Document:

Exhibit 10.21

 

LEASE AGREEMENT

 

between

 

NEW BRIGHTON
14TH STREET LLC

as “Landlord”

 

and

 

RYAN COMPANIES
US, INC.

as “Limited Guarantor”

 

and

 

TRANSOMA
MEDICAL, INC.

as “Tenant”

 

 

BASIC LEASE
INFORMATION

 

	
  Lease Date:

  	
   

  	
  For identification
  purposes only, the date of this Lease is October 1, 2007.

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  NEW BRIGHTON 14TH STREET
  LLC, a Minnesota limited liability company

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  TRANSOMA MEDICAL, INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  A two-story building to be
  built, consisting of approximately 115,849 square feet of Rentable Area, (the “Building”)
  together with the adjacent driveways, parking areas, sidewalks, and landscape
  areas depicted on Exhibit A attached hereto.

  
	
   

  	
   

  	
   

  
	
  Building Address:

  	
   

  	
  TBD

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  144 full calendar months
  (plus any partial month at the beginning of the Term)

  
	
   

  	
   

  	
   

  
	
  Scheduled 

  Commencement Date:

  	
   

  	
  August 15, 2008

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  The last day of the 144th
  full calendar month in the Term

  
	
   

  	
   

  	
   

  
	
  Base Rent:

  	
   

  	
  From the Commencement Date
  through the last Day of 

  
	
   

  	
   

  	
  Month 12: 

  	
  $14.50 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 13 - 24:

  	
  $14.79 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 25 - 36:

  	
  $15.09 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 37 - 48:

  	
  $15.39 per square foot of
  Rentable Area per  Annum

  
	
   

  	
   

  	
  Months 49 - 60:

  	
  $15.70 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 61 - 72:

  	
  $16.01 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 73 - 84:

  	
  $16.33 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 85 - 96:

  	
  $16.66 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 97 - 108:

  	
  $16.99 per square foot of
  Rentable Area per  Annum 

  
					

 

1

 

	
   

  	
   

  	
  Months 109 - 120:

  	
  $17.33 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 121 - 132:

  	
  $17.68 per square foot of
  Rentable Area per  Annum 

  
	
   

  	
   

  	
  Months 133 - 144:

  	
  $18.03 per square foot of Rentable Area per  Annum

  
	
   

  	
   

  	
  Option Periods 

  	
  Market Rate

  
	
   

  	
   

  	
   

  
	
  Tenant’s Share:

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  See Section 4.

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address 

  for Payment of Rent:

  	
   

  	
  NEW BRIGHTON 14TH STREET
  LLC  

  c/o Ryan Companies US, Inc.  

  50 South Tenth Street  

  Suite 300  

  Minneapolis, MN 55403

  
	
   

  	
   

  	
   

  
	
  Business Hours:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address  

  for Notices:

  	
   

  	
  NEW BRIGHTON 14TH STREET
  LLC  

  c/o Ryan Companies US, Inc.  

  50 South Tenth Street  

  Suite 300  

  Minneapolis, MN 55403

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address  

  for Notices:

  	
   

  	
  Prior to Commencement:  

  Transoma Medical, Inc.

  4211 Lexington Avenue North  

  Suite 2244  St. Paul, MN
  55126  

  Attn: Vice President Manufacturing Operations  

  

  Following Commencement:  

  

  [Premises Address]

  
	
   

  	
   

  	
   

  
	
  Guarantor’s Address for
  Notices:

  	
   

  	
  Ryan Companies US, Inc.  

  50 South Tenth Street  

  Suite 300  

  Minneapolis, MN 55403

  
	
  Broker(s):

  	
   

  	
  The Keewaydin Group, Inc.

  
	
   

  	
   

  	
   

  
	
  Property Manager:

  	
   

  	
  Ryan Companies US, Inc.

  

 

2

 

	
  Additional Provisions:

  	
   

  	
  None

  

 

	
  Exhibits:

  	
   

  	
   

  
	
  Exhibit A:

  	
   

  	
  The Premises

  
	
  Exhibit B:

  	
   

  	
  Construction Rider

  
	
  Exhibit C:

  	
   

  	
  Option Property Parking
  Area

  
	
  Exhibit D:

  	
   

  	
  Form of
  Subordination, Non-disturbance and Attornment Agreement and Estoppel
  Certificate

  

 

The Basic Lease
Information set forth above is part of the Lease. In the event of any conflict
between any provision in the Basic Lease Information and the Lease, the Lease
shall control.

 

3

 

THIS LEASE is
made as of the Lease Date set forth in the Basic Lease Information, by and
between the Landlord identified in the Basic Lease Information (“Landlord”), and the Tenant identified in the Basic Lease
Information (“Tenant”). Landlord and Tenant
hereby agree as follows:

 

1.                                       PREMISES. Landlord hereby leases to Tenant,
and Tenant hereby leases from Landlord, upon the terms and subject to the
conditions of this Lease, the Building located at the address specified in the
Basic Lease Information (the “Building”)
together with the adjacent driveways, parking areas (in size sufficient to
yield at least 453 parking spaces), sidewalks and landscape areas
(collectively, the “Premises”). The
approximate configuration and location of the Premises is shown on Exhibit A.
Landlord and Tenant agree that the rentable area of the Building for all
purposes under this Lease shall be the Rentable Area specified in the Basic
Lease Information, provided that within ninety (90) days from the Commencement
Date, Tenant may have the Rentable Area of the Building verified by a CAD
calculation performed by Landlord’s architect. In the event that such
verification reveals a discrepancy between the measured square footage of the
Building as measured by Landlord’s architect and the Rentable Area specified in
the Basic Lease Information, and Landlord and Tenant are unable to agree upon
the Rentable Area of the Premises, an independent architect acceptable to both
parties (the cost of which shall be divided equally between Landlord and
Tenant) shall measure the Premises in accordance with the standard herein
provided. The square footage of the Building as determined by said independent
architect shall be the Rentable Area of the Building, and within thirty days
thereafter the parties shall execute an Addendum to this Lease confirming same
and the Base Rent, Tenant’s Share of Operating Costs and any other sums due
hereunder based in whole or in part on the rentable square footage of the
Building, and further any necessary payments or reimbursements shall be made by
the appropriate party. The Rentable Area of the Building will be calculated in
accordance with the American National Standard Method of Measuring Floor Area
in Office Buildings, ANSI/BOMAA65.1-1996, except that the Rentable Area of the
Building shall be computed as if the second floor of the Building extended
through any atrium to the exterior wall, as if the atrium did not exist.

 

2.1                                 TERM; POSSESSION. The term of this Lease (the
“Term”) shall commence on the Commencement
Date as described below and, unless sooner terminated, shall expire on the
Expiration Date set forth in the Basic Lease Information (the “Expiration Date”). The “Commencement Date”
shall be the earlier of (a) the later of (i) the date that is three
hundred thirty (330) days after the date Landlord receives the Approvals
(defined herein), or (ii) the date on which Landlord tenders possession of
the Premises to Tenant, with all of Landlord’s construction obligations, “Substantially Completed” as provided in the Construction
Rider attached as Exhibit B (the “Construction
Rider”) or, in the event of any “Tenant Delay,”
as defined in the Construction Rider, the date on which Landlord could have
done so had there been no such Tenant Delay; or (b) the date upon which
Tenant, with Landlord’s written permission, actually occupies and conducts
business in any portion of the Premises. Landlord acknowledges that as of the
date of Landlord’s signature of this Lease, no Tenant Delay has occurred. The
parties anticipate that the Commencement Date will occur on or about the
Scheduled Commencement Date set forth in the Basic Lease Information (the “Scheduled Commencement Date”); provided, however, that
Landlord shall not be liable for any claims, damages or liabilities except
those specifically provided for in Section 2.1.1 if the Premises are not
ready for occupancy by the Scheduled Commencement 

 

4

 

Date. When the Commencement
Date has been established, Landlord and Tenant shall at the request of either
party confirm the Commencement Date and Expiration Date in writing.

 

Notwithstanding anything
herein to the contrary, the parties acknowledge that Landlord has not received
final approval of the Planned Unit Development for the Premises, and final
approvals from the MPCA and watershed district with respect to the Premises
(collectively, the “Approvals”) and that to the extent that any delays in
obtaining such Approvals delay Landlord’s commencement or completion of
construction of the Premises, then the time or deadline for all performances by
Landlord set forth in this Lease and the Construction Rider (including without
limitation, the Scheduled Commencement Date and the various deadlines set forth
in Section 2.1.1) shall be extended one day for each day from and after September 15,
2007 through and including the date Landlord receives such Approvals. Landlord
shall promptly notify Tenant in writing of the date Landlord obtains the
Approvals and of any construction delays caused by delay in obtaining the
Approvals. Upon request by either party, the parties agree to confirm the
extension of any applicable time or deadline for performance by Landlord
pursuant to a written Addendum to this Lease. Notwithstanding anything herein
to the contrary, the parties hereby acknowledge and agree that if Landlord
obtains the Approvals on October 5, 2007, then delays experienced by
Landlord in obtaining the Approvals will cause the Scheduled Commencement Date
to be delayed until September 5, 2008 and will similarly extend the time
or deadlines for performance set forth in this Lease (including without
limitation Section 2.1.1), by a period of twenty (20) days.

 

2.1.1                        In
the event Landlord does not deliver possession of the Substantially Completed Premises
to Tenant by August 15, 2008, and such failure is not caused by any of the
events described in Section 26 — Force Majeure — or by Tenant Delay,
Tenant shall receive a credit against Rent first coming due in an amount equal
to one day’s Rent for each day of delay. By way of example, if Landlord
delivers possession of the Substantially Completed Premises to Tenant on August 20,
2008 (and such delay was not caused by a Force Majeure or Tenant Delay), Tenant’s
liability for Rent would commence on August 25, 2008.

 

2.2                                 Extended Term. Landlord grants to Tenant the option to
extend the Term of this Lease for two (2) additional periods of five (5) years
each (“Extension Terms”), subject to and upon the following conditions:

 

(a)                                  The Extension Terms will commence as of the
expiration of the preceding Term of this Lease.

 

(b)                                 Tenant will give written notice of exercise
to Landlord not less than twelve (12) months prior to the commencement of the
Extension Terms, time being of the essence.

 

(c)                                  The Extension Terms will be upon all of the
terms and conditions of this Lease, except that Base Rent will be equal to the
Market Rate for the Extension Term. If Landlord and Tenant cannot agree upon
the Market Rate for the Extension Terms within the time frame set forth in Section 3.1.2,
the determination of the Market Rate will be made in accordance with the terms
of Section 3.1.2.

 

5

 

(d)                                 The Lease must be in full force and effect
and no Event of Default shall be in existence at either the time of exercise or
at any time prior to commencement of the Extension Terms.

 

2.4                                 Material Delay in Delivery. Notwithstanding anything to the contrary
contained in this Lease, if other than due to Force Majeure or Tenant Delays
Landlord fails to cause the Premises to be Substantially Complete by January 15,
2009 (or fails, other than due to Tenant Delays, to cause the Premises to be
Substantially Complete by June 15, 2009), then Tenant may, upon thirty
(30) days prior written notice, terminate this Lease, provided that if Landlord
shall cause the Premises to be Substantially Complete prior to the expiration
of the thirty (30) day period, this Lease shall remain in full force and effect
and the termination notice shall be deemed null and void.

 

3.                                       RENT.

 

3.1                                 Base Rent. Tenant agrees to pay to Landlord the Base
Rent set forth in the Basic Lease Information, without prior notice or demand,
on the first day of each and every calendar month during the Term. Base Rent
for any partial month at the beginning or end of the Term shall be prorated
based on the actual number of days in the month.

 

3.1.2                        Base
Rent: Extension Term.
Tenant agrees to pay to Landlord Base Rent for the Extension Term at the market
rate (“Market Rate”).

 

Market Rate shall be set at a single annual
dollar amount per square feet (but shall be payable monthly in accordance with
the terms of this Lease), and shall be defined as what an arm’s-length,
non-expansion, non-equity tenant of comparable credit to Tenant would, as of
the beginning of the term in question, pay for space of comparable size,
quality, utility and location, taking into account the length of the term and
all comparable allowances and concessions being offered in the market. The
Market Rate shall be determined as follows: 
Within thirty (30) days after Landlord receives notice from Tenant of
Tenant’s election to exercise an Extension Option, Landlord will give notice to
Tenant of its determination of the Market Rate for the Premises and Landlord’s
determination will constitute the Market Rate unless Tenant objects by notice
to Landlord in writing within thirty (30) days after Tenant’s receipt of
Landlord’s determination. Landlord’s notice of determination shall include a
statement in all capitalized, 12 point or larger type on the first page of
the notice, stating:  “THE DETERMINATION
OF MARKET RENT SET FORTH HEREIN SHALL BE BINDING ON TENANT UNLESS TENANT SHALL
OBJECT THERETO WITHIN 30 DAYS OF TENANT’S RECEIPT OF THIS NOTICE.”  If Tenant so objects, the parties shall meet
within Fifteen (15) days after Tenant’s objection and attempt to agree on the
Market Rate. If the parties are unable to agree upon the Market Rate within
such Fifteen (15) day period after the Tenant’s objection, then at the request
of either party, the Market Rate will be determined by appraisal, made by a
board of appraisers consisting of three reputable real estate appraisers (each
an “Expert”), each of whom has been actively involved in commercial real estate
in Minneapolis, Minnesota no less than ten years prior to appointment. In
addition, each such Expert shall have been active over the five (5) year
period ending on the date of such appointment in the appraisal of comparable
commercial properties in the Minneapolis-St. Paul metropolitan area. One Expert
will be appointed by Tenant, and one Expert will be appointed by Landlord. Both
Landlord and Tenant shall appoint their Expert within fifteen (15) days after
the failure of Landlord and Tenant to agree on the Market Rate. 

 

6

 

The third Expert will be appointed by the first two Experts. If the first
two Experts are unable to agree on a third Expert within ten (10) days
after the appointment of the second Expert, or if either party refuses or
neglects to appoint an Expert as herein provided within fifteen (15) days after
the appointment of the first Expert, then the third Expert or the second
Expert, whose appointment was not made as provided above, may be appointed by
any active judge of the Hennepin County District Court. If determinations of at
least two of the Experts are identical in amount, that amount will be
determined to be the Market Rate. If the determinations of all three Experts
are different in amount, the highest appraised value will be averaged with the
middle value (that average being referred to as “Sum A”). The lowest appraised
value will be averaged with the middle value (that average being referred to as
“Sum B”), and the Market Rate will be determined as follows:  (i) if neither Sum A nor Sum B differs
from the middle appraised value by more than 10% of the middle appraised value,
then the Market Rate will be the average of the three appraisals, (ii) if
either Sum A or Sum B (but not both) differs from the middle appraised value by
more than 10% of the middle appraised value, then the Market Rate will be the
average of the middle appraised value and the appraised value closer in amount
to the middle appraised value, and (iii) if both Sum A and Sum B differ
from the middle appraised value by more than 10% of the middle appraised value,
then the Market Rate will be equal to the middle appraised value. Written
notice of the Market Rate as duly determined in accordance with this Section shall
be promptly given to Landlord and Tenant and will be binding and conclusive on
them. Each party will bear its own expenses in connection with the board
proceeding, except that the fees of the Experts will be borne equally. If, for
any reason, the Market Rate has not been determined at the time of the
commencement of the Extension Term, then the Market Rate will be the amount set
forth in Landlord’s determination, and if the determination of the Experts as
provided above indicates that a lesser or greater amount should have been paid
than that which was actually paid, a proper adjustment will be made in a
payment from Landlord to Tenant, or Tenant to Landlord, as the case may be,
such payment to be made within thirty (30) days of the determination of the
Market Rate.

 

3.2                                 Additional Rent:  Increases in Operating Costs and Taxes.

 

(a)                                  Definitions.

 

(1)                                  “Operating Costs”
means all costs of managing, operating, maintaining and repairing the Premises,
including, but not limited to, all costs, expenditures, fees and charges
for:  (A) operation, maintenance and
repair of the Premises (including maintenance, repair and replacement of glass,
the roof covering or membrane, parking lot (including, without limitation,
sealcoating, sweeping, striping and patching), and landscaping); (B) utilities
and services (including telecommunications facilities and equipment, recycling
programs and trash removal), and associated supplies and materials; (C) compensation
(including employment taxes and fringe benefits) for persons who perform duties
in connection with the operation, management, maintenance and repair of the
Building, such compensation to be appropriately allocated for persons who also
perform duties unrelated to the Building; (D) property (excluding coverage
for earthquake and flood if carried by Landlord), liability, rental income (not
to exceed 12 months’ coverage) and other insurance relating to the Premises,
and, to the extent of any claim thereunder that is subject to a deductible or
retention, the amount of any deductible or retention under any such policies (other
than any deductible or retention under any liability insurance policy that
Landlord may maintain in addition to the liability policy described in Section 11.1(a) below);
(E) licenses, 

 

7

 

permits and inspections; (F) complying
with the requirements of any law, statute, ordinance or governmental rule or
regulation or any orders pursuant thereto (collectively “Laws”);
(G) amortization over the useful life thereof of capital improvements
required to comply with Laws, or which are intended to reduce Operating Costs
(not to exceed the amount of such savings in any event) or installed (if such
installation is approved by Tenant in its reasonable discretion) to improve the
utility, efficiency or capacity of any Building System, with interest on the
unamortized balance at the rate paid by Landlord on funds borrowed to finance
such capital improvements (or, if Landlord finances such improvements out of
Landlord’s funds without borrowing, the rate that Landlord would have paid to
borrow such funds, as reasonably determined by Landlord), over such useful life
as Landlord shall reasonably determine; (H) property management fees (not
to exceed 3% of gross rental); (I) accounting, legal and other professional
services incurred in connection with the operation of the Premises and the
calculation of Operating Costs and Taxes; (J) contesting (to the extent such
contest is approved by Tenant in its reasonable discretion) the validity or
applicability of any Laws that may affect the Premises; (K) the Building’s
share of any shared or common area maintenance fees and expenses (including
costs and expenses of operating, managing, owning and maintaining any common
parking or other common areas within any project of which the Premises are a
part and including costs payable to the City pursuant to the Developer’s
Agreement relative to maintenance of the storm sewer pond serving the
Premises); (L) the Building’s share (which shall be equal to fifty percent
(50%) of total costs thereof) of maintenance and repair of any skyway between
the Premises and the Expansion Property (defined in Section 33 herein);
and (M) any other cost, expenditure, fee or charge, whether or not hereinbefore
described, which in accordance with generally accepted property management
practices would be considered an expense of managing, operating, maintaining
and repairing the Premises (but excluding any such costs that may relate to the
ownership or management of the asset as distinguished from the Premises itself).

 

Operating Costs shall not
include (i) capital improvements (except as otherwise provided above); (ii) costs
of special services rendered to individual tenants (including Tenant) for which
a special charge is made; (iii) interest and principal payments on loans
or indebtedness secured by the Building; (iv) costs of improvements for
Tenant or other tenants of the Building; (v) costs of services or other
benefits of a type which are not available to Tenant but which are available to
other tenants or occupants, and costs for which Landlord is reimbursed by other
tenants of the Building other than through payment of tenants’ shares of
increases in Operating Costs and Taxes; (vi) leasing commissions,
attorneys’ fees and other expenses incurred in connection with leasing space in
the Building or enforcing such leases; (vii) depreciation or amortization,
other than as specifically enumerated in the definition of Operating Costs
above; and (viii) costs, fines or penalties incurred due to Landlord’s
violation of any Law.

