Document:

Exhibit
10.2

ENPATH MEDICAL, INC.

1999 NON-EMPLOYEE DIRECTOR AND
MEDICAL ADVISORY BOARD

STOCK OPTION PLAN

(as
amended through April 27, 2006)

1.             PURPOSE OF PLAN

This Plan shall be known as the “Enpath Medical, Inc.
1999 Non-Employee Director and Medical Advisory Board Stock Option Plan” and is
hereinafter referred to as the “Plan.” The purposes of the Plan are to attract
and retain the best available personnel for service as members of the Board of
Directors and Medical Advisory Board of Enpath Medical, Inc. (the “Company”)
and to provide additional incentive to the non-employee directors and advisors
to continue to serve on the Board of Directors and Medical Advisory Board,
respectively, by affording them an opportunity to acquire a proprietary
interest in the Company. It is intended that these purposes be effected through
the granting of stock options or restricted stock awards, as provided herein.

2.             DEFINITIONS

The following terms have the meanings set forth below,
unless the context otherwise requires:

(a)           “ADVISOR”
means a member of the Advisory Board.

(b)           “ADVISORY
BOARD” means the Medical Advisory Board of the Company.

(c)           “BOARD”
means the Board of Directors of the Company.

(d)           “CODE”
means the Internal Revenue Code of 1986, as amended.

(e)           “COMMITTEE”
means the group of individuals administering the Plan, as provided in Section 4
of the Plan.

(f)            “COMMON
STOCK” means the common stock of the Company, par value $.01 per share (as such
par value may be adjusted from time to time).

(g)           “DISABILITY”
means the permanent and total disability of the Participant within the meaning
of Section 22 (e) (3) of the Code.

(h)           “EXCHANGE
ACT” means the Securities Exchange Act of 1934, as amended.

(i)            “FAIR
MARKET VALUE” means, with respect to the Common Stock, the following:

(i)            If the
Common Stock is listed or admitted to unlisted trading privileges on any
national securities exchange or is not so listed or admitted but transactions
in the Common Stock are reported on the NASDAQ Stock Market, the last sale
price of the Common Stock on such exchange or reported by the NASDAQ Stock
Market as of such date (or, if no shares were traded on such day, as of the
next preceding day on which there was such a trade).

(ii)           If the
Common Stock is not so listed or admitted to unlisted trading privileges or
reported on the NASDAQ Stock Market, and bid and asked prices therefore in the
over-the-counter market are reported by the NASDAQ System or the National
Quotation Bureau, Inc. (or any comparable reporting service), the average of the
closing bid and asked prices as of such date, as so reported by the NASDAQ
System, or, if-not so reported 

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thereon, as reported by the National Quotation Bureau,
Inc. (or such comparable reporting service).

(iii)          If
the Common Stock is not so listed or admitted to unlisted trading privileges,
or reported on the NASDAQ Stock Market, and bid and asked prices are not so
reported, such price as the Committee determines in good faith in the exercise
of its reasonable discretion.

(j)            “NON-EMPLOYEE
DIRECTOR” means a member of the Board that meets the requirements of Section
5(a) of the Plan.

(k)           “NON-STATUTORY
STOCK OPTION” means a right to purchase Common Stock granted to and pursuant to
the Plan that does not qualify as an Incentive Stock Option, meaning of Section
422 of the Code.

(l)            “OPTION”
means a Non-Statutory Stock Option granted pursuant to this Plan.

(m)          “PARTICIPANT”
means an individual who is eligible to receive and who receives one or more
Options pursuant to the Plan.

(n)           “PERSON”
means any individual, corporation, partnership, group, association or other “person”
(as such term is used in Section 14 (d) of the Exchange Act), other than the
Company, a wholly owned subsidiary of the Company or any employee benefit plan
sponsored by the Company or a wholly owned subsidiary of the Company.

(o)           “PREVIOUSLY
ACQUIRED SHARES” mean shares of Common Stock that are already owned by the
Participant and shares of Common Stock that are to be acquired by the
Participant pursuant to the exercise of an Option.

(p)           “RESTRICTED
STOCK” means an award of Shares that are subject to restrictions under
Section 12 below.

(q)           “RETIREMENT”
means the retirement of a Participant pursuant to and in accordance with the
regular or, if approved by the Board for purposes of the Plan, any early
retirement plan or practice of the Company or Subsidiary then covering the
Participant.

(r)            “SECURITIES
ACT” means the Securities Act of 1933, as amended.

(s)           “SHARE”
or “SHARES” means one or more shares of Common Stock.

(t)            “SUBSIDIARY”
means any subsidiary corporation of the Company within the meaning of Section
424(f) and (g) of the Code.

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3.             STOCK SUBJECT TO PLAN

The stock subject to option grants or restricted stock
awards under the Plan shall be shares of the Company’s authorized Common Stock.
Subject to the adjustment as provided in Section 15 hereof, the maximum number
of Shares for which options may be exercised or restricted stock awards made
under this Plan shall be 400,000(1) Shares. Any Shares subject to an option or
restricted stock award under the Plan which, for any reason, is forfeited,
expires, lapses or is otherwise terminated unexercised as to such Shares shall
be available for options and restricted stock awards thereafter granted during
the term of the Plan and may be again subjected to an option or restricted
stock grant under the Plan.

4.             ADMINISTRATION
OF PLAN

The Plan shall be effective as of July 29, 1999,
according to the terms and conditions herein, and, if required by Section 17 of
the Exchange Act or the rules and regulations thereunder, subject to subsequent
approval by the shareholders of the Company. The Plan shall be administered by
the Board. The Board may authorize the compensation or other committee thereof,
consisting of at least two (2) members appointed by the Board to exercise the
powers conferred on the Board under the Plan, other than the power under
Section 15 hereof to amend or terminate the Plan.

The interpretation and construction by the Board or
Committee of any provisions of the Plan or of any option or award of restricted
stock granted hereunder shall be final. No member of the Board or Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any option or award of restricted stock granted hereunder.

5.             ELIGIBILITY
AND GRANT

(a)           NON-EMPLOYEE
DIRECTORS.

Each
member of the Board who satisfies all of the following criteria shall
automatically be a Participant in the Plan:

(i)            Such
member is not, and has not during the immediately preceding 12-month period
been, an employee of the Company or any Subsidiary; and

(ii)           Such
member does not hold any options to purchase Common Stock of the Company,
except for stock options previously granted pursuant to the Plan, the 1996 or
the 1992 Non-Employee Director Stock Option Plan.

(b)           ADVISORY
BOARD MEMBERS.

Each
member of the Advisory Board who satisfies all of the following criteria shall
be eligible to be a Participant in the Plan:

(i)            Such
member is not, and has not during the immediately preceding 12-month period,
been an employee of the Company or any Subsidiary; and

(ii)           Such
member does not hold any options to purchase Common Stock of the Company,
except for stock options previously granted pursuant to the Plan.

(1)   The Plan originally authorized
200,000 Shares for issuance.  An
amendment to the Plan to increase the number of Shares authorized under the
Plan by 200,000 shares was approved by the Board on February 16, 2005 and by
the Company’s shareholders on April 28, 2005.

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6.             NON-EMPLOYEE
DIRECTOR OPTIONS (2)

(a)   GRANT
OF NON-EMPLOYEE DIRECTOR OPTIONS. 
Beginning at the 2006 Annual Meeting of Shareholders, each Non-Employee
Director will receive, by virtue of serving as a Non-Employee Director of the
Company, an annual grant of a Non-Statutory Stock Option to purchase 5,000
Shares.  The Option will be issued on the
Monday following the Annual Shareholder meeting at a price equal to Fair Market
Value on that date.

(b)   EXERCISABILITY
OF OPTIONS.

Non-Employee
Director Options will vest and become exercisable as follows:

(i)            Each
option granted on or after the date of the 2006 Annual Meeting of Shareholders
will vest 100% 330 days after issuance;

(ii)           Each
option granted to Non-Employee Directors prior to the date of the 2006 Annual
Meeting of Shareholders pursuant to the transition option grants set forth in
Section 6(e) will vest one-third on the date of grant and one-third each on the
first and second anniversary of the grant date.

The
vesting of a Non-Employee Director Option will accelerate and the Non-Employee
Director Option will become immediately exercisable in full in accordance with
Section 16 hereof.  Each Non-Employee
Director Option, to the extent exercisable, may be exercisable in whole or in
part.

(c)   TERM.

Subject
to Section 13 hereof, Non-Employee Director Options will expire at the earlier
of

(i)            the
8-year anniversary date of the grant of the Non-Employee Director Option, and

(ii)           except
as otherwise provided in Section 16 hereof, one year after the date the
Non-Employee Director ceases to be a director of the Company to the extent that
the Option was vested on the date of termination.

In no
event will any Non-Employee Director Option be exercisable at any time after
its expiration date.  When a Non-Employee
Director Option is no longer exercisable, it will be deemed to have lapsed or
terminated.

(d)   EXERCISE
PRICE.

The
purchase price of each Share subject to a Non-Employee Director Option will be
the Fair Market Value per Share on the date of grant.  A Non-Employee Director may exercise a
Non-Employee Director Option using as payment any form of consideration
provided for in Section 8 hereof.

(e)   TRANSITION
GRANTS.

In
order to create an effective transition to this new Section 6, Non-Employee
Directors that would otherwise be entitled to a grant of options under the
provisions of prior Section 6 on or after October 1, 2005 and prior to the 2006
Annual Shareholders Meeting will receive a grant equal to the pro rata portion
of the grant that Non-Employee Director would otherwise have received had the
prior program remained in effect.  The
Board of Directors is authorized by resolution to designate the amount of each
pro rata option and to issue it to the director.

(f)    CANCELLATION
OF UNVESTED OPTIONS.

Upon
approval of this revised Section 6 by Shareholders at the 2006 Annual
Shareholders Meeting, all unvested options issued to Non-Employee Directors
(other than the transition option 

(2)   As
approved by the Board of Directors on December 30, 2005 and approved by the
shareholders on April 27, 2006. 

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grants set forth
in Section 6(e)) will be cancelled and the expiration date for the vested, but
unexercised portion of these options (as set forth in Section 6(c)(i)) will be
extended for one additional year.

7.             ADVISORY
COMMITTEE MEMBER OPTIONS

(a)           GRANT OF
ADVISOR OPTIONS. An Advisor may be granted from time to time one or more
Non-Statutory Stock Options under the Plan and such Advisor Options shall be
subject to such terms and conditions, consistent with the other provisions of
the Plan, as shall be determined by the Committee in its sole discretion.

(b)           EXERCISABILITY.
An Advisor Option shall become exercisable at such times and in such
installments (which may be cumulative) as shall be determined by the Committee
in its sole discretion at the time the Advisor Option is granted.

(c)           TERM.
Subject to Section 13 hereof, the duration of Advisor Options shall be fixed by
the Committee in its sole discretion at its date of grant.

