more of the total Square Feet in the Building, either partymay terminate this Lease as of the date the public authority takes possession,by written notice to the other party within 30 days after the taking.  If this Lease is so terminated, any rentsand other payments will be prorated as of the termination and will beproportionately refunded to Tenant, or paid to Lessor, as the case may be.  All damages, awards and payments for thetaking will belong to Lessor irrespective of the basis upon which they weremade or awarded, except that Tenant will be entitled to any amountsspecifically awarded for Tenant’s trade fixtures or equipment or as arelocation payment or allowance.  Ifthis Lease is not terminated as a result of the taking, Lessor will restore theremainder of the Premises to a condition as near as reasonably possible to thecondition prior to the taking, the rent will be abated for the period of timethe space is untenantable in proportion to the square foot area

 

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untenantable and this Lease will be amendedappropriately to reflect the deletion of the space taken.

 

28.           Defaults.

 

a.             Defaultby Tenant:

 

If (a) Tenant defaults in the payment of rentor other amounts under this Lease and the default continues for ten (10) daysafter written notice by Lessor or Tenant, (b) Tenant defaults in any otherobligation under this Lease and the default continues for thirty (30) daysafter written notice by Lessor to Tenant, (c) any proceeding is begun by oragainst Tenant to subject the assets of Tenant to any bankruptcy or insolvencylaw or for an appointment of a receiver of Tenant or for any of Tenant’sassets, or (d) Tenant makes a general assignment of Tenant’s assets for thebenefit of creditors, then Lessor may, with or without terminating this Lease,cure the default and charge Tenant all costs and expenses of doing so, andLessor also may reenter the Premises, remove all persons and property; andregain possession of the Premises, without waiver or loss of any of Lessor’srights under this Lease, including Lessor’s right to payment of MonthlyRent.  Lessor also may terminate thisLease as to all future rights of Tenant, without terminating Lessor’s right topayment of Monthly Rent and other charges due under this Lease.

 

Tenant waives any right of restoration topossession of the Premises after reentry, notice of termination, or of judgmentfor possession.  If this Lease isterminated under this Section, Tenant promises and agrees to pay all MonthlyRent and other charges due for the remainder of the original Term, and allreasonable attorneys’ fees and other expenses. If Tenant defaults in any of its obligations under this Lease, it willpromptly pay all reasonable costs including reasonable attorneys’ fees incurredby Lessor in enforcing Tenant’s obligations, whether or not this Lease isterminated and whether or not suit is brought. No right or remedy will preclude any other right or remedy, no right orremedy will be exclusive of or dependent upon any other right or remedy, andany right or remedy may be exercised independently or in combination.

 

If Tenant is in default and notice oftermination of Tenant’s right to possession has been mailed to Tenant at thePremises and it appears in Lessor’s reasonable judgment that Tenant hasabandoned or vacated the Premises, Lessor may reenter the Premises and retakepossession without legal action, without relieving Tenant of the obligation topay Monthly Rent or any other obligations under this Lease, and without anyliability to Tenant for re-entry or removal of Tenant’s property.

 

In the event that this Lease is terminatedand/or Tenant is dispossessed from the Premises on account of Tenant’s defaulthereunder, Lessor agrees to use good-faith, commercially reasonable efforts tore-let same and to otherwise mitigate damages.

 

b.             Defaultby Lessor:

If Lessor shall fail to keep, observe or perform any of the terms,covenants or conditions herein to be kept, observed and performed by Lessor,and such default has not been cured by Lessor within thirty (30) days afterTenant has given written notice to Lessor, and provided that Lessor is notdiligently and effectively in the process of curing the default, then Tenant inaddition to

 

