Document:

exv10w18

 

EXHIBIT 10.18

LEASE

ARTICLE 1. LEASE TERMS

	1.1	 	LANDLORD AND TENANT. This Lease (“Lease”) is entered into this 26th day
of September 2005 by and between Industrial Equities Group LLC (“Landlord”) and
Cardiovascular Systems, Inc. (“Tenant”).
	 
	1.2	 	PREMISES. Landlord hereby rents, leases, lets and demises to Tenant the
following described property (“Premises”) as illustrated on the site plan
attached hereto as Exhibit A; approximately 3,105 square feet of warehouse space
and 22,364 square feet of office space and 107 square feet of common area (25,576
total square feet) located at Lakeview Business Campus III, 651 Campus Drive, New
Brighton, Minnesota which consists of approximately 46,970 square feet
(“Building”). A floor plan of the Premises is attached as Exhibit B and a
description of improvements, if any, to be constructed is attached hereto as
Exhibit C.
	 
	1.3	 	LEASE TERM. The term of this Lease shall commence on November 1, 2005
(“Commencement Date”) and shall terminate January 31, 2012 unless sooner
terminated as hereinafter provided. 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 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 one &
one-half (11⁄2) 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.
	 
	1.4	 	BASE RENT. Base Rent is:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Total Annual
	Months	 	Monthly Base Rent	 	Base Rent
	Nov. 1, 2005 – Jan. 31, 2006
	 	$	0.00	 	 	 	 	 
	Feb. 1, 2006 – Jan. 31, 2007
	 	$	19,177.00	 	 	$	230,124.00	 
	Feb. 1, 2007 – Jan. 31, 2008
	 	$	19,560.54	 	 	$	234,726.48	 
	Feb. 1, 2008 – Jan. 31, 2009
	 	$	19,951.75	 	 	$	239,421.01	 
	Feb. 1, 2009 – Jan. 31, 2010
	 	$	20,350.79	 	 	$	244,209.43	 
	Feb. 1, 2010
– Jan. 31, 2011
	 	$	20,757.80	 	 	$	249,093.62	 
	Feb. 1,
2011 – Jan. 31, 2012
	 	$	21,172.96	 	 	$	254,075.49	 

	1.5	 	PERMITTED USE. Office, Warehouse and related legal purposes.
	 
	1.6	 	SECURITY DEPOSIT. $29,804.86 (equal to one month’s gross rent)
	 
	1.7	 	PRO RATA SHARE. 54.45%
	 
	1.8	 	PARKING. Ninety (90) non-exclusive parking stalls shall be provided.
	 
	1.9	 	ADDRESSES.

	 	 	 	 	 	 	 	 	 
	Landlord’s Address:	 	 	 	Tenant’s Address:	 	 	 	 
	 
	Industrial Equities Group LLC

	 	 	 	Cardiovascular Systems, Inc.
	c/o Industrial Equities LLP

	 	 	 	651 Campus Drive
	321 First Avenue North

	 	 	 	New Brighton, MN 55112
	Minneapolis, MN 55401

	 	 	 	Attn: James Flaherty
	Phone: 612/ 332-1122

	 	 	 	Phone: (763) 544-1890

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ARTICLE 2. RENT, OPERATING EXPENSES AND SECURITY DEPOSIT, LATE CHARGES

AND REPAYMENT OF FREE RENT

	2.1	 	BASE RENT. Tenant agrees to pay monthly as Base Rent during the term of this Lease the
sum of money set forth in Section 1.4 of this Lease, which amount shall be payable to
Landlord at the address shown above. One monthly installment 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, then the base rent shall be pro rated on a per diem
basis, and all succeeding installments of rent shall be payable on or before the first
day of each succeeding calendar month during the term of this Lease. Tenant shall pay, as
additional rent, all other sums due under this Lease. Notwithstanding anything in this
Lease to the contrary, if Landlord, for any reason whatsoever (other than Tenant’s
default), cannot deliver possession of the Premises to the Tenant on the Commencement
Date, this Lease shall not be void or voidable, nor shall Landlord be liable for any loss
or damage resulting therefrom, nor shall the expiration of the term be extended, but all
rent shall be abated until Landlord delivers possession. Notwithstanding the foregoing,
in the event Landlord fails to deliver the Premises to Tenant in the condition required
by the Commencement Date, then Tenant shall have the right to terminate this Lease after
December 31, 2005 by providing five (5) days written notice to Landlord.
	 
	2.2	 	OPERATING EXPENSES. Tenant shall also pay as additional rent Tenant’s pro rata share of
the Operating Expenses of Landlord for the Building. 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 six (6) months following the close of each calendar year,
Landlord shall provide Tenant an accounting showing in reasonable detail the
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 any event, if 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 provisions 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 calendar 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
pro rated 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 ten (10) days following receipt of the
invoice or accounting showing additional rent due. Tenant’s pro rata share set forth in
Section 1.7 shall, subject to reasonable adjustment by Landlord, be equal to a
percentage based upon a fraction, the numerator of which is the total area of the
Premises as set forth in Article 1 and the denominator of which shall be the net
rentable area of the Building, as the same may change from time to time. Landlord shall
maintain books and records showing, in reasonable detail, actual Operating Expenses in
accordance with generally accepted accounting principles. All such books and records
shall be made available to Tenant for inspection upon reasonable prior notice.
	 
	2.3	 	DEFINITION OF OPERATING EXPENSES. The term “Operating Expenses” includes all expenses
incurred by Landlord with respect to the maintenance and operation of the Building,
including, but not limited to, the following: maintenance, repair and replacement
costs; electricity, fuel, water, sewer, gas and other common Building utility charges;
equipment used for maintenance and operation of the Building; operational expenses;
exterior window washing and janitorial services; trash and snow removal; landscaping
and pest control; management fees, 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 which improves the operating efficiency of any system within
the Premises and thereby reduces Operating Expenses; all other expenses which would
generally be regarded as operating, repair, replacement and maintenance expenses; all
real property taxes and installments of special assessments, including dues and
assessments by means of deed restrictions and/or owner’s association which accrue
against the Building during the term of

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	 	 	this Lease and 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, and rent loss and public liability insurance.
	 