 

Operating Costs shall
further not include:

 

(1)                                  Costs of correcting any violations of any
Laws (including any fines or penalties and interest thereon) by Landlord or its
employees, agents or contractors;

 

(2)                                  Leasing commissions, costs and disbursements
and any other cost or expense incurred in connection with negotiations or
disputes with Building occupants, or prospective occupants of the Building;

 

8

 

(3)                                  Legal fees, costs and disbursements related to
the initial development of the Premises or any sale or marketing of the
property or the preparation of the Premises for sale;

 

(4)                                  Any special assessments or other taxes which
are charged against the land or the Building to compensate any taxing authority
for special assessments which were levied or pending on the Commencement Date
and any special assessments which might be levied to compensate any taxing
authority for the initial construction of any improvements and local
infrastructure necessary for the use and operation of the Building to the
extent incurred in connection with the initial construction of the Premises;

 

(5)                                  Costs of correcting defects in, or inadequacy
of, the design or construction of the Building or the materials used in the
construction of the Building or in the Building equipment or appurtenances
thereto, except that, for the purposes of this paragraph, conditions (not
occasioned by or related to design, materials or construction defects or
inadequacies) resulting from ordinary wear and tear and use shall not be deemed
defects;

 

(6)                                  Depreciation and amortization, except as
otherwise provided above;

 

(7)                                  Costs (and reserves therefor) of a capital
nature irrespective of the amount thereof, including capital improvements,
capital repairs and replacements and capital equipment, except as otherwise
provided above;

 

(8)                                  Fees or costs for management of the Building
or management of the asset other than the approved management fee, including
any property management fee paid to a property management company for the
Building, or any fees, costs or expenses associated with any accounting,
bill-paying or management activities (but fees or commissions paid to a third
party risk manager, to a third party administrator of insurance claims
pertaining to the Premises, and to an insurance broker or agent, to the extent
fairly allocable to the Premises, may be included in Operating Costs). It is
contemplated that there will be a single management fee, not to exceed 3% of
the gross rent of the lease and no duplication of the fee, nor in the event
that the Building has an asset manager as distinguished from a property
manager, is it intended that any of the costs of that asset manager be borne by
Tenant;

 

(9)                                  Amounts which would otherwise be included in
Operating Costs which are payable to affiliates of Landlord, for services on or
to the Building or the Land to the extent that the costs of such services
exceed average competitive costs for such services rendered by persons or
entities of similar skill, competence and experience, other than an affiliate
of Landlord;

 

(10)                            Cost related to any damage or destruction of
the property or the Tenant’s improvements within the Premises to the extent
that they would by be payable by an insurer if the Landlord would have purchased
the type or the amount of insurance required by the terms of this Lease and the
item damaged or destroyed would have been covered by such insurance (but the
amount of deductibles or retentions, subject to the limitations set forth
herein, may be included in Operating Costs);

 

9

 

(11)                            Financing and refinancing costs, interest on
debt or amortization payments on any mortgage or mortgages, and rental under
any ground or underlying leases or lease, together with all costs incidental to
the items mentioned in this paragraph (11);

 

(12)                            Costs of Landlord’s general corporate
overhead and general administrative expenses (including personnel costs (but
the cost of employees below the level of a building manager, to the extent
fairly allocable to the Premises, may be included in Operating Costs) and costs
and expenses paid to third parties to collect rents, prepare tax returns and
accounting reports and obtain financing);

 

(13)                            Rentals and other related costs, if any,
incurred in leasing air conditioning, security, or other building operation or
management systems, elevators or other equipment or facilities which, if
purchased and owned by Landlord, would ordinarily be considered to be of a
capital nature (except that the rental of equipment necessary to perform
Landlord’s maintenance and repair obligations may be included in Operating
Costs);

 

(14)                            Costs associated with items and services for
which Tenant reimburses Landlord (other than through Tenant paying Tenant’s
Additional Rent) or for which Tenant pays or Landlord receives reimbursement
from third persons;

 

(15)                            Costs of entertaining current or prospective
Building occupants, and costs incurred in advertising in respect of or for the
Building or other marketing or promotional activity;

 

(16)                            Costs resulting from the negligence or
misconduct of Landlord or its employees, managers, agents or contractors;

 

(17)                            Bad debt expenses or bad debt reserves,
whether for rent or otherwise, or any fees or penalties charged to Landlord as
a result of not paying any amount constituting costs or expenses when due;

 

(18)                            Costs incurred in connection with or related
in any manner to the initial construction of the Building;

 

(19)                            Costs in any manner associated with Hazardous
Materials, provided, however, the following may be included in Operating Costs:
(i) routine fees for disposal of building standard fluorescent lamps and
similar items, and (ii) costs associated with disposal of any Hazardous
Materials brought onto the site (e.g. illegal dumping) by a third party after
the Commencement Date of this Lease;

 

(20)                            Costs related to correction or remediation of
Hazardous Materials existing on the Premises prior to or on the date of
execution of this Lease due to the fact that it is a “brownfield site” it being
understood that all such costs must be borne either by the seller of the land
(The City of New Brighton (the “City”)) or by Landlord (for clarity, the
initial construction of the parking lot and greenspace shall be excluded from
Operating Costs, however, maintenance and repair of the parking lot and
greenspace may be included in Operating Costs subject to any other applicable
limitations set forth in this Lease);

 

10

 

(21)                            Capital costs and maintenance costs for
sculpture, paintings or other art objects or other amenities on the Premises
that are not specifically approved by Tenant;

 

(22)                            Contributions to or memberships in any
organizations, whether professional, political, civic or charitable;

 

(23)                            Costs incurred in connection with any special
events held on the Premises which are not approved by Tenant;

 

(24)                            Costs related to the Expansion Property (as
defined in Section 33) other than the Building’s share of maintenance of
any skyway connecting the Expansion Property and the Premises and Tenant’s
share of the option payment due for years four and five of the option period.

 

(25)                            Premiums paid to perform work on the Building
or Premises after hours, unless required by the terms of this Lease to be
performed after hours or unless approved in advance in writing by Tenant
(except as necessary in an emergency);

 

(26)                            Travel, entertainment and related expenses
incurred by Landlord, its building manager or its personnel;

 

(27)                            Accountant and auditor’s fees except to the
extent that Tenant shall request audited reports of Operating Costs.

 

(28)                            Major repairs or replacement of the roof or
parking lot during the first sixty (60) months of the Term , unless the need
for repair or replacement was caused by the acts or omissions of Tenant or its
employees, agents or contractors. For purposes of this Section 28, “major”
repairs or replacements are those that are capital in nature or are unusually
large in cost or frequency in comparison to normal repairs for such items.

 

(29)                            Extraordinary costs incurred in the
maintenance or repair of the parking lot or greenspace attributable to
remediation measures implemented as part of the RAPs (defined herein).

 

(30)                            Costs of maintaining or repairing the venting
systems that are part of the remediation measures implemented as part of the
RAPs.

 

(2)                                  “Taxes”
means:  all real property taxes and
general, special or district assessments or other governmental impositions, of
whatever kind, nature or origin, imposed on the Premises that are due and
payable during the term of this Lease, or imposed on Landlord by reason of the
ownership, management or use of the Premises (but excluding income taxes);
payments in lieu of taxes pursuant to the Developer’s Agreement for any period
the Premises is tax exempt (not to exceed $33,040.00 per year, but prorated for
any partial year of the Term of this Lease); any Tax Increment Deficiency (as
defined in the Developer’s Agreement) required to be paid by Landlord; service
payments in lieu of taxes and taxes and assessments of every kind and nature
whatsoever levied or assessed in addition to, in lieu of or in substitution for
existing or additional real or personal property taxes on the Premises or the
personal property described above and that are due and payable during the term
of this Lease; and the reasonable cost of contesting by appropriate proceedings
the amount or validity of any taxes, assessments or charges described 

 

11

 

above, provided, however,
that Tenant shall have the right in its reasonable discretion to approve or
disapprove any tax protests and the costs related thereto in advance.

 

(3)                                  “Tenant’s Share”
means one hundred percent (100%).

 

(b)                                 Additional Rent.

 

(1)                                  Tenant shall pay Landlord as “Additional Rent” for each calendar year or portion thereof
during the Term Tenant’s Share of Operating Costs for such period.

 

(2)                                  Prior to the beginning of each calendar year,
Landlord shall notify Tenant of Landlord’s estimate of Operating Costs and
Tenant’s Additional Rent for the following calendar year. Commencing on the
first day of January of each calendar year and continuing on the first day
of every month thereafter in such year, Tenant shall pay to Landlord
one-twelfth (1/12th) of the estimated Additional Rent. If Landlord thereafter
estimates that Operating Costs or Taxes for such year will vary from Landlord’s
prior estimate, Landlord may, by notice to Tenant, revise the estimate for such
year (and Additional Rent shall thereafter be payable based on the revised
estimate).

 

(3)                                  As soon as reasonably practicable after the
end of each calendar year (but not later than 120 days after the end of each
calendar year, in any event), Landlord shall furnish Tenant a statement with
respect to such year, showing Operating Costs and Additional Rent for the year,
and the total payments made by Tenant with respect thereto. Except as otherwise
provided herein, unless Tenant raises any objections to Landlord’s statement
within fifteen (15) months after receipt of the same, such statement shall
conclusively be deemed correct and Tenant shall have no right thereafter to
dispute such statement or any item therein or the computation of Additional
Rent based thereon. If Tenant does object to such statement, then Landlord
shall provide Tenant with reasonable verification of the figures shown on the
statement and the parties shall negotiate in good faith to resolve any
disputes. Any objection of Tenant to Landlord’s statement and resolution of any
dispute shall not postpone the time for payment of any amounts due Tenant or
Landlord based on Landlord’s statement, nor shall any failure of Landlord to
deliver Landlord’s statement in a timely manner relieve Tenant of Tenant’s
obligation to pay any amounts due Landlord based on Landlord’s statement.
Within fifteen (15) months after receipt of Landlord’s annual reconciliation
statement, Tenant shall have the right, during normal business hours and upon
reasonable advance notice to Landlord, to review or audit Landlord’s books and
records pertaining to Operating Costs set forth in said reconciliation
statement. Further, Tenant may only perform one such review or audit in each
calendar year during the Term and any such review or audit shall be performed
at the offices of Landlord or such other location in the Twin Cities that
Landlord may reasonably select. In the event that Landlord’s review or audit
discloses that Landlord has overcharged Tenant, (i) Tenant may also review
the prior year’s reconciliation statement (notwithstanding the 15 month cut off
for review of same described above), to the extent Tenant has not already
performed an audit on same, and (ii) Landlord shall promptly reimburse
Tenant for the excess amounts paid by Tenant. In the event that any such
overage exceeds the amount actually owed by Tenant by more than five (5) percent
(5%), Landlord shall promptly reimburse Tenant for the out of pocket cost of
its audit (excluding, travel, meals and lodging) and if the dollar amount of
the overcharge exceeds the amount actually owed by Tenant by more than five
percent (5%), Landlord shall pay interest at the 

 

12

 

Interest Rate on any sums
from July 1 of the calendar year with respect to which such overcharge
occurred until payment is received by the Tenant.

 

(4)                                  If Tenant’s Additional Rent as finally
determined for any calendar year exceeds the total payments made by Tenant on
account thereof, Tenant shall pay Landlord the deficiency within thirty (30)
days of Tenant’s receipt of Landlord’s statement. If the total payments made by
Tenant on account thereof exceed Tenant’s Additional Rent as finally determined
for such year, Tenant’s excess payment shall, at Tenant’s option, either be
credited toward the rent next due from Tenant under this Lease, or be refunded
by Landlord in cash within thirty (30) days after notifying Landlord in writing
of its election to receive such cash payment. For any partial calendar year at
the beginning or end of the Term, Additional Rent shall be prorated on the
basis of a 365-day year by computing Tenant’s Share of Operating Costs and
Taxes for the entire year and then prorating such amount for the number of days
during such year included in the Term. Notwithstanding the termination of this
Lease, Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the
case may be, within thirty (30) days after Tenant’s receipt of Landlord’s final
statement for the calendar year in which this Lease terminates, the difference
between Tenant’s Additional Rent for that year, as finally determined by
Landlord, and the total amount previously paid by Tenant on account thereof.

 

(c)                                  Additional Rent:  Taxes

 

(1)                                  Tenant shall pay Landlord as Additional Rent
for each calendar year or portion thereof during the Term Tenant’s share of
Taxes that are due and payable during such period.

 

(2)                                  Landlord shall furnish Tenant a statement
showing the Taxes payable for the then current calendar year and Tenant’s share
of such Taxes. Tenant shall pay the same to Landlord, on or before the later of
(i) the fifteenth business day following receipt of Landlord’s statement
or (ii) the day which is twenty calendar days prior to the latest date on
which Taxes may be paid without incurring a penalty or late charge, provided
that if any penalty, late charge or interest is imposed or payable on any Taxes
solely by reason of Tenant’s failure to pay Tenant’s Share of Taxes within the
time required, Tenant shall, upon demand, reimburse Landlord for such penalty,
late charge or interest.

 

(3)                                  If Tenant in the exercise of its reasonable
judgment believes that Taxes are excessive because of improper valuations, tax
rates or special assessments and should be contested, and Landlord is not
contesting Taxes for such year, then Tenant shall have the right to contest
with reasonable diligence the Taxes and to deduct all reasonable out of pocket
costs relating to the contest from any refund obtained from such contest.
Tenant shall be entitled to collect the entire refund, except to the extent
that the refund applies to taxes attributable to a period that precedes or
follows, in whole or in part, the Term, in which case the refund shall be pro
rated accordingly. Tenant shall use reasonable diligence in pursuing any such
tax contest, including any settlement thereof; provided, however, (a) Landlord
and Tenant agree to consult with the other prior to commencing any such tax
contest; and (b) neither Landlord nor Tenant shall settle any such tax
contest without the approval of the other, which may be given or withheld in
the approving party’s reasonable discretion. Tenant acknowledges and agrees
that the Developer’s Agreement requires Landlord and Tenant to sign and deliver
to the City and be bound by the terms of that certain Cost 

 

13

 

Certification attached to
the Developer’s Agreement as Exhibit M, which, among other things,
certifies that the sum of all construction costs for the Premises (including
land, building, development costs and tenant improvements, but not
trade-specific fixtures or relocation costs), shall, upon issuance of a
Certificate of Completion (defined in the Developer’s Agreement), be
$13,275,000 and further, requires the parties to agree not to assert certain
factual matters more particularly set forth in the Cost Certification, all of
which may have a bearing on the assessed value of the Premises and the outcome
of any tax appeal.

 

3.3                                 Payment of Rent. All amounts payable or reimbursable by
Tenant under this Lease, including late charges and interest (collectively, “Rent”), shall constitute rent and shall be payable and
recoverable as rent in the manner provided in this Lease. All sums payable to
Landlord on demand under the terms of this Lease shall be payable within thirty
(30) days after notice from Landlord of the amounts due. All rent shall be paid
without offset, recoupment or deduction except as otherwise provided in this
Lease in lawful money of the United States of America to Landlord at Landlord’s
Address for Payment of Rent as set forth in the Basic Lease Information, or to
such other person or at such other place as Landlord may from time to time
designate.

 

4.                                       SECURITY DEPOSIT. Within five (5) business
days after execution of this Lease, Tenant shall deposit with Landlord the
Security Deposit, (the “Security Deposit”),
as security for the performance of Tenant’s obligations under this Lease.
Landlord may (but shall have no obligation to) use the Security Deposit or any
portion thereof to cure any Event of Default under this Lease or to compensate
Landlord for any damage Landlord incurs as a result of Tenant’s failure to
perform any of Tenant’s obligations hereunder. In such event Tenant shall pay
to Landlord on demand an amount sufficient to replenish the Security Deposit.
If Tenant is not in default at the expiration or termination of this Lease,
Landlord shall return to Tenant the Security Deposit or the balance thereof
then held by Landlord and not applied as provided above. The Security Deposit
shall be in the form of an unconditional and irrevocable letter of credit
issued by a National bank acceptable to Landlord. Landlord may draw against the
letter of credit if it is not extended or replaced at least thirty (30) days
prior to its expiration date.

 

The amount of the Security
Deposit shall be determined as follows:

 

(a)                                  Ryan will fund the entire $39 of Tenant
Improvements and rent will remain at $14.50 (subject to the 2% escalation
provided above).

 

(b)                                 Tenant will post a $2,000,000.00 letter of
credit.

 

(c)                                  The letter of credit will be reduced by
$400,000 on each anniversary date of lease commencement provided that two
conditions are met at that time:

 

(i)                                     Tenant is not then in default on any material
financial matter under the Lease beyond the applicable cure period.

 

(ii)                                  Tenant’s market capitalization is at least
$100,000,000.00.

 

(d)                                 Tenant’s market capitalization value will be
determined by the following:

 

14

 

(i)                                     If Tenant is a publicly traded company: by
multiplying the outstanding shares by the average market price for the 20
trading days immediately preceding the Lease anniversary.

 

(ii)                                  If Tenant is not publicly traded: by
multiplying the number of outstanding shares times the issue price of the stock
in the latest round of private equity sold.

 

(e)                                  Tenant may reduce the amount of Tenant
Improvements available by any amount by putting in cash.

 

(i)                                     For every $1.00 per foot in improvements that
the TI allowance is reduced the annual rent will be reduced by $0.0937.

 

(ii)                                  In other words, if Tenant were to reduce the
improvement allowance by $10.00 per rentable foot ($1,140,000.00) the rent
would be reduced by $0.937 per year, so the net rent would be $13.563 per foot.
Or,

 

(iii)                               If Tenant were to reduce the improvement
allowance by $2,000,000.00, that would reduce the allowance by $17.544 per foot
and the rent would be reduced by $1.644 per year for a net rent or $12.856 per
foot.

 

(f)                                    Tenant may select a combination of the above.

 

(i)                                     For example, Tenant could put in
$1,000,000.00 in cash, with the appropriate rent reduction and a $1,000,000.00
letter of credit, 20% of that number would burn off at the end of each year.

 

5.                                       USE AND COMPLIANCE WITH LAWS.

 

5.1                                 Use. The Premises may be used for any purpose permitted
by Laws, including, but not limited to, office purposes, light manufacturing or
assembly, and product research and testing of medical devices, and other uses
incidental to the foregoing, but subject to the terms, conditions and
restrictions set forth in the Planned Unit Development Agreement, as modified
by the City of New Brighton Resolution No. 07-103 and a Planned Unit
Development Declaration executed by Landlord (as modified, the “PUD”), Contract
for Private Redevelopment between the City of New Brighton and Landlord (the “Developer’s
Agreement) and the Declaration (defined in Section 5.2(a)(5) herein).
Tenant shall comply with all present and future Laws, the PUD, and the
Developer’s Agreement relating to Tenant’s use or occupancy of the Premises
(and make any repairs, alterations or improvements as required to comply with
all such Laws, provided that in no event shall Tenant be responsible for making
any required repairs, alterations or improvements required by any Laws existing
as of the Commencement Date unless due to Tenant’s specific and unique use or
occupancy of the Premises), and shall observe the “Building Rules” (as defined
in Section 27 - Rules and Regulations).
Tenant shall not do, bring, keep or sell anything in or about the Premises that
is prohibited by, or that will cause a cancellation of or an increase in the
existing premium for, any insurance policy covering the Premises or any part
thereof. Tenant shall not permit the Premises to be occupied or used in any
manner that will constitute waste or a nuisance. 

 

15

 

Tenant shall not, without
the prior consent of Landlord, (i) bring into the Building or the Premises
anything that may cause substantial noise, odor or vibration, overload the
floors in the Premises or the Building or any of the heating, ventilating and
air-conditioning (“HVAC”),
mechanical, elevator, plumbing, electrical, fire protection, life safety,
security or other systems in the Building (“Building
Systems”), or jeopardize the structural integrity of the Building or
any part thereof; (ii) connect to the utility systems of the Building any
apparatus, machinery or other equipment other than as contemplated in the
second sentence of this Section 5.1; or (iii) connect to any
electrical circuit in the Premises any equipment or other load with aggregate
electrical power requirements in excess of 80% of the rated capacity of the
circuit.

 

5.2                                 Hazardous Materials.

 

(a)                                  Definitions.

 

(1)                                  “Hazardous Materials”
shall mean any substance:  (A) that
now or in the future is regulated or governed by, requires investigation or
remediation under, or is defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any governmental statute, code, ordinance,
regulation, rule or order, and any amendment thereto, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
§9601 et  seq., and the Resource Conservation and Recovery Act, 42
U.S.C. §6901 et  seq., or (B) that is toxic, explosive, corrosive,
flammable, radioactive, carcinogenic, dangerous or otherwise hazardous,
including gasoline, diesel fuel, petroleum hydrocarbons, polychlorinated
biphenyls (PCBs), asbestos, radon and urea formaldehyde foam insulation.