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any other rights or remedies available to Tenant hereunder, shallhave:  (i) the right, at its option, tocure such default by such acts as may be reasonably necessary under thecircumstances, and to offset any and all expense thereof, including reasonableattorneys’ fees, against amounts due to Lessor from Tenant;  (ii) if the default by Lessor is such as toconstructively evict or effectively dispossess Tenant, or substantially destroyTenant’s right to quiet enjoyment, Tenant shall have the right to invoke anyand all rights and remedies Tenant may have at law and in equity; or (iii) theoption to exercise any other rights or remedies which Tenant may have at law orequity.  Notwithstanding the foregoing,the notice and cure period provided to Lessor above shall not apply to Lessor’sobligation to timely deliver the Premises as required under this Lease.  If Tenant makes any advances because of adefault by Lessor not cured within thirty (30) days after notice from Tenant,Lessor is obligated to repay the full amount of such advances, together withinterest on the amount advanced at the rate of interest set forth in Section 5hereof (18% per annum or the maximum rate of interest permitted by law).  No remedy herein or otherwise conferred uponor reserved to Tenant shall be considered to exclude or suspend any otherremedy but the same shall be cumulative and shall be in addition to every otherremedy given hereunder, or now or hereafter existing at law or in equity or bystatute, and every power and remedy given by this Lease to Tenant may beexercised from time to time and so often as occasion may arise or as may be deemedexpedient.

 

29.           Waiver of Lease Provisions.

 

No waiver of any provision of this Lease willbe deemed a waiver of any other provision or a waiver of that same provision ona subsequent occasion.  The receipt ofrent by Lessor with knowledge of a default under this Lease by Tenant will notbe deemed a waiver of the default. Lessor and Tenant will not be deemed to have waived any provision ofthis Lease by any action or inaction and no waiver will be effective unless itis done by express written agreement signed by the waiving party.  Any payment by Tenant and acceptance byLessor of a lesser amount than the full amount of all Monthly Rent and othercharges then due will be applied to the earliest amounts due.  No endorsement or statement on any check orletter for payment of rent or other amount will be deemed an accord andsatisfaction, and Lessor may accept such check or payment without prejudice toits right to recover the balance of any rent or other amount or to pursue anyother remedy provided in this Lease.  Noacceptance of payment of less than the full amount due will be deemed a waiverof the right to the full amount due together with any interest and servicecharges.

 

30.           Return of Possession to Lessor.

 

On expiration of the Term or sooner terminationof this Lease, Tenant will return possession of the Premises to Lessor, withoutnotice from Lessor, in good order and condition, except for ordinary wear anddamage, destruction or conditions Tenant is not required to remedy under thisLease.  If Tenant does not returnpossession of the Premises to Lessor, Tenant will pay Lessor all damages Lessormay suffer as a result of Tenant’s holdover. Tenant will give Lessor all keys for the Premises and will inform Lessorof combinations on any locks and safes on the Premises.  Any property left in the Premises afterexpiration or termination of this Lease or after the Premises have been vacatedby Tenant will become the property of Lessor to dispose of as Lessor chooses.

 

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31.           HoldingOver.

 

IfTenant remains in possession of the Premises after expiration of the Termwithout a new lease, any such holding over will be from month-to-month subjectto all the same provisions of this Lease, except that the Monthly Rent will be150% of the Monthly Rent of the expired Lease. The month-to-month occupancy may be terminated by Lessor or Tenant onthe last day of any month by at least 30 days’ prior written notice to theother.

 

32.           Brokers.

 

Lessor and Tenant represent and warrant oneto another that neither of them has employed or otherwise used any broker oragent in relation to this Lease except that Lessor has engaged SpectrumDevelopment Group, LLC or its assigns and Tenant has engaged The KeewaydinGroup as its broker.  Lessor agrees topay The Keewaydin Group, Inc., a fee equal to $4.00 per usable square footleased by Tenant per this Lease, pursuant to a separate brokerage agreement,which fee shall be payable one-half upon execution of the Lease and one-half onthe Commencement Date. Lessor will indemnify and hold Tenant harmless, andTenant will indemnify and hold Lessor harmless, from and against any claims forany other brokerage or other commissions or fees arising out of any breach ofthe foregoing representation and warranty by the respective indemnitors.  The brokerage fee will be adjusted upwardsor downward based on the actual square footage committed to at the time ofOccupancy.