	 	 	Notwithstanding the foregoing, Operating Expenses shall not include the following:

	 	i.	 	repairs or other work occasioned by fire, windstorm or other casualty, to the
extent that the costs thereof are reimbursed to Landlord by insurers, or would
have been reimbursed had the insurance required hereunder been maintained,
or by governmental authorities in eminent domain;
	 
	 	ii.	 	leasing commission, attorneys’ fees and other expenses
incurred in connection with negotiations or disputes with tenants, or
prospective tenants of the Building;
	 
	 	iii.	 	costs incurred in renovating or otherwise improving or decorating or
redecorating space for tenants in the Building or other space leased or held for
lease in the Building;
	 
	 	iv.	 	Landlord’s costs of utilities, janitorial and other
services sold to tenants for which Landlord is entitled to be reimbursed by
tenants;
	 
	 	v.	 	Depreciation and amortization;
	 
	 	vi.	 	Costs which under generally accepted accounting principles,
consistently applied, must be capitalized, and such costs shall be amortized
over there useful life, not to exceed fifteen (15) years, at 10% interest;
	 
	 	vii.	 	Interest on debt or amortization payments on any
mortgage or mortgages, and rental under any ground or underlying lease or
leases;
	 
	 	viii.	 	The cost of changes to the Building, parking structure, or
the appurtenances in compliance with any laws, statutes, ordinances, rules or
directives enacted prior to the Commencement Date; and
	 
	 	ix.	 	Any charges for ground leases or other underlying leases,
easements or any other similar or dissimilar use fees or other costs.

	2.4	 	INCREASE IN INSURANCE PREMIUMS. If an increase in any insurance premiums paid by Landlord
for the Building is caused by Tenants 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.
	 
	2.5	 	SECURITY DEPOSIT. The security deposit set forth in Section 1.6 shall be held by Landlord
for the performance of Tenant’s covenants and obligations under this Lease, it being
expressly understood that the security deposit shall not be considered an advance payment of
rental or a measure of Landlord’s damage in case of default by Tenant. Upon the occurrence of
any event of default by Tenant or breach by Tenant of Tenant’s covenants under this Lease,
and Tenant’s failure to cure within the applicable time frame, Landlord may, from time to
time, without prejudice to any other remedy, use the security deposit to the extent necessary
to make good any arrears of rent, or to repair any damage or injury, or pay any expense or
liability reasonably incurred by Landlord as a result of the event of default or breach of
covenant, and any remaining balance of the security deposit shall be returned by Landlord to
Tenant upon termination of this Lease. If any portion of the security deposit is so used or
applied, Tenant shall upon ten (10) days written notice from Landlord, deposit with Landlord
by cash or cashier’s check an amount sufficient to restore the security deposit to its
original amount.
	 
	2.6	 	LATE CHARGES. Tenant’s failure to pay rent promptly may cause Landlord to incur
unanticipated costs. The exact amount of such costs are impractical or extremely difficult
to ascertain, such costs may include, but are not limited to, processing and accounting
charges and late charges which may be imposed on Landlord by any ground lease, mortgage or
trust deed encumbering the Property. Therefore, if Landlord doesn’t receive any rent payment
within five (5) days after it becomes due, Tenant shall pay Landlord a late charge equal to
ten percent (10%) of the overdue amount. The parties agree that such late charge represents
a fair and reasonable estimate of the costs Landlord will incur by reason of such late
payment. Tenant shall have two (2) annual late payment waivers provided payment is received
within five (5) business days of written notice from Landlord.
	 
	2.7	 	INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant to Landlord which is not paid
when due shall bear interest at the rate of fifteen percent (15%) per annum from the due
date of such amount. However, interest shall not be payable on late charges to be paid by
Tenant under this Lease. The payment of interest on such amounts shall not excuse or cure
any default by Tenant under this Lease. If the interest rate specified in this Lease is
higher than the rate permitted by law, the interest rate is hereby decreased to the maximum
legal interest rate permitted by law.

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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 purpose as set forth in Section 1.5. 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 other portions of the Building or otherwise interfere
with, annoy or disturb any other portions of the Building or otherwise interfere with, annoy
or disturb any other lessee in its normal business operations or Landlord in its management of
the Building. Tenant shall neither permit any waste on the Premises nor permit the Premises to
be used in any way which would in the opinion 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 or stickers of any type or description (to include security stickers) shall
be erected, placed or painted in or about the Premises or Building which are visible from the
exterior of the Premises, except those submitted to, and approved by Landlord in writing,
which approval shall not be unreasonably withheld, and are in conformance with Landlord’s
sign criteria, if any, established for the Building. Security stickers may be placed on glass
surfaces only.
	 
	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 but only if the requirements apply to
Tenant’s specific use of the Premises and not to office or retail use generally, and
otherwise Landlord shall be responsible for such compliance. Tenant will comply with the
reasonable rules and regulations of the Building adopted by Landlord. Landlord shall have
the right at all times to change and amend the rules and regulations 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. All 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 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.
Landlord shall not be responsible for the acts or omissions of any other Lessee or third
party that may interfere with Tenant’s use and enjoyment of the Premises.
	 