 

(2)                                  “Environmental Requirements”
shall mean all present and future Laws, orders, permits, licenses, approvals,
authorizations and other requirements of any kind applicable to Hazardous
Materials, including without limitation the Declaration.

 

(3)                                  “Handled by Tenant”
and “Handling by Tenant” shall mean and
refer to any installation, handling, generation, storage, use, disposal,
discharge, release, abatement, removal, transportation, or any other activity
of any type by Tenant or its agents, employees, contractors, licensees,
assignees, sublessees, transferees or representatives (collectively, “Representatives”) or its guests, customers, invitees, or
visitors (collectively, “Visitors”), at
or about the Premises in connection with or involving Hazardous Materials.

 

(4)                                  “Environmental Losses”
shall mean all costs and expenses of any kind, damages, including foreseeable
and unforeseeable consequential damages, fines and penalties incurred in
connection with any violation of and compliance with Environmental Requirements
and all losses of any kind attributable to the diminution of value, loss of use
or adverse effects on marketability or use of any portion of the Premises.

 

(5)                                  “Declaration”. “Declaration”
shall mean a Declaration of Restrictive Covenants required by the Minnesota
Pollution Control Agency (“MPCA”) to be
filed against the title to the Premises upon the completion of redevelopment of
the Premises that will (i) give recorded notice of contamination of soil
and groundwater by Hazardous Materials which contamination is allowed by the
MPCA to remain on the Premises; (ii) prohibit use of the Premises 

 

16

 

as a residence, hotel, day
care center, nursing home, hospital or recreational facility; (iii) prohibit
installation of wells (except by MPCA) on the Premises; (iv) prohibit
disturbance of soil without the approval of MPCA; (v) give MPCA access to
the Premises to verify compliance with the Declaration; and (vi) require
maintenance of the covers over contaminated soils allowed by MPCA to be left on
the Premises. Landlord shall provide a copy of the proposed Declaration to
Tenant prior to executing same and Tenant may provide to Landlord any
suggestions or concerns Tenant may have concerning the terms of the
Declaration, provided, however, neither this Lease nor any of Tenant’s
obligations hereunder are made contingent upon Tenant’s review or approval of
the form of the Declaration, or inclusion of provisions therein to address any
of Tenant’s suggestions or concerns.

 

(6)                                  “Response Action Plans” or “RAPs”.
“Response Action Plans” or “RAPs” shall mean plans required and to
be pre-approved by MPCA to protect human health and the environment and
pursuant to which Landlord will address existing contamination on the Premises
in the course of its redevelopment of the Premises.

 

(b)                                 Tenant’s Covenants. No Hazardous Materials shall be Handled by
Tenant at or about the Premises without Landlord’s prior written consent, which
consent may be granted, denied, or conditioned upon compliance with Landlord’s
requirements, all in Landlord’s absolute discretion. Notwithstanding the
foregoing, normal quantities and use of those Hazardous Materials customarily
used in the conduct of the activities described in the second sentence of Section 5.1
(“Permitted Hazardous Materials”) may be
used and stored at the Premises without Landlord’s prior written consent,
provided that Tenant’s activities at or about the Premises and the Handling by
Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. Promptly after it is finalized, Landlord shall
provide a copy of the Declaration to Tenant and Tenant agrees that, upon its
receipt thereof, the Declaration shall be incorporated into and become a part
of this Lease. At the expiration or termination of the Lease, Tenant shall
promptly remove from the Premises all Hazardous Materials Handled by Tenant at
the Premises. Tenant shall keep Landlord fully and promptly informed of all
Handling by Tenant of Hazardous Materials other than Permitted Hazardous
Materials. Tenant shall be responsible and liable for the compliance with all
of the provisions of this Section by all of Tenant’s Representatives and
Visitors, and all of Tenant’s obligations under this Section (including
its indemnification obligations under paragraph (e) below) shall survive
the expiration or termination of this Lease.

 

(c)                                  Tenant’s Compliance. Tenant shall at Tenant’s expense promptly
take all actions required by any governmental agency or entity in connection
with or as a result of the Handling by Tenant of Hazardous Materials at or
about the Premises, including inspection and testing, performing all cleanup,
removal and remediation work required with respect to those Hazardous
Materials, complying with all closure requirements and post-closure monitoring,
and filing all required reports or plans. All of the foregoing work and all
Handling by Tenant of all Hazardous Materials shall be performed in a good,
safe and workmanlike manner by consultants qualified and licensed to undertake
such work and in a manner that will not interfere with any other tenant’s quiet
enjoyment of the Premises or Landlord’s use, operation, leasing and sale of the
Premises. Tenant shall deliver to Landlord prior to delivery to any
governmental agency, or promptly after receipt from any such agency, copies of
all permits, manifests, closure or remedial action plans, notices, and all
other documents relating to the Handling by Tenant of Hazardous Materials at or
about the Premises. If any lien attaches to the Premises in connection with or
as a 

 

17

 

result of the Handling by
Tenant of Hazardous Materials, and Tenant does not cause the same to be
released, by payment, bonding or otherwise, within ten (10) days after the
attachment thereof, Landlord shall have the right but not the obligation to
cause the same to be released and any sums expended by Landlord (plus Landlord’s
administrative costs) in connection therewith shall be payable by Tenant on
demand.

 

(d)                                 Landlord’s Rights. Landlord shall have the right, but not the
obligation, to enter the Premises at any reasonable time upon not less than 24
hours prior notice (except in case of emergency) and only if accompanied by an
authorized representative of Tenant (i) to confirm Tenant’s compliance
with the provisions of this Section 5.2, and (ii) to perform Tenant’s
obligations under this Section if Tenant has failed to do so after
reasonable notice to Tenant. Landlord shall also have the right to engage
qualified Hazardous Materials consultants to inspect the Premises and review
the Handling by Tenant of Hazardous Materials, including review of all permits,
reports, plans, and other documents regarding same. Tenant shall pay to
Landlord on demand the costs of Landlord’s consultants’ fees and all costs
incurred by Landlord in performing Tenant’s obligations under this Section.
Landlord shall use reasonable efforts to minimize any interference with Tenant’s
business caused by Landlord’s entry into the Premises, but Landlord shall not
be responsible for any interference caused thereby.

 

(e)                                  Tenant’s Indemnification. Tenant agrees to indemnify, defend, protect
and hold harmless Landlord and its partners or members and its or their
partners, members, directors, officers, shareholders, employees and agents from
all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys’,
experts’ and consultants’ fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Premises or Tenant’s failure to comply in full with all Environmental
Requirements with respect to the Premises.

 

(f)                                    Landlord’s Compliance. Landlord shall comply with all
Environmental Requirements in completing Landlord’s construction obligations
under this Lease, and shall incorporate no Hazardous Materials into the
Premises other than those, if any, permitted by Environmental Requirements and
customarily used in the construction of similar projects in the Twin Cities
area. Landlord and Tenant acknowledge that the Premises is located on a
so-called “brownfields” site, and in furtherance of the obligations set forth
in the foregoing sentence, Landlord shall construct the improvements to the
Premises in accordance with the RAPs.

 

(g)                                 Tenant’s Rights. In the event that Tenant reasonably
determines that any Hazardous Materials are present on the Premises (other than
any Hazardous Materials that may have been introduced upon the Premises by
Tenant, its Representatives or Visitors and other than any Hazardous Materials
that are allowed by MPCA to remain in the soil and groundwater of the Premises
pursuant to the RAPs and the Declaration, including any such allowable
Hazardous Materials which have been exacerbated by the actions of Tenant, its
Representative or Visitors and vapors other than those contemplated in the RAPs
that entered the Premises subsequent to Landlord’s completion of the actions
required by the RAPs) and represent a material danger to persons or property on
the Premises, Tenant shall notify Landlord of the same, and Landlord shall
immediately take such steps as are required by MPCA with respect to such
Hazardous Materials. If Landlord fails to do so within one hundred twenty (120)
days after receipt of written notice from 

 

18

 

Tenant, Tenant, at its sole
option, shall have the right to elect either of the following remedies by
written notice to Landlord: (i) Tenant may take over such steps required
by MPCA of Landlord, in which case Tenant shall have the right to recover from
Landlord the reasonable costs incurred by Tenant to perform such steps required
by MPCA, together with interest thereon at the Interest Rate, or (ii) Tenant
may terminate this Lease, provided, however, to be effective, Tenant’s written
notice to Landlord stating Tenant’s election either of said remedies in
subparagraph (i) or (ii) above must be delivered to Landlord prior to
Landlord’s completion of the MPCA required work. Notwithstanding the foregoing
provisions to the contrary, Tenant shall not have the option to terminate this
Lease unless the MPCA (or, if the MPCA fails to provide a timely response to
inquiry of Landlord or Tenant, an environmental consultant reasonably
acceptable to both Landlord or Tenant) shall determine that occupancy of the
Premises creates material risk of illness or injury from such Hazardous
Materials. Notwithstanding the foregoing provisions to the contrary, provided
that Landlord promptly commences and diligently proceeds with the steps
required by MPCA, Landlord shall have such additional time as may be reasonably
necessary to complete such steps so long as in the reasonable judgment of
Tenant the occupants of the Premises are reasonably able to continue to occupy
the Premises without material risk of illness or injury from such Hazardous
Materials. Landlord shall use reasonable efforts to minimize any interference
with Tenant’s business caused by Landlord’s entry into the Premises.

 

The obligations of Landlord
and Tenant under subsections (e) and (f), respectively, shall survive the
expiration or termination of this Lease.

 

5.3                                 Americans With Disabilities Act.                 The parties
agree that the liabilities and obligations of that certain federal statute
commonly known as the Americans With Disabilities Act as well as the
regulations and accessibility guidelines promulgated thereunder as each of the
foregoing is supplemented or amended from time to time (collectively, the “ADA”)
shall be the responsibility of Tenant.

 

Prior to the
Commencement Date, Landlord shall construct the Premises and the Tenant
Improvements in a manner that, as of the Commencement Date, complies with all
requirements of the ADA. From and after the Commencement Date, Tenant covenants
and agrees to conduct its operations within the Premises in compliance with the
ADA. If any of the Premises fails to comply with the ADA, as a result of
Landlord’s failure to meet the requirements of the first sentence of this
paragraph, Landlord shall be responsible for correcting such non-compliance. If
any portion of the Premises fails to comply with the ADA as a result of any
change in the ADA after the Commencement Date, such nonconformity shall be
promptly made to comply by Tenant to the extent so required under the ADA. In
the event that Tenant elects to undertake any alterations to, for or within the
Premises, Tenant agrees to cause such alterations to be performed in compliance
with the ADA.

 

6.                                       TENANT IMPROVEMENTS & ALTERATIONS.

 

6.1                                 Landlord and Tenant shall perform their
respective obligations with respect to design and construction of any
improvements to be constructed and installed in the Premises (the “Tenant Improvements”), as provided in the Construction
Rider. Except for any Tenant Improvements to be constructed by Tenant as
provided in the Construction Rider and except as 

 

19

 

otherwise provided below,
Tenant shall not make any alterations, improvements or changes to the Premises,
including installation of any security system or telephone or data
communication wiring, (“Alterations”),
without Landlord’s prior written consent, which consent shall not be
unreasonably withheld or delayed. Any such Alterations shall be completed by
Tenant at Tenant’s sole cost and expense: 
(i) with due diligence, in a good and workmanlike manner, using new
materials and utilizing contractors approved by Landlord in its reasonable
discretion; (ii) in compliance with plans and specifications approved by
Landlord; (iii) in compliance with the construction rules and
regulations promulgated by Landlord from time to time; and (iv) in
accordance with the Declaration and all applicable Laws (including all work,
whether structural or non-structural, inside or outside the Premises, required
to comply fully with the Declaration and all applicable Laws and necessitated
by Tenant’s work). Landlord’s right to review and approve (or withhold approval
of) Tenant’s plans, drawings, specifications, contractor(s) and other aspects
of construction work proposed by Tenant is intended solely to ensure compliance with the Declaration and Laws and to reasonably
protect Landlord’s interest from any material diminution in value or material
damage to the structure or the HVAC and Building Systems of the Building. No approval or consent by Landlord shall be deemed or construed to be
a representation or warranty by Landlord as to the adequacy, sufficiency,
fitness or suitability thereof or compliance thereof with the Declaration or
applicable Laws or other requirements. Notwithstanding the
foregoing provisions to the contrary, Tenant shall have the right, without
Landlord’s consent, to make non-structural Alterations such as
painting, wall or window coverings, floor coverings, or installation or
rearrangement of cubicles or other modular office dividers that do not violate
the Declaration or otherwise disturb the parking lot or soil on the Premises
and that do not affect the Building structure, HVAC or Building Systems (“Minor Alterations”), provided that
Tenant gives Landlord not less than ten (10) days prior written notice of
any such Minor Alterations and shall otherwise comply with the terms and
provisions of this Lease. Except as otherwise provided in Landlord’s
consent (if applicable), and except as otherwise provided in Section 6.4
below, all Alterations shall upon installation become part of the realty and be
the property of Landlord. Tenant shall have no obligation to remove any Minor
Alterations or any other Alterations except to the extent that the same
materially diminish the value of the Building in Landlord’s reasonable
determination or materially affect the Building’s structure, HVAC or Building
Systems, and then only to the extent that Landlord, at the time of giving its
consent to any such Alteration, notified Tenant of the requirement that such
Alteration be removed at the end of the Term. Whether or not Landlord’s consent
is required for any improvements, upon receipt of written notice of Tenant’s
intention to make any Alterations, Landlord may impose conditions upon Tenant’s
right to perform such work as Landlord may deem reasonably necessary to protect
its interest in the Premises, including without limitation, requiring (a) insurance
naming Landlord as additional insured, (b) Tenant to carry builder’s risk
insurance with limits of coverage adequate to cover the cost of construction
and naming Landlord as additional insured (which insurance shall be maintained
during periods of construction and shall be primary in the event of a casualty
occurring on or about the Premises), (c) adequate financial security or
assurances to ensure the contractor and all subcontractors will be paid for
their work, (d) the right to have a representative of Landlord be present
during the making of any Alterations or Minor Alterations, and (e) the
right to inspect any Alterations or Minor Alterations during the course of
construction. Notwithstanding anything herein to the contrary, during any
period where Landlord is performing initial construction of the Premises,
including without limitation, constructing or installing the Tenant
Improvements (i.e. until Landlord is completely finished with its initial
construction work of the Premises and any Tenant Improvements), Tenant must use
union contractors recognized and approved by the Building Trades Council having
jurisdiction 

 

20

 

over Minneapolis, Minnesota
to construct or install any tenant improvements, Alterations, Minor Alterations
or tenant trade fixtures, equipment, etc...

 

6.2                                 Before making any Alterations (other than
Minor Alterations), Tenant shall submit to Landlord for Landlord’s prior
approval reasonably detailed final plans and specifications prepared by a licensed
architect or engineer, a copy of the construction contract, including the name
of the contractor and all subcontractors proposed by Tenant to make the
Alterations and, if required, a copy of the contractor’s license. Tenant shall
not be required to reimburse Landlord for any costs incurred by Landlord in
connection with any Alterations made by Tenant except that Tenant shall
reimburse Landlord within thirty (30) days after written request for payment
for any reasonable out of pocket costs incurred by Landlord in connection with
having a mechanical engineer or structural engineer reasonably review plans or
inspect completed work for Alterations made or desired to be made by Tenant.
Tenant shall obtain all applicable permits, authorizations and governmental
approvals and deliver copies of the same to Landlord before commencement of any
Alterations. Tenant shall also deliver to Landlord copies of inspection
approvals and any certificate of occupancy issued upon completion of the
Alterations (other than Minor Alterations), together with a sworn construction
statement from the general contractor substantiating the total cost of the
project (including the value of labor of materials) and identifying all
subcontractors, and together with copies of full and final lien waivers or paid
invoices from the general contractor and all subcontractors.

 

6.3                                 Tenant shall keep the Premises free and clear
of all liens arising out of any work performed, materials furnished or
obligations incurred by Tenant. If any such lien attaches to the Premises, and
Tenant does not cause the same to be released by payment, bonding or otherwise
within thirty (30) days after the attachment thereof, Landlord shall have the
right but not the obligation to cause the same to be released by payment of the
lien or otherwise, and any sums expended by Landlord (plus Landlord’s
administrative costs) in connection therewith shall be payable by Tenant on
demand with interest thereon from the date of expenditure by Landlord at the
Interest Rate (as defined in Section 16.2 - Interest).
Tenant shall give Landlord at least ten (10) days’ notice prior to the
commencement of any Alterations (except in case of emergency when notice shall
be given as soon as reasonably possible) and cooperate with Landlord in posting
and maintaining notices of non-responsibility in connection therewith.

 

6.4                                 Subject to the provisions of Section 5 -
Use and Compliance with Laws and the
foregoing provisions of this Section, Tenant may install and maintain
furnishings, equipment, movable partitions, business equipment and other trade
fixtures (“Trade Fixtures”) in the Premises,
provided that the Trade Fixtures do not become an integral part of the Premises
or the Building. Tenant shall promptly repair any damage to the Premises or the
Building caused by any installation or removal of such Trade Fixtures.

 

7.                                       MAINTENANCE AND REPAIRS.

 

7.1                                 At the time of lease commencement and prior
to Tenant’s possession of the Premises, Tenant and its architect and project
manager shall prepare and deliver to Landlord a written punch list of
then-known building deficiencies. Landlord shall correct all such deficiencies
within thirty (30) days after receipt of said written punchlist, except if the
nature of the deficiency is such that it cannot be corrected in thirty (30)
days, then Landlord shall have an additional 

 

21

 

reasonable amount of time
within which to correct the particular deficiency. If Landlord does not correct
any deficiency within the time period permitted above, then Tenant shall have
the right to do so and upon completion thereof and delivery to Landlord of
written documentation substantiating costs incurred and payment thereof by
Tenant, Landlord shall pay Tenant said costs (inclusive of an administrative
cost of 10%) within thirty (30) days after receipt of same. If Landlord does
not pay any amounts due under the preceding sentence within said thirty (30)
day period, then Tenant may deduct the cost thereof from the next
installment(s) of Rent payable under the Lease. Tenant’s occupancy of the
Premises or preparation of a punch list shall not reduce Landlord’s obligation
to construct the space in accordance with the Final Plans (defined in Exhibit B).
Landlord agrees to cooperate with Tenant
to enforce, at Tenant’s sole cost and expense, any express warranties or
guaranties of workmanship or materials given by subcontractors or materialmen
that guarantee or warrant against defective workmanship or materials and to
cooperate with Tenant in the enforcement, at Tenant’s sole cost and expense, of
any service contracts that provide service, repair or maintenance to any item
incorporated in the Building; provided that Landlord will not charge Tenant for
Landlord’s employees’ time in such cooperation.

 

7.2                                 During the Term, Tenant at Tenant’s expense
but under the direction of Landlord, shall repair and maintain Tenant’s signage
and the interior of the Premises, including, without limitation, the interior
walls, floor coverings, ceiling (ceiling tiles and grid), Tenant Improvements,
Alterations, Minor Alterations, fire extinguishers, outlets and fixtures, plate
glass, doors, door locks and door hardware, security systems,
telecommunications systems, and plumbing fixtures, and any appliances (including
dishwashers, hot water heaters and garbage disposers) in the Premises, in a
first class condition, and keep the Premises and the parking areas in a clean,
safe and orderly condition.