 

33.           Option to Renew.

 

Provided Tenant is not then in default underthis Lease, to the extent of the portion of the Premises Tenant is actuallyoccupying at the end of the applicable Term or Option Term, Tenant shall havethe option to renew this Lease for up to two (2) successive periods of five (5)years each (the “Option Terms(s)”).  IfTenant exercises any option, all the provisions of the Lease shall remain infull force and effect and the parties’ rights, duties, and obligations shallremain the same except Sections 34, 35, and 36 hereof shall be deleted in theirentirety and the rent set forth in Section 5 shall be adjusted as hereinprovided.  Tenant may not exercise thisoption for any five (5) year period if it is not then a Tenant under this Leaseor if it is in default under this Lease. In order to exercise any option, Tenant must give Lessor writtennotification of its election to do so, together with a then-current copy ofTenant’s financial statements, no later than one (1) calendar year prior to theexpiration of the term under which it is currently operating (the initial termor any subsequently exercised Option Term, whichever is applicable).

 

Base rent payable under anyOption term shall be established for each Option Term prior to itscommencement.  The base rent utilizedfor any Option Term shall be the prevailing rate (the “Prevailing Rental Rate”)at the commencement of such Option Term, for renewals of space in the Buildingof equivalent quality, size, utility and location, with the length of theOption Term and the credit standing of Tenant taken into account.  Within 30 days after receipt of Tenant’snotice to renew, Lessor shall deliver to Tenant written notice of thePrevailing Rental Rate and shall advise Tenant of the required adjustment toBasic Rent, if any, and the other terms and conditions offered including,whether any letter of credit would be required if Lessor determines,

 

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in its reasonable judgment,that Tenant’s financial condition or credit-worthiness has materiallydeteriorated since the date of this Lease, together with documentationsubstantiating such determination. Tenant shall, within thirty (30) days after receipt of Lessor’s notice,notify Lessor in writing whether; (i) Tenant accepts or rejects Lessor’sdetermination of the Prevailing Rental Rate; and (ii) whether Tenant disputesLessor’s determination that a letter of credit will be required (if a letter ofcredit is required in Lessor’s offer). If Tenant timely notifies Lessor that Tenant accepts Lessor’sdetermination of the Prevailing Rental Rate (including any letter of creditrequirement), then, on or before the commencement date of the Option Term,Lessor and Tenant shall execute an amendment to this Lease extending the Termon the same terms provided in this Lease, except as follows:

 

(a)           Basic Rent shall be adjusted to thePrevailing Rental Rate; and

 

(b)           Lessor shall lease to Tenant the Premises intheir then-current condition, and Lessor shall not provide to Tenant anyallowances (e.g. moving allowance, construction allowance, and the like) orother tenant inducements, unless mutually agreed to by Lessor and Tenant atthat time.

 

If Tenant accepts Lessor’sdetermination of the Prevailing Rental Rate, but rejects Lessor’s requirementfor a Letter of Credit, then Lessor and Tenant agree that the Parties shallhave an additional thirty (30) day period to allow the Parties additional timeto further negotiate the Letter of Credit requirement, including Tenant’s rightto provide documentation, evidence or other assurances to support orsubstantiate that Tenant’s financial condition should be reasonably acceptableto Lessor.  If after the thirty (30) dayadditional period, the parties cannot agree whether a Letter of Credit shouldbe required, then Tenant’s rights under this Section shall terminate and Tenantshall have no right to renew this Lease.

 

If Tenant rejects Lessor’sdetermination of the Prevailing Rental Rate, or fails to timely notify Lessorin writing that Tenant accepts or rejects Lessor’s determination of thePrevailing Rental Rate, time being of the essence with respect thereto,Tenant’s rights under this Section shall terminate and Tenant shall have noright to renew this Lease.