	3.5	 	RIGHT OF ACCESS. Upon reasonable prior notice, Landlord or its authorized agents shall at
any and all reasonable times during usual business hours have the right to enter the Premises
to inspect the same, to show the Premises to prospective purchasers, Lessees, mortgagees,
insurers or other interested parties, and to alter, improve or repair the Premises or any
other portion of the Building. Tenant hereby waives any claim for damages 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. Notwithstanding the foregoing, Landlord
agrees to exercise the rights set forth herein in a manner that does not unreasonably
interrupt or impair Tenant’s use of the Premises. Tenant shall not change Landlord’s lock
system or in any other manner prohibit Landlord from entering 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. 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 the Landlord may now or hereafter deem to be necessary or
appropriate for the proper use, operation and maintenance of the Building, provided the same
does not unreasonably interfere with Tenant’s use or operation of the Premises.

ARTICLE 4. UTILITIES AND ACTS OF OTHERS

	4.1	 	BUILDING SERVICES. Tenant shall pay when due, all charges for utilities furnished to
or for the use or benefits 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

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	 	 	property or personnel 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 or the Building during the term of this
Lease except as are set forth in this Section. Landlord shall maintain only the roof,
foundation, parking 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 are operating
expenses subject to the additional rent provisions in Section 2.2 and 2.3. 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; provided,
however, if Landlord fails to complete a repair obligation within (15) days after receipt of
notice from Tenant, Tenant shall have the right to complete the repair and bill Landlord for
the reasonable cost of said repair.
	 
	5.2	 	TENANT REPAIRS. Tenant shall, at all times throughout the term of this Lease, including
renewals and extensions, at its sole expense, keep and maintain the Premises in a clean,
safe, and sanitary 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 and equipment, fixtures, motors and machinery,
all interior walls, partitions, doors and windows, including the regular painting thereof,
all exterior entrances, windows, doors and docks and the replacement of all broken glass.
When used in this provision, the term “repairs” shall include replacements or renewals when
necessary, and all such repairs made by the Tenant shall be equal in quality and class to the
original work. The Tenant shall keep and maintain all portions of the Premises 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 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, and upon completion thereof, Tenant shall pay to Landlord
all costs plus fifteen percent (15%) for overhead incurred by Landlord in making such repairs
upon presentation to Tenant of bill therefore. Notwithstanding the foregoing, provided Tenant
has engaged in a consistent, professional maintenance contract for the HVAC equipment serving
the Premises, then Tenant shall not be required at lease termination to replace any HVAC
equipment serving the Premises.
	 
	5.3	 	TENANT DAMAGES. Tenant shall not allow any damages 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 excepted. The cost and expense
of repairs necessary to restore the Premises to the condition required herein shall be borne
by Tenant.

ARTICLE 6. ALTERATIONS AND IMPROVEMENTS

	6.1	 	LANDLORD IMPROVEMENTS. Landlord shall provide the
improvements (as outlined on Exhibit B), consistent with the attached Exhibit
C, to include:

	 	0	 	Demo walls as required per plan
	 
	 	1	 	Construct new walls as required per plan
	 
	 	2	 	Paint all drywall walls
	 
	 	3	 	Furnish and install new carpet and base
	 
	 	4	 	VCT to be cleaned, patched and repaired as necessary
	 
	 	5	 	Replace ceiling tiles as necessary
	 
	 	6	 	Re-lamp lights as necessary
	 
	 	7	 	Existing electrical to remain for Tenant’s future use; provided,
however, that Landlord shall provide all required electrical that may be necessary
due to wall modifications
	 
	 	8	 	Restrooms cleaned and all plumbing certified in good working order
	 
	 	•	 	Service and certify that the HVAC unit(s) serving the Premises are in good

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	 	 	 	working order, and replace the compressor unit(s), if required, within
one year following the Commencement Date

	 	 	Landlord further agrees to provide the additional improvements as discussed in the
meeting with Paul Robinson on August 31, 2005 to upgrade the existing clean room
to Class 10,000, to include the following:

	 	0	 	Furnish and install (8) 120v cord drops and (?) 102/220 cord drops
	 
	 	1	 	Furnish and install (6) HEPA filters for clean room
	 
	 	2	 	Provide plentium drop vent covers
	 
	 	3	 	Furnish and install (5) argon lines
	 
	 	4	 	Furnish and install (23) air lines
	 
	 	5	 	Construct drywall chases for floor air ducting
	 
	 	6	 	Furnish and install (3) stainless steel double sinks and
(4) stainless steel sink sinks
	 
	 	7	 	Furnish and install cabinets (upper and/or lower and
countertops) in machine shop, chemical lab and production per plan

	6.2	 	TENANT IMPROVEMENTS. Tenant shall not make or allow to be made any alterations or
physical additions in or to the Premises without first obtaining the written consent
of Landlord, which consent may in the sole and absolute discretion of Landlord be
denied. Any alterations, physical additions or improvements to the Premises made by
Tenant shall at once become the property of Landlord and shall be surrendered to
Landlord upon the termination of this Lease, provided, however, Landlord, at its
option, may require Tenant to remove any physical additions and/or repair any
alterations in order to restore the Premises to the conditions existing at the time
Tenant took possession, all costs of removal and/or alterations to be borne by
Tenant. This clause shall not apply to moveable equipment or furniture owned by
Tenant, which may be removed by Tenant at the end of the term of this Lease if
Tenant is not then in default and if such equipment and furniture are not subject
to any other rights, liens and interests of Landlord.

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) working days after the date written notification by Tenant to
Landlord 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 either party by
written notice to the other party within sixty (60) days following the occurrence, and the
rent shall be abated for the unexpired portion of the Lease effective as of the date of this
written notification.
	 