 

7.3                                 Landlord shall maintain or cause to be
maintained in reasonably good order, condition and repair, (i) the exterior of the Building and all other exterior improvements
constructed upon the Premises, including, but not limited to, roof (including
without limitation flashing and drainage systems), lawn care and landscaping,
snow removal, parking areas (other than routine maintenance such as debris and
rubbish removal which shall be performed by Tenant), and (ii) the
following portions of the Premises: fire sprinkler system, utility lines up to
connection points with the building, HVAC and other Building Systems,  foundations, floor slab (but not
floor coverings) and exterior walls of the Building. All costs incurred by
Landlord in performing such maintenance and repair shall be included within the
definition of Operating Costs pursuant to the terms of this Lease (except as
otherwise provided in this Lease), provided, however, that Tenant shall pay
directly the cost of repairs for any damage occasioned by Tenant’s use of the
Premises or any act or omission of Tenant or Tenant’s Representatives or
Visitors, to the extent (if any) not covered by the property insurance in the
form required to be maintained by Landlord pursuant to this Lease (or if
covered by insurance, then to the extent of any deductible). Notwithstanding
anything herein to the contrary, Landlord shall also maintain or cause to be
maintained, at its sole cost, the structural portions of the Premises. Landlord
shall be under no obligation to inspect the Premises. Tenant shall promptly
report in writing to Landlord any defective condition known to Tenant which
Landlord is required to repair.

 

7.4                                 If any governmental authority promulgates or
revises any Law or imposes mandatory controls on Landlord or the Premises
relating to the use or conservation of energy or utilities or the reduction of
automobile or other emissions or reduction or management of traffic or 

 

22

 

parking on the Premises
(collectively “Controls”), Tenant shall comply
with such Controls or make any required alterations to the Premises related
thereto.

 

7.5                                 Tenant shall have the exclusive right,
subject to approval by the City, to place two large lighted signs on the
exterior or on the top of the Building and one monument sign in front or on the
side of the Building. Tenant shall also have the right to post signs in the
parking area, including signs identifying visitors, reserved and/or other
parking designations or limitations. All such signage and Tenant’s right to
install same shall be subject to and installed in compliance with applicable
Laws. The cost of all signage is the responsibility of the Tenant. Landlord
shall have the right to approve the design of such signage provided such
approval shall not be unreasonably withheld or delayed. It is intended that
Tenant shall have the right to place on the Building two large signs with its
logotype and its colors, subject to Landlord’s reasonable approval. Tenant
shall be obligated to maintain the building-mounted signage. Tenant shall not
be obligated to remove the Building mounted sign and restore the Building
exterior surface to its original condition unless the Lease shall be
involuntarily terminated earlier than the end of the 144th month of
the Term.

 

7.6                                 Right to Install Antennas. In addition to the other rights granted by
this Lease, Tenant shall have the exclusive right during the Term to install,
maintain and operate satellite dish and/or whip antennae or similar rooftop
antenna (the “Antennas”) on the Building’s roof. Tenant shall pay no additional
charge for such right during the Term. Tenant shall install and maintain the
Antennas and related cabling at its sole expense. Tenant shall fully comply
with the requirements of any roof warranty. The installation of the Antennas
shall be completed in a workmanlike manner and in accordance with all
applicable laws. Tenant shall install the Antennas using non-penetrating roof
mounts. Tenant shall comply with all floor load limitations. At the termination
of this Lease Tenant shall, at Tenant’s sole cost and expense, remove the
Antennas and restore the Antenna site to the condition it was prior to the
installation of the Antennas, reasonable wear and tear and damage due to fire
or other casualty excepted. Tenant shall be responsible for obtaining, if
required, any licenses or permits required by any governmental agency having
jurisdiction over the Building.

 

8.                                       TAXES. Tenant shall pay all rental, excise,
sales or transaction privilege taxes arising out of this Lease (excluding,
however, state and federal personal or corporate income taxes measured by the
income of Landlord from all sources) imposed by any taxing authority upon
Landlord or upon Landlord’s receipt of any rent payable by Tenant pursuant to
the terms of this Lease (“Rental Tax”).
Tenant shall pay any Rental Tax to Landlord in addition to and at the same time
as Base Rent is payable under this Lease.

 

9.                                       UTILITIES AND SERVICES.

 

9.1                                 Description of Services. Landlord shall install utilities and HVAC
equipment to serve the Premises, all in accordance with the specifications set
forth in the Final Plans (defined in Exhibit B).Landlord shall also
provide the Building with janitorial services five days a week (except public
holidays), normal fluorescent lamp replacement, window washing, elevator
service, and common area toilet room supplies. All electrical, water, sewer,
and natural gas services will be paid by the Tenant directly to the utility
providers, and any such sums so paid shall not constitute Rent for the purpose
of calculating Landlord’s management fee (if applicable).

 

23

 

9.2                                 Interruption of Services. In the event of an interruption in or
failure or inability to provide any services or utilities to the Premises for
any reason (a “Service Failure”), such Service
Failure shall not, regardless of its duration, impose upon Landlord any
liability whatsoever, constitute an eviction of Tenant, constructive or
otherwise, entitle Tenant to an abatement of rent or to terminate this Lease or
otherwise release Tenant from any of Tenant’s obligations under this Lease. Notwithstanding the foregoing provisions to the contrary, in the
event of any utility service interruption that is caused by Landlord’s acts and
materially interferes with Tenant’s use and enjoyment of the Premises, and Landlord fails to take all commercially reasonable steps to restore
such utility service as soon as reasonably possible and
said interruption continues for at least five (5) consecutive days, then
Tenant shall have the right to abate Rent in proportion to the area of the
Premises which Tenant’s use and enjoyment has been
materially interfered with commencing on the sixth (6) day after service
was interrupted and ending on the day the applicable utility service is
restored to the Premises, provided, however, (i)  a condition precedent to
Tenant’s right of abatement is that Tenant shall cooperate with Landlord and
provide such information or certifications reasonably required in order to
submit a claim for such rent loss insurance, and (ii) the abatement shall
only apply to the extent the type of utility interrupted is either gas,
electric, water or sewer.

 

10.                                 EXCULPATION AND INDEMNIFICATION.

 

10.1                           Landlord’s Indemnification of Tenant. Subject to Section 11.3 and Section 28,
Landlord shall indemnify, protect, defend and hold Tenant harmless from and
against any claims, actions, liabilities, damages, costs or expenses, including
reasonable attorneys’ fees and costs incurred in defending against the same (“Claims”) asserted by any third party against Tenant for
loss, injury or damage, to the extent such loss, injury or damage is caused by
the Landlord’s breach of this Lease or by the willful misconduct or negligent
acts or omissions of Landlord or its authorized representatives.

 

10.2                           Tenant’s Indemnification of Landlord. Subject to Section 11.3, Tenant shall
indemnify, protect, defend and hold Landlord and Landlord’s authorized
representatives harmless from and against Claims arising from (a) the
negligent acts or omissions or willful misconduct of Tenant or Tenant’s
Representatives or Visitors in or about the Premises, or (b) any
construction or other work undertaken by Tenant on the Premises (including any
design defects), or (c) any breach or default under this Lease by Tenant,
or (d) any loss, injury or damage, howsoever and by whomsoever caused, to
any person or property, occurring in or about the Premises during the Term,
excepting only Claims described in this clause (d) to the extent they are
caused by the willful misconduct or negligent acts or omissions of Landlord or
its authorized representatives.

 

10.3                           Damage to Tenant’s Property. Landlord shall not be liable to Tenant for
any loss, injury or other damage to Tenant’s property in or about the Premises
from any cause (including defects in the Premises or in any equipment in the
Premises; fire, explosion or other casualty; bursting, rupture, leakage or
overflow of any plumbing or other pipes or lines, sprinklers, tanks, drains,
drinking fountains or washstands in, above, or about the Premises; or acts of
other tenants in the Premises) unless caused by Landlord’s negligence (unless
waived pursuant to Section 11.3) or willful misconduct. Except as provided
in the preceding sentence, Tenant hereby waives all claims 

 

24

 

against Landlord for any
such loss, injury or damage and the cost and expense of defending against
claims relating thereto.

 

10.4                           Survival. The obligations of the parties under this Section 10
shall survive the expiration or termination of this Lease.

 

11.                                 INSURANCE.

 

11.1                           Tenant’s Insurance.

 

(a)                                  Liability Insurance. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Three Million Dollars
($3,000,000.00) each occurrence for bodily injury and property damage combined,
Three Million Dollars ($3,000,000.00) annual general aggregate, and Three
Million Dollars ($3,000,000.00) products and completed operations annual aggregate.
Tenant’s liability insurance policy or policies shall:  (i) include premises and operations
liability coverage, products and completed operations liability coverage, broad
form property damage coverage including completed operations, blanket contractual
liability coverage including, to the maximum extent possible, coverage for the
indemnification obligations of Tenant under this Lease, and personal and
advertising injury coverage; (ii) provide that the insurance company has
the duty to defend all insureds under the policy; (iii) provide that
defense costs are paid in addition to and do not deplete any of the policy
limits; (iv) cover liabilities arising out of or incurred in connection
with Tenant’s use or occupancy of the Premises; (v) extend coverage to
cover liability for the actions of Tenant’s Representatives and Visitors; and (vi) designate
separate limits for the Premises. Each policy of liability insurance required
by this Section shall:  (i) contain
a cross liability endorsement or separation of insureds clause; (ii) provide
that any waiver of subrogation rights or release prior to a loss does not void
coverage; (iii) provide that it is primary to and not contributing with,
any policy of insurance carried by Landlord covering the same loss; (iv) provide
that any failure to comply with the reporting provisions shall not affect
coverage provided to Landlord, its partners, property managers and Mortgagees;
and (v) name Landlord, its partners, the Property Manager identified in
the Basic Lease Information (the “Property Manager”),
and such other parties in interest as Landlord may from time to time reasonably
designate to Tenant in writing, as additional insureds. Such additional
insureds shall be provided at least the same extent of coverage as is provided
to Tenant under such policies.

 

(b)                                 Property Insurance. Tenant shall at all times maintain in
effect with respect to any Alterations and Tenant’s Trade Fixtures and personal
property, commercial property insurance providing coverage, on an “all risk” or
“special form” basis, in an amount equal to at least 90% of the full
replacement cost of the covered property. Tenant may carry such insurance under
a blanket policy, provided that such policy provides coverage equivalent to a
separate policy. During the Term, the proceeds from any such policies of
insurance shall be used for the repair or replacement of the Alterations, Trade
Fixtures and personal property so insured. Landlord shall be provided coverage
under such insurance to the extent of its insurable interest and, if requested
by Landlord, both Landlord and Tenant shall sign all documents reasonably
necessary or proper in connection with the settlement of any claim or loss
under such insurance. Landlord will have no obligation to carry insurance on
any Alterations or on Tenant’s Trade Fixtures or personal property.

 

25

 

(c)                                  Requirements For All Policies. Each policy of insurance required under
this Section 11.1 shall:  (i) be
in a form, and written by an insurer, reasonably acceptable to Landlord, (ii) be
maintained at Tenant’s sole cost and expense, and (iii) require at least
thirty (30) days’ written notice to Landlord prior to any cancellation,
nonrenewal or modification of insurance coverage. Insurance companies issuing
such policies shall have rating classifications of “A” or better and financial
size category ratings of “VII” or better according to the latest edition of the A.M.
Best Key Rating Guide. All insurance companies issuing such policies shall be
admitted carriers licensed to do business in the state where the Premises is
located. Any deductible amount under such insurance shall not exceed $50,000.
Tenant shall provide to Landlord, upon request, evidence that the insurance
required to be carried by Tenant pursuant to this Section, including any
endorsement effecting the additional insured status, is in full force and
effect and that premiums therefor have been paid.

 

(d)                                 Updating Coverage. Tenant shall increase the amounts of
insurance as required by any Mortgagee, and, not more frequently than once
every three (3) years, as recommended by Landlord’s insurance broker, if,
in the opinion of either of them, the amount of insurance then required under
this Lease is not adequate. Any limits set forth in this Lease on the amount or
type of coverage required by Tenant’s insurance shall not limit the liability
of Tenant under this Lease.

 

(e)                                  Certificates of Insurance. Prior to occupancy of the Premises by
Tenant, and not less than thirty (30) days prior to expiration of any policy
thereafter, Tenant shall furnish to Landlord a certificate of insurance
reflecting that the insurance required by this Section is in force,
accompanied by an endorsement showing the required additional insureds satisfactory
to Landlord in substance and form. Notwithstanding the requirements of this
paragraph, Tenant shall at Landlord’s request provide to Landlord a certified
copy of each insurance policy required to be in force at any time pursuant to
the requirements of this Lease or its Exhibits.

 

11.2                           Landlord’s Insurance. During the Term, Landlord shall maintain in
effect insurance on the Building with responsible insurers, on an “all risk” or
“special form” basis, insuring the Building and the Tenant Improvements (excluding
items Tenant is responsible for insuring under this Lease and Tenant’s personal
property, trade fixtures, Minor Alterations, and also excluding Alterations
that Tenant is required to remove upon Lease termination) in an amount equal to
at least 90% of the replacement cost thereof, excluding land, foundations,
footings and underground installations, and including coverage for loss of
rents. Landlord may also carry commercial general liability insurance with
respect to the Premises and such other insurance coverages required to be
carried pursuant to the Developer’s Agreement for the Premises. No such policy
shall be subject to a deductible or retention in excess of $50,000.00 per
occurrence without Tenant’s prior written consent, which may be withheld in
Tenant’s sole discretion. Landlord may, but shall not be obligated to, carry
insurance against additional perils and/or in greater amounts, as reasonably
determined by Landlord. Notwithstanding the foregoing, any insurance carried or
required to be carried by Landlord relative to the Premises may be maintained
under a blanket policy or policies of insurance covering the Premises and other
properties owned or managed by Landlord or its management agent, provided,
however, if any insurance is carried under a blanket policy or policies of
insurance, then only such portion of the premium (or deductible) that is fairly
allocable to the Premises shall be included in Operating Costs.

 

26

 

11.3                           Mutual Waiver of Right of Recovery &
Waiver of Subrogation.
Landlord and Tenant each hereby waive any right of recovery against each other
and the partners, managers, members, shareholders, officers, directors and
authorized representatives of each other for any loss or damage that is covered
by any policy of property insurance maintained by either party (or required by
this Lease to be maintained) with respect to the Premises or any operation
therein, regardless of cause, including negligence (active or passive) of the
party benefiting from the waiver. If any such policy of insurance relating to
this Lease or to the Premises does not permit the foregoing waiver or if the
coverage under any such policy would be invalidated as a result of such waiver,
the party maintaining such policy shall obtain from the insurer under such
policy a waiver of all right of recovery by way of subrogation against either
party in connection with any claim, loss or damage covered by such policy.

 

12.                                 DAMAGE OR DESTRUCTION.

 

12.1                           Landlord’s Duty to Repair.

 

(a)                                  If all or a substantial part of the Premises
are rendered untenantable or inaccessible by damage to all or any part of the
Premises from fire or other casualty then, unless either party is entitled to
and elects to terminate this Lease pursuant to Sections 12.2 - Mutual Right to Terminate and 12.3  Landlord’s Right to
Terminate and 12.4 — Tenant’s Right to
Terminate,, Landlord shall, at its expense, repair and restore the
Premises, as the case may be, to substantially their former condition to the
extent permitted by then applicable Laws; provided, however, that in no event
shall Landlord have any obligation for repair or restoration beyond the extent
of insurance proceeds received by Landlord for such repair or restoration, or
for any of Tenant’s personal property, Trade Fixtures, Minor Alterations or
Alterations.

 

(b)                                 If Landlord is required or elects to repair
damage to the Premises, this Lease shall continue in effect, but Tenant’s Base
Rent and Additional Rent shall be ratably abated with regard to any portion of
the Premises that Tenant is prevented from using by reason of such damage or
its repair from the date of the casualty until substantial completion of
Landlord’s repair of the affected portion of the Premises as required under
this Lease. In no event shall Landlord be liable to Tenant by reason of any
injury to or interference with Tenant’s business or property arising from fire
or other casualty or by reason of any repairs to any part of the Premises
necessitated by such casualty.

 

12.2                           Mutual Right to Terminate. Either Landlord or Tenant may elect to
terminate this Lease following damage by fire or other casualty if:

 

(a)                                  in the reasonable judgment of Landlord, the
Premises cannot be substantially repaired and restored under applicable Laws
within three hundred sixty-five (365) days after the date of the casualty,
provided, however, that the party electing to terminate shall give written
notice to the other party within thirty (30) days after the date of casualty;
or

 

(b)                                 the fire or other casualty occurs during the
last year of the Term unless prior to such fire or casualty, Tenant has timely
exercised its renewal option for an additional five (5) year term.

 

27

 

If any of the circumstances
described in subparagraphs (a) or (b) of this Section 12.2 occur
or arise, the party electing to terminate shall give written notice to the
other party within thirty (30) days after the date of the casualty, specifying
such party’s election to terminate this Lease as provided above. If neither
party gives such election notice within said thirty (30) day period, then
Landlord shall within thirty (30) days thereafter, notify Tenant in writing of
Landlord’s estimate of the time required to complete Landlord’s repair
obligations under this Lease.

 

12.3                           Landlord’s Right to Terminate.

 

(a)                                  Landlord shall also have the right to
terminate this Lease if, in the reasonable judgment of Landlord, adequate
proceeds are not, for any reason, made available to Landlord from Landlord’s
insurance policies (and/or from Landlord’s funds made available for such
purpose, at Landlord’s sole option) to make the required repairs.

 

(b)                                 If the circumstances described in
subparagraph (a) of this Section 12.3 occur or arise, Landlord shall
give Tenant notice within thirty (30) days after the date of the casualty,
specifying whether Landlord elects to terminate this Lease as provided above
and, if not, Landlord’s estimate of the time required to complete Landlord’s
repair obligations under this Lease.

 

12.4                           Tenant’s Right to Terminate. If Landlord fails to complete all repairs
to the Premises as contemplated in this Article 12 within three hundred
sixty-five (365) days after the occurrence of the event of casualty, subject to
Tenant Delays and Force Majeure (or fails to complete all repairs as
contemplated in this Article 12 within eighteen (18) months after the
occurrence of the event of casualty, subject to Tenant Delays), then Tenant
may, upon thirty (30) days prior written notice, terminate this Lease, provided
that if Landlord completes all such repairs prior to the expiration of the
thirty (30) day period, this Lease shall remain in full force and effect and
the termination notice shall be deemed null and void.

 

13.                                 CONDEMNATION.

 

13.1                           Definitions.

 

(a)                                  “Award” shall
mean all compensation, sums, or anything of value awarded, paid or received on
a total or partial Condemnation.

 

(b)                                 “Condemnation”
shall mean (i) a permanent taking (or a temporary taking for a period
extending beyond the end of the Term) pursuant to the exercise of the power of
condemnation or eminent domain by any public or quasi-public authority, private
corporation or individual having such power (“Condemnor”),
whether by legal proceedings or otherwise, or (ii) a voluntary sale or
transfer by Landlord to any such authority, either under threat of condemnation
or while legal proceedings for condemnation are pending.

 

(c)                                  “Date of Condemnation”
shall mean the earlier of the date that title to the property taken is vested in
the Condemnor or the date the Condemnor has the right to possession of the
property being condemned.

 

28

 

13.2                           Effect on Lease.

 

(a)                                  If the Premises are totally taken by
Condemnation, this Lease shall terminate as of the Date of Condemnation. If a
portion but not all of the Premises is taken by Condemnation, this Lease shall
remain in effect, except as otherwise provided herein to the contrary. If a
portion of the Building is taken by Condemnation and Landlord determines that
it would not be economically prudent to restore the Premises or if there are
not adequate condemnation proceeds made available to Landlord to complete
restoration, then upon written notice to Tenant delivered within sixty (60)
days after Landlord notifies Tenant of the Condemnation, Landlord may terminate
this Lease effective as of the date of Condemnation. Further, if such a significant portion of the Premises is taken by eminent
domain that Tenant’s use and enjoyment of the Premises for the purposes
permitted under this Lease is unreasonably interfered with, or if such a
significant portion of the parking areas is taken so as to materially and
adversely affect Tenant’s ingress and egress to the Premises or the required
level of parking for the Premises, and Landlord is not able to provide
substitutes or replacements for the parking areas taken reasonably acceptable
to Tenant, then upon written notice to the other party
delivered within sixty (60) days after Landlord notifies Tenant of the
Condemnation, either party may terminate this Lease effective as of the Date of
Condemnation.