 

Tenant’s rights under thisSection shall terminate if (1) this Lease or Tenant’s right to possession ofthe Premises is terminated, (2) Tenant assigns all of its interest in thisLease or sublets all of the Premises, (3) Tenant fails to timely exercise itsoption under this Section, time being of the essence with respect to Tenant’sexercise thereof or (4) in connection with an offer, Lessor determines, it itssole but reasonable discretion, that Tenant’s financial condition orcreditworthiness has materially deteriorated since the date of this Lease andTenant fails to provide adequate Credit assurances to Lessor as previouslyoutlined within in this Section.

 

34.           Early Termination by Tenant.

 

Provided Tenant is not thenin default under this Lease, Tenant shall have the right to terminate thisLease on the seven (7) year anniversary of the Commencement Date (the “EarlyTermination Date”) upon written notice given to Lessor at least one hundredeighty (180) days in advance of the Early Termination Date.  Should Tenant properly terminate the Leasepursuant to this

 

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Section, the Lease shall bedeemed to end on the Early Termination Date for all purposes and the Term shallend on such Early Termination Date.  Onthe Early Termination Date, Tenant will pay Lessor the unamortized portion ofthe “*” per square foot Tenant Improvement Allowance amortized at a rate of “*”per annum .  Tenant will pay no otherpenalty to Lessor for this right and will have no further obligations to Lessoror anyone claiming through Lessor under this Lease.

 

35.           Reduction of Space by Tenant. Provided Tenant is not then in default under this Lease, Tenant shallhave the option to reduce the square footage of the Premises by up to 15,000square feet on the seven (7) year anniversary of the Commencement Date and forthe balance of the Term.  In order toexercise this option, Tenant must give Lessor written notification of itselection, specifying the amount and location of the square footage (which mustbe contiguous to the space adjoining the Premises) to be given up by Tenant nolater than one hundred eighty (180) days prior to the date occurring seven (7)years from the Commencement Date. Tenant will not pay any penalty to Lessor for this right and will haveno further obligation to Lessor for the Leased Premises space**.**  If Tenantreduces the Premises as set forth in this Section 35, Tenant will pay Lessorthe unamortized portion of the “*” per square foot Tenant Improvement Allowance amortized at a rate of “*” per annum with respect to the TenantImprovement Allowance attributable to the relinquished portion of thePremises.  Tenant will pay no otherpenalty to Lessor for this right to reduce the Premises and will have nofurther obligations to Lessor or anyone claiming through Lessor under thisLease with respect to the relinquished portion of the Premises.

 

36.           Option to Increase the Size of the Premises.

 

ProvidedTenant is not then in default under this Lease, Tenant shall have the option toincrease the Usable Square Footage of the Premises by 5,000 square feet on thethree, five and seven year anniversaries of the Commencement Date.  (Each 5,000 square foot addition ishereafter termed the “Additional Space”.) Any square feet added to the Premises must be contiguous to the initialPremises (or any Additional Space added to the initial Premises.  In order to exercise its option on thethird, fifth or seventh anniversary of the Commencement Date, or any of them,Tenant shall give written notice of its election to add no later than twohundred seventy days prior to the third, fifth or seventh anniversary of theCommencement Date, as the case may be. Upon exercise of either option by Tenant, the Additional Space shall beadded to the Usable Square Footage of the Premises effective on the third,fifth or seventh anniversary of the Commencement Date, as applicable.   Lessor shall allow Tenant to beginconstruction up to 180 days prior to the anniversary date.  Tenant shall bear no cost associated withremoval or relocation of any existing tenant of the Additional Space, and such costwill be paid by the existing tenant or by Lessor.  The Additional Space shall be delivered under the same terms andconditions as the initial Premises, including the Lessor delivering theAdditional Space to Tenant in accordance with Exhibit C-1 and including theidentical improvements installed as part of the tenant shell improvements ofTenant’s Work (as set forth in Exhibit C) in the initial Premises.  All Additional Space will be coterminouswith the Initial Premises and will be under the same terms and conditions asthe Initial Premises except that the Monthly Rent for the Additional Spaceshall be the sum of:  (i) Base Rent (asdetermined below), *plus* the (ii)the

 

* Omitted pursuant to a request for confidential treatment.