	7.2	 	PARTIAL DESTRUCTION. If the Premises should be partially damaged by fire or other
casualty, and rebuilding or repairs can reasonably be completed within one hundred
eighty (180) working days from the date of written notification by Tenant to
Landlord 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 and the damage or destruction
was not caused or contributed to by act of negligence of Tenant, its agents,
employees, invitees or those for whom Tenant is responsible, the rent payable under
this Lease during the period for which the Premises are untenantable shall be
adjusted to such an extent as may be fair and reasonable under the circumstances. In
the event Landlord fails to complete the necessary repairs or rebuilding within one
hundred eighty (180) working days from the date of written notification by Tenant to
Landlord of the destruction, Tenant may at its option to 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	 	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 and shall

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	 	 	also maintain plate glass insurance. 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. Landlord shall maintain commercially reasonable
casualty insurance on the Building and all improvements.
	 
	7.4	 	WAIVER OF SUBROGATION. Anything in this Lease to the contrary not withstanding, 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 a person or damage to
property on or about the Premises caused by any act or omission of 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, except to the extent that liability for damage or
loss is caused by the gross negligence of Landlord, its agents, contractors or employees.
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 reasonably approved in
writing by Landlord; in which both Tenant and Landlord shall be covered by being named as
insured parties 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.

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 the rent 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 granted to Tenant.
	 
	8.2	 	PARTIAL TAKING. If all or a substantial part of this Premises are taken for an public or
quasipublic 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. If not so terminated, then landlord shall restore the Building and the
Premises to a complete architectural unit and rent shall abate until Landlord completes its
restoration obligation. Tenant shall have no claim to the condemnation award or proceeds in
lieu thereof, except that Tenant shall be entitled to any separate award grated to Tenant.
Landlord shall commence restoration and shall restore the Building and the Premises with
reasonable promptness, subject to delays beyond Landlord’s control and delays in the making
of condemnation or sale proceeds adjustment by Landlord; and Tenant shall have no right to
terminate this Lease except as herein provided. Upon completion of such restoration, the
rent shall be adjusted based upon the portion, if any, of the Premises restored.

7

 

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.
	 
	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 by transfer of a majority interest of stock, merger, or dissolution, which transfer
of majority interest of stock, merger or dissolution shall be deemed an assignment) 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 or delayed, and in no
event shall said such assignment or sublease ever release Tenant or any guarantor from any
obligation or liability hereunder. 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 assignable by Tenant to any assignee or subleasee. No assignee or subleasee
of the Premises or any portion thereof may assign or sublet the Premises or any portion
thereof. Notwithstanding the foregoing, Tenant shall have the right to assign or sublet the
Premises without without Landlord’s consent to any of the following (a “Permitted
Transferee”): (i) any successor corporation or other entity resulting from the merger or
consolidation of Tenant; (ii) any entity that which controls, is controlled by, or is under
common control with Tenant; or, (iii) any purchaser of all or substantially all of Tenant’s
assets.
	 
	9.3	 	CONDITIONS OF ASSIGNMENT. With the exception of an assignment or sublease to a Permitted
Transferee, 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 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) cancel this Lease as to the Premises
or portion thereof proposed to be assigned or sublet; (2) consent to the proposed assignment
or sublease, and, if the rent due 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 (3) refuse, in its sole and absolute
discretion and judgment, 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 then 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
this assignment or sublease, and Landlord shall have a security interest in all
properties on the Premises to secure payment of such sums. Any collection directly by
Landlord from the assignee or sublessee shall not be construed to constitute a novation
or a release of Tenant or any guarantor from the further performance of its obligation
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, easements 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 upon demand to execute additional
instruments subordinating this Lease as landlord may require. If the interests 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”) at the
option of 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 foregoing, Tenant shall not be disturbed in its possession of the
Premises so long as Tenant is not in default hereunder.

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	9.5	 	TENANT’S STATEMENT. Tenant agrees to furnish, from time to time, within fifteen (15)
days after receipt of a request from Landlord to Landlord’s mortgagee, a statement
certifying, if applicable, the following: Tenant is in possession of the Premises; the
Premises are acceptable; the Lease is in full force and effect; the Lease is unmodified;
Tenant claims no present charge, lien, or claim or offset against rent; the rent is paid
for the current month, but is not prepaid for more than one month and will not be prepaid
for more then one month in advance; there is no existing default by reason of some act or
omission by Landlord; and such other matters may be reasonably required by Landlord or
Landlord’s mortgagee. Tenant’s failure to deliver such statement, in addition to being a
default under this Lease, shall be deemed to establish conclusively that this Lease is in
full force and effect except as declared by Landlord, that Landlord is not in default of
any of its obligations under this Lease, and that Landlord has not received more than one
month’s rent in advance. Tenant agrees to furnish, from time to time, within ten (10) days
after receipt of request from Landlord, a current financial statement of Tenant, certified
as true and correct by Tenant.

ARTICLE 10. OMITTED

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 rent or any
other payment required pursuant to this Lease; (2) Tenant shall fail to comply with any term,
provision or covenant of this Lease, other than the payment of rent, and the failure is not
cured within ten (10) days after written notice to Tenant or such additional time period as
is reasonably necessary to cure such default, provided Tenant commences such cure and
proceeds with due diligence to cure such default: (3) Tenant shall file a petition or if an
involuntary petition is filed against Tenant, or becomes insolvent, under any applicable
federal or state bankruptcy or insolvency law or admits that it cannot meet its financial
obligation as they become due, or a receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant; or Tenant shall make a transfer in fraud of
creditors or shall make an assignment for the benefit of creditors; or (4) 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.
	 
	 	 	In the event that an order for relief is entered in any case under Title 11, U.S.C. (the
“Bankruptcy Code”) in which Tenant is the debtor and: (A) Tenant as debtor-in-possession,
or any trustee who may be appointed in the case (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 this Lease by depositing with
Landlord a sum equal to the lesser of twenty-five percent (25%) of the rental or other
charges due for the balance of this Lease term or six (6) months’ rent (“Security”), to be
held (without any allowance or interest thereon) to secure Tenant’s obligation under the
Lease, and (B) Tenant, or Trustee if applicable, seeks to assign the Lease after
assumption of the same, then Tenant, 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 or 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.
	 