(d)           EXERCISE
PRICE. The per share purchase price to be paid by the Advisor at the time an Advisor
Option is exercised shall be determined by the Committee in its sole discretion
at the time the Advisor Option is granted; provided, however, that such price
shall not be less than the Fair Market Value of one share of Common Stock on
the date the Advisor Option is granted.

8.             PAYMENT
OF EXERCISE PRICE

The purchase price of each Share subject to Options
granted under the Plan shall be payable at the time written notice of exercise
is given to the Company. Payment for Shares issued upon exercise of an option
may consist of cash, check, exchange of Previously Acquired Shares (by
tendering to the Company shares previously owned by the Participant which have
a Fair Market Value on the date of exercise equal to the option price), or a
combination thereof.

9.             OPTION AGREEMENT

Each Option granted under this Plan shall be evidenced
by a stock option agreement between the Company and the Participant to whom the
option is granted.

10.          EXERCISE
OF OPTION

(a)           The
exercise of any Option may be contingent upon receipt from the Participant (or
other person rightfully exercising the option) of a representation that, at the
time of such exercise, it is his of her present intention to acquire the Shares
received thereunder for investment and not with a view to distribution thereof.
Certificates for Shares so issued may be restricted as to transfer upon advice
of legal counsel that such restriction is appropriate to comply with applicable
securities laws.

(b)           The
exercise of any Option shall only be effective at such time as counsel to the
Company shall have determined that the issuance and delivery of Shares pursuant
to such exercise will not violate any state or federal securities or other
laws. The Company may, in its sole discretion, defer the effectiveness of any
Option exercised hereunder in order to permit registration or an exemption from
registration for such issuance of Shares for the purpose of compliance with
applicable federal and state securities laws.

(c)           A
Participant electing to exercise an Option shall give written notice to the
Company of such election and of the number of Shares subject to such exercise.
The full purchase price of such Shares shall be tendered with such notice of
exercise. Until such person has been issued a certificate or certificates for the
Shares subject to such exercise, he or she shall possess no rights as a
shareholder with respect to such Shares.

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11.          RIGHT
TO TERMINATE SERVICE

Nothing in the Plan or in any agreement hereunder
shall confer on any Participant any right to continue as a Director or Advisor
of the Company or affect, in any way, the right of the Company to terminate his
or her service as a Director or Advisor at any time.

12.          RESTRICTED
STOCK

(a)           Administration.  Shares of Restricted Stock may be issued
either alone or in addition to other awards granted under the Plan.  The Committee has the right to determine to
whom, and the time or times at which, Restricted Stock awards will be made, the
number of shares to be awarded, the time or times within which such awards may
be subject to forfeiture, and all other conditions of the awards.  The provisions of Restricted Stock awards
need not be the same with respect to each recipient.

(b)           Awards
and Certificates.  The prospective
recipient of an award of shares of Restricted Stock shall not have any rights
with respect to such award, unless and until such recipient has executed an
agreement evidencing the award and has delivered a fully executed copy thereof
to the Company, and has otherwise complied with the then applicable terms and
conditions.

(i)            Each
participant shall be issued a stock certificate in respect of shares of
Restricted Stock awarded under the Plan. 
Such certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:

“The transferability of
this certificate and the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the Enpath Medical, Inc. 1999
Non-Employee Director and Medical Advisory Board Stock Option Plan and an
Agreement entered into between the registered owner and Enpath Medical,
Inc.  Copies of such Plan and Agreement are
on file in the offices of Enpath Medical, Inc., 15301 Hwy 55 West, Plymouth, MN
55447.”

(ii)           The
Committee must require that the stock certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have
lapsed, and that, as a condition of any Restricted Stock award, the participant
shall have delivered a stock power, endorsed in blank, relating to the Shares
covered by such award.

(c)           Restrictions
and Conditions.  The shares of
Restricted Stock awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:

(i)            Subject
to the provisions of this Plan and the award agreement, during a period set by
the Committee commencing with the date of such award (the “Restriction Period”),
the participant shall not be permitted to sell, transfer, pledge or assign
shares of Restricted Stock awarded under the Plan.  Within these limits, the Committee may
provide for the lapse of such restrictions in installments where deemed
appropriate.

(ii)           Except as
provided in paragraph (c)(i) of this Section 12, the participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the shares and the
right to receive any cash dividends.  The
Committee, in its sole discretion, may permit or require the payment of cash
dividends to be deferred and, if the Committee so determines, reinvested in
additional shares of Restricted Stock (to the extent shares are available under
Section 3 and subject to paragraph (c)(vi) of this Section 12).

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(iii)          Subject
to the provisions of the award agreement and paragraph (c)(iv) of this Section
12, upon termination of employment for any reason during the Restriction
Period, all shares still subject to restriction shall be forfeited by the participant.

(iv)          In the
event of special hardship circumstances of a participant whose directorship is
terminated (other than for cause), including death, Disability or Retirement,
or in the event of an unforeseeable emergency of a participant still in service,
the Committee may, in its sole discretion, when it finds that a waiver would be
in the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to such participant’s shares of Restricted
Stock.

(v)           Notwithstanding
the foregoing, in the event of the sale by the Company of substantially all of
its assets and the consequent discontinuance of its business, or in the event
of a merger, exchange, consolidation or liquidation of the Company, the Board
shall, in its sole discretion, in connection with the Board’s adoption of the
plan for sale, merger, exchange, consolidation or liquidation, provide for one
or more of the following with respect to Restricted Stock Awards that are, on
such date, still subject to a Restriction Period:  (i) the removal of the restrictions on any or
all outstanding Restricted Stock Awards; (ii) the complete termination of this
Plan and forfeiture of outstanding Restricted Stock Awards prior to a date
specified by the Board; and (iii) the continuance of the Plan with respect to
the Restricted Stock Award which were outstanding as of the date of adoption by
the Board of such plan for sale, merger, exchange, consolidation or liquidation
and provide to participants holding Restricted Stock Awards the right to an
equivalent number of restricted shares of stock of the corporation succeeding
the Company by reason of such sale, merger, exchange, consolidation or
liquidation.  The grant of a Restricted
Stock Award pursuant to the Plan shall not limit in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

(vi)          As a
condition of any Restricted Stock award, the Company may require the
participant to represent and warrant to the Company at the time of the award
that the Shares are being acquired only for investment and without any present
intention to sell or distribute the Shares if, in the opinion of counsel for
the Company, that such representation is required under the Securities Act of
1933, or any other applicable law, regulation or rule of any governmental
agency.

13.          SUSPENSION
OR TERMINATION OF OPTIONS

If the President of the Company or his or her designee
reasonably believes that a Participant has committed an act of misconduct, the
President may suspend the Participant’s right to exercise any Option pending a
determination by the Board (excluding the Director accused of such misconduct).
If the Board (excluding the Director accused of such misconduct) determines
that the Participant has committed an act of embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, breach of fiduciary duty or
deliberate disregard of Company rules or policies resulting in loss, damage or
injury to the Company, or if a Participant makes an unauthorized disclosure of
any Company trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Company customer to breach a
contract with the Company, or induces any principal for whom the Company acts
as agent to terminate such agency relationship, neither the Participant nor his
or her estate shall be entitled to exercise any Option whatsoever. In making
such a determination, the Board (excluding the Director accused of such
misconduct) shall give the Participant an opportunity to appear and present
evidence on the Participant’s behalf at a hearing before the Board.

14.          NON-TRANSFERABILITY

No Option granted under the Plan shall be transferable
by a Participant, other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code 

 7
 

 

of 1986, as amended, or Title I of the Employee
Retirement Income Security Act or the rules thereunder. During the lifetime of
a Participant, the Option shall be exercisable only by such Participant.

15.          DILUTION
OR OTHER ADJUSTMENTS

If there shall be any change in the Shares of the
Company through merger, consolidation, reorganization, recapitalization, stock
dividend (of whatever amount), stock split or other change in the corporate
structure, appropriate adjustments in the Plan and outstanding options shall be
made by the Board. In the event of any such changes, adjustments shall include,
where appropriate, changes in the aggregate number of Shares subject to the
Plan and in the number of Shares and the price per Share subject to outstanding
options, in order to prevent dilution or enlargement of option rights.

16.          CHANGE
OF CONTROL OF THE COMPANY

In the event of a Change in Control (as hereinafter
defined), an Option granted to a Participant shall become fully exercisable if,
within one year of such Change in Control, such Participant shall cease for any
reason to be a member of the Board or Advisory Board, as the case may be. Any
exercise of an Option permitted by these Change of Control provisions may be
made at any time during the remaining term of the Option. A Change in Control
shall be deemed to have occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which Shares would be
converted into cash, securities, or other property, other than a merger in
which shareholders of the Company immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (ii) the shareholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company; or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the “1934 Act”)) shall become
the beneficial owner (within the meaning of Rule 1 3d-3 under the 1934 Act) of
30% or more of the Company’s outstanding Common Stock; or (iv) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company’s shareholders, of each new Director was approved by a
vote of at least two-thirds of the Directors then still in office who were
Directors at the beginning of the period.

17.          AMENDMENT
OR DISCONTINUANCE OF PLAN

The Board may amend or discontinue the Plan at any
time provided, however, that, if necessary to maintain the Plan in compliance
with Exchange Act Rule 16b-3, the Plan may not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act, or the rules thereunder. Further,
if necessary to maintain the Plan in compliance with Exchange Act Rule 16b-3,
no amendment of the Plan shall, without shareholder approval: (i) increase by
more than 10% the number of Shares issuable under the Plan (not including
increases to reflect stock splits and stock dividends); (ii) change the
eligibility requirements or the limits on Options; (iii) decrease the minimum
option price; (iv) extend the maximum option term; or (v) materially increase
the benefits which may accrue to Participants under the Plan. Except as
provided in Section 13 hereof, the Board shall not alter or impair any Option
previously granted under the Plan without the consent of the holder of the
Option.

18.          TERMINATION
OF PLAN

Unless the Plan shall have been discontinued as
provided in Section 17 hereof, the Plan shall terminate on July 29, 2011. No
Option may be granted after such date, but termination of the Plan shall not,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option granted prior to termination of the Plan.

 8
 

 

19.          SHAREHOLDER
APPROVAL

Provided that approval of the Company’s shareholders
is required under Section 17 of the Exchange Act and the rules and regulations
thereunder, the Plan shall be null and void, and each option granted hereunder
shall be null and void, if the shareholders of the Company shall not have
approved the Plan prior to May 1, 2000.

 9Exhibit
10.3

STANDARD
COMMERCIAL LEASE

ARTICLE
1. BASIC LEASE TERMS

1.1           Parties.  This lease agreement (“Lease”) is entered
into this 26th day of May, 2006 (“Effective Date”) by and between Plymouth
2200, LLP, a Minnesota limited liability partnership, or its assigns (“Landlord”)
and Enpath Medical, Inc., a Minnesota corporation (“Tenant”).