 

(b)                                 If all or a portion of the Premises is
temporarily taken by a Condemnor for a period not extending beyond the end of
the Term, this Lease shall remain in full force and effect.

 

13.3                           Restoration. If this Lease is not terminated as provided
in Section 13.2 - Effect on Lease,
Landlord, at its expense, shall diligently proceed to repair and restore the
Premises to substantially its former condition (to the extent permitted by then
applicable Laws) and/or repair and restore the Building in an architecturally
complete manner to as near the condition to which the Building was originally
constructed as reasonably possible, reasonable wear and tear excepted. In no event
shall Landlord have any obligation to repair or replace any of Tenant’s
personal property, Trade Fixtures, Minor Alterations, or Alterations.

 

13.4                           Abatement and Reduction of Rent. If any portion of the Premises is taken in
a Condemnation or is rendered permanently untenantable by repairs necessitated
by the Condemnation, and this Lease is not terminated, the Base Rent and
Additional Rent payable under this Lease shall be proportionally reduced as of
the Date of Condemnation based upon the percentage of rentable square feet in
the Premises so taken or rendered permanently untenantable. In addition, if
this Lease remains in effect following a Condemnation and Landlord proceeds to
repair and restore the Premises, the Base Rent and Additional Rent payable under
this Lease shall be abated during the period of such repair or restoration to
the extent such repairs prevent Tenant’s use of the Premises.

 

13.5                           Awards. Any Award made shall be paid to Landlord,
and Tenant hereby assigns to Landlord, and waives all interest in or claim to,
any such Award, including any claim for the value of the unexpired Term;
provided, however, that Tenant shall be entitled to receive, or to prosecute a
separate claim for, an Award for a temporary taking of the Premises or a portion
thereof by a Condemnor where this Lease is not terminated (to the extent such
Award relates to the unexpired Term), or an Award or portion thereof separately
designated for relocation expenses or the interruption of or damage to Tenant’s
business or as compensation for Tenant’s personal property, Trade Fixtures or
Alterations.

 

29

 

13.6                           Failure to Complete Restoration. If Landlord fails to complete the
restoration of the Premises as contemplated in Section 13.3 within three
hundred sixty-five (365) days after the occurrence of any partial Condemnation,
subject to Tenant Delays and Force Majeure, then Tenant may, upon thirty (30)
days prior written notice, terminate this Lease, provided that if Landlord
completes all such repairs prior to the expiration of the thirty (30) day
period, this Lease shall remain in full force and effect and the termination
notice shall be deemed null and void.

 

14.                                 ASSIGNMENT AND SUBLETTING.

 

14.1                           General Except as otherwise permitted herein, Tenant
may not, either voluntarily or by operation of law, assign this Lease or
otherwise transfer, mortgage, pledge, hypothecate or encumber this Lease or any
interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant’s interest under this
Lease (each and all a “Transfer”),
without the consent of Landlord, not to be unreasonably withheld. The issuance, transfer, or sale of stock in Tenant, shall not be
deemed an assignment of this Lease, provided, however, that Tenant shall notify
Landlord in writing of a sale of more than fifty percent (50%) of the voting
stock of Tenant in one transaction. Further, Landlord’s consent shall not be
required for any Transfer to any affiliate of Tenant (for purposes of this Section 14.1
the term “affiliate” means any corporation, partnership or other entity which
is included in the consolidated financial statements of Transoma Medical, Inc.),
or to any entity that has acquired all or substantially all the assets of
Transoma Medical, Inc. or either of its divisions, Implantable Diagnostic
Division or Data Science International, provided, however, that such assignee assumes
Tenant’s obligations under this Lease in writing and provides a copy of such
assignment, sublease or transfer document to Landlord promptly upon full
execution thereof by the parties. Further, Tenant shall also have the right to
assign its interest in this Lease without the necessity of Landlord’s consent
for collateral purposes in connection with any financing undertaken by Tenant
that pertains to the Premises or the operation of Tenant’s business therein.

 

Prior to any proposed Transfer that requires Landlord’s consent, Tenant
shall submit in writing to Landlord (i) the name and legal composition of
the proposed assignee, subtenant, user or other transferee (each a “Proposed Transferee”); (ii) the nature of the business
proposed to be carried on in the Premises; (iii) a current balance sheet,
income statements for the last two years and such other reasonable financial
and other information concerning the Proposed Transferee as Landlord may
request; and (iv) a copy of the proposed assignment and assumption,
sublease or other agreement governing the proposed Transfer. Within fifteen
(15) Business Days after Landlord receives all such information it shall notify
Tenant whether it approves or disapproves such Transfer.

 

14.2                           No Release Of Tenant. No Transfer, whether made with or without
the consent of Landlord (including without limitation, any Transfer to an
affiliate of Transoma Medical, Inc.), shall relieve Tenant of any obligation to be performed by Tenant
under this Lease, whether occurring before or after such consent, assignment,
subletting or other Transfer. Each Transferee shall be jointly and severally
liable with Tenant (and Tenant shall be jointly and severally liable with each
Transferee) for the payment of rent (or, in the case of a sublease, rent in the
amount set forth in the sublease) and for the performance of all other terms
and provisions of this Lease. Each 

 

30

 

assignee shall deliver to
Landlord a written assumption of the Tenant’s obligations under this Lease. The consent by Landlord to any
Transfer shall not relieve Tenant or any such Transferee from the obligation to
obtain Landlord’s express prior written consent to any subsequent Transfer by
Tenant or any Transferee. The acceptance of rent by Landlord from any other
person (whether or not such person is an occupant of the Premises) shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any Transfer.

 

14.3                           Effectiveness of Transfer. Within ten (10) days after the date on
which any Transfer becomes effective, Tenant shall deliver to Landlord a
counterpart of the fully executed Transfer document and Landlord’s commercially
reasonable form of Consent to Assignment or Consent to Sublease, executed by
Tenant and the Transferee in which each of Tenant and the Transferee confirms
its obligations pursuant to this Lease. Failure or refusal of a Transferee to
execute any such instrument shall not release or discharge the Transferee from
liability as provided herein. The voluntary, involuntary or other surrender of
this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall
not work a merger, and any such surrender or cancellation shall, at the option
of Landlord, either terminate all or any existing subleases or operate as an
assignment to Landlord of any or all of such subleases.

 

14.4                           Assignment of Sublease Rents. Tenant hereby absolutely and irrevocably
assigns to Landlord any and all rights to receive rent and other consideration
from any sublease and agrees that Landlord, as assignee or as attorney-in-fact
for Tenant for purposes hereof, or a receiver for Tenant appointed on Landlord’s
application may (but shall not be obligated to) collect such rents and other
consideration and apply the same toward Tenant’s obligations to Landlord under
this Lease; provided, however, that Landlord grants to Tenant at all times
prior to occurrence of any breach or default by Tenant a revocable license to
collect such rents (which license shall automatically and without notice be and
be deemed to have been revoked and terminated immediately upon any Event of
Default).

 

15.                                 DEFAULT AND REMEDIES.

 

15.1                           Events of Tenant Default. The occurrence of any of the following
shall constitute an “Event of Default”
by Tenant:

 

(a)                                  Tenant fails to make any payment of rent when
due, or any amount required to replenish the security deposit as provided in Section 4
above, if payment in full is not received by Landlord within ten (10) days
after written notice that it is due.

 

(b)                                 Tenant abandons the Premises (provided that
Tenant shall not be deemed to have abandoned the Premises if it vacates the
Premises so long as it continues to pay Rent due and otherwise perform its
obligations under this Lease).

 

(c)                                  Tenant fails timely to deliver any
subordination document, estoppel certificate or financial statement requested
by Landlord within the applicable time period specified in Sections 20 - Encumbrances - and 21 - Estoppel Certificates and
Financial Statements - below.

 

(d)                                 Tenant violates the restrictions on Transfer
set forth in Section 14 - Assignment and Subletting.

 

31

 

(e)                                  Tenant ceases doing business as a going
concern; makes a general assignment for the benefit of creditors; is
adjudicated an insolvent, files a petition (or files an answer admitting the
material allegations of a petition) seeking relief under any state or federal
bankruptcy or other statute, law or regulation affecting creditors’ rights; all
or substantially all of Tenant’s assets are subject to judicial seizure or
attachment and are not released within ninety (90) days, or Tenant consents to
or acquiesces in the appointment of a trustee, receiver or liquidator for
Tenant or for all or any substantial part of Tenant’s assets.

 

(f)                                    Tenant fails, within ninety (90) days after
the commencement of any proceedings against Tenant seeking relief under any
state or federal bankruptcy or other statute, law or regulation affecting
creditors’ rights, to have such proceedings dismissed, or Tenant fails, within
ninety (90) days after an appointment, without Tenant’s consent or
acquiescence, of any trustee, receiver or liquidator for Tenant or for all or
any substantial part of Tenant’s assets, to have such appointment vacated.

 

(g)                                 Tenant fails to perform or comply with any
provision of this Lease other than those described in (a) through (f) above,
and does not fully cure such failure within thirty (30) days after notice to
Tenant or, if such failure cannot be cured within such thirty (30)-day period,
Tenant fails within such thirty (30)-day period to commence, and thereafter
diligently proceed with, all actions necessary to cure such failure as soon as
reasonably possible but in all events within ninety (90) days of such notice.

 

15.2                           Landlord’s  Remedies. Upon the occurrence of an
Event of Default by Tenant, Landlord shall have the following remedies, which
shall not be exclusive but shall be cumulative and shall be in addition to any
other remedies now or hereafter allowed by law:

 

(a)                                  Landlord may terminate Tenant’s right to
possession of the Premises at any time by written notice to Tenant. Tenant
expressly acknowledges that in the absence of such written notice from
Landlord, no other act of Landlord, including re-entry into the Premises,
efforts to relet the Premises, reletting of the Premises for Tenant’s account,
storage of Tenant’s personal property and Trade Fixtures, acceptance of keys to
the Premises from Tenant or exercise of any other rights and remedies under
this Section, shall constitute an acceptance of Tenant’s surrender of the
Premises or constitute a termination of this Lease or of Tenant’s right to
possession of the Premises. Upon such termination in writing of Tenant’s right
to possession of the Premises, as herein provided, this Lease shall terminate
and Landlord shall be entitled to recover damages, including, but not limited
to, tenant improvement costs, broker fees and negotiating costs and foreseeable
consequential damages from Tenant as provided in any applicable statutes and
any other applicable existing or future Law providing for recovery of damages
for such breach.

 

(b)                                 Landlord may cure the Event of Default at Tenant’s
expense. If Landlord pays any sum or incurs any expense in curing the Event of
Default, Tenant shall reimburse Landlord upon demand for the amount of such
payment or expense with interest at the Interest Rate from the date the sum is
paid or the expense is incurred until Landlord is reimbursed by Tenant.

 

(c)                                  Landlord may remove all Tenant’s property
from the Premises, and such property may be stored by Landlord in a public
warehouse or elsewhere at the sole cost and for the 

 

32

 

account of Tenant. If
Landlord does not elect to store any or all of Tenant’s property left in the
Premises, Landlord may consider such property to be abandoned by Tenant, and
Landlord may thereupon dispose of such property in any manner deemed
appropriate by Landlord. Any proceeds realized by Landlord on the disposal of
any such property shall be applied first to offset all expenses of storage and
sale, then credited against Tenant’s outstanding obligations to Landlord under
this Lease, and any balance remaining after satisfaction of all obligations of
Tenant under this Lease shall be delivered to Tenant.

 

15.3                           Landlord’s
Default. In the event of any default under this
Lease by Landlord, Landlord shall have thirty (30) days after written notice
thereof to cure such default, unless it shall be of a nature that it cannot
reasonably be cured within said thirty (30) day period, in which event Landlord
shall have a reasonable period of time to cure such default provided that
Landlord commences to cure such default within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion. If Landlord fails to
cure any default within the cure period specified above, Tenant, without
limiting any of its rights or remedies permitted at law or in equity, shall
have the right (but not the obligation) to cure such default and to charge
Landlord for the cost thereof, or if Landlord does not reimburse Tenant
therefor within thirty (30) days after written demand for payment, together
with written evidence substantiating costs incurred by Tenant, then Tenant may offset
any amounts owed by Landlord, plus interest at the Interest Rate, against the
Rent or other amounts due hereunder. Notwithstanding anything herein to the
contrary, Tenant shall not deduct more than fifty percent (50%) of the Base
Rent from any monthly installment of Base Rent if there are sufficient months
remaining in the Term to full recover the amount owed by Landlord (the “Maximum
Offset”).

 

16.                                 LATE CHARGE AND INTEREST.

 

16.1                           Late Charge. If any regularly scheduled installment payment
of rent is not received by Landlord within five (5) days after its due
date, Tenant shall pay to Landlord on demand as a late charge the sum of $250.00.
A late charge shall not be imposed more than once on any particular installment
not paid when due, but imposition of a late charge on any payment not made when
due does not eliminate or supersede late charges imposed on other (prior)
payments not made when due or preclude imposition of a late charge on other
installments or payments not made when due.

 

16.2                           Interest. In addition to the late charges referred to
above, which are intended to defray Landlord’s costs resulting from late
payments, any payment from Tenant to Landlord not paid when due shall at
Landlord’s option bear interest from the date due until paid to Landlord by
Tenant at the rate of twelve percent (12%) per annum or the maximum lawful rate
that Landlord may charge to Tenant under applicable laws, whichever is less (the
“Interest Rate”). Acceptance of any late
charge and/or interest shall not constitute a waiver of Tenant’s default with
respect to the overdue sum or prevent Landlord from exercising any of its other
rights and remedies under this Lease.

 

17.                                 WAIVER. No provisions of this Lease shall be
deemed waived by Landlord unless such waiver is in a writing signed by the
waiving party. The waiver by either party of any breach of any provision of
this Lease shall not be deemed a waiver of such provision or of any subsequent
breach of the same or any other provision of this Lease. No delay or omission
in the exercise of any right or remedy of either party upon any default by the
other party shall impair such right or remedy or be 

 

33

 

construed as a waiver. Landlord’s
acceptance of any payments of rent due under this Lease shall not be deemed a
waiver of any default by Tenant under this Lease (including Tenant’s recurrent
failure to timely pay rent) other than Tenant’s nonpayment of the accepted
sums, and no endorsement or statement on any check or payment or in any letter
or document accompanying any check or payment shall be deemed an accord and
satisfaction. Either party’s consent to or approval of any act by the other party
requiring consent or approval shall not be deemed to waive or render
unnecessary consent to or approval of any subsequent act.

 

18.                                 ENTRY, INSPECTION AND CLOSURE. Upon
reasonable oral or written notice to Tenant (and without notice in
emergencies), Landlord and its authorized representatives may enter the
Premises at all reasonable times to:  (a) determine
whether the Premises are in good condition, (b) determine whether Tenant
is complying with its obligations under this Lease, (c) perform any maintenance
or repair of the Premises that Landlord has the right or obligation to perform,
(d) serve, post or keep posted any notices required or allowed under the
provisions of this Lease, (e)show the Premises to prospective brokers, agents,
buyers, transferees, Mortgagees or tenants (but Landlord may show the space to
prospective tenants only during the last twelve (12) months of the Term or any
renewal thereof), or (f) do any other act or thing necessary for the
safety or preservation of the Premises. Landlord shall conduct its activities
under this Section in a manner that will minimize inconvenience to Tenant
without incurring additional expense to Landlord. Tenant shall have the right
to have a representative be present during any entry by Landlord, except in the
event of an emergency. In no event shall Tenant be entitled to an abatement of
rent on account of any entry by Landlord, and Landlord shall not be liable in
any manner for any inconvenience, loss of business or other damage to Tenant or
other persons arising out of Landlord’s entry on the Premises in accordance
with this Section. No action by Landlord pursuant to this paragraph shall
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of rent or to terminate this Lease or otherwise release Tenant
from any of Tenant’s obligations under this Lease.

 

19.                                 SURRENDER AND HOLDING OVER.

 

19.1                           Surrender. Upon the expiration or termination of this
Lease, Tenant shall surrender the Premises and all Tenant Improvements and Alterations
to Landlord broom-clean and in their original condition, except for reasonable
wear and tear, damage from casualty or condemnation and any changes resulting
from approved Alterations, and Tenant
shall have no obligation to remove Alterations or Minor Alterations to the
Premises except to extent specifically provided in this Lease; provided, however, that prior to the expiration or termination of
this Lease Tenant shall remove from the Premises all Tenant’s telephone and
electronic cabling and security systems installed in the Building by Tenant, personal
property and any Trade Fixtures and all Alterations and Minor Alterations that
Landlord has elected to require Tenant to remove as provided in Section 6.1
- Tenant Improvements & Alterations,
and repair any damage caused by such removal, provided, however, that Tenant
shall not be required to remove any telephone or other cabling installed in the
Building by Tenant if Tenant fulfills the initial 144 month Term of this Lease.
If such removal is not completed before the expiration or termination of the
Term, Landlord shall have the right (but no obligation) to remove the same, and
Tenant shall pay Landlord on demand for all costs of removal and storage
thereof and Tenant shall indemnify Landlord from any other costs or damages
incurred by Landlord by reason of Tenant’s failure to complete timely removal. Landlord
shall also have the right to retain or dispose of all or any portion of such
property if 

 

34

 

Tenant does not pay all such
costs and retrieve the property within ten (10) days after notice from
Landlord (in which event title to all such property described in Landlord’s
notice shall be transferred to and vest in Landlord). Tenant waives all Claims
against Landlord for any damage or loss to Tenant resulting from Landlord’s
removal, storage, retention, or disposition of any such property. Upon
expiration or termination of this Lease or of Tenant’s possession, whichever is
earliest, Tenant shall surrender all keys to the Premises or any other part of
the Building and shall deliver to Landlord all keys for or make known to
Landlord the combination of locks on all safes, cabinets and vaults that may be
located in the Premises. Tenant’s obligations under this Section shall
survive the expiration or termination of this Lease. In no event shall Tenant
be required to remove the Tenant Improvements or any Alterations except as
provided in Section 6.1 above.

 

19.2                           Holding Over. If Tenant (directly or through any
Transferee or other successor-in-interest of Tenant) remains in possession of
the Premises after the expiration or termination of this Lease, Tenant’s
continued possession shall be on the basis of a tenancy at the sufferance of
Landlord. In such event, Tenant shall continue to comply with or perform all
the terms and obligations of Tenant under this Lease, except that the monthly
Base Rent during Tenant’s holding over shall be one and one-half times the Base
Rent payable in the last full month prior to the termination hereof. Tenant
shall indemnify, defend and hold Landlord harmless from and against all Claims
arising or resulting directly or indirectly from Tenant’s failure to timely
surrender the Premises, including (i) any rent payable by or any loss, cost,
or damages claimed by any prospective tenant of the Premises, and (ii) Landlord’s
damages as a result of such prospective tenant rescinding or refusing to enter
into the prospective lease of the Premises by reason of such failure to timely
surrender the Premises. Nothing contained herein shall be construed to give
Tenant any right to hold over or to impair or limit any of Landlord’s rights
and remedies set forth in this Lease if Tenant holds over without the prior
written consent of Landlord, including without limitation, the right to
terminate this Lease at any time during such holdover period, to recover
possession of the Premises from Tenant, or to recover damages from Tenant from
such holding over.

 

20.                                 ENCUMBRANCES.

 

20.1                           Subordination, Non- Disturbance and
Attornment. This
Lease is expressly made subject and subordinate to any mortgage, deed of trust,
ground lease, underlying lease or like encumbrance affecting any part of the Premises
or any interest of Landlord therein which is now existing or hereafter executed
or recorded (“Encumbrance”); provided, however,
that this Lease and all Tenant’s rights thereunder shall survive the
termination of the Encumbrance by lapse of time, foreclosure or otherwise so
long as this Lease is in full force and effect and Tenant is not in default
under this Lease. In order to confirm such subordination, Tenant shall execute
and deliver to Landlord, within fifteen (15)  days after written request therefor by
Landlord and in substantially the form attached hereto as Exhibit D,
or in such other form as may be requested by Landlord or its lender that is
mutually and reasonably acceptable in form to Tenant and such lender, any
additional documents evidencing the subordination of this Lease with respect to
any such Encumbrance and the nondisturbance agreement of the holder of any such
Encumbrance, provided that no such documents shall limit or reduce Tenant’s
rights under this Lease as between Landlord and Tenant. If the interest of
Landlord in the Premises is transferred pursuant to or in lieu of proceedings
for enforcement of any Encumbrance, Tenant shall immediately and automatically
attorn to the new owner, and this Lease shall continue in full force and effect
as a direct lease between the transferee and Tenant on the terms and conditions
set forth in this Lease. Notwithstanding anything 

 

35

 

contained herein to the
contrary, if the holder of any Encumbrance elects to have this Lease be prior
to its lien, Tenant agrees that upon receipt of notice of same from Landlord or
such Encumbrance holder, this Lease will be prior to such lien.