	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 three (3) 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.

9

 

	 	 	In the event of election under (ii) to terminate Tenant’s right to possession only,
Landlord may, at Landlord’s option, enter 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 Tenants obligation to pay all amounts hereunder for the full stated
term. Upon such re-entry, 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
and for the account of Tenant, without becoming liable for any loss or damage which may be
occasioned thereby. Such re-entry 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, relet 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 reasonable discretion, shall
determine. Landlord may make alterations and repairs to the Premises to the extent deemed
by Landlord necessary or desirable.
	 
	 	 	Upon such re-entry, Tenant shall be liable to Landlord as follows:

	 	A.	 	For 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 re-entry, 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
re-entry 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 reasonable expenses incurred in releasing the Premises,
including leasing commissions, attorney’s fees, and costs of alteration or
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 reletting without termination, Landlord, at any time thereafter, may
elect to terminate this Lease, and to recover (in lieu of the amounts which would
thereafter be 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 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 Landlord, after such re-entry,
leases the Premises, then the rent payable under such new Lease shall be conclusive
evidence of the rental value of the unexpired portion of the term of this Lease.
	 
	 	 	If this Lease shall be terminated by reason of 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
upon demand for any amount expended by Landlord in connection with the cure, including,
without limitation, attorney’s fees and interest.
	 
	11.4	 	INTEREST AND LEASE ENFORCEMENT COSTS. In the event of a Default by
Tenant, then, in addition to all other remedies allowed by this Lease or by law, interest
will

10

 

	 	 	accrue on any delinquent sum at the rate of the lesser of eighteen percent (18%) per annum
or the highest rate permitted by law, and (b) Tenant will be liable for all expenses
incurred by Landlord in order to enforce Landlord’s rights and remedies on account of that
Default. Such enforcement expenses include, without limitation, attorneys’ fees (whether or
not suit is actually filed, and, if filed, whether or not incurred in seeking a judgment or
order, in defending against any claim or defense raised by Tenant, enforcing a judgment or
order, defending a judgment or order on appeal, or successfully appealing any judgment or
order); sheriff’s fees; process server’s fees; filing fees; court imposed fees for
obtaining any writ; expert witness fees; and, in the case of each suit filed on account of
a Tenant Default (including, without limitation, each unlawful detainer action), an
automatic charge (in addition to the late charge authorized by Section 2.6), set at the
liquidated amount of $300, to cover additional landlord administrative expense associated
with litigation. Furthermore, and whether or not Tenant is in default, Tenant will be
liable for all expenses incurred by Landlord in successfully establishing its rights or
successfully defending against any claim asserted by Tenant in any action in which a court
or other tribunal is asked to adjudicate any such matters.
	 
	11.5	 	ADDITIONAL REMEDIES, WAIVER, 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 time, 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.
	 
	 	B.	 	A single or partial exercise of a right or remedy shall not preclude
a further 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 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 Default.
	 
	 	F.	 	No waiver of a Default shall be effective unless it is in writing and
signed by Landlord.

ARTICLE 12. RELOCATION

INTENTIONALLY OMITTED

ARTICLE 13. AMENDMENT AND LIMITATION OF WARRANTIES

	13.1	 	ENTIRE AGREEMENT. It is expressly agreed by Tenant, as a material consideration for the
execution of this Lease, that this, Lease, with the specific references to written extrinsic
documents, 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 or to the expressly mentioned written extrinsic documents not incorporated in
writing in this Lease.
	 
	13.2	 	AMENDMENT. The Lease may not be altered, waived, amended or extended except by a 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 or merchantability, habitability, fitness for a particular purpose or
of any other kind arising out of this Lease, and there are not warranties which extend
beyond those expressly set forth in this Lease.

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ARTICLE 14. MISCELLANEOUS

	14.1	 	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 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.
	 
	14.2	 	USE OR 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, county or other similar taxes, if any, levied or imposed
by any city, state, county or other governmental body having authority, 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 charges upon which the tax is based as set forth above.
	 
	14.3	 	ACT OF GOD. Landlord shall not be required to perform any covenant or obligation in this
Lease, or be liable in damages to Tenant, so long as the performance
or non-performance of
the covenant or obligation is delayed, caused or prevented by an act of God, force majeure or
by Tenant.
	 
	14.4	 	HEADINGS. The section headings 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 1.9. All payments required to be made
by Landlord to Tenant shall be payable at the address set forth in Section 1.9, 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)
when 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 1.9.
	 
	14.6	 	HAZARDOUS SUBSTANCES. Tenant shall not bring or permit to remain on the Premises or
Building any asbestos, petroleum or petroleum products, explosives, toxic materials, or
substances defined as hazardous wastes, hazardous material, or hazardous substances
under any federal, state or local law or regulation (“Hazardous Materials”), unless
such materials are properly classed, described, packaged, marked, labeled and
in condition for shipment as required or authorized by applicable provisions of Title
49, Code of Federal Regulations, Subtitle B, Chapter I, Subchapter C (“Hazardous
Materials Regulations”). Landlord authorizes Tenant to bring or permit to remain on the
Premises, as an integral part of Tenant’s business, “hazardous materials” which comply
with the applicable requirements or authorizations of Title 49, Code of Federal
Regulations. Tenant’s violation of the foregoing prohibition shall constitute a
material breach and default hereunder and Tenant shall indemnify, hold harmless and
defend Landlord from and against any claims, damages, penalties, liabilities, and costs
(including reasonable attorney fees and court costs) caused by or arising out of (i) a
violation of the foregoing prohibition or (ii) the presence of any Hazardous Materials
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 of
earlier termination, for any reason, of this Lease. Tenant shall indemnify, hold
harmless and defend Landlord from and against any claims, damages, penalties,
liabilities, and costs (including reasonable attorney fees and court costs) caused by
or arising out of the presence of any Hazardous Materials on, under, or about the
Premises or the Building during the term of the Lease, except to the extent caused by
Tenant.
	 