 

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Tenant Improvement Allowance for the AdditionalSpace equal to an amount of up to “*” per square foot, amortizedat 9.6% per annum over the remaining Term.

 

For purposes hereof, “Base Rent” for the AdditionalSpace shall be calculated by multiplying the Usable Square Feet of theAdditional Space by the following annual rates and dividing by 12.

 

 
| **Year** |   | **Annual Rate Per  Usable Square Foot  of the Premises** |          |
|----------|--------|----------------------------------------------------------|---------------|
| 3        |   |                                                     | “*” |   |
| 4        |   |                                                     | “*” |   |
| 5        |   |                                                     | “*” |   |
| 6        |   |                                                     | “*” |   |
| 7        |   |                                                     | “*” |   |
| 8        |   |                                                     | “*” |   |
| 9        |   |                                                     | “*” |   |
| 10       |   |                                                     | “*” |   |

 

The parties agree to execute an amendment to thisLease to reflect the Monthly Rent schedule applicable to any expansion space.

 

Except as otherwise mutually agreed, in noevent shall Lessor be obligated to pay a commission with respect to any spaceleased by Tenant under this Section, and Tenant and Lessor shall each indemnifythe other against all costs, expenses, attorneys’ fees, and other liability forcommissions or other compensation claimed by any broker or agent claiming thesame by, through, or under the indemnifying party.

 

Tenant’s rights under this Section shallterminate if (a) this Lease or Tenant’s right to possession of the Premises isterminated, or (b) less than thirty-six (36) full calendar months remain in theinitial Term of this Lease.

 

37.           Right of First Refusal.

 

(a)    Grant of Right

 

Subject to the renewal or expansion optionsof Pan Am, or Tenant (Mesaba) as a current Sub-Tenant of Pan Am, which exist asof the Commencement Date of this Lease; and provided (a) no Event of Default exists, and (b) Tenant is thenoccupying at least 15,000 Usable square feet of the Premises, Tenant shall atall times have a right of first refusal on any space contiguous to thePremises.  “First Refusal Space” shallmean, collectively, any space contiguous to the Premises as designated on ExhibitB, limited to Phase II and the Pan Am leased space located in Phase I,including Tenant’s subleased space therein (collectively, the “First RefusalSpace”).

 

* Omitted pursuant to a request for confidential treatment.

 

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(b)   Notice of Third Party LeaseOffer.

 

If Lessor enters into good faith negotiationswith any third party to lease all or any part of the First Refusal Space andsends to or receives from such third party a letter of intent or similardocument acceptable to Lessor in Lessor’s sole discretion to lease all or anypart of the First Refusal Space, Lessor will provide Tenant with an “OfferNotice” which will notify Tenant of the terms and conditions of the proposedlease between Lessor and the third party and provide Tenant with a copy of theletter of intent or similar document. The Offer Notice shall be in writing, and shall include the date on whichthe First Refusal Space shall be included in the Premises, and shall alsoinclude the financial, economic and other relevant terms of the lease offer forthe First Refusal Space.

 

(c)    Exercise of Right.

 