1.2           Premises.  In consideration of the rents, terms,
provisions and covenants of this Lease, Landlord hereby leases, lets and
demises to Tenant the premises (“Premises”) as illustrated on Exhibit A
attached hereto consisting of approximately 95,691 rentable square feet of
warehouse/manufacturing space in the building located at 2300 Berkshire Lane
North, Plymouth, Minnesota (“Building”), which consists of approximately 244,016
rentable square feet, situated on land legally described on Exhibit B attached
hereto (“Property”).  Appurtenant to the
Premises shall be a non-exclusive license for Tenant to have access over, on
and through the Building and the Property for use of the parking lots,
driveways, sidewalks, hallways and other common areas.

1.3           Term.  Subject to and upon the conditions set forth
herein, the “Initial Term” of this Lease shall be 120 months commencing on
January 1, 2007 the (“Commencement Date”) and shall terminate on December 31,
2016 unless sooner terminated as hereinafter provided.

1.4           Renewal
Terms.  Tenant shall have the right
to renew the term of the Lease for one (1) period of five (5) years (each a “Renewal
Term”).  Tenant shall exercise its right
to renew the Lease by giving Landlord written notice (“Renewal Notice”) no less
than one (1) year prior to the commencement of the applicable Renewal
Term.  Provided, however, Tenant shall
not be in default, beyond any applicable cure or notice period, at the time of
giving the Renewal Notice or at any time thereafter to and including the
commencement of the Renewal Term.  The
Initial Term and Renewal Terms shall be collectively referred to herein as the “Term.”

Notwithstanding
the foregoing, the option to renew this Lease as set forth in this Section 1.4
is “personal” to Tenant and therefore not transferable, except that Landlord
agrees that this limitation on transfers shall not be applicable with respect
to:  i) an assignment or sublease to a
subsidiary or parent company of Tenant; or ii) an assignment to an entity which
has acquired all of Tenant’s stock, or substantially all of Tenant’s assets or
has merged with Tenant, provided the assignee or sublessee assumes Tenant’s
obligations under the Lease in writing.

	
  1.5

  	
  Base Rent. “Base Rent” is:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Year 1 [1/1/07-12/31/07]:

  	
  Monthly payments of $33,623.85

  
	
   

  	
   

  	
  ($4.30 per rental square foot of space leased by
  Tenant)

  
	
   

  	
   

  	
   

  
	
   

  	
  Years 2-16:

  	
  Base Rent shall increase annually commencing with the
  first annual anniversary of the Commencement Date by the lesser of (i) 2.5%,
  or (ii) any increase based on the Consumer Price Index calculation set forth
  in Section 2.2 below.

  
	
  1.6

  	
  Addresses.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Landlord’s Address:

  	
  Tenant’s Address:

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o Continental Property Group

  	
  2300 Berkshire Lane

  
	
   

  	
  253 East Lake Street

  	
  Plymouth, MN

  
	
   

  	
  Wayzata, MN 55391

  	
   

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Permitted Use.

  	
  Office, warehouse and manufacturing.

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  Security Deposit.

  	
  Wavied.

  

 1
 

 

 

	
  1.9

  	
  Pro-Rata Share.

  	
  Thirty-nine and twenty-two hundredths percent (39.22%)
  (The percentage calculated by dividing the number of rentable square feet of
  space in the Premises by the total rentable square feet of space in the
  Building.)

  
	
   

  	
   

  	
   

  
	
  1.10

  	
  Delivery Date.

  	
  July 1, 2006.

  
	
   

  	
   

  	
   

  
	
  1.11

  	
  Delivery Fee.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  October 1, 2006:

  	
  $30,000

  
	
   

  	
  November 1, 2006:

  	
  $30,000

  
	
   

  	
  December 1, 2006:

  	
  $30,000

  

 

ARTICLE
2. RENT

2.1           Base
Rent.  Tenant agrees to pay monthly
as Base Rent during the Term of this Lease the sum set forth in Section 1.5 of
this Lease, which amount shall be payable to Landlord at the address shown
above. The first monthly installment of Base Rent shall be due and payable to
Landlord on the Commencement Date for the first month’s rent and each monthly
installment of rent shall be due and payable on or before the first day of each
calendar month succeeding the Commencement Date during the Term of this Lease,
provided, if the Commencement Date should be a date other than the first day of
a calendar month, the monthly rental set forth above shall be prorated to the
end of that calendar month during the term of this Lease.  Tenant shall pay, as additional rent, all
other sums due under this Lease.  Tenant
shall pay the first Delivery Fee payment to Landlord immediately upon Landlord’s
delivery of the Premises to Tenant. 
Notwithstanding anything in this Lease to the contrary, if Landlord
cannot deliver possession of the Premises to the Tenant on the Delivery Date due to a holding over by a prior tenant, Tenant’s
default, or casualty affecting the Premises, this Lease shall not be
void or voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom, but the Delivery Fee and all rents and other amounts due
hereunder shall be abated until Landlord delivers possession and the expiration
date of the Lease shall be extended by the corresponding number of days that
the Commencement Date is postponed. 
Provided, however, if Landlord does not deliver possession of the
Premises to Tenant within thirty (30) days after the Delivery Date, then Tenant
may terminate the Lease upon giving Landlord written notice.

2.2           CPI Calculation.  Rent
shall increase annually commencing with the first anniversary of the
Commencement Date, and then again on each successive anniversary of the
Commencement Date thereafter through the balance of the Term as follows:  the monthly Base Rent in effect prior to the
year in question (the “Prior Rent”) shall be increased during the year in
question to equal the sum of (A) the Prior Rent, plus, (B) the product of (i)
the sum of the numeral 1 plus the amount equal to the “Percentage Increase” (as
defined below), multiplied by ii) the Prior Rent, provided that in no event
shall annual Rent during any year be less than the annual Rent during the
previous year.

The following terms shall have the meanings
assigned to them in this Section 3:

(i)            “CPI” means the “Consumer Price Index for All
Urban Consumers, Minneapolis-St. Paul, MN-WI, All Items, Standard Reference
Base 1982-84=100” issued by the Bureau of Labor Statistics of the United States
Department of Labor.  If the Bureau of
Labor Statistics substantially revises the manner in which the CPI is
determined, an adjustment shall be made in the revised Index which would
produce results equivalent, as nearly as possible, to those, which would be
obtained if the CPI had not been so revised. 
If the 1982-84 average shall no longer be used as an index of 100, such
change shall constitute a substantial revision. 
If the CPI become unavailable to the public because publication is
discontinued, or otherwise becomes unavailable, the Landlord shall substitute a
comparable index based upon changes in the cost of living or purchasing power
of the consumer dollar published by any other governmental agency or, if no
such index is available, then a comparable index published by a major bank, or
other financial institution, university or recognized financial publication.

(ii)           “Base CPI” means CPI in effect during the 13th
month prior to the month in which the Rent in question is to be effective.

(iii)          “Calculation Month” means the month prior to the
month in which the Rent in question is to become effective.

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(iv)          “Percentage
Increase” means the percentage equal to the fraction, the numerator of which
shall be the CPI in effect in the current Calculation Month less the Base CPI,
and the denominator of which shall be the Base CPI.

2.3           Operating
Expenses.  Tenant shall also pay as
additional rent Tenant’s Pro Rata Share of the Operating Expenses of Landlord
for the Building of which the Premises are a part.  Landlord
shall, on or before December 31st of each calendar year during the
Term of this Lease, give Tenant an estimate of the Operating Expenses payable
per square foot of rentable area for the next calendar year.  Tenant shall pay, as additional rent, along
with its monthly Base Rent, one-twelfth (1/12) of such estimated Operating
Expenses.  Landlord may invoice
Tenant monthly for Tenant’s Pro Rata Share of the estimated Operating Expenses
for each calendar year, which amount shall be adjusted from time-to-time by
Landlord based upon anticipated Operating Expenses. Within four (4) months
following the close of each calendar year, Landlord shall provide Tenant an
accounting prepared in accordance with Generally Accepted Accounting Principals
(GAAP) showing in reasonable detail all computations of additional rent due
under this Section.  In the event the
accounting shows that the total of the monthly payments made by Tenant exceeds
the amount of additional rent due by Tenant under this Section, the accounting
shall be accompanied by evidence of a credit to Tenant’s account.  In the event the accounting shows that the
total of the monthly payments made by Tenant is less than the amount of
additional rent due by Tenant under this Section, the accounting shall be
accompanied by an invoice for the additional rent.  Notwithstanding any other provision in this
Lease, during the year in which this Lease terminates, Landlord, prior to the
termination date, shall have the option to invoice Tenant for Tenant’s pro rata
share of the operating expenses based upon the previous year’s operating
expenses. If this Lease shall terminate on a day other than the last day of a
calendar year, the amount of any additional rent payable by Tenant applicable
to the year in which the termination shall occur shall be prorated on the ratio
that the number of days from the commencement of the calendar year to and
including such termination date bears to 365. 
Tenant agrees to pay any additional rent due under this Section within
thirty (30) days following receipt of the invoice or accounting showing
additional rent due. Tenant’s pro rata share set forth in Section 1.9 shall be
equal to a percentage based upon a fraction, the numerator of which is the
rentable square feet of space in the Premises as set forth in Section 1.2 and
the denominator of which shall be the rentable square feet of space in the
Building as set forth in Section 1.2.

2.4           Definition
of Operating Expenses.  The term “Operating
Expenses” includes all expenses incurred by Landlord with respect to the
maintenance and operation of the Building of which the Premises are a part,
including, but not limited to, the following: maintenance, repair and
replacement costs; electricity, fuel, water, sewer, gas and other common
Building utility charges; signage; security system charges; security, window
washing and janitorial services; trash and snow removal; lawn mowing,
landscaping and pest control; management fees (not to exceed 5% of the gross
rental income of the Building), reasonable wages and benefits payable to
employees of Landlord whose duties are directly connected with the operation
and maintenance of the Building; all services, supplies, repairs, replacements
or other expenses for maintaining and operating the Building or project
including parking and common areas; improvements made to the Building which are
required under any governmental law or regulation that was not applicable to
the Building at the time it was constructed; installation of any device or other
equipment or capital improvement which improves the operating efficiency of any
system within the Premises and thereby reduces Operating Expenses; any and all necessary
replacements of the roof, structural portions of the Building, foundation and
HVAC equipment done by Landlord and reimbursed by Tenant as additional rent,
provided however said costs shall be amortized over the useful life of such
replaced item according to GAAP; and all other expenses which would
generally be regarded as operating, repair, replacement and maintenance
expenses, all real property taxes and installments of special assessments
(payable over the longest time period available), including dues and
assessments by means of deed restrictions and/or owners associations which
accrue against the Building during the term of this Lease and reasonable legal
fees incurred in connection with actions to reduce the same; and all insurance
premiums Landlord is required to pay or deems necessary to pay, including fire
and extended coverage, rent loss and public liability insurance, with respect
to the Building.  Operating Expenses shall not include (a) costs of alterations of the
premises of other tenants of the Building; (b) costs of capital improvements to
the Building or Property except as expressly stated above; (c) depreciation
charges; (d) interest and principal payments on mortgages or security
agreements concerning the Building;  (e)
real estate leasing and brokerage commissions; and (f) any expenditure for
which Landlord has been reimbursed by insurance, judgment award or other means.