	14.7	 	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

12

 

	 	 	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.
	 
	14.8	 	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 than its interest in the Building as herein
expressly provided.
	 
	14.9	 	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 Steve Chirhart/Griffin
Companies 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.
	 
	14.10	 	BROKER AS OWNER/MANAGEMENT AGENT. Landlord hereby notifies Tenant that the person
authorized to execute this Lease and manage the Premises is John N. Allen, who is a
licensed Real Estate Broker in the State of Minnesota and Tenant hereby acknowledges
and consents to this Landlord/Broker relationship.
	 
	14.11	 	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.
	 
	14.12	 	OPTION TO RENEW. By written notice given to Landlord at least twelve (12)
months prior to the expiration of the term of this Lease, Tenant may elect to
renew this Lease for
one (1) additional term of five (5) years. The renewal shall be upon all the terms and
conditions of this Lease, except the base rent shall be at the then prevailing market rate
with annual increases for similar spaces in the market area and provided further that
Tenant shall have no further renewal options. If the parties cannot agree on the
amount of the prevailing market rate, the matter shall be submitted to binding arbitration
in accordance with the rules of the American Arbitrators Association. The arbitrator shall
be a Real Estate professional with at least (10) years experience in evaluating properties
similar to this building. The arbitrators determined market rate and annual
increases shall take effect as of the renewal date of the Lease. This Right of Renewal is
not assignable to a sublessee or third party.
	 
	14.13	 	RIGHT OF FIRST REFUSAL. Tenant shall have the Right of First Refusal on
any contiguous space within the building for ten (10) days after written notice
from Landlord of its availability, provided Tenant is not in default under the
terms and conditions of this Lease and provided further that at least five (5)
years remain on the Lease term or Tenant agrees to modify the Lease to provide
for not less than five (5) years on the total Leased premises. Tenant shall
exercise this Right of First Refusal by written notice to Landlord. In the
event Tenant so notifies Landlord, then Tenant shall commence rental payments
on the date first indicated in Landlords notice and Tenant shall accept such
space in its current condition without obligation of Landlord to make Leasehold
improvements. If Tenant does not so notify Landlord within ten (10) days
thereafter, then Tenant shall be deemed to have waived its Right of First
Refusal and Landlord shall proceed to Lease the space. The Right of First
Refusal is not assignable. The base rental rate shall be at the then
prevailing market rate and annual increases for similar space in the market area.
If the parties cannot then agree on the amount of the prevailing market
rate, then the matter shall be submitted to binding arbitration in
accordance with the rules of the American Arbitration Association.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective the day and year
first above written.

13

 

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:	 	 
	INDUSTRIAL EQUITIES GROUP LLC	 	CARDIOVASCULAR SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ JOHN N. ALLEN	 	By:	 	/s/ MICHAEL J. KALLOK	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	John N. Allen	 	 	 	 	 	 
	 
	Its:

	 	Managing Agent
	 	Its:
	 	President & CEO	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	Date:

	 	 	 	Date:
	 	26 September 2005	 	 

14

 

EXHIBIT A

15

 

EXHIBIT B

16

 

17

 

EXHIBIT C

TENANT IMPROVEMENT STANDARDS

	1	 	INTERIOR FINISHES
	 
	1.1	 	Ceilings
	 
	 	 	Ceilings throughout the office shall be 2’ x 4’ “Second Look II” acoustical ceiling tile
or equivalent installed in the building standard exposed grid system at a height of 9’0”
above finished concrete floor. The ceiling grid will be installed continuous throughout
the suite. The warehouse ceiling shall be exposed prime painted structural steel and metal
deck.
	 
	1.2	 	Floors
	 
	 	 	The typical floor finish in office area shall be carpet. A
28-ounce direct glue down
installation is the building standard. Toilet rooms hall receive a 4 foot high wainscoat
USPCU071 4 1/4” x 4 1/4” tile or comparable on plumbing wall and wall adjacent to toilet
only. Floor area shall be Lonestar 2” x 2” 1050 Gray or comparable. The floor in the
entry vestibule shall receive Floorgress 12” x 12” tile or comparable. The warehouse
floor shall be existing sealed concrete floor.
	 
	1.3	 	Walls
	 
	 	 	Typically, interior partition walls throughout the suite will be constructed of 3-5/8”
metal studs at 24” on center with one layer each side of 5/8” drywall and shall extend to
the underside of the acoustical ceiling grid. Exterior walls in finished areas shall be
furred out, insulated, and receive one layer 5/8” drywall. Partition walls in demising
location and warehouse separation walls, as shown on the plan, shall be built to the
underside of the structural deck above. All walls to deck will include insulation in the
stud cavity if required by code. Toilet room walls shall be built to 9 foot A.F.F. with a
sheetrock and stud ceiling cap and will include insulation in the stud cavity. All walls
in the office will be taped and sanded smooth and shall receive two finish coats of
Sherwin Williams flat latex paint. 4” vinyl cove base is included throughout the office.
The warehouse walls shall remain unfinished.
	 
	2.	 	DOORS, FRAMES, HARDWARE, INTERIOR WINDOWS AND COUNTER TOPS
	 
	2.1	 	Doors
	 
	 	 	All swing doors shall be 3’0” x 7’0” solid core plain sliced red oak veneer doors. Doors
shall be stained and sealed.
	 
	2.2	 	Finish Hardware
	 
	 	 	All interior door hardware shall be Schlage “AL Saturn 605 Polished Brass” series and
exterior door shall be Schlage “AL Saturn 626 Bell Chrome” series or equal. Locksets are
included at suite access doors only.
	 