 

20.2                           Mortgagee Protection. Tenant agrees to give any holder of any
Encumbrance covering any part of the Premises (“Mortgagee”),
by certified mail, a copy of any notice of default served upon Landlord,
provided that prior to such notice Tenant has been notified in writing (by way
of notice of assignment of rents and leases, or otherwise) of the address of
such Mortgagee. If Landlord shall have failed to cure such default within the
time permitted by this Lease commencing after the effective date of such notice
of default, then the Mortgagee shall have the same period of time that Landlord
has or had under this Lease within which to cure such default (but in no event
less than thirty (30) days), provided, however, if the Mortgagee requires an
additional period of time within which to obtain the legal right to enter the
Premises to effect cure, then the Mortgagee shall have an additional thirty
(30) days within which to obtain said right to enter the Premises in addition
to the same period of time Landlord has under this Lease to make cure, and this
Lease shall not be terminated so long as such remedies are being diligently
pursued.

 

21.                                 ESTOPPEL CERTIFICATES AND FINANCIAL
STATEMENTS.

 

21.1                           Estoppel Certificates. Within fifteen (15) days after written
request therefor, Tenant shall execute and deliver to Landlord, in substantially
the form attached hereto as Exhibit D, or in such other form  as may be requested by Landlord or its lender
or a prospective purchaser of the Premises that is mutually and reasonably
acceptable in form to Tenant and either Landlord or its lender or prospective
purchaser, as the case may be, a certificate stating that this Lease is in full
force and effect, describing any amendments or modifications hereto,
acknowledging that this Lease is subordinate or prior, as the case may be, to
any Encumbrance and stating any other information Landlord may reasonably
request, including the Term, the monthly Base Rent, the date to which Rent has
been paid, the amount of any security deposit or prepaid rent, whether either
party hereto is in default under the terms of the Lease, whether Landlord has
completed its construction obligations hereunder (if any) and such other
information or certifications that Landlord, a lender or prospective purchaser
may reasonably require. Any person or entity purchasing, acquiring an interest
in or extending financing with respect to the Premises shall be entitled to
rely upon any such certificate.

 

21.2                           Financial Statements. Within thirty (30) days after written
request therefor, but not more than once a year, except in the case of a
financing or refinancing of the Premises or sale of the Premises, Tenant shall
deliver to Landlord a copy of the financial statements (including at least a
year end balance sheet and a statement of profit and loss) of Tenant (and of
each guarantor of Tenant’s obligations under this Lease) for each of the three
most recently completed years, prepared in accordance with generally accepted
accounting principles (and, if such is Tenant’s normal practice, audited by an
independent certified public accountant), all then available subsequent interim
statements, and such other financial information as may reasonably be requested
by Landlord or required by any Mortgagee.

 

22.                                 NOTICES. Any notice, demand, request, consent
or approval that either party desires or is required to give to the other party
under this Lease shall be in writing and shall be served personally, delivered
by messenger or courier service, or sent by U.S. certified mail, return receipt

 

36

 

requested, postage prepaid,
addressed to the other party at the party’s address for notices set forth in
the Basic Lease Information. Any notice required pursuant to any Laws may be
incorporated into, given concurrently with or given separately from any notice
required under this Lease. Notices shall be deemed to have been given and be
effective on the earlier of (a)  receipt (or refusal of delivery or
receipt); or (b) one (1) day after acceptance by the independent
service for delivery, if sent by independent messenger or courier service, or
three (3) days after mailing if sent by mail in accordance with this
Section. Either party may change its address for notices hereunder, effective
fifteen (15) days after notice to the other party complying with this Section. If
Tenant sublets the Premises, notices from Landlord shall be effective on the subtenant
when given to Tenant pursuant to this Section.

 

23.                                 ATTORNEYS’ FEES. In the event of any dispute  between
Landlord and Tenant in any way related to this Lease, and whether involving
contract and/or tort claims, the non-prevailing party shall pay to the
prevailing party all reasonable attorneys’ fees and costs and expenses of any
type,  without restriction by statute, court rule or
otherwise, incurred by the prevailing party in connection with any action or
proceeding (including any appeal and the enforcement of any judgment or award),
whether or not the dispute is litigated or prosecuted to final judgment
(collectively, “Fees”).
The “prevailing party” shall be determined based upon an assessment of which
party’s major arguments or positions taken in the action or proceeding could
fairly be said to have prevailed (whether by compromise, settlement,
abandonment by the other party of its claim or defense, final decision, after
any appeals, or otherwise) over the other party’s major arguments or positions
on major disputed issues. Any Fees incurred in enforcing a judgment shall be
recoverable separately from any other amount included in the judgment and shall
survive and not be merged in the judgment.

 

24.                                 QUIET POSSESSION. Subject to Tenant’s full
and timely performance of all of Tenant’s obligations under this Lease (including
any applicable notice and cure periods) and subject to the terms of this Lease,
including Section 20 - Encumbrances,
Tenant shall have the quiet possession of the Premises throughout the Term as
against any persons or entities lawfully claiming by, through or under
Landlord.

 

25.                                 SECURITY MEASURES. Landlord shall, only at
Tenant’s direction, or Tenant may, at any time, implement security measures for
the Premises, such as the registration or search of all persons entering or
leaving the Building, requiring identification for access to the Building,
evacuation of the Building for cause, suspected cause, or for drill purposes,
the issuance of magnetic pass cards or keys for Building or elevator access and
other actions that Tenant deems necessary or appropriate to prevent any threat
of property loss or damage, bodily injury or business interruption. Tenant
shall cooperate and comply with, and cause Tenant’s Representatives and
Visitors to cooperate and comply with, such security measures. Landlord, its
agents and employees shall have no liability to Tenant or its Representatives
or Visitors for the implementation or exercise of, or the failure to implement
or exercise, any such security measures or for any resulting disturbance of
Tenant’s use or enjoyment of the Premises.

 

26.                                 FORCE MAJEURE. If Landlord is delayed,
interrupted or prevented from performing any of its obligations under this
Lease, including its obligations under the Construction Rider (if any), and
such delay, interruption or prevention is due to (i) fire, (ii) act
of God, (iii) governmental act or failure to act, (iv) labor dispute,
(v) unavailability of materials, (vi) delays
caused by the 

 

37

 

investigation,
remediation and/or management of environmental contamination not included in
the scope of work provided to the City pursuant to the Developer’s Agreement, or (vii) any cause outside the reasonable control of Landlord (collectively,
an event of “Force Majeure”), then the time for performance of the affected
obligations of Landlord shall be extended for a period equivalent to the period
of such delay, interruption or prevention. Notwithstanding the foregoing to the
contrary, the unavailability of materials shall not constitute a Force Majeure
delay if there is a reasonable substitute material available and Landlord does
not use reasonable efforts to obtain it. Further, if there is a reasonable
substitute material available, then a Force Majeure delay for unavailability of
materials shall not extend beyond the time reasonably necessary to determine
what the substitute material is and to obtain the substitute material. Landlord
shall provide Tenant with prompt written notice of an event of Force Majeure.

 

27.                                 LANDLORD’S LIABILITY. The term “Landlord,” as
used in this Lease, shall mean only the owner or owners of the Building at the
time in question. In the event of any conveyance of title to the Building, then
from and after the date of such conveyance, the transferor Landlord shall be
relieved of all liability with respect to Landlord’s obligations to be
performed under this Lease after the date of such conveyance, provided that the
transferee Landlord has assumed all of the same. Notwithstanding any other term
or provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord’s interest in the Building as the same
may from time to time be encumbered, and no personal liability shall at any
time be asserted or enforceable against any other assets of Landlord or against
Landlord’s partners or members or its or their respective partners,
shareholders, members, directors, officers or managers on account of any of
Landlord’s obligations or actions under this Lease.

 

28.                                 CONSENTS AND APPROVALS.

 

28.1                           Determination in Good Faith. Wherever the consent, approval, judgment or
determination of Landlord is required or permitted under this Lease, Landlord
may exercise its good faith business judgment in granting or withholding such
consent or approval or in making such judgment or determination without
reference to any extrinsic standard of reasonableness, unless the specific
provision contained in this Lease providing for such consent, approval,
judgment or determination specifies that Landlord’s consent or approval is not
to be unreasonably withheld, or that such judgment or determination is to be
reasonable, or otherwise specifies the standards under which Landlord may
withhold its consent.

 

28.2                           No Liability Imposed on Landlord. The review and/or approval by Landlord of
any item or matter to be reviewed or approved by Landlord under the terms of
this Lease or any Exhibits or Addenda hereto shall not impose upon Landlord any
liability for the accuracy or sufficiency of any such item or matter or the
quality or suitability of such item for its intended use. Any such review or
approval is for the sole purpose of protecting Landlord’s interest in the Premises,
and no third parties, including Tenant or the Representatives and Visitors of
Tenant or any person or entity claiming by, through or under Tenant, shall have
any rights as a consequence thereof.

 

29.                                 BROKERS. Landlord shall pay the fee or
commission of the broker or brokers identified in the Basic Lease Information
(the “Broker”) in accordance with Landlord’s
separate written agreement with the Broker, if any. Tenant warrants and
represents to Landlord that in the 

 

38

 

negotiating or making of
this Lease neither Tenant nor anyone acting on Tenant’s behalf has dealt with
any broker or finder who might be entitled to a fee or commission for this
Lease other than the Broker. Tenant shall indemnify and hold Landlord harmless
from any claim or claims, including costs, expenses and attorney’s fees
incurred by Landlord asserted by any other broker or finder for a fee or
commission based upon any dealings with or statements made by Tenant or Tenant’s
Representatives.

 

30.                                 ENTIRE AGREEMENT. This Lease, including the
Exhibits and any Addenda attached hereto, and the documents referred to herein,
if any, constitute the entire agreement between Landlord and Tenant with
respect to the leasing of space by Tenant, and supersede all prior or
contemporaneous agreements, understandings, proposals and other representations
by or between Landlord and Tenant, whether written or oral, all of which are
merged herein. Neither Landlord nor Landlord’s agents have made any
representations or warranties with respect to the Premises or this Lease except
as expressly set forth herein, and no rights, easements or licenses shall be
acquired by Tenant by implication or otherwise unless expressly set forth
herein. The submission of this Lease for examination does not constitute an option
for the Premises and this Lease shall become effective as a binding agreement
only upon execution and delivery thereof.

 

31.                                 MISCELLANEOUS. This Lease may not be amended
or modified except by a writing signed by Landlord and Tenant. Subject to Section 14
- Assignment and Subletting and Section 28
- Landlord’s Liability, this Lease shall
be binding on and shall inure to the benefit of the parties and their
respective successors, assigns and legal representatives. The determination
that any provisions hereof may be void, invalid, illegal or unenforceable shall
not impair any other provisions hereof and all such other provisions of this
Lease shall remain in full force and effect. The unenforceability, invalidity
or illegality of any provision of this Lease under particular circumstances
shall not render unenforceable, invalid or illegal other provisions of this
Lease, or the same provisions under other circumstances. This Lease shall be
construed and interpreted in accordance with the laws (excluding conflict of
laws principles) of the State of Minnesota. The provisions of this Lease shall
be construed in accordance with the fair meaning of the language used and shall
not be strictly construed against either party, even if such party drafted the
provision in question. When required by the context of this Lease, the singular
includes the plural. Wherever the term “including” is used in this Lease, it
shall be interpreted as meaning “including, but not limited to” the matter or
matters thereafter enumerated. The captions contained in this Lease are for
purposes of convenience only and are not to be used to interpret or construe
this Lease. If more than one person or entity is identified as Tenant
hereunder, the obligations of each and all of them under this Lease shall be
joint and several. Time is of the essence with respect to this Lease, except as
to the conditions relating to the delivery of possession of the Premises to
Tenant. Neither Landlord nor Tenant shall record this Lease, provided that upon
the request of either party, each party shall promptly execute a recordable
memorandum of this Lease, provided, however, upon termination or cancellation
of this Lease, Tenant shall promptly deliver a written release or cancellation
of the memorandum in form required by Landlord.

 

32.                                 AUTHORITY. If Tenant is a corporation,
partnership, limited liability company or other form of business entity, each
of the persons executing this Lease on behalf of Tenant warrants and represents
that Tenant is a duly organized and validly existing entity, that Tenant has
full right and authority to enter into this Lease and that the persons signing
on behalf of Tenant are authorized to 

 

39

 

do so and have the power to
bind Tenant to this Lease. Tenant shall provide Landlord upon request with
evidence reasonably satisfactory to Landlord confirming the foregoing
representations.

 

33.                                 DUTY TO COOPERATE. Simultaneously with the
execution of this Lease, Landlord and Tenant are executing a certain Option to
Lease (the “Option”). In the event of the exercise of the Option by Tenant,
Landlord (at no expense to Landlord) and Tenant agree to cooperate with respect
to the construction and maintenance of a skyway linking the Premises to the
improvements to be constructed on the property that is the subject of the
Option (the “Option Property”). Further, Landlord or the party actually
constructing said skyway shall have a right of entry to the Premises as
reasonably necessary to complete construction of said skyway. Further, the
Landlord shall be obligated to permit the construction of said skyway, so long
as the party performing construction complies with the following terms and
conditions:

 

(a)                                  Prior to commencement of construction of the
skyway, the party constructing the skyway shall forward to Landlord, for
Landlord’s approval, copies of the proposed plans and specifications of the
proposed work. The plans must be approved by the City of New Brighton. If the
plans have been approved by the City of New Brighton, Landlord may not
disapprove the same unless the design requires (i) unusually extensive
construction management oversight, (ii) an unusually long construction
schedule, (iii) construction methods that would materially alter the
mechanical or structural systems of the Building, or (iv) materially
increase any of Landlord’s obligations under this Lease (other than its
respective share of the cost of future maintenance as provided herein),  or the design is otherwise manifestly
unreasonable.

 

(b)                                 Prior to commencement of construction of the
skyway, the party constructing the skyway shall forward to Landlord names and
addresses of all contractors and subcontractors which will be working in or on
the Premises.

 

(c)                                  The party constructing the skyway shall be
responsible for ensuring that all work complies with the approved plans and
specifications and applicable Laws.

 

(d)                                 The party constructing the skyway shall bear
the entire expense of constructing the skyway and shall indemnify, defend (with
counsel reasonably approved by Landlord), and hold Landlord harmless from and
against any and all claims, causes of action, damages or expenses (including,
without limitation, mechanic’s liens) arising out of, by reason of, or as a
result of said party’s construction and installation of the skyway.

 

(e)                                  In addition to the foregoing, Landlord may
impose conditions upon the right to perform such work as Landlord may deem
reasonably necessary to protect its interest in the Premises, including without
limitation, requiring (a) liability insurance naming Landlord as
additional insured, (b) builder’s risk insurance with limits of coverage
adequate to cover the cost of construction and naming Landlord as additional
insured (which insurance shall be maintained during periods of construction and
shall be primary in the event of a casualty occurring on or about the
Premises), (c) reasonable evidence of ability to pay for the work or
reasonable

 

40

 

                                                evidence that funding is place for such work
(e.g. bank commitment letter), (d) the right to have a representative of
Landlord be present during the construction of the skyway, and (e) the
right to inspect the skyway during the course of construction.

 

Further, the parties agree that
fifty percent (50%) of the cost of maintenance and repair of any such skyway
shall be allocable to the Building and shall be recoverable from Tenant by the
Landlord as part of Operating Costs.

 

34.                                 ACCESS FOR OPTION PROPERTY PARKING AREA. If
the Option is exercised and the Option Property is purchased from and conveyed
by the City of New Brighton to the Option holder, then Landlord hereby agrees
to grant an easement to the fee owner of the Option Property for the benefit of
said fee owner and its tenant(s) of any building constructed upon the Option
Property, for the purpose of reasonable pedestrian and vehicular ingress and
egress over and across the drive aisles of the parking lot constructed upon the
Premises, as such drive aisles may be relocated on reconfigured from time to
time, to and from that portion of the parking area serving the Option Property
depicted on Exhibit C attached hereto.

 

35.                                 TENANT’S RIGHT TO SELF MANAGE. Tenant shall have the right, upon not less than sixty (60) days
prior written notice to Landlord, in addition to and without otherwise limiting
Tenant’s obligations to maintain certain portions of the Premises pursuant to Section 7.2
or other provisions of this Lease (but excluding Landlord’s obligations under
this Lease regarding procurement and maintenance of insurance and payment of
real estate taxes), to self manage the Premises under the following terms and
conditions:

 

(a)                                  Tenant will be obligated to provide all Services to the Premises
described in Section 9 of this Lease and to perform all maintenance,
repair, and replacement obligations that would otherwise be the responsibility
of Landlord under this Lease, excluding those obligations which Landlord is
required to maintain and repair at its sole expense under Section 7.3 of
the Lease. All such Services and maintenance, repair and replacement work shall
be performed at Tenant’s sole expense and in accordance with the terms of the
Declaration and this Lease. Tenant’s obligations shall include, without
limitation, the maintenance, repair and replacement of all improvements located
upon or within the Premises, including without limitation, the interior and
exterior of the Building, site lighting, landscaping and irrigation, trees,
lawn (including regular mowing thereof), building signs, directional signs,
monument signs, curbing, paving, drive-aisles and sidewalks, including without
limitation, parking lot striping, seal-coating, and patching, and snow and ice
removal for all sidewalks, entryways, parking areas and drive aisles located
within the area of the Premises, in a first class, clean, safe, sanitary, and
working condition and in compliance with the Declaration and all applicable
Laws. To the extent requested by Tenant, Landlord will cooperate with Tenant to
provide Tenant with the benefit of all applicable warranties available to
Landlord for items which Tenant is responsible for maintaining and repairing
under this Section 35.

 

(b)                                 Landlord shall have the right to require and review copies of
reports and invoices pertaining to Tenant’s maintenance and repair obligations
under this Section 35, and to take other reasonable actions required to
ensure Tenant’s performance of its obligations hereunder pertaining to self
management.

 

41

 

(c)                                  In the event that Tenant is not performing its self management
obligations as set forth in this Section, and has not cured such non-performance
within ten (10) days of Landlord’s written notice to Tenant (unless such
failure cannot reasonably be cured within ten (10) days, in which case
Tenant shall have so much time to cure such failure as is reasonably necessary
provided Tenant commences cure within the initial ten (10) day period and
thereafter diligently pursues such cure to completion), then Landlord may
perform such maintenance, repair or replacement work, without liability to
Tenant for any loss or damage that may accrue to Tenant’s personal property or
to Tenant’s business by reason thereof, provided that Landlord shall use
reasonable efforts not to disturb or otherwise interfere with Tenant’s
operations in the Premises, and upon completion thereof, Tenant shall pay to
Landlord all costs incurred by Landlord in performing such work, including ten
percent (10%) of such costs for overhead, within thirty (30) days after
Landlord delivers to Tenant an invoice for such costs, and any such invoice not
timely paid by Tenant shall bear interest at the Interest Rate from the date
due until the date paid in full. Without limiting the generality of the foregoing
and in addition any other right or remedy Landlord may have under this Lease,
at law or in equity, if Tenant has defaulted or breached its self management
obligations hereunder three (3) or more times within any twelve (12) month
period, then Landlord shall also have the option to terminate Tenant’s self
management rights after written notice to Tenant, and return the Premises to
Landlord controlled management, in which event Landlord shall again be entitled
recover a management fee from Tenant not to exceed three percent (3%) of gross
rental.