2.5           Late
Payment Charge.  Other remedies for
nonpayment of rent notwithstanding, if the monthly Base Rent payment or any
additional rent payment due from Tenant to Landlord is not received by Landlord
on or before the fifth (5th) day of the month for which the rent is
due, a late payment charge of five percent (5%) of such past due amount shall
become due and payable in addition to such amounts owed under this Lease.

 3
 

 

2.6           Increase
in Insurance Premiums.  If an increase
in any insurance premiums paid by Landlord for the Building is caused by Tenant’s
use of the Premises or if Tenant vacates the Premises and causes an increase in
such premiums, then Tenant shall pay as additional rent the amount of such
increase to Landlord.

2.7           Security
Deposit.  N/A

2.8           Holding
over.  In the event that Tenant does
not vacate the Premises upon the expiration or termination of this Lease,
Tenant shall be a tenant at will for the holdover period and all of the terms
and provisions of this Lease shall be applicable during that period, except
that Tenant shall pay Landlord as base rental for the period of such holdover
an amount equal to 1.5 times the Base Rent which would have been payable by
Tenant had the holdover period been a part of the original term of this Lease
together with all additional rent as provided in this Lease.  Tenant agrees to vacate and deliver the
Premises to Landlord upon Tenant’s receipt of notice from Landlord to
vacate.  The rental payable during the
holdover period shall be payable to Landlord on demand.  No holding over by Tenant whether with or
without the consent of Landlord shall operate to extend the term of this Lease.

ARTICLE
3. OCCUPANCY AND USE

3.1           Use.  Tenant warrants and represents to Landlord
that the Premises shall be used and occupied only for the Permitted Use as set
forth in Section 1.7.  Tenant shall
occupy the Premises, conduct its business and control its agents, employees,
invitees and visitors in such a manner as is lawful, reputable and will not
create a nuisance.  Tenant shall not
permit any operation which emits any odor or matter which intrudes into other
portions of the Building use any apparatus or machine which makes undue noise
or causes vibration in any portion of the Building or otherwise materially
interfere with or disturb any other tenant of the Building in its normal
business operations or Landlord in its management of the Building.  Tenant shall neither permit any waste on the
Premises nor allow the Premises to be used in any way, which would in the
option of Landlord, be extra hazardous on account of fire or which would in any
way increase or render void the fire insurance on the Building

3.2           Signs.  No sign of any type or description shall be
erected, placed or painted in or about the Premises, which is visible from the
outside of the Premises, except those signs submitted to Landlord in writing
and approved by Landlord in writing, and which signs are in conformance with
Landlord’s sign criteria established for the project, attached hereto as
Exhibit D.

3.3           Compliance
with Laws, Rules and Regulations. 
Tenant, at Tenant’s sole cost and expense, shall comply with all laws,
ordinances, orders, rules and regulations of state, federal, municipal or other
agencies or bodies having jurisdiction over the use, condition or occupancy of
the Premises.  Tenant will comply with
the rules and regulations of the Building adopted by Landlord in any reasonable
manner as may be deemed advisable for the safety, care, cleanliness,
preservation of good order and operation or use of the Building or the
Premises.  A copy of the current rules
and regulations are attached hereto as Exhibit E.  All changes and amendments to the rules and
regulations of the Building will be sent by Landlord to Tenant in writing and
shall thereafter be carried out and observed by Tenant.

3.4           Warranty
of Possession.  Landlord warrants
that it is the owner of the Building and the Property, that it has the right
and authority to execute this Lease, and Tenant, upon payment of the required
rents and subject to the terms, conditions, covenants and agreements contained
in this Lease, shall have possession of the Premises during the full term of
this Lease as well as any extension or renewal thereof.

3.5           Right
of Access.  Landlord or its
authorized agents shall at any and all reasonable times, upon giving Tenant no
less than 24 hours notice (except in an emergency in such instance Landlord is
not required to give prior notice), have the right to enter the Premises to
inspect the same, to show the Premises to prospective purchasers or lessees,
and to alter, improve or repair the Premises or any other portion of the
Building.  Tenant hereby waives any claim
for damages against Landlord for injury or inconvenience to or interference with
Tenant’s business, any loss of occupancy or use of the Premises, and any other
loss occasioned thereby, except for Landlord’s gross negligence or willful
misconduct or omission.  Landlord shall
at all times have and retain a key with which to unlock the main door to the
Premises.  Landlord shall have the right
to use any and all means, which Landlord may deem proper to open any door in an
emergency without liability therefore, except for Landlord’s gross negligence
and willful misconduct to the extent affected by Section 7.4 below.  Tenant shall permit Landlord to erect, use,
maintain and repair pipes, cables, conduits, plumbing, vents and wires in, to
and through the Premises as often and to the extent that Landlord may now or
hereafter deem to be necessary or appropriate for the proper use, operation and
maintenance of the Building.

 4
 

 

3.6           Early
Occupancy.  Landlord shall deliver
possession of the Premises to Tenant no later than the Delivery Date set forth
in Section 1.10 above to commence the construction and installation of the
Tenant Improvements (as defined in Section 6.1 below).  If Tenant is given and accepts possession of
the Premises on or before the Delivery Date, Tenant shall immediately pay the
Delivery Fee as set forth in Section 1.11 above to Landlord and all covenants,
agreements and obligations herein and the term of this Lease shall commence.

3.7           Parking.  At no charge to Tenant, Landlord grants
Tenant the non-exclusive use of the parking lot situated on the Property.  If Tenant is unable to utilize this parking
lot to the extent necessary for its business, employees, agents and guests,
then Landlord agrees to construct additional parking on the Property in the
area depicted on Exhibit F attached hereto to the extent permitted by
applicable governmental laws, ordinances and regulations.

ARTICLE
4. UTILITIES AND SERVICE

4.1           Building
Services.  Tenant shall pay when due,
all charges for utilities furnished to or for the sole use or benefit of Tenant
or the Premises.  Tenant shall have no
claim for rebate of rent on account of any interruption in service.

4.2           Theft
or Burglary.  Landlord shall not be
liable to Tenant for losses to Tenant’s property or personal injury caused by
criminal acts or entry by unauthorized persons into the Premises or the Building.

ARTICLE
5. REPAIRS AND MAINTENANCE

5.1           Landlord
Repairs.  Landlord shall not be
required to make any improvements, replacements or repairs of any kind or
character to the Premises during the Term of this Lease except as are set forth
in this Section.  Landlord shall
maintain, repair and replace all portions of the Building (excluding the
Premises) and the Property including the Building’s foundation and roof,
parking, sidewalks, landscaping and common areas, the structural soundness of
the exterior walls, doors, corridors, and other structures serving the
Premises, provided, that Landlord’s cost of maintaining, replacing and
repairing the items set forth in this Section shall be Operating Expenses
subject to the additional rent provisions in Section 2.3 and 2.4.  Landlord shall not be liable to Tenant except
as expressly provided in this Lease, for any damage or inconvenience, and
Tenant shall not be entitled to any abatement or reduction of rent by reason of
any repairs, alterations or additions made by Landlord under this Lease.

5.2           Tenant
Repairs.  Tenant shall, at all times
throughout the Term of this Lease, including renewals and extensions, and at
its sole expense, keep and maintain the Premises in a clean, safe, sanitary and
good condition and in compliance with all applicable laws, codes, ordinances,
rules and regulations. Tenant’s obligations hereunder shall include, but not be
limited to, the maintenance, repair, and replacement, if necessary, of all
heating, ventilation, air conditioning, lighting and plumbing fixtures that
solely serve the Premises and equipment, fixtures, motors and machinery solely
serving the Premises, all interior walls, partitions, doors and windows,
including the regular painting thereof, all exterior entrances, windows, doors
and docks and the replacement of all broken glass.  When used in this provision, the term “repairs”
shall include replacements or renewals when necessary, and all such repairs
made by the Tenant shall be equal in quality and class to the original
work.  The Tenant shall keep and maintain
all portions of the Premises and the sidewalk and areas adjoining the same in a
clean and orderly condition, free of accumulation of dirt, rubbish, snow and
ice.  If Tenant fails, refuses or
neglects to maintain or repair the Premises as required in this Lease after no
less than thirty (30) days notice shall have been given Tenant, in accordance
with this Lease, Landlord may make such repairs without liability to Tenant for
any loss or damage that may accrue to Tenant’s merchandise, fixtures or other
property or to Tenant’s business by reason thereof, except for Landlord’s gross
negligence or willful misconduct to the extent affected by Section 7.4 below,
and upon completion thereof Tenant shall pay to Landlord all costs plus five
percent (5%) for overhead incurred by Landlord in making such repairs upon
presentation to Tenant of bill therefor.

5.3           Tenant
Damages.  Tenant shall not allow any
damage to be committed on any portion of the Premises or Building or common areas,
and at the termination of this Lease, by lapse of time or otherwise, Tenant
shall deliver the Premises to Landlord in as good condition as existed at the
Commencement Date of this Lease, ordinary wear and tear and casualty losses
excepted.  The cost and expense of any
repairs necessary to restore the condition of the Premises shall be borne by
Tenant.

 5
 

 

ARTICLE
6. ALTERATIONS AND IMPROVEMENTS

6.1           Tenant
Improvements.  Tenant shall, at
Tenant’s expense, construct and install any and all improvements, equipment and
fixtures within the Premises or otherwise make such alterations to the Premises
as Tenant deems necessary for its use during the Term, which are generally set
forth on Exhibit C attached hereto (“Tenant Improvements”).  Tenant shall obtain all necessary
governmental permits and approvals to perform said work and use reasonable
diligence to install and construct the Tenant Improvements in a good and
workmanlike manner in compliance with all laws, rules and ordinances.  Tenant agrees to promptly pay the cost of all
such Tenant Improvements.  All Tenant
Improvements, except furniture, equipment and trade fixtures placed in the
Premises at the expense of Tenant, shall become the property of Landlord and
shall remain upon and be surrendered with the Premises to Landlord as a part
thereof at the termination of this Lease. 
Notwithstanding, Tenant shall repair any and all damage caused to the
Premises upon removal of its equipment and trade fixtures.