	2.3	 	Frames
	 
	 	 	All wood swing doors shall be set in painted 18 gauge hollow metal frames. Exterior door
frame to be 16 gauge hollow metal frame.
	 
	2.4	 	Main Entry Doors
	 
	 	 	The main entry door shall be a 3’0” x 7’0” building standard aluminum and glass door.
	 
	2.5	 	Toilet Room Signage
	 
	 	 	One restroom sign indicating handicap accessibility shall be included for each restroom
as required by code.
	 
	2.6	 	Counter Tops, Window Sills and Cabinets.
	 
	 	 	All window sills and counter tops shall be light gray Formica laminate S612T NEV-A-MAR.
	 
	3.	 	MECHANICAL
	 
	3.1	 	HVAC
	 
	 	 	The HVAC in the office and the warehouse will be accomplished with gas heating/cooling
roof top units. In areas with finished ceilings all equipment and duct runs, shall be
overhead within the ceiling plenum. Diffusers will be building standard, ceiling mounted.
Return air grilles are included as required. Positive Room Ventilation is included for
the toilet rooms as required. The warehouse shall be heated only by means of gas fired
unit heaters to maintain 65°F.

18

 

	3.2	 	Fire Protection
	 
	 	 	The office sprinkler system will be modified as necessary to accommodate the suite layout.
Sprinkler heads in the office area shall be building standard. Fire extinguishers will be
provided as required by code and the Fire Marshall.
	 
	3.3	 	Plumbing
	 
	 	 	Water closets shall be building standard tank type units. Lavatories shall be
wall-mounted type. Toilet accessories include handicap grab bars as required by
applicable code and toilet paper holders.
	 
	4.	 	ELECTRICAL
	 
	4.1	 	Lighting
	 
	 	 	Lighting throughout the office area will be accomplished by use of building standard 2’ x
4’ parabolic fixtures. The lights will be spaced to provide approximately one fixture
(average) for every 100 square feet of office space.
	 
	4.2	 	Light Switches
	 
	 	 	One single pole switch at suite entry and one switch per private office is included.
Three-way switching is included in the warehouse. All other warehouse lights will be
switched at the panel.
	 
	4.3	 	Electrical Outlets
	 
	 	 	Two wall mounted, duplex outlets have been included in each private office.
	 
	4.4	 	Telephone Outlets
	 
	 	 	One wall-mounted telephone opening has been included in each private office.
	 
	4.5	 	Warehouse Lighting
	 
	 	 	Metal Halide lights mounted at roof joints are included to provide approximately one
fixture per 600 square feet of warehouse.
	 
	4.6	 	Electrical Service
	 
	 	 	Service to the space shall be 200 ampere 277/480 service.
	 
	4.7	 	Exit Lights
	 
	 	 	Exit and emergency lighting shall be provided as required by code.
	 
	5.	 	TENANT ENTRANCE
	 
	 	 	A concrete walkway shall be installed from the parking lot to the main entry door.
	 
	6.	 	ITEMS NOT INCLUDED
	 
	6.1	 	Muzak or telephone communications.
	 
	6.2	 	Security systems, smoke/fire detection systems, access control systems or any related
monitoring systems.
	 
	6.3	 	Appliances, vending machines, kitchen equipment.
	 
	6.4	 	Office furniture, moveable partitions, etc.
	 
	6.5	 	Extra cooling capacity for tenant finished equipment.
	 
	6.6	 	Window treatments, i.e., curtains, blinds, etc.
	 
	6.7	 	Millwork: counters, cabinets, shelving, closets, etc., other than those listed within
this specification.
	 
	6.8	 	Computer terminal outlets, wiring or systems.
	 
	6.9	 	Electrical items other than those listed within this specification.
	 
	6.10	 	Exhausting of tenant areas; i.e., conference rooms, break rooms, etc.
	 
	6.11	 	Provisions for high pile storage.

19

 

	6.12	 	Provisions for smoke ventilation, and combustible, flammable or hazardous chemical
and/or material storage.
	 
	6.13	 	Provisions for fire sprinklers requirements beyond that of a Group III, ordinary hazard
classification.
	 
	6.14	 	Tenant signage.
	 
	6.15	 	Air make-up for inside vehicle storage.

20exv10w19

 

EXHIBIT 10.19

FIRST AMENDMENT TO LEASE

This First Amendment to Lease is made this 20th day of February, 2007, by and between
Industrial Equities Group LLC (“Landlord”) and Cardiovascular Systems, Inc. (“Tenant”).

RECITALS

WHEREAS, Landlord and Tenant entered into a Lease dated September 26, 2005 (the “Lease”) for
certain premises containing approximately 25,576 total square feet located at Lakeview Business
Campus III, 651 Campus Drive, New Brighton, Minnesota (“Leased Premises”); and

WHEREAS, Tenant is desirous of expanding the Leased Premises by leasing approximately 8,980 square
feet of additional space (8,937 sq. ft. of office space and
43 sq. ft. of common area) located
adjacent to the Leased Premises as shown on the attached Exhibit A (“Expansion Space”); and

WHEREAS, Landlord and Tenant are desirous of extending the lease term to expire on May 31, 2012.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and Tenant hereby agree to amend the Lease as follows:

	1.	 	The Lease for the Expansion Space shall commence on May 1, 2007. Landlord will make its best
efforts to complete the space by April 1, 2007 and that any occupancy prior to the May
1st commencement date will be at no additional cost other than utilities which
Tenant may use which shall be separately metered.
	 
	2.	 	The Lease term shall terminate May 31, 2012.
	 
	3.	 	For purposes of this Amendment, effective May 1, 2007, the Leased Premises shall contain
approximately 34,513 total square feet.
	 