 

(d)                                 So long as Tenant self-manages, Tenant shall not be obligated to
pay any Operating Costs related to any matters which Tenant self-manages,
provided, however, Landlord shall be entitled to recover a management fee from
Tenant equal to one and one-half percent (1.5%) of gross rental.

 

36.                                 LIMITED GUARANTY. In order to induce Tenant to enter into this Lease and as a
condition precedent of Landlord’s obligations under this Lease, Tenant requires
that all of Landlord’s obligations under this Lease pertaining to the initial
construction of the Premises, including without limitation completion of the
obligations under the RAPs (collectively, the “Guaranteed Obligations”) be
secured by a guaranty executed by Limited Guarantor in favor of Tenant. The
Limited Guarantor, by its execution of the Lease, hereby guaranties the
Guaranteed Obligations, but shall not otherwise be responsible for any of
Landlord’s obligations under this Lease except as otherwise provided below.
Limited Guarantor agrees that in the event of any default by Landlord under the
Lease with respect to the Guaranteed Obligations, the Limited Guarantor shall
immediately upon written demand by Tenant, commence and diligently pursue to
completion, the Guaranteed Obligations subject to and in accordance with the
terms of the Lease. In addition, in the event that the Lease is terminated due
to a default by Landlord under the Developer’s Agreement (and provided that
such default is not due to a default by Tenant under this Lease), then Tenant
shall have a claim against Limited Guarantor for all losses suffered by Tenant
as a result of such termination and may pursue as against Limited Guarantor all
rights and remedies available to Tenant in law or in equity. Upon Substantial
Completion of the Guaranteed Obligations by the Landlord in accordance with the
terms of this Lease, the foregoing limited guaranty shall terminate and be of
no further force and effect.

 

37.                                 CANCELLATION UPON RE-VESTING OR REPURCHASE BY CITY. The parties
acknowledge and agree that pursuant to the terms and conditions of the
Developer’s Agreement, 

 

42

 

the City has
certain rights to re-vest title to the Premises in the City or repurchase of the
Premises by the City upon the occurrence of certain circumstances. Therefore,
if the City exercises its right to re-vest title in the Premises to the City
pursuant to the Developer’s Agreement, or if the City repurchases the Premises
pursuant to the Developer’s Agreement for any reason permitted therein, other
than a default by Landlord under the Developer’s Agreement, then the parties
agree that this Lease shall henceforth terminate as of the date title re-vests
in the City and shall be of no further force and effect, and neither party
shall have any further liability or obligation to the other hereunder, except
as otherwise provided herein. However, if the City terminates the Developer’s
Agreement and exercises its right to re-vest title in the Premises to the City
due to a default by Landlord under the Developer’s Agreement (and provided that
such default is not due to a default by Tenant under this Lease), then this
Lease shall automatically be terminated upon the date title re-vests in the
City and shall be of no further force and effect, and neither party shall have
any further liability or obligations to the other hereunder, provided, however,
Tenant shall have a claim against Landlord and Limited Guarantor for all losses
suffered by Tenant as a result of such termination and may pursue as against
Landlord and Limited Guarantor all rights and remedies available to Tenant in
law or in equity. This Section 37 shall be of no further force and effect
upon the recording of that certain Certificate of Completion and Release of
Forfeiture duly executed by the City in the form attached to the Developer’s
Agreement as Exhibit D.

 

38.                                 CONTINGENCY. Notwithstanding anything herein to the
contrary, the Landlord’s and Tenant’s obligations under
this Lease are contingent upon Landlord obtaining, not later than October 31,
2007, (i) all Approvals, and (ii) a conveyance of fee title to
the Premises from the City. If Landlord is not able fulfill or satisfy the
foregoing contingency, then either Landlord or Tenant may elect to terminate
this Lease upon thirty (30) days prior written notice to the other party and
upon expiration of said thirty (30) day period, except as otherwise provided
herein, neither party shall have any further liability or obligation to the
other hereunder. During such thirty (30) day notice period, Landlord shall
continue to attempt to resolve any outstanding contingencies, and Tenant shall
cooperate with Landlord as provided under this Lease in such endeavor, and if
such contingencies shall be resolved during such period, the termination notice
shall be deemed retracted, null and void and this Lease shall continue in full
force and effect.

 

43

 

IN WITNESS
WHEREOF, Landlord and Tenant have entered into this Lease as of the date first
above written.

 

	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  
	
  TRANSOMA MEDICAL, INC.

  	
  NEW BRIGHTON 14TH STREET
  LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Charles T. Coggin

  	
   

  	
  By:

  	
      /s/

  	
   

  
	
   

  	
  Name:

  	
  Charles T. Coggin

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  VP & CFO

  	
   

  	
  Its:

  	
  Manager/Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIMITED GUARANTOR:

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  RYAN COMPANIES US, INC.

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
      /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
      Vice
  President

  	
   

  
									

 

44

 

EXHIBIT A

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF              ,
2007

BETWEEN

NEW BRIGHTON 14TH STREET LLC, AS LANDLORD,

AND

TRANSOMA MEDICAL, INC., AS TENANT (“LEASE”)

 

THE PREMISES

 

[Diagram of building layout.]

 

1

 

EXHIBIT B

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF                ,
200  

BETWEEN

NEW BRIGHTON 14TH STREET LLC, AS LANDLORD,

AND

TRANSOMA MEDICAL, INC., AS TENANT (“LEASE”)

 

CONSTRUCTION RIDER

 

1.                                       BUILDING.

 

1.1                                 Plans. Landlord has prepared, based
upon Tenant’s architect’s proposed preliminary plans, specifications and
drawings,  and Tenant has approved,  the final plans and specifications (collectively,
the “Final Plans”) for the Building
described as follows:

 

(a)                                  Site
plan identified as Sheet C-3 prepared by Ryan Companies US, Inc. and
approved by Tenant on July 30, 2007;

 

(b)                                 Floor
plans identified as Sheet A-201 and A-202 prepared by Ryan Companies US, Inc.
and approved by Tenant on July 30, 2007;

 

(c)                                  Elevations
identified as Sheet A-301 prepared by Ryan Companies US, Inc. and approved
by Tenant on July 30, 2007.

 

(d)                                 Shell
specifications set forth in the Design/Build Scope Document for Shell Building
Transoma Medical dated September 11, 2007 attached hereto as Exhibit B-1.

 

1.2                                 Construction. Landlord shall with
reasonable diligence construct, at Landlord’s sole cost and expense, the
Building substantially as shown on the Final Plans. Landlord’s responsibility
with respect to the construction and completion of the Building shall include
obtaining all required governmental approvals, consents and permits. Landlord
shall utilize contractors and subcontractors performing work at the Premises
for the initial construction of the Building and Tenant Improvements that are
recognized and approved by the Building Trades Council having jurisdiction over
Minneapolis, Minnesota or the Premises.

 

2.                                       TENANT IMPROVEMENTS.

 

2.1                                 Timing. Landlord and Tenant shall
cooperate with each other to the fullest extent necessary to ensure timely
development of final plans and specifications for the tenant 

 

2

 

improvements to
be constructed by Landlord within the Building as described in this Exhibit B
(the “Tenant Improvements”) and the timely
construction and installation of the Tenant Improvements. Tenant has previously
delivered to Landlord preliminary drawings, plans and specifications for the
Tenant Improvements prepared by Tenant’s architect and Landlord and Tenant have
mutually agreed upon the scope of the Tenant Improvements pursuant to a scoping
document and preliminary interior plans for the space developed by the parties
prior to execution of this Lease. Landlord and Tenant acknowledge their
understanding that the time period for the preparation of the final plans by
Landlord’s architect for the Tenant Improvements (“Final Tenant Improvement
Plans”) and completion of construction of the Building is highly compressed,
and that the parties’ continued diligent, good faith efforts to cooperate in
speedily completing and approving the Final Tenant Improvements Plans and any
subsequent changes thereto is essential to meeting the Scheduled Commencement
Date. The parties acknowledge that Tenant’s timely approval of the Final Tenant
Improvement Plans are essential to enable Landlord to deliver the Premises to Tenant
Substantially Complete prior to the applicable deadline set forth in the Lease.
Consequently, Tenant shall deliver its final approval of the Final Tenant
Improvement Plans to Landlord no later than the following dates, time being of
the essence, and any delay in timely delivering its approval to Landlord shall
constitute a Tenant Delay:

 

(a)                                  Tenant shall approve the design development plans for the Final
Tenant Improvement Plans not later than September 26, 2007; and

 

(b)                                 Tenant shall approve the final construction plan documents for the
Final Tenant Improvement Plans not later than November 6, 2007.

 

2.2.                              Intentionally Omitted.

 

2.3                                 Bids.

 

(a)                                  Upon Tenant’s approval of the Final Tenant Improvement Plans,
Landlord shall prepare the bid packages for the Tenant Improvements (“Tenant Improvement Bid Packages”). All aspects of the Tenant
Improvement work will be competitively bid by Landlord’s Contractor as set
forth below unless otherwise consented to by Tenant. Tenant will not
unreasonably withhold, delay or condition its consent to any request of
Landlord to waive bidding on a case by case basis provided Landlord provides a
reasonably supported justification for dispensing with competitive bidding in
order for Landlord’s Contractor to “self-perform” such aspect of work. Any such
self-performed work by Landlord’s Contractor shall be competitive with third
party bids. Based upon the Tenant Improvement Bid Packages, Landlord shall
obtain written bids for each element of the work from not less than three (3) responsible
subcontractors and shall present such bids to Tenant for review. Although
Landlord shall have the right to select the subcontractors invited to bid on
any particular element of the work, Landlord shall also invite any
subcontractors proposed by Tenant so long as such subcontractors (i) are
financially responsible, (ii) are qualified to perform the work, and (iii) agree
to comply with any safety rules reasonably imposed by Landlord. Within
seven (7) working days after Tenant’s receipt of Landlord’s summary of the
written bids and self-performed work (if any), including copies of each bids,
the schedule of values for each bid and any other information 

 

3

 

reasonably
requested by Tenant, for any element of the work, Tenant shall select the
winning bid, it being understood that Tenant may but need not select the lowest
bid for any particular element of the work. Upon such selection, Landlord shall
accept such bids and enter into construction contracts and any related
documents necessary for the performance of the work the subcontractor was
selected to perform (collectively, for all subcontractors, the “Tenant Improvement Construction Documents”). Landlord shall
provide copies of the Tenant Improvement Construction Documents to Tenant for
Tenant’s review and approval, which approval shall not be unreasonably withheld
or delayed.

 

(b)                                 The total estimated cost of the Tenant Improvements as set forth in
the Tenant Improvement Construction Documents (the “Cost Estimate”) shall
reflect bids that are priced by Landlord on an individual item-by-item or
trade-by-trade basis. Landlord and Tenant shall work together in good faith in
an attempt to agree upon a mutually acceptable Cost Estimate as soon as
reasonably possible. No cost may be included in the Cost Estimate or charged to
the Tenant Improvement project unless approved by Tenant.

 

2.4                                 Construction. Upon approval by
Landlord and Tenant of the Tenant Improvement Construction Documents and the
Cost Estimate, Landlord shall proceed with reasonable diligence to cause the
Tenant Improvements to be Substantially Completed on or prior to the Scheduled
Commencement Date. Landlord’s responsibility with respect to the construction
and completion of the Tenant Improvements shall include obtaining all
governmental approvals, consents and permits required for the construction and
installation of the Tenant Improvements and Tenant’s occupancy of the Premises.
Unless otherwise specifically agreed to, Landlord shall provide and pay for all
labor, materials, equipment, tools, construction equipment and machinery,
water, heat and utilities, transportation and other facilities and services
necessary for property execution and completion of the Tenant Improvements. Landlord
shall supervise and direct the construction of the Tenant Improvements using
the Landlord’s best skills and attention and shall be fully responsible for and
have control over construction means, methods, techniques, sequences and
procedures for coordinating all portions of the work under the contract. Landlord
shall provide full time supervision during the construction of the Tenant
Improvements. Landlord shall take all prudent actions (not including overtime
or premium time) to maintain progress of construction. Landlord shall review,
approve and submit to Tenant’s Architect shop drawings, product data, samples
and submittals required by the contract documents and promptness and in
sequence as to cause no delay in the progress of construction. Landlord shall
take reasonable precautions for safety and shall provide reasonable protection
to prevent damage, injury or loss. Landlord shall not change or amend the
Tenant Improvement Construction Documents or the Cost Estimate or any
subcontract without the prior written approval of Tenant, and Tenant shall not
be responsible for any amounts by which the actual costs of completing the
Tenant Improvements exceed the approved bid amounts or the Cost Estimate unless
the change order or other amendment resulting in the cost overrun has received
Tenant’s prior written approval pursuant to Section 2.6 of this Exhibit B.
The Tenant Improvements shall be deemed to be “Substantially
Completed” when they have been completed such that Tenant can occupy
or utilize the Premises for their intended use. Substantial Completion shall
not have occurred unless the following have occurred:  Landlord has delivered the Premises, to
Tenant in broom-clean condition subject only to Punch List items, a temporary certificate
of occupancy or its equivalent permitting occupancy of such portion of the
Premises improved with such Tenant Improvements 

 

4

 

has been
issued by the City or other applicable governmental agency, the Premises are
substantially complete and all essential Building Systems, including but not
limited to, electrical, plumbing, heat, air conditioning systems, and their
distribution into such portions of the Premises, are operational to the extent
reasonably necessary to service the portion of the Premises covered by such
Tenant Improvements. Landlord shall cause its contractor to immediately correct
any construction defect or other “punch list” item, which Tenant brings to the
Landlord’s attention pursuant to Section 7.1 of the Lease. All such work
shall be performed so as to reasonably minimize the interruption to Tenant and
its activities on the Premises. (The definition of Substantially Completed
shall also define the terms “Substantial Completion”
and “Substantially Complete.”)

 

2.5                                 Cost of Tenant Improvements.

 

(a)                                  Landlord shall contribute $39.00 per square foot of Rentable Area in
the Premises toward the cost of construction and installation of the Tenant
Improvements (the “Tenant Improvements
Allowance”). The Tenant Improvements Allowance may be used for all
design, engineering and construction costs, and other fees and expenses
reasonably related thereto, including telecommunications, consulting and
project management fees, governmental fees. The balance, if any, of the cost of
the Tenant Improvements as constructed (“Additional Cost”),
including but not limited to Landlord’s Markups, shall be paid by Tenant in
accordance with this Section 2.5(a). If the cost of the design,
construction and installation of the Tenant Improvements, including any Tenant
approved Changes, exceeds $39.00 per rentable square foot, Landlord may deliver
to Tenant, not more than once each calendar month during the construction
schedule, a written request for payment (“Progress Invoice”)
of Tenant’s prorata share of the Additional Cost to date. Each such Progress
Invoice shall include and be accompanied by (i) the Landlord’s certified
statements setting forth the amount requested and the percentage of completion
of each item of Additional Cost and (ii) copies of conditional and
unconditional lien releases from all subcontractors and vendors as of the
immediately prior Progress Invoice. Each Progress Invoice shall include
retention of ten percent (10%) of the amount until Substantial Completion. Tenant
shall pay the amount due, if any, pursuant to the Progress Invoice to Landlord,
within fifteen (15) days after Tenant’s receipt of the above items. All costs
for Tenant Improvements shall be fully documented to and verified by Tenant. Tenant
shall have the right to review and approve the Progress Invoice. If the actual
cost of the Tenant Improvements as constructed is less than the Tenant
Improvements Allowance (the “Savings”), Landlord
shall apply the Savings to Base Rent installments in regular order of maturity.

 

(b)                                 Landlord shall receive a fee of seven percent (7%) of the cost of
constructing the Tenant Improvements as Landlord’s fee for overhead and profit.

 

2.6                                 Changes. If Tenant requests any
change, addition or alteration in or to any Tenant Improvement Final Plans (a “Change”), Tenant shall cause Tenant’s Architect to prepare
appropriate modifications to the Tenant Improvement Final Plans implementing
the Change. Tenant shall pay the cost for the modification of the Tenant
Improvement Final Plans to accommodate the Change. As soon as practicable after
completion of such modification to the Tenant Improvement Final Plans, Landlord
shall notify Tenant of the estimated cost of the Change and of any delay in
Substantial Completion resulting from the Change. Within three (3) 

 

5

 

working days
after receipt of such cost and delay estimate, including the schedule of
values for each cost item and any other information reasonably requested by
Tenant, Tenant shall notify Landlord in writing whether Tenant desires to
proceed with the Change. If Tenant still desires the Change, Landlord shall
proceed with the Change and Tenant shall be liable for any Additional Cost
resulting from the Change. If Landlord or Tenant fails to give their approvals
herein, construction of the Tenant Improvements shall proceed as provided in
accordance with the original Tenant Improvement Construction Documents.

 

2.7                                 Tenant Delay. Tenant shall be
responsible for, and shall pay to Landlord, any and all costs and expenses
incurred by Landlord in connection with any delay in the commencement or
completion of any Tenant Improvements that delays the Scheduled Commencement
Date or the critical path of construction and any increase in the cost of the
Tenant Improvements caused solely by (i) Tenant’s failure to provide or
approve any Final Tenant Improvement Plans, Tenant Improvement Construction
Documents or cost estimates, or to select any winning bids, within the applicable
time periods required herein, (ii) any delays in obtaining any items or
materials constituting part of the Tenant Improvements requested by Tenant to
the extent arising from Changes, (iii) any Changes, but only to the extent
the delays associated with the Changes do not exceed the estimates provided to
Tenant pursuant to paragraph 2.6 above, (iv) the use of any subcontractor
selected by Tenant but only if Landlord advises Tenant in writing prior to
final selection that such subcontractor would not otherwise have satisfied
Landlord’s qualification criteria, or (v) any other delay requested or
caused by Tenant (collectively, “Tenant Delays”).
Landlord shall promptly notify Tenant of any event that in Landlord’s opinion
constitutes a Tenant Delay.

 

2.8                                 Ownership of Tenant Improvements. All
Tenant Improvements, whether installed by Landlord or Tenant, shall become a
part of the Building, shall be the property of Landlord and, subject to the
provisions of the Lease, shall be surrendered by Tenant with the Premises,
without any compensation to Tenant, at the expiration or termination of the
Lease in accordance with the provisions of the Lease.

 

2.9                                 Correction of Work. If, within one (1) year
after the date of Substantial Completion of the Tenant Improvements or
designated portion thereof, any of the Tenant Improvements is found to be not
in accordance with the requirements of the Final Construction Documents,
Landlord shall correct the nonconformance promptly after receipt of written
notice from Tenant to do so unless Tenant has previously given Landlord a
specific written acceptance with respect to such condition. This period of one (1) year
shall be extended with respect to portions of the Tenant Improvements first
performed after Substantial Completion by the period of time between
Substantial Completion and the actual performance of the work on such Tenant
Improvements. The obligations of Landlord under this Section 2.9 shall
survive acceptance of the Tenant Improvements by Tenant. Tenant shall give such
notice promptly after discovery of the condition.

 

6

 

3.                                       PARTIES’ REPRESENTATIVES.

 

3.1                                 Tenant’s Representative. Tenant
designates Laurie Olson of Relocation Strategies, Inc. to act as Tenant’s
Representative with respect to all approvals, directions and authorizations
pursuant to this Exhibit B Construction Rider.

 

3.2                                 Landlord’s Representative. Landlord
designates Mark Nordland, alone or together, to act as Landlord’s
Representative with respect to all approvals, directions and authorizations
pursuant to this Exhibit B Construction Rider.

 

3.3                                 Change of Representative. Either
Landlord or Tenant may change its representative for the purposes of this Article 3
by giving written notice to the other party hereto in accordance with the terms
of the Lease.

 

7

 

EXHIBIT B-1

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF              ,
200  

BETWEEN

NEW BRIGHTON 14TH STREET LLC, AS LANDLORD,

AND

TRANSOMA MEDICAL, INC., AS TENANT (“LEASE”)

 

SHELL SPECIFICATIONS

 

1

 

DESIGN/BUILD

 

SCOPE DOCUMENT

 

for

 

SHELL BUILDING

TRANSOMA MEDICAL

 

Dated:  September 11,
2007

 

1

 

TABLE OF CONTENTS

 

	
  I.