If Tenant desires to lease the portion of theFirst Refusal Space that is the subject of the Offer Notice, Tenant may do sounder the same terms and conditions as the Initial Premises as outlined in thisLease, except for the Base rent.  Baserent will be determined by reducing the Base Rent of the third-party leaseoffer to the First Refusal Space, reduced by the amortization (at rate of 10%per annum) of all allowances given to said third-party, including but notlimited to, tenant improvements, moving, architectural or other allowances,cost of Lessor’s construction of shell condition, and commissions paid toarrive at the net effective rate (the “Net Effective Rent”). The cost ofdelivering the space according to Exhibit C of this Lease will then beamortized at a rate of 10% per annum over the balance of the Term of this Leaseand added to the Net Effective Rent. The sum of this amortization and the Net Effective Rent will constituteBase Rent for the First Refusal Space. Tenant shall notify Lessor in writing whether or not Tenant elects tolease the entire First Refusal Space on the terms set forth in the OfferNotice, as amended by the above mentioned rent calculation, within ten (10)business days after Lessor delivers to Tenant the Offer Notice.  If Tenant provides notice it elects not tolease the entire First Refusal Space (a “Decline”) it shall state in good faithin such notice whether its decision was made primarily due to (i) lack of needfor additional space in the Building, or (ii) the amount of the Base Rent forsuch First Refusal Space.  If Tenantdoes not so notify Lessor within the foregoing ten (10) business days period,Lessor may lease the subject portion of the First Refusal Space to the thirdparty on the same terms and conditions described in the Offer Notice, andTenant’s right of first refusal with respect to the subject portion of theFirst Refusal Space automatically terminates if a Lease document is executedwith Third Party and is of no further force and effect, except as specificallyprovided below.  At the expiration of theterm of Third Party’s lease or if so terminated, Tenant shall again have theright of first refusal;  Provided,however, if the Third Party’s Lease (i) is in excess of 15,000 square feet, or(ii) contains a priority right of renewal, then Tenant’s Right of First Refusalcontained herein shall terminate.

 

If Tenant timely elects to lease the FirstRefusal Space, then Lessor and Tenant shall execute an amendment to this Lease,effective as of the date the First Refusal Space is to be included in thePremises, under the same terms set forth in the terms and conditions of thisLease except for the Base rent, which will be adjusted as described above.

 

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(d)   Change of Terms

 

If Lessor is entitled to lease all or anypart of the First Refusal Space to a third party as described in Section 37 (c)above, and, prior to Lessor’s execution of a lease with the third party, theterms and conditions of the transaction between Lessor and the third partychange by a reduction in the base rent of “*” per square foot or more from thatcontained in the initial letter of intent or similar document as describedabove, Lessor will notify Tenant of the revised terms and conditions.  If Tenant desires to lease the subjectportion of the First Refusal Space on the revised terms and conditions, Tenantshall notify Lessor in writing whether Tenant elects to lease the revisedsubject portion of the First Refusal within ten (10) business days after Lessordelivers such notice to Tenant.  IfTenant does not so notify Lessor within the foregoing ten (10) business daysperiod, Lessor may lease the subject portion of the First Refusal Space to thethird party on the changed terms and conditions, and Tenant’s right of firstrefusal with respect to the subject portion of the First Refusal Spaceautomatically terminates if a lease document is executed with the third-partyand is of no further force and effect. If Tenant timely elects and notified Lessor of its intent to lease thesubject portion of the First Refusal Space as revised and adjusted, then Lessorand Tenant shall execute an amendment to this Lease, effective as of the datethe First Refusal Space is to be included in the Premises, under the same termsset forth in the terms and conditions of this Lease except for Base Rent, whichwill be adjusted as described above.

 

(e)    Revival of First RefusalRights

 

If Lessor is entitled to lease all or anypart of the First Refusal Space to a third party under this Section and doesnot thereafter enter into a lease of such space with the third party, Tenant’sright of first refusal is revived with respect to the First Refusal Space asdesignated herein.

 

(f)    Right of First Refusal Termsand Conditions

 

All such First Refusal Space will becoterminous with the Initial Premises and will be under the same terms andconditions as the Initial Premises and this Lease, except for the Base Rent asadjusted in Section 37(c) hereof.

 

Tenant may not exercise its rights under thisSection if Tenant is in default under this Lease. Except as mutually agreed, inno event shall Lessor be obligated to pay a commission with respect to anyspace leased by Tenant under this Section, and Tenant and Lessor shall eachindemnify the other against all costs, expenses, attorneys’ fees, and otherliability for commissions or other compensation claimed by any broker or agentclaiming the same by, through, or under the indemnifying party.