ARTICLE
7. CASUALTY AND INSURANCE

7.1           Substantial
Destruction.  If all or a substantial
portion of the Premises or the Building should be totally destroyed by fire or
other casualty, or if the Premises or the Building should be damaged so that
rebuilding cannot reasonably be completed within one hundred eighty (180) days
from the date of the destruction, or if insurance proceeds are not made
available to Landlord, or are inadequate, for restoration, this Lease shall
terminate at the option of Landlord by written notice to Tenant within sixty
(60) days following the occurrence, and the Base Rent and additional rent shall
be abated for the unexpired portion of the Lease, effective as of the date of
the written notification.  If Landlord
does not terminate the Lease as permitted herein, all rentals due under this
Lease shall abate during the time the Premises are untenantable, in whole or in
part, in proportion to the amount of the Premises that are untenantable and
Landlord shall diligently repair or rebuild the Premises or the Building, in
compliance with all applicable laws, ordinances and regulations, to
substantially the same condition in which it existed as of the Commencement
Date.  If Landlord fails to repair or
restore the Premises within 120 days after the damage or destruction, Tenant
may immediately terminate the Lease upon giving Landlord written notice of such
termination.

7.2           Partial
Destruction.  If the Premises or
Building should be partially damaged by fire or other casualty, and rebuilding
or repairs can reasonably be completed within one hundred twenty (120) days
from the date of the destruction, and insurance proceeds are adequate and
available to Landlord for restoration, this Lease shall not terminate, and
Landlord shall at its sole risk and expense proceed with reasonable diligence
to rebuild or repair the Building or other improvements to substantially the
same condition in which they existed prior to the damage.  If the Premises are to be rebuilt or repaired
and are untenantable in whole or in part following the damage, the Base Rent
and additional rent payable under this Lease during the period for which the
Premises are untenantable shall be prorated on a per diem basis and apportioned
in accordance with the portion of the Premises which is usable by Tenant’s use
until the restoration of the Premises is substantially completed.  Landlord shall diligently repair or rebuild
the Premises or the Building, in compliance with all applicable laws,
ordinances and regulations, to substantially the same condition in which it
existed as of the Commencement Date.  In
the event that Landlord fails to complete the necessary repairs or rebuilding
within one hundred twenty (120) days from the date of the destruction, Tenant
may at its option immediately terminate this Lease by delivering written notice
of termination to Landlord, whereupon all rights and obligations under this
Lease shall cease to exist.

7.3           Personal
Property Insurance.  Landlord shall
not be obligated in any way or manner to insure any personal property
(including, but not limited to, any furniture, machinery, goods or supplies) of
Tenant upon or within the Premises, any fixtures installed or paid for by
Tenant upon or within the Premises, or any improvements which Tenant may
construct on the Premises.  Tenant shall
maintain property insurance on its personal property.  Tenant shall have no right in or claim to the
proceeds of any policy of insurance maintained by Landlord even if the cost of
such insurance is borne by Tenant as set forth in Article 2.

7.4           Waiver
of Subrogation.  Anything in this
Lease to the contrary notwithstanding, Landlord and Tenant hereby waive and
release each other of and from any and all right of recovery, claim, action, or
cause of action, against each other, their agents, officers and employees, for
any loss or damage that may occur to the Premises, the improvements of the
Building or personal property within the Building, by reason of fire or the
elements, regardless of cause or origin, including negligence of Landlord or
Tenant and their agents, officers and employees.  Landlord and Tenant agree immediately to give
their respective insurance companies which have issued policies of insurance
covering all risk of direct physical loss, written notice of’ the terms of the
mutual waivers contained in this Section.

7.5           Hold
Harmless.  Landlord shall not be
liable to Tenant’s employees, agents, invitees, licensees, or visitors, or to
any other person, for an injury to person or damage to property on or about the
Premises caused by any act or omission of

 6
 

 

Tenant, its
agents, servants, or employees, or of any other person entering upon the
Premises under express or implied invitation by Tenant, or caused by the
improvements located on the Premises becoming out of repair, the failure or
cessation of any service provided by Landlord (including security service and
devices), or caused by leakage of gas, oil, water or steam or by electricity
emanating from the Premises.  Tenant
agrees to indemnify and hold harmless Landlord of and from any loss, attorney’s
fees, expenses or claims arising out of any such damage or injury.

7.6           Public
Liability Insurance.  Tenant shall
during the Term hereof keep in full force and effect at its expense a policy or
policies of public liability insurance with respect to the Premises and the
business of Tenant, on terms and with companies approved in writing by
Landlord, which approval shall not be unreasonably withheld, in which Landlord
shall be named as an additional insured, under reasonable limits of liability
not less than $1,000,000, or such greater coverage as Landlord may reasonably
require, combined single limit coverage for injury or death.  Such policy or policies shall provide that
thirty (30) days written notice must be given to Landlord prior to cancellation
thereof Tenant shall furnish evidence satisfactory to Landlord at the time this
Lease is executed that such coverage is in full force and effect.

7.7           Building
Insurance Coverage.  Landlord shall
maintain throughout the Term of the Lease, or any extension thereof, fire and
extended coverage insurance on the Building and the property owned by Landlord
located in and about the Building in an amount equivalent to the full
replacement cost thereof (excluding foundation, grading and excavation costs)
and with such deductibles as Landlord shall determine.  Landlord shall keep the Building insured for
the benefit of Landlord against loss or damage by fire and such other risk or
risks of a similar or dissimilar nature as are now, or may in the future be,
customarily covered with respect to buildings and improvements similar in
construction, general location, use, occupancy and design to the Building,
including, but without limiting the generality of the foregoing, windstorms,
hail, explosion, vandalism, malicious mischief, and civil commotion, provided
coverage is obtainable.  Landlord shall
also maintain, for its benefit general liability insurance against claims for
personal injury, death or property damage occurring upon, in or about the
Building, and any other insurance that Landlord deems appropriate and is
customarily carried with respect to buildings and improvements similar in
construction, general location, use, occupancy and design to the Building,
including loss of rents coverage.

ARTICLE
8. CONDEMNATION

8.1           Substantial
Taking.  If all or a substantial part
of the Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain or by
purchase in lieu thereof, and the taking would prevent or materially interfere
with the use of the Premises for the purpose for which it is then being used,
this Lease shall terminate and all rents shall be abated during the unexpired
portion of this Lease effective on the date physical possession is taken by the
condemning authority. Tenant shall have no claim to the condemnation award or
proceeds in lieu thereof, except that Tenant shall be entitled to a separate
award for the cost of removing and moving its personal property.

8.2           Partial
Taking.  If a portion of the Premises
shall be taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by purchase in lieu
thereof, and this Lease is not terminated as provided in Section 8.1 above, the
rent payable under this Lease during the unexpired portion of the term shall be
adjusted to such an extent as may be fair and reasonable under the
circumstances.  Tenant shall have no
claim to the condemnation award or proceeds in lieu thereof, except that Tenant
shall be entitled to a separate award for the cost of removing and moving its
personal property.

ARTICLE
9. ASSIGNMENT OR SUBLEASE

9.1           Landlord
Assignment.  Landlord shall have the
right to sell, transfer or assign, in whole or in part, its rights and
obligations under this Lease and in the Building.  Any such sale, transfer or assignment shall
operate to release Landlord from any and all liabilities under this Lease
arising after the date of such sale, assignment or transfer, provided such
transferee or assignee assumes all of Landlord’s obligations hereunder in
writing for all obligations arising after the date of such sale, assignment or
transfer.

9.2           Tenant
Assignment.  Tenant shall not assign,
in whole or in part, this Lease, or allow it to be assigned, in whole or in
part by operation of law or otherwise (including without limitation a transfer
of a majority interest of stock, or transfer of substantially all the assets of
a corporation by merger, dissolution or otherwise) or mortgage or pledge the
same, or sublet the Premises, in whole or in part, without the prior written
consent of Landlord, which shall not be unreasonably withheld, conditioned or
delayed, and in no event shall say such assignment or sublease ever release
Tenant from any obligation or liability hereunder.  Provided, however, Tenant may without
Landlord’s consent (but only after notice is given to Landlord),

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assign this Lease
to (a) any subsidiary or parent company of Tenant, or (b) any entity resulting
from a sale, merger, or consolidation of Tenant upon the following conditions:
(i) that the total assets and net worth of such assignee shall be equal to or
more than that of Tenant immediately prior to such sale, consolidation, or
merger; (ii) that Tenant is not at such time in default hereunder; and (iii)
that such successor shall execute an instrument in writing in form and
substance reasonably acceptable to Landlord fully assuming all of the
obligations and liabilities imposed upon Tenant hereunder and shall deliver the
same to Landlord.  Notwithstanding
anything in this Lease to the contrary, in the event of any assignment or
sublease, any option or right of first refusal granted to Tenant shall not be
assigned by Tenant to any assignee or sublessee.  No assignee or sublessee of the Premises or
any portion thereof may assign or sublet the Premises or any portion thereof.

9.3           Conditions
of Assignment.  If Tenant desires to
assign or sublet all or any part of the Premises, it shall so notify Landlord
at least thirty (30) days in advance of the date on which Tenant desires to
make such assignment or sublease. Tenant shall provide Landlord with a copy of
the proposed assignment or sublease and such information as Landlord might
reasonably request concerning the proposed sublessee or assignee to allow
Landlord to make informed judgments as to the financial condition, reputation,
operations and general desirability of the proposed sublessee or assignee.
Within fifteen (15) days after Landlord’s receipt of Tenant’s proposed
assignment or sublease and all required information concerning the proposed
sublessee or assignee, Landlord shall have the following options: (1) consent
to the proposed assignment or sublease, and, if the rent due and payable by any
assignee or sublessee under any such permitted assignment or sublease (or a
combination of the rent payable under such assignment or sublease plus any
bonus or any other consideration or any payment incident thereto) exceeds the
rent payable under this Lease for such. space, Tenant shall pay to Landlord all
such excess rent and other excess consideration within ten (10) days following
receipt thereof by Tenant; or (2) refuse to consent to the proposed assignment
or sublease, which refusal shall be deemed to have been exercised unless
Landlord gives tenant written notice providing otherwise.  Upon the occurrence of an event of default,
if all or any part of the Premises are assigned or sublet, Landlord, in
addition to any other remedies provided by this Lease or provided by law, may,
at its option, collect directly from the assignee or sublessee all rents
becoming due to Tenant by reason of the assignment or sublease, and Landlord
shall have a security interest in all properties on the Premises to secure
payment of such sums. Any collections directly by Landlord from the assignee or
sublessee shall not be construed to constitute a novation or a release of
Tenant from the further performance of its obligations under this Lease.

9.4           Rights
of Mortgage.  Tenant accepts this
Lease subject and subordinate to any recorded mortgage presently existing or
hereafter created upon the Building and to all existing recorded restrictions,
covenants, casements and agreements with respect to the Building. Landlord is
hereby irrevocably vested with full power and authority to subordinate Tenant’s
interest under this Lease to any first mortgage lien hereafter placed on the
Premises, and Tenant agrees within ten (10) business days notice to execute a
subordination, non-disturbance and attornment agreement and such additional
instruments as Landlord may reasonably require. 
If the interest of Landlord under this Lease shall be transferred by
reason of foreclosure or other proceedings for enforcement of any first
mortgage or deed of trust on the Premises, Tenant shall be bound to the
transferee (sometimes called the “Purchaser”) under the terms, covenants and
conditions of this Lease for the balance of the Term remaining, including any
extensions or renewals, with the same force and effect as if the Purchaser were
Landlord under this Lease, and, if requested by the Purchaser, Tenant agrees to
attorn to the Purchaser, including the first mortgagee under any such mortgage
if it be the Purchaser, as its Landlord. 
Notwithstanding the forgoing, Tenant shall not be disturbed in its
possession of the Premises so long as Tenant is not in default hereunder.