  	
   

  	
  GENERAL
  REQUIREMENTS

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  INTENT

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  GENERAL
  PROJECT SCOPE

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  WARRANTY

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  BUILDING

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  SITEWORK

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  STRUCTURE

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  EXTERIOR
  ENCLOSURE

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D.

  	
  INTERIOR
  FINISHES

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E.

  	
  SPECIAL
  SYSTEMS

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  F.

  	
  MECHANICAL
  SYSTEMS

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  G.

  	
  ELECTRICAL
  SYSTEMS

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  EXCLUSIONS

  	
  13

  

 

2

 

I.                                         GENERAL REQUIREMENTS

 

A.                                   INTENT

1.                                       This scope document defines the general scope of work for the build
to suit office building at the Northwest Quadrant Development in New Brighton,
Minnesota utilizing the services of Ryan Companies US, Inc.
(Design/Builder).

 

B.                                     GENERAL PROJECT SCOPE

	
  1.

  	
   

  	
  The
  general project scope  is listed as follows:

  	
   

  	
   

  
	
   

  	
   

  	
  a.

  	
   

  	
  Site
  Size

  	
   

  	
  5.92
  acres.

  
	
   

  	
   

  	
  b.

  	
   

  	
  Gross
  Square Feet of Building

  	
   

  	
  120,000
  sf.

  
	
   

  	
   

  	
  c.

  	
   

  	
  Rentable
  Square Feet

  	
   

  	
  approximately
  114,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  rentable
  square feet.

  
	
   

  	
   

  	
  d.

  	
   

  	
  Parking
  Provided:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1)

  	
  Automobile

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a) Provided                 453 (3.78/1000 gsf) stalls

  	
   

  	
   

  

 

2.                                       Regu1atory Requirements:

a.                                       Tenant shall be responsible to secure all permits relating to
Tenant operations.

b.                                      Forty-two (46)
SAC/WAC units are included in building shell.

c.                                       Additional SAC and WAC charges resulting from Tenant Improvements
shall be paid for under the Tenant Improvement Costs.

 

C.                                     WARRANTY

1.                                       Design/Builder shall repair or  replace any
defective or faulty work for a period of one year from the date of substantial
completion or certificate of occupancy, whichever is earlier.

2.                                       10 months after substantial completion, Design/Builder and
Developer will inspect the project and identify any defects which shall be
corrected immediately.

 

II.                                     BUILDING

 

A.                                   SITEWORK

1.                                       Utilities.

a.                                       Electrical Service.

1)                                      The serving electrical utility company will place and connect a
transformer on the proposed site.

2)                                      Service size is  2000 amp at 480/277 volts. Four (4) 4”
conduits are installed to provide an entrance for the primary and
secondary feeders.

b.                                      Gas Service.

1)                                      The serving gas utility company will place and connect a gas meter
on the proposed site.

 

3

 

c.                                       Telephone.

1)                                      The serving telephone utility company will bring telephone service
line to the demarcation location in the building. Fiber optics and cable
television shall be pulled by tenant if required.

d.                                      Sanitary Sewer.

1)                                      Sanitary sewer service will be provided complete including
connection to the sewer main in the street and an on-site sewer main to the
building.

e.                                       Water.

1)                                      Water service will be provided to the building for domestic water
and fire protection systems complete including connection to the water main in
the street and on-site water main to the building. In addition, water mains
and fire hydrants will be provided for fire service as required by the
local Fire Marshall.

f.                                         Storm Sewer.

1)                                      Provisions will be made for the proper drainage of storm water from
roof, parking, drive and landscaped areas. Storm drainage will be piped to the
overall development’s storm system.

 

2.                                       Bituminous and
Concrete Paving.

a.                                       Bituminous Paving.

1)                                      Bituminous paving will be provided complete including curb cuts and
driveways.

2)                                      Paved areas subject to heavy truck traffic will consist of 8” of
aggregate base and 4” of bituminous surface. Paved areas subject to light truck and car traffic
consist of 6” of aggregate base and 3” of bituminous surface. Parking area striping
and traffic markings are provided.

 

b.                                      Concrete Paving.

1)                                      Cast-in-place concrete curb and gutter (B612) will be
provided at the perimeter of all paved parking and drive areas.

2)                                      Sidewalks are constructed with 4000 p.s.i., air
entrained, non-reinforced
concrete. Sidewalks shall be broom finished unless indicated otherwise on the
drawings.

3)                                      Pedestrian ramps are provided at sidewalks.

 

3.                                       Landscaping.

a.                                       Landscaping.

1)                                      An allowance will be included for site landscaping; landscaping
shall be designed and installed in accordance 

 

4

 

                                                with the requirements of the Northwest Quadrant per the City of New
Brighton.

 

4.                                       Site Signage.

a.                                       Monument sign shall be designed and installed per City requirements.

b.                                      A $10,000 allowance will be inc1uded for the design, construction and
installation of the monument sign.

c.                                       Monument sign to be lighted.

d.                                      Traffic Signage.

1)                                      Traffic control signage is  provided and
installed per city requirements.

 

5.                                       Site Exterior Lighting.

a.                                       Site Lighting.

1)                                      Parking and drive areas are lighted with 30 foot high, pole mounted
fixtures mounted on concrete bases, with photocell and time clock control.
Building mounted fixtures are utilized where possible. Foot-candles will meet city
minimum requirements.

 

B.                                     STRUCTURE

1.                                       Concrete.

a.                                       Concrete Foundations.

1)                                      Concrete foundations are spread footings consisting of strip
footings, pads and cast-in-place walls constructed with concrete and
reinforcing steel as required by the final structural design.

 

b.                                      Concrete Slabs.

1)                                      Floors.

(a)                                  Slab
on grade 4” thick 3500
psi, non-reinforced concrete in approximately 28,500
SF.

(b)                                 Slab
on grade 5” thick 3500
psi over approximately 1,500 SF

(c)                                  Slab
on deck will be 4” 3500 psi non-reinforced concrete in approximately 45,000 SF.

(d)                                 Smooth
dowel connections are provided at slab on grade construction joints.

(e)                                  Sawcut
control joints are provided for the control of shrinkage cracking. Filling of
exposed sawcut joints to be Tenant Improvement cost.

(f)                                    Concrete slabs are treated with liquid applied dissipating
curing/sealing compound.

(g)                                 Vapor
barrier will be provided as part of the underslab venting system.

 

5

 

2)                                      Underslab Venting System (to be paid by City of New
Brighton)

(a)                                  A
passive sub-slab venting system will be provided under the SOG. The system will
consist of 4-inch schedule 40 PVC collection piping spaced 50 feet on
center in rounded washed gravel or pea rock filled trenches which are approximately
8 to 10 inches in depth. Areas between the collection piping will have a 4-inch
thick layer of rounded washed gravel or pea rock.

(b)                                 A
vapor barrier will be constructed of either two layers of 15-millimeter (mill)
polyethylene, with 2-inch overlay on sheets and taped) or one layer of
Stegowrap vapor barrier. The vapor barrier will be secured to  the
foundation wall with adhesive and penetrations will be sealed with gas-tight boots.

c.                                       Concrete Walls.

1)                                      Concrete foundation walls will be provided around the building
perimeter. All exposed walls have grout rubbed finish.

2)                                      Perimeter foundation walls and dock walls to have rigid insulation.

3)                                      One dock pit is included. An additional Dock pit will be part of
Tenant Improvement costs.

d.                                      Stair Treads.

1)                                      Metal pan stair treads and landings shall be provided with concrete
fill, troweled smooth and sealed.

2.                                       Masonry.

a.                                       Masonry Details.

1)                                      Sealed control joints are provided at exterior masonry walls for
control of thermal and structural movement.

2)                                      Exterior walls are a combination of integral color rockface and
integral color burnished concrete block.

3.                                       Metals.

a.                                       Structural Steel.

1)                                      The structural framing system for the building consists of steel
columns, beams, bar joists, and metal roof deck.

 

C.                                     EXTERIOR ENCLOSURE

1.                                       Roof.

a.                                       Roof System.

1)                                      Roof system is a single-ply, 45 mil, ballasted EPDM membrane.

2)                                      Roof edge fascia and other visible flashings are pre-finished
metal.

 

6

 

3)                                      The roofing system materials are guaranteed free from defects for a
period of 10 years by the roofing system manufacturer directly to the Owner.

4)                                      Roof areas are insulated with rigid insulation installed over metal
deck to provide a  minimum overall R value of 22.5.

b.                                      Roof Drainage.

1)                                      Internal roof drains and PVC rain leader
discharge to the storm sewer system.

2)                                      Above grade, horizontal portions of the roof drain piping are
insulated.

3)                                      Overflow scuppers are provided at the exterior of the building.

c.                                       Roof Access.

1)                                      A ships ladder and roof hatch is provided for roof access.

2.                                       Exterior Walls.

a.                                       Concrete Block.

1)                                      The building exterior walls are constructed of integrally colored
architectural concrete block (rock face and burnished) with colored mortar.

2)                                      Exterior masonry walls  shall be insulated with 2” of foil-faced
expanded polystyrene insulation.

3)                                      Concrete block walls are constructed with bond beams and
reinforcing as required by the final structural design.

4)                                      Sealed control joints are provided at masonry walls for control of
thermal and structural movement.

5)                                      Flashings and weeps are provided at exterior walls as required for
control of water infiltration.

6)                                      Architectural masonry has a  clear coat sealer.

3.                                       Exterior Insulation Finish System (EIFS).

1)                                      Finish texture to be standard pebble finish.

2)                                      EIFS system shall include concrete unit masonry substrate, expanded
polystyrene insulation, synthetic base coat, reinforcing fabric and finish
color coat.

4.                                       Exterior Window System.

a.                                       Windows are punched, 1”  thick, tinted thermal panes set in anodized
aluminum frames with thermally-broken design with Low-E glass.

b.                                      Metal trim and flashing matches the window system on the exterior
wall.

5.                                       Exterior Doors.

a.                                       Aluminum Doors.

1)                                      Finish matches window framing system.

2)                                      Aluminum thresholds are provided at exterior doors.

3)                                      Panic devices are provided at entrance doors where required by code.

b.                                      Exterior Hollow Metal Doors.

 

7

 

1)                                      Exterior hollow metal doors are 3’-0” x 7’-0”, flush face
panel design.

2)                                      Exterior hollow metal doors shall be insulated and
weather-stripped.

3)                                      Hollow metal door will be painted to match exterior.

c.                                       Overhead Doors.

1)                                      Two exterior insulated sectional doors will be provided.

2)                                      Overhead doors will be manually operated.

3)                                      Overhead doors will be pre-finished.

6.                                       Miscellaneous Metals.

a.                                       Painted steel tread dock stairs.

b.                                      One (1) painted ships ladder is included.

c.                                       Pained 6” bollards are provided at dock stairs.

d.                                      Track protection and bent plate jambs are provided at each OH door.

 

D.                                    INTERIOR FINISHES

1.                                       Carpentry and Millwork.

a.                                       Restroom Vanities.

1)                                      Restroom vanities shall be solid surface with self-rimming
lavatories with splash blocks at sides, rear and front apron.

2.                                       Interior Doors and Frames.

a.                                       Wood Doors.

Wood doors shall be 3’-0” x 8’-0” solid core
prefinished maple. Doors shall be set 1-1/2” hollow metal frames.

b.                                      Hollow Metal Doors.

Hollow
metal doors shall be 3’-0” x 8’-0” flush face panel
design. Doors shall be primed finish.

Doors shall be set  in 1-1/2” hollow
metal frames

c.                                       Hollow Metal Frames.

All
doors and interior glazing shall be set in welded, primed frames.

d.                                      Finish Hardware.

Door
hardware shall be manufactured by Schlage, Yale,
Corbin or equal commercial grade, USD26 finish, with its function appropriate for
its intended use.

Keying
system shall allow doors to be keyed alike within a given area and
tied to a building master.

3.                                       Gypsum Board Partitions.

a.                                       Perimeter walls to be finished taped and sanded and ready for
paint.

b.                                      Restroom to be finished taped and sanded to deck.

c.                                       The mechanical room walls will be full height to underside of
structure with steel studs and 5/8” gypsum board,
both sides.

d.                                      All gypsum board will be taped and sanded where finishes are to be
applied or code required. Floor Coverings.

 

8

 

4.                                       Ceramic Tile - Restrooms

a.                                       Ceramic tile shall be installed by the thin-set method.

b.                                      Floor tile shall be Type 1, 8” x 8” x 1/4”.

c.                                       Wall tile shall be 4” x 4” x 1/4”, and shall be applied
to wet walls up to 6’-0”  above finished floor.

d.                                      Ceramic tile coved base shall be provided at the perimeter of
ceramic tile floors.

5.                                       Toilet Partitions and Accessories.

a.                                       Toilet partitions shall be floor mounted metal partitions with baked
enamel finish complete with baked enamel finish.

b.                                      Urinal screen shall be provided between urinals.

c.                                       The following accessories shall be provided:

Toilet
tissue dispenser: One (1) dual roll dispenser at each toilet
stall.

Paper
towel dispenser: Maximum of two (2) per
restroom.

Soap dispenser: One (1) per
lavatory.

Grab bars: As required by handicapped
code.

Feminine
napkin dispensers: One (1) in each woman’s toilet room. Frameless
mirror above each vanity.

6.                                       Wall Covering Systems.

a.                                       Painted Surfaces.

1)                                      Restroom walls not receiving ceramic tile shall receive paint.

2)                                      Egress stairs to receive paint inside the stairwells.

7.                                       Ceilings

a.                                       Acoustical Ceiling

1)                                      Acoustical ceiling grid will be installed for 2’ x 2’ ceiling tile
system.

2)                                      Acoustical ceiling pad will be provided and stockpiled. Ceiling
tile will be tegular lay-in with minimum NRC of .55 and provide an
STC of 35-39.

8.                                       Fire Extinguishers.

a.                                       Fire extinguishers are provided as required by local fire codes for
a Shell Building.

b.                                      Fire extinguishers are surface mounted.

c.                                       All fire extinguishers required for the Tenant build-out will be
part of Tenant Improvement Allowance.

9.                                       Interior Signage.

a.                                       Code required building signs are provided as required for Shell
building.

b.                                      All other interior and exterior signage shall be part of Tenant
Improvement Allowance.

10.                                 Elevators

a.                                       One (1) 2,500lb pre-engineered hydraulic passenger elevator with
manufacturer standard cab finishes and one (l) 4,000lb pre-

 

9

 

                                                engineered hydraulic passenger/service elevator. Elevators will
have a speed of 125 feet per minute.

 

E.                                      SPECIAL SYSTEMS

1.                                       Loading Dock

a.                                       One (1) manual clock leveler.

b.                                      All dock seals, fans, dock lights and other dock equipment to be
part of Tenant Improvement costs.

 

F.                                      MECHANICAL SYSTEMS

1.                                       Plumbing.

a.                                       Systems.

1)                                      Sanitary Sewer.

(a)                                  6” Sanitary line is
installed. Two (2) flammable waste traps (one at each O/H drive-in door
location) and associated floor drains have been provided.

2)                                      Domestic Water.

(a)                                  Domestic water shall be valved and capped at one location for each
20,000 usable square feet.

3)                                      Storm Water.

(a)                                  Storm
sewer piping is installed and connected to roof drains in accordance with all
applicable codes.

(b)                                 Roof
Drainage: Refer to “Section C - Exterior Enclosure”.

b.                                      Fixtures.

1)                                      22 Water Closets: Wall mounted vitreous china flush valve type
water closets. All water closets will include automatic flush valves.

2)                                      6 Urinals: Wall mounted vitreous china with siphon jet and flush
valve. All urinals will include automatic flush valves.

3)                                      16 Lavatories: Vitreous china countertop mounted self rimming type
in the main bathrooms. and wall hung at other locations. Lavatory trim shall
meet ADA requirements. All lavatories will include automatic flush valves.

4)                                      4 Electric Water Coolers: Shall meet ADA requirements.

5)                                      Service Sinks: Floor mounted molded fiberglass type receptors.

6)                                      Wall Hydrants: Freeze proof wall hydrants will be provided at the
main entrance, each building elevation, and at two locations on the roof for
maintenance.

7)                                      Floor Drains: Provided in bathrooms, mechanical rooms and other areas
required.

8)                                      Water Heaters: Electric water heaters shall supply hot water at 105 degrees.

 

10

 

2.                                       Heating, Ventilating and Air Conditioning (HVAC).

a.                                       Design Criteria:

1)                                      Office Cooling: Outdoor conditions 92°  F. dry bulb, 74°  F. wet
bulb; indoor conditions 74°  F. dry bulb.

2)                                      Office Heating: Outdoor conditions - 19°  F. dry bulb; indoor
conditions 72°  F. dry bulb.

3)                                      Design shall be per ASHRE 1% standard for design conditions.

4)                                      Cooling Loads: Shall include 150 square feet per
person occupant load, 1.5 watts per square foot lighting and 2.0 watts per
square foot miscellaneous power usage.

5)                                      Office Ventilation: Minimum required outside air shall be 0.1 CFM
per square foot; 10 air changes per hour at toilet rooms.

6)                                      Acoustical Considerations:

(a)                                  Design
all areas in accordance with ASHRAE recommendations (office areas generally NC
40 or better, meeting rooms NC 35 or better, utility/unoccupied areas NC 50 or
better).

(b)                                 Noise
analysis and appropriate design solutions (sound attenuators, roof curb
isolation, double wall ductwork, etc.) for roof-mounted equipment, especially breakout
noise from RTU’s above, supply ductwork, return relief ductwork, and all
openings within 50’ of any RTU.

2.                                       Fire Protection System.

a.                                       System Description.

1)                                      A complete wet automatic fire protection system shall be provided
for the facility in accordance with the requirements with NFPA standards, the
local Fire Marshall and applicable codes.

2)                                      Concealed sprinkler heads shall be provided for the office areas
and other finished spaces, initially assumed in an open office configuration.
Brass upright or pendant heads shall be provided in areas without a finished
ceiling.

3)                                      Fire alarm and smoke detection systems: As required by code.

b.                                      HVAC System

1)                                      Office areas shall be heated, cooled and ventilated by variable air
volume (VAV) systems. System will be designed to meet or exceed ASHRE 62-200l. Design
of cooling will be based on one person per 150 usable square feet and two
personal computers per person.

2)                                      Conditioned air supplied to interior zones will pass through
pinchdown VAV boxes without reheat (i.e. shutoff box). One shutoff box per 1,800
usable square feet will be 

 

11

 

                                                stockpiled on floor. VAV boxes at perimeter zones shall be
fan-powered with electric reheat and will be installed every 1,200 usable
square feet along exterior walls.

3)                                      Temperature controls shall be provided by building management
system utilizing direct digital control techniques.

4)                                      Air filtration shall be provided by two sets  of particulate
filters, one pre-filter set of 30% efficient filters and one final set of at
least 65% efficiency for lab area.

c.                                       HVAC System Components

1)                                      Supply air shall be distributed by insulated sheet metal overhead,
ductwork manufactured by SMACNA standards. Insulated flexible ducts shall be
used to connect diffusers to main ductwork.

2)                                      Return air shall be returned to the HVAC equipment via free air
movement through the open ceiling plenum. All areas to utilize free return.

3)                                      An exhaust system shall be provided at each bathroom, which
exhausts air to the outside.

 

G.                                     ELECTRICAL SYSTEMS

1.                                       Power Distribution.

a.                                       Distribution shall be one electrical room for approximately each
19,000 usable square feet.

b.                                      A complete shell electrical system is provided in accordance with applicable
codes from a 2000 amp, 277/480 volt, 3-phase service to panel boards with circuit
breakers and distribution as required to provide power for HVAC equipment,
lighting, and convenience outlets.

c.                                       Electrical rooms will provide two 120/208 volt panel boards with 75
KVA transformer. Each panel board shall have a 225 amp main breaker and
provisions for 42 one pole bolt-on breakers.

d.                                      The electrical system and equipment will have a grounding system
required by code.

2.                                       Lighting.