 

Tenant’s rights under this Section shallterminate (i) if this Lease or Tenant’s right to possession of the Premises isterminated, (ii) if the Term of this Lease is extended pursuant to Section 33hereof and the Offer Notice would occur in years eighteen (18), nineteen (19)or twenty (20) of the Term, or (iii) subject to the provisions of Section 37(d)hereof, the Tenant stated in its Decline that its reason for not leasing theFirst Refusal Space was due to Tenant’s lack of need for additional space inthe Building.

 

* Omitted pursuant to a request for confidential treatment.

 

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38.           Notice.

 

Any notice under this Lease will be inwriting, and will be sent by prepaid overnight courier service, or bytelephonic facsimile confirmed by certified mail, addressed to Tenant at thePremises and to Lessor at:

 

Richard V. Morphew

Spectrum Investment Group,L.L.C.

1000 Blue Gentian Road

Eagan, MN 55121

(Fax: 651-675-2290)

 

or to such other address as is designated ina notice given under this Section.  Anotice will be deemed given on the date mailed.  Routine mailings to Tenant need not be sent by certified mail.

 

39.           GoverningLaw.

 

This Lease will be construed under andgoverned by the laws of Minnesota.  Ifany provision of this Lease is illegal or unenforceable, it will be severableand all other provisions will remain in force as though the severable provisionhad never been included.

 

40.           EntireAgreement.

 

This Lease, including all documents andExhibits incorporated herein by reference, contains the entire agreementbetween Lessor and Tenant regarding the Premises and supercedes and replacesany and or all prior contemporaneous discussions, negotiations, understandingsand agreements, written and oral, regarding such Premises.  Any Shuttle Services contemplated betweenthe Parties hereto, if any, shall be addressed in a separate Agreement.  Tenant agrees that it has not relied on anystatement, representation or warranty of any person except as set out in thisLease.  All Exhibits attached hereto arefully incorporated herein by reference. This Lease may be modified only by anagreement in writing signed by Lessor and Tenant.  No surrender of the Premises, or of the remainder of the Term,will be valid unless accepted by Lessor in writing.  This Lease may be executed in two or more counterparts, each ofwhich will be deemed an original, but all of which together shall continue oneand the same instrument.

 

41.           Successorsand Assigns.

 

All provisions of this Lease will be bindingon and inure to the benefit of the successors and assigns of Lessor and Tenant,except that no person or entity holding under or through Tenant in violation ofany provision of this Lease will have any right or interest in this Lease orthe Premises.

 

## 42.           ForceMajeure

##  

## In the eventthat either party hereto shall be partially or totally delayed or hindered inor prevented from performing any of its obligations hereunder, or if suchobligations are rendered

 

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## impossible dueto any events of Force Majeure, including but not limited to accidents,breakage, labor strikes, shortage of materials, acts of God, fire, explosion,flood, wars, riots, acts of public enemy, acts of terrorism, sabotage, civilcommotion,  acts of Government, delaysof governments or any department of regulatory agency thereof or createdthereby (including national aviation authorities), or any other conditions,events or other causes beyond such party’s reasonable control, then performanceof such acts or obligations shall be excused for the period of the delay andthe period for the performance of any such act shall be extended for a periodequivalent to the period of such delay. The party who has suffered the Force Majeure Event shall use its bestefforts to inform the other party of the Event and shall use its best effortsto ameliorate the situation.  Theoccurrence of a Force Majeure Event shall not constitute a breach hereunder.

 

IN WITNESS WHEREOF, Lessor and Tenant haveexecuted this Lease to be effective as of the date stated in the firstparagraph of this Lease.

 
|   | Lessor:                            |
|--------|------------------------------------|
|   |                               |
|   | SPECTRUM INVESTMENT GROUP,  L.L.C. |
|   |                               |
|   | By:                                | /s/ Richard V. Morphew |   |
|   | Its President                      |
|   |                               |
|   | Tenant:                            |
|   |                               |
|   | MESABA AVIATION, INC.              |
|   |                               |
|   | By                                 | /s/ Randy W. Strobel |   |
|   | Its Vice President, Finance        |
|        |                                    |  |  |  |  |

 

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