	4.	 	Base Rent for the Leased Premises shall be amended and paid according to the following
schedule:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Base	 	Expansion Base	 	Total Monthly
	Period
	 	Rent/Month	 	Rent/Month	 	Base Rent
	May.1, 2007–Jul. 31, 2007
	 	$	19,560.54	 	 	$	0.00	 	 	$	19,560.54	 
	Aug.1, 2007–Jan. 31, 2008
	 	$	19,560.54	 	 	$	7,169.03	 	 	$	26,729.57	 
	Feb. 1, 2008–Jan. 31, 2009
	 	$	19,951.75	 	 	$	7,312.41	 	 	$	27,264.16	 
	Feb. 1, 2009–Jan. 31, 2010
	 	$	20,350.79	 	 	$	7,458.66	 	 	$	27,809.45	 
	Feb. 1, 2010–Jan. 31, 2011
	 	$	20,757.80	 	 	$	7,607.84	 	 	$	28,365.65	 
	Feb. 1, 2011–May 31, 2012
	 	$	21,172.96	 	 	$	7,759.99	 	 	$	28,932.95	 

	5.	 	Tenant’s Proportionate Share, as defined in the Lease,
shall be 73.48%.

 

 

	6.	 	PARKING. An additional thirty-two (32) non-exclusive parking stalls shall be provided for
a total of one-hundred twenty-two (122) non-exclusive parking stalls.
	 
	7.	 	Landlord shall provide the following Tenant Improvements to the Expansion Space:

	 	•	 	Replace carpet in front half of bay to match existing office.
	 
	 	•	 	Replace existing VCT with new VCT tile entirely in back half for lab area.
	 
	 	•	 	Replace ceiling tiles as needed throughout the entire area.
	 
	 	•	 	Ensure all lighting is in good working order, evenly and adequately spaced.
	 
	 	•	 	Demo existing cabinetry and sink in front half of office.
	 
	 	•	 	Add 3 new private offices/conference rooms in a location to
be determined.
	 
	 	•	 	Replace cabinetry and sink in break area adjacent to restrooms.
	 
	 	•	 	Repaint all walls to match current office and lab areas.
	 
	 	•	 	Electrical service shall be ample to serve the office and lab consistent with
Tenant’s current use in its existing Premises.
	 
	 	•	 	Open existing demising wall five (5) feet in an area to be determined to join
lab area to existing premises’ lab area.
	 
	 	•	 	Restrooms cleaned and all plumbing certified in good working order. Repair and
replace all damaged tile as necessary and repaint all walls.
	 
	 	•	 	Complete new demising wall and paint to match premises.
	 
	 	•	 	Service and certify that HVAC units serving the premises are in good working
order and replace the compressor units if required within one year following the
commencement date.
	 
	 	•	 	Tenant space plan shall be provided at Landlord’s expense.

	 	 	Other than the improvements outlined above, Tenant agrees to accept the Premises in its
“AS-IS” condition. Any additional improvements shall be completed at the Tenant’s sole cost
and expense and must receive the Landlord’s prior written approval.

	8.	 	OPTION TO RENEW. By written notice given to Landlord at least twelve (12) months prior to
the expiration of the term of this Lease, Tenant may elect to renew this Lease for one (1)
additional term of five (5) years. The renewal shall be upon all the terms and conditions of this Lease, except
the base rent shall be at the then prevailing market rate with annual increases for similar spaces
in the market area and provided further that Tenant shall have no further renewal options. If the parties cannot agree on the amount of
the prevailing market rate, the matter shall be submitted to binding arbitration in accordance
with the rules of the American Arbitrators Association. The arbitrator shall be a Real Estate
professional with at least (10) years experience in evaluating properties similar to this
building. The arbitrators determined market rate and annual increases shall take effect as of
the renewal date of the Lease. This Right of Renewal is not assignable to a sublessee or third
party.
	 
	9.	 	RIGHT OF FIRST REFUSAL. Tenant shall have the Right of First Refusal on any contiguous
space within the building for ten (10) days after written notice from Landlord of its
availability, provided Tenant is not in default under the terms and conditions of this Lease and provided
further that at least five (5) years remain on the Lease term or Tenant agrees to modify the Lease to
provide for not less than five (5) years on the total Leased premises. Tenant shall exercise this Right
of First

 

 

	 	 	Refusal by written notice to Landlord. In the event Tenant so notifies Landlord, then
Tenant shall commence rental payments on the date first indicated in Landlords notice and
Tenant shall accept such space in its current condition without obligation of Landlord to
make Leasehold improvements. If Tenant does not so notify Landlord within ten (10) days
thereafter, then Tenant shall be deemed to have waived its Right of First Refusal and
Landlord shall proceed to Lease the space. The Right of First Refusal is not assignable.
The base rental rate shall be at the then prevailing market rate and annual increases for
similar space in the market area. If the parties cannot then agree on the amount of the
prevailing market rate, then the matter shall be submitted to binding arbitration in
accordance with the rules of the American Arbitration Association.
	 
	10.	 	BROKERAGE. Landlord shall pay TaTonka Real Estate Advisors a commission on the expansion
premises in the amount of 5% of the base rent paid over the term. No commission shall be due
on the initial premises extended term from 1/31/12 to 5/31/12.

Except as modified herein, Landlord and Tenant hereby ratify and reconfirm each provision of
the existing Lease. The provisions of the Amendment shall supersede any inconsistent or
conflicting provisions of the original Lease.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD	 	TENANT
	INDUSTRIAL EQUITIES GROUP LLC	 	CARDIOVASCULAR SYSTEMS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:
	 	/s/ JAMES E. FLAHERTY	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	John N. Allen	 	 	 	 	 	 	 	 
	 
	Its:

	 	Managing Agent
	 	Its:
	 	CFO	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	Date:

	 	 	 	Date:
	 	2/26/07	 	 	 	 

 

 

EXHIBIT A

8,980 sq. ft. Total (8,937sf office, 43sf common)

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