9.5           Tenant’s
Statement.  Tenant agrees to furnish,
from time to time, within ten (10) days after receipt of a request from
Landlord or Landlord’s mortgagee, a statement certifying if applicable, the
following; whether Tenant is in possession of the Premises; whether the
Premises are acceptable; whether the Lease is in full force and effect; whether
the Lease is modified or amended; whether Tenant claims any present charge,
lien, or claim of offset against rent; whether the rent is paid for the current
month and the amount prepaid, if any; whether there is any existing default by
reason of some act or omission by Landlord; and such other matters as may be
reasonably required by Landlord or Landlord’s mortgagee.  Tenant agrees to furnish, from time to time,
within ten (10) days after receipt of a request from Landlord, a current
financial statement of Tenant, certified as true and correct by Tenant.

ARTICLE
10. LIEN

Intentionally omitted.

 8
 

 

ARTICLE
11. DEFAULT AND REMEDIES

11.1         Default
by Tenant.  The following shall be
deemed to be events of default (“Default”) by Tenant under this Lease; (1)
Tenant shall fail to pay when due any installment of Base Rent or additional
rent and such failure shall be continuing for a period of more than five (5)
days after such installment was due or any other payment required pursuant to
this Lease for a period of more than five (5) days after written notice to
Tenant that such amount was due; (2) Tenant shall abandon any substantial portion
of the Premises; (3) Tenant shall fail to comply with any term, provision or
covenant of this Lease, other than the payment of rent, and such default shall
continue for a period of more than fifteen (15) days after written notice to
Tenant; provided, however, if such default may not be practicably cured by
Tenant within such fifteen (15) day period, and provided further Tenant shall
commence to cure the default within the fifteen (15) day period, the fact that
the default is not cured within the fifteen (15) day period shall not
constitute a breach of the Lease so long as Tenant diligently proceeds to cure
the default and such default is cured within a reasonable period thereafter;
(4) Tenant shall file a petition or if an involuntary petition is filed against
Tenant (which is not dismissed within sixty (60) days or said filing), or
becomes insolvent, under any applicable federal or state bankruptcy or
insolvency law or admit that it cannot meet its financial obligations as they
become due; or a receiver or trustee shall be appointed for the benefit of
creditors; or (5) Tenant shall do or permit to be done any act which results in
a lien being filed against the Premises or the Building and/or project of which
the Premises are a part, which is not released within sixty (60) days of the
date such claim or lien first attached.

In the event that
an order for relief is entered in any case under the United States Code, Title
11 (the “Bankruptcy Code”) in which the Tenant is the debtor, the Tenant as
debtor-in-possession, or any Trustee who may be appointed, if applicable,
agrees as follows (i) to perform each and every obligation of Tenant under this
Lease until such time as this Lease is either rejected or assumed by order of
the United States Bankruptcy Court; (ii) to pay monthly compensation for use
and occupancy of the Premises, an amount equal to the fixed rent as well as
other charges due pursuant to the Lease; (iii) if Tenant or the Trustee seeks
to assume the Lease, then Tenant, or Trustee, if applicable, in addition to
providing adequate assurance described in applicable provisions of the
Bankruptcy Code, shall provide adequate assurance to Landlord of Tenant’s
future performance under the Lease by depositing with Landlord a sum equal to
the lesser of twenty-five percent of the rental and other charges due for the
balance of the Lease term or three (3) months rent (“Security”), to be held
(without any allowance for interest thereon) to secure Tenant’s obligations
under the Lease; (iv) if Tenant or Trustee, seeks to assume or assign the
Lease, Tenant or Trustee agrees to give Landlord at least forty-five (45) days
prior written notice of any proceeding relating to any assumption of this
Lease; (v) if Tenant or Trustee seeks to assign this Lease after assumption of
the same, then Tenant or the Trustee, in addition to providing adequate
assurance described in applicable provisions of the Bankruptcy Code, shall
provide adequate assurance to Landlord of the proposed assignee’s future
performance under the Lease by depositing with Landlord a sum equal to the
Security to be held (without any allowance for interest thereon) to secure
performance under the Lease. Nothing contained herein expresses or implies, or
shall be construed to express or imply, that Landlord is consenting to
assumption and/or assignment of the Lease by Tenant, and Landlord expressly
reserves all of its rights to object to any assumption and/or assignment of the
Lease. Neither Tenant nor any Trustee shall conduct or permit the conduct of
any “fire”, “bankruptcy”, “going out of business” or auction sale in or from
the Premises; (vi) Tenant or Trustee agrees to give at least thirty (30) days
prior written notice of any abandonment of the Premises or rejection of the
Lease; (vii) if Tenant or the trustee, rejects the Lease as described in the
applicable provisions of the Bankruptcy Code, Tenant or Trustee consents to the
entry of an order by the Bankruptcy Court permitting the immediate lifting of
the automatic stay, waiving notice and hearing of the entry of same, so the
Landlord may offset any security deposits or other monies being held by the
Landlord against any and all obligations due and owing pursuant to the Lease;
(viii) without limiting the foregoing, Tenant and/or the Trustee releases Landlord
from any and all causes of action, claims, demand, defenses, set offs and the
like under Sections 502 (d), 542, 547, 548, 550, 551 and 553 of the Bankruptcy
Code; (ix) the Tenant or Trustee agrees that the Landlord will have an allowed
claim in the Tenant’s bankruptcy case in the amount equal to the obligations
which remain due and owing pursuant to the provisions of the Lease.

11.2         Remedies
for Tenant’s Default.  Upon the
occurrence of a Default as defined above Landlord may elect either (i) to
cancel and terminate this Lease and this Lease shall not be treated as an asset
of Tenant’s bankruptcy estate, or (ii) to terminate Tenant’s right to
possession only without canceling and terminating Tenant’s continued liability
under this Lease.  Notwithstanding the
fact that initially Landlord elects under (ii) to terminate Tenant’s right to
possession only, Landlord shall have the continuing right to cancel and
terminate this Lease by giving ten (10) days written notice to Tenant of such
further election, and shall have the right to pursue any remedy at law or in
equity that may be available to Landlord.

In the event of
election under (ii) to terminate Tenant’s right to possession only, Landlord
may at Landlord’s option, enter into the Premises and take and hold possession
thereof, without such entry into possession terminating this Lease or releasing
Tenant in whole or in part from Tenant’s obligations to pay all amounts
hereunder for the full stated term. Upon such reentry, Landlord may remove all
persons and property from the Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant, without becoming liable for any loss

 9
 

 

or damage which
may be occasioned thereby. Such reentry shall be conducted in the following
manner; without resort to judicial process or notice of any kind if Tenant has
abandoned or voluntarily surrendered possession of the Premises; and,
otherwise, by resort to judicial process. Upon and after entry into possession
without termination of the Lease, Landlord may, but is not obligated to,
release the Premises, or any part thereof, to any one other than the Tenant for
such time and upon such terms as Landlord, in Landlord’s sole discretion, shall
determine Landlord may make alterations and repairs to the Premises to the
extent deemed by Landlord necessary or desirable.

Upon such reentry, Tenant
shall be liable to Landlord as follows:

A.            For
all reasonable attorney’s fees incurred by Landlord in connection with
exercising any remedy hereunder;

B.            For
the unpaid installments of Base Rent, additional rent or other unpaid sums
which were due prior to such reentry, including interest and late payment fees,
which sums shall be payable immediately.

C.            For
the installments of Base Rent, additional rent, and other sums falling due
pursuant to the provisions of this Lease for the period after reentry during
which the Premises remain vacant, including late payment charges and interest,
which sums shall be payable as they become due hereunder.

D.            For
all expenses incurred in releasing the Premises, including reasonable leasing
commissions, attorney’s fees, and costs of alteration and repairs, which shall
be payable by Tenant as they are incurred by Landlord; and

E.             While
the Premises are subject to any new lease or leases made pursuant to this
Section, for the amount by which the monthly installments payable under such
new lease or leases is less than the monthly installment for all charges
payable pursuant to this Lease, which deficiencies shall be payable monthly.

Notwithstanding
Landlord’s election to terminate Tenant’s right to possession only, and
notwithstanding any releasing without termination, Landlord at any time
thereafter, may elect to terminate this Lease, and to recover (in lieu of the
amounts which would thereafter by payable pursuant to the foregoing, but not in
diminution of the amounts payable as provided above before termination), as
damages for loss of bargain and not as a penalty, an aggregate sum equal to the
amount by which the rental value of the portion of the term unexpired at the
time of such election is less than an amount equal to the unpaid Base Rent,
percentage rent, and additional rent and all other charges which would have
been payable by Tenant for the unexpired portion of the term of this Lease,
which deficiency and all expenses incident thereto, including reasonable
commissions, attorney’s fees, expenses of alterations and repairs, shall be due
to Landlord as of the time Landlord exercises said election, notwithstanding
that the term had not expired.

If this Lease
shall be terminated by reason of the bankruptcy or insolvency of Tenant,
Landlord shall be entitled to recover from Tenant or Tenant’s estate, as
liquidated damages for loss of bargain and not as a penalty, the amount
determined by the immediately preceding paragraph.

11.3         Landlord’s
Right to Perform For Account of Tenant. 
If Tenant shall be in Default under this Lease, Landlord may cure the
Default at any time for the account and at the expense of Tenant.  If Landlord cures a Default on the part of
Tenant, Tenant shall reimburse Landlord within ten (10) days of receiving a
statement that sets forth the nature of the work performed, supplies furnished
or any amount expended by Landlord in connection with the cure, including,
without limitation, reasonable attorney’s fees and interest.

11.4         Interest
and Attorney’s Fees.  In the event of
a Default by Tenant; (1) if a monetary default, interest shall accrue on any
sum due and unpaid at the rate of the lesser of ten percent (10%) per annum or
the highest rate permitted by law and, if Landlord places in the hands of an
attorney the enforcement of all or any part of this Lease, the collection of
any rent due or to become due or recovery of the possession of the Premises,
Tenant agrees to pay Landlord’s costs of collection, including reasonable
attorney’s fees for the services of the attorney, whether suit is actually
filed or not.

11.5         Additional
Remedies, Waivers, Etc.

A.            The
rights and remedies of Landlord set forth herein shall be in addition to any
other right and remedy now and hereafter provided by law.  All rights and remedies shall be cumulative
and not exclusive of each other. 
Landlord may exercise its rights and remedies at any times, in any
order, to any extent, and as often as Landlord deems advisable without regard
to whether the exercise of one right or remedy precedes, concurs with or
succeeds the exercise of another.

 10
 

 

B.            A
single or partial exercise of a right or remedy shall not preclude a farther
exercise thereof, or the exercise of another right or remedy from time to time.

C.            No
delay or omission by Landlord in exercising a right or remedy shall exhaust or
impair the same or constitute a waiver of, or acquiesce to, a Default.

D.            No
waiver of a Default shall extend to or affect any other Default or impair any
right or remedy with respect thereto.

E.             No
action or inaction by Landlord shall constitute a waiver of a Default.

No waiver of a Default
shall be effective unless it is in writing and signed by Landlord.

11.6         Default
by Landlord.  Landlord shall not be deemed to be in default under
this Lease until Tenant has given Landlord written notice specifying the nature
of the default and Landlord does not cure such default within fifteen (15) days
after receipt of such notice or within such reasonable time thereafter as may
be necessary to cure such default where such default is of such a character as
to reasonably require more than fifteen (15) days to cure.  Upon an event of default by Landlord,
Tenant shall have all remedies provided at law or in equity for such default.

ARTICLE
12. RELOCATION

Intentionally omitted.

ARTICLE
13. AMENDMENT AND LIMITATION OF WARRANTIES

13.1         Entire
Agreement.  It is expressly agreed by
Tenant and Landlord that this Lease, with specific reference to certain
attached exhibits, is the entire agreement of the parties; that there are and
were, no verbal representations, warranties, understandings, stipulations,
agreements or promises pertaining to this Lease.

13.2         Amendment.  This Lease may not be altered, waived,
amended or extended except by an instrument in writing signed by Landlord and
Tenant.

13.3         Limitation
of Warranties.  Landlord and Tenant
expressly agree that there are and shall be no implied warranties of merchantability,
habitability, fitness for a particular purpose or of any other kind arising out
of this Lease, and there are no warranties which extend beyond those expressly
set forth in this Lease.

ARTICLE 14. MISCELLANEOUS

14.1         Force
Majeure.  Excluding Tenant’s
obligation to make timely rent payments, the parties shall not be required to
perform any covenant or obligation in this Lease, or be liable in damages to
the other, so long as the performance or non-performance of the covenant or
obligation is delayed, caused or prevented by an act of God, act of terrorism,
inability to obtain suitable labor, materials or supplies, strikes, lockouts,
riots or war.

14.2         Successors
and Assigns.  This Lease shall be
binding upon and inure to the benefit of Landlord and Tenant and their
respective heirs, personal representatives, successors and assigns.  It is hereby covenanted and agreed that
should Landlord’s interest in the Premises cease to exist for any reason during
the term of this Lease, then notwithstanding the happening of such event this
Lease nevertheless shall remain unimpaired and in full force and effect, and
Tenant hereunder agrees to attorn to the then owner of the Premises.

14.3         Rent
Tax.  If applicable in the
jurisdiction where the Premises are issued, Tenant shall pay and be liable for
all rental, sales and use taxes or other similar taxes.  If any, levied or imposed by any city, state
country or other governmental body having authority against the Property, such
payments to be in addition to all other payments required to be paid to
Landlord under the terms of this Lease, any such payment shall be paid
concurrently with the payment of the rent, additional rent, operating expenses
or other charge upon which the tax is based as set forth above.

 11

 

 

14.4                           Captions.
The captions appearing in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe or describe the scope or
intent of any Section.

14.5                           Notice.
All rent and other payments required to be made by Tenant shall be payable to
Landlord at the address set forth in Section 1.6. All payments required to be
made by Landlord to Tenant shall be payable to Tenant at the address set forth
in Section 1.6, or at any other address within the United States as Tenant may
specify from time to time by written notice. Any notice or document required or
permitted to be delivered by the terms of this Lease shall be deemed to be
delivered (whether or not actually received) (a) three (3) business days after
being deposited in the United States Mail, postage prepaid, certified mail,
return receipt requested, addressed to the parties at the respective addresses
set forth in Section 1.6, or (b) on the date of receipt if being sent by
overnight delivery service or hand-delivered.

14.6                           Submission
of Lease. Submission of this Lease to Tenant for signature does not
constitute a reservation of space or an option to lease. This Lease is not
effective until execution by and delivery to both Landlord and Tenant.

14.7                           Corporate
Authority. If Tenant executes this Lease as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby personally
represent and warrant that Tenant is a duly authorized and existing corporation
that Tenant is qualified to do business in the state in which the Premises are
located, that the corporation has full right and authority to enter into this
Lease, and that each person signing on behalf of the corporation is authorized
to do so. In the event any representation or warranty is false, all persons who
execute this Lease shall be liable, individually as Tenant. Tenant shall
provide Landlord with a resolution of the Board of Directors authorizing the
executor and the execution of the Lease.

14.8                           Hazardous
Substances. Tenant shall not bring or permit to remain on the Premises or
the Building any asbestos, petroleum, or petroleum products, explosives, toxic
materials, or substances defined as hazardous wastes, hazardous materials, or
hazardous substances under any federal, state, or local law or regulation (“Hazardous
Materials”). Tenant’s violation of the foregoing prohibition shall constitute a
material breach and default hereunder and Tenant shall indemnity, hold harmless
and defend Landlord from and against any claims, damages, penalties, liabilities,
and costs (including reasonable attorney’s fees and court costs) caused by or
arising out of (i) a violation of the foregoing prohibition, or (ii) the
presence or any release of any Hazardous Materials on, under, or about the
Premises or the Building during the term of the Lease. Tenant shall clean up
remove, remediate and repair any soil or ground water contamination and damage
caused by the presence and any release of any Hazardous Materials in, on,
under, or about the Premises or the Building during the term of the Lease in
conformance with the requirements of applicable law. Tenant shall immediately
give Landlord written notice of any suspected breach of this paragraph upon
learning of the presence of any release of any Hazardous Materials, and upon
receiving any notices from governmental agencies pertaining to Hazardous
Materials, which may affect the Premises or the Building. The obligations of
Tenant hereunder shall survive the expiration or earlier termination, for any
reason of this Lease.

14.9                           Severability.
If any provision of this Lease or the application thereof to any person or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Lease and the application of such provisions to other persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.

14.10                   Landlord’s
Liability. If Landlord shall be in default under this Lease and, if as a
consequence of such default, Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the right, title and
interest of Landlord in the Building as the same may then be encumbered and
neither Landlord nor any person or entity comprising Landlord shall be liable
for any deficiency. In no event shall Tenant have the right to levy execution
against any property of Landlord nor any person or entity comprising Landlord
other shall its interest in the Building as herein expressly provided.

14.11                   Brokerage.
Landlord and Tenant each represents and warrants to the other that there is no
obligation to pay any brokerage fee, commission, finder’s fee or other similar
charge in connection with this Lease, other than fees due to Benchmark
Commercial Real Estate which are the responsibility of Landlord. Each party
covenants that it will defend, indemnify and hold harmless the other party from
and against any loss or liability by reason of brokerage or similar services
alleged to have been rendered to, at the instance of or agreed upon by said
indemnifying party. Notwithstanding anything herein to the contrary, Landlord
and Tenant agree that there shall be no brokerage fee or commission due on
expansions, options or renewals by Tenant.

 12
 

 

 

14.12       Notification
To Tenant. Landlord hereby represents and warrants to Tenant that the
person authorized to execute this Lease and manage the Premises is Hoyt
Management, which has been appointed to act as the agent in leasing management
and on behalf of Landlord. Landlord reserves the right to change the identity
and status of its duly authorized agent upon written notice to Tenant.

14.13       Right
of First Offer. Provided that as of the date Landlord gives Tenant notice
that certain space in the Building is or will become available for leasing (the
“Offered Space”) Tenant is not in Default beyond any applicable cure period,
then Landlord, before offering such Offered Space to anyone, other than Tenant,
will offer to Tenant the right to lease the Offered Space on the same terms and
conditions upon which Landlord intends to offer the Offered Space for lease.

Such offer will be
made by Landlord to Tenant in a written notice (the “Offer Notice”), which will
designate the space being offered and specify the terms which Landlord intends
to offer with respect to the Offered Space. Tenant may accept the offer set
forth in the Offer Notice by delivering to Landlord an unconditional acceptance
(“Tenant’s Notice”) of such offer within 5 business days after delivery by
Landlord of the Offer Notice to Tenant. Time will be of the essence with
respect to the giving of Tenant’s Notice. If Tenant does not accept (or fails
to timely accept) an offer made by Landlord in the Offer Notice, Landlord will
be under no further obligation to Tenant with respect to such space.

If Tenant at any
time declines any Offered Space offered by Landlord, Tenant will be deemed to
have irrevocably waived all further rights with respect to the Offered Space,
and Landlord will be free to lease the Offered Space to third parties. In such
event, upon Landlord’s request, Tenant will execute a release evidencing its
waiver of such rights with respect to the Offered Space.

14.14       Representations
of Landlord. Landlord warrants and represents to Tenant the following as of
the date hereof:

a.             To
the knowledge of Landlord, all buildings on the Premises are structurally sound
and in good condition and repair (ordinary wear and tear excepted), and all
material mechanical, electrical, heating, air conditioning, sewer, water and
plumbing systems are in good working order.

b.             To
the knowledge of Landlord, any restrictions, covenants and applicable laws and
ordinances applying to the Premises permit the presently existing improvements
and Tenant’s proposed use of the Premises.

c.             To
the knowledge of Landlord, no portion of the Property is subject to any
delinquent real estate taxes or pending special assessments, or any decree or
order to be sold or is being condemned or otherwise taken by any public
authority, nor has Landlord been notified in writing of any proposed
assessments or condemnation or other taking.

d.             To
the knowledge of Landlord, all utilities required for the current operation of
the improvements on the Premises are installed and operating and Landlord has
not received written notice of actual or threatened reduction or limitation on
use of any utility service now supplied to the Premises.

e.             If
Landlord sells its ownership interest in the Premises prior to the expiration
of the Term, the sale shall be subject to the terms of this Lease and the
Landlord shall require the subsequent owner of the Premises to assume in
writing all obligations of Landlord under this Lease.

14.15
                 Exhibits. Reference
is made to the following Exhibits, which are attached hereto and made apart
hereof:

Exhibit A Plan of Demise
Premises

Exhibit B Legal
Description

Exhibit C Tenant’s
Improvements

Exhibit D Sign
Restrictions

Exhibit E Rules and
Regulations

Exhibit F Parking

 13
 

 

 

SIGNED effective the day
and year first above written.

	
  LANDLORD

  	
  TENANT

  	
   

  
	
  Plymouth 2200
  LLP

  	
  Enpath Medical, Inc.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  John C. Hertig

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
  Chief Executive Officer

  
							

 

 14
 

 

Exhibit A

To Lease dated May    , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

Plan of Demised
Premises

 15
 

 

Exhibit B

To Lease dated May    , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

Legal Description

Lots 1 and 2, Block 3, Minneapolis Industrial Park 2nd Addition,
Hennepin County, Minnesota.

 16
 

 

Exhibit C

To Lease dated May    , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

Tenant Improvements

	
  Address:

  	
   

  	
   

  
	
  General
  contractor: KM Building Co

  	
  Office Phone #:

  	
   

  
	
  Project Manager:
  Scott Anderson

  	
  Cell # :

  	
   

  
	
  Superintendent:
  TBD

  	
  Cell # :

  	
   

  
	
  Scheduled
  duration: TBD

  	
   

  	
   

  
	
  Architect: TBD

  	
  Phone #:

  	
   

  
	
  Project Square
  Footage

  	
  09584

  	
   

  
	
  Date of plan:
  Preliminary

  	
   

  	
   

  

 

	
  COST

  	
   

  	
  ITEM

  	
   

  	
  Chronimed

  	
   

  	
  Shell

  	
   

  	
  SUBCONTRACTOR

  
	
  CODE

  	
   

  	
  DESCRIPTION

  	
   

  	
  building

  	
   

  	
  bldg

  	
   

  	
  NOTES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01-102

  	
   

  	
  Demolition

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
  Incl Flooring, walls and clgs as needed per walk
  thru.

  
	
  01-130

  	
   

  	
  Temp Facilities (Dumpsters)

  	
   

  	
   

  	
   

  	
  $

  	
  2,800.00

  	
   

  	
  Dumpsters for construction

  
	
  06-650

  	
   

  	
  Millwork

  	
   

  	
   

  	
   

  	
  $

  	
  125,000.00

  	
   

  	
  Incl. millwork allowance for shelving, pass thru’s,
  c-lops shelving etc.

  
	
  08-820

  	
   

  	
  Doors/Frames/Hdwe

  	
   

  	
   

  	
   

  	
  $

  	
  19,100.00

  	
   

  	
  Incl. 12 dbl & 6 single doors (relocated in
  chronimed) now in shell

  
	
  08-880

  	
   

  	
  Glass/Glazing

  	
   

  	
   

  	
   

  	
  $

  	
  15,500.00

  	
   

  	
  Incl 10–1x6 windows and 18-vision kits in doors

  
	
  09-920

  	
   

  	
  Carpentary/Drywall

  	
   

  	
   

  	
   

  	
  $

  	
  78,500.00

  	
   

  	
  Incl drywall to deck per plans (all walls on 3rd to
  deck)

  
	
  09-930

  	
   

  	
  Ceramic

  	
   

  	
   

  	
   

  	
  $

  	
  22,500.00

  	
   

  	
  Ceramic in restrooms is existing (new in shell
  similar in size)

  
	
  09-950

  	
   

  	
  Acoustical Ceilings

  	
   

  	
   

  	
   

  	
  $

  	
  225,000.00

  	
   

  	
  Incl patch acoustical in demo (new in clean rooms),
  New thru-out in shell bldg

  
	
  09-968

  	
   

  	
  Carpet

  	
   

  	
   

  	
   

  	
  $

  	
  263,427.00

  	
   

  	
  Incl new carpet in office area’s welded sheet vinyl
  in [ILLEGIBLE]. Vcl @ mfg [ILLEGIBLE]

  
	
  09-990

  	
   

  	
  Paint/VWC

  	
   

  	
   

  	
   

  	
  $

  	
  255,000.00

  	
   

  	
  Incl new paint through-out

  
	
  10-800

  	
   

  	
  Specialties

  	
   

  	
   

  	
   

  	
  $

  	
  2,500.00

  	
   

  	
  Incl grab bars, and accessories (new restrooms)

  
	
  15-100

  	
   

  	
  Plumbing

  	
   

  	
   

  	
   

  	
  $

  	
  85,000.00

  	
   

  	
  Incl sinks, drains, airlines, etc

  
	
  15-500

  	
   

  	
  Fire Protection

  	
   

  	
   

  	
   

  	
  $

  	
  85,000.00

  	
   

  	
  Relocate and adjust height on heads

  
	
  15-800

  	
   

  	
  HVAC

  	
   

  	
   

  	
   

  	
  $

  	
  240,000.00

  	
   

  	
  HVAC per new lay-out

  
	
  15-800

  	
   

  	
  HVAC - Clean room

  	
   

  	
   

  	
   

  	
  $

  	
  1,040,000.00

  	
   

  	
  Incl clean rm units @ 10,000 parts

  
	
  16-001

  	
   

  	
  Electrical -Energy efficient fixtures

  	
   

  	
   

  	
   

  	
  $

  	
  150,000.00

  	
   

  	
  Demo, clean room fixtures, panels, transformers,
  mechanical systems, & permit

  
	
   

  	
   

  	
  Electrical - Clean room

  	
   

  	
   

  	
   

  	
  $

  	
  375,000.00

  	
   

  	
  Clean room lights class 10000 fixtures. Power for
  cln-room units

  
	
  16-002

  	
   

  	
  Fire Alarm

  	
   

  	
   

  	
   

  	
  $

  	
  30,000.00

  	
   

  	
  Allowance for fire alarm

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  
	
   

  	
   

  	
  GENERAL CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01-130

  	
   

  	
  Misc - Materials

  	
   

  	
   

  	
   

  	
  $

  	
  43,714.91

  	
   

  	
   

  
	
  01-110

  	
   

  	
  Permit

  	
   

  	
   

  	
   

  	
  $

  	
  25,000.00

  	
   

  	
   

  
	
  01-140

  	
   

  	
  Cleaning

  	
   

  	
   

  	
   

  	
  $

  	
  18,500.00

  	
   

  	
  Incl final construction cln (certification cln by
  tenant)

  
	
  17-001

  	
   

  	
  Supervision

  	
   

  	
   

  	
   

  	
  $

  	
  32,500.00

  	
   

  	
  Incl full time supervision (12 wks)

  
	
  01-116

  	
   

  	
  Insurance

  	
   

  	
   

  	
   

  	
  $

  	
  22,755.31

  	
   

  	
   

  
	
   

  	
   

  	
  SUBTOTAL

  	
   

  	
   

  	
   

  	
  $

  	
  3,056,797.22

  	
   

  	
   

  
	
  20-001

  	
   

  	
  OVERHEAD & PROFIT

  	
   

  	
   

  	
   

  	
  $

  	
  137,555.87

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTEED NOT TO EXCEED TOTAL

  	
   

  	
   

  	
   

  	
  $

  	
  3,194,353.09

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cost per Square Foot

  	
   

  	
   

  	
   

  	
  $

  	
  32.08

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADD/ALTS:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alt #1

  	
   

  	
  To provide electrical engineering for project

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  
	
  Alt #2

  	
   

  	
  To Provide mechanical origin for project

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  
	
  Alt #3

  	
   

  	
  To remove existing unused data cabling

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
  Budget

  
	
  Alt #4

  	
   

  	
  To install new phone and data cabling

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
  Budget

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  -

  	
   

  	
   

  

 

 17
 

 

Exhibit D

To Lease dated May     , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

 

Sign Restrictions

Land Lord Attorney will
send info before Monday. (Denny Maas)

 18
 

 

Exhibit E

To Lease dated May    , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

Rules and
Regulations

Any sign,
lettering, picture, notice, or advertisement installed on or in any part of the
Premises and visible from the exterior of the Premises shall be installed at
Tenant’s sole cost and expense, and in such manner, character, and style as
Landlord may approve in advance in writing. In the event of a violation of the
foregoing by Tenant, Landlord may remove the same without any liability and may
charge the expense incurred by such removal to Tenant.

No awning or other
projection shall be attached to the outside walls of the Building. No curtains,
blinds, shades, or screens visible for the exterior of the Premises shall be
attached to or hung in, or used in connection with any window or door of the
Premises without prior written consent of Landlord. Such curtains, blinds,
shades, screens, or other fixtures must be of quality, type, design, and color
and attached in the manner approved in advance by Landlord.

Tenant, its
servants, employees, customers, invitees, and guests shall not obstruct
sidewalks, entrances, passages, corridors, vestibules, or halls in and about
the Building which are used in common with other tenants and their servants,
employees, customers, guests and invitees, and which are not a part of the
Premises of Tenant.

Tenant shall not
make excessive noises, cause disturbances or vibrations, or use or operate any
electrical or mechanical devices that emit excessive sound or other waves or
disturbances or create obnoxious odors, any of which may be offensive to other
tenants and occupants of the Building.

Tenant assumes
full responsibility for protecting its space from theft, robbery, and
pilferage, which includes keeping doors locked and other means of entry to
Premises closed and secured after normal business hours.

In no event shall
Tenant bring into the Building flammables, such as gasoline, kerosene, naphtha,
and benzene, or explosives or any other substance of intrinsically dangerous
nature. If, by reason of the failure of Tenant to comply with the provisions of
this subparagraph, any insurance premium for all or any part of the Building
shall at any time be increased, Tenant shall be required to make immediate
payment of the whole of the increased insurance premium.

The water and wash
closets, drinking fountains and other plumbing fixtures shall not be used for
any purpose other than this for which they were constructed, and no sweepings,
rubbish, rags, coffee grounds, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the Tenant
who; or in whose servants, employees, agents, visitors, or licensees; shall
have caused the same. No person shall waste water by interfering or tampering
with the faucets or otherwise.

Tenant shall keep
the Premises at a temperature sufficiently high to prevent freezing of water in
pipes and fixtures.

The outside areas
immediately adjoining the Premises shall be kept clean by Tenant and Tenant
shall not place or permit any obstructions or merchandise in such areas.

The use of parking
shall be subject to reasonable regulations as Landlord may promulgate from time
to time uniformly to all tenants. Tenant agrees that it will not use more that
its prescribed number of stalls at any one time, and will not use or permit the
use by its employees of the parking area for the overnight storage of automobiles
or other vehicles. There will not be any assigned exclusive parking spaces
available to any tenant of the building except with prior, written consent of
the Landlord.

 19
 

 

Tenant shall pay
for and maintain its own separate rubbish container (dumpster). Such container
shall be placed at the rear of the Building and must have a lid so as to
prevent scattering of trash.

Tenant and its
servants, employees, agents, visitors, and licensees shall observe faithfully
and comply strictly with the foregoing rules and regulations and such other and
further appropriate rules and regulations as Landlord or its agent may from
time to time adopt. Landlord shall give written notice of any additional rules
and regulations.

Landlord reserves
the right at any time and from time to time as reasonably necessary to rescind,
alter, or waive, in whole or in part, any of these Rules and Regulations when
it is deemed necessary, desirable, or proper, in Landlord’s judgment, for its
best interest or for the best interest of the tenants of the Building.

 20
 

 

Exhibit F

To Lease dated May    , 2006

By and Between

Plymouth 2200 LLP,

Landlord, and

Enpath Medical, Inc.,

Tenant

 

Parking

 21
 

 

 

 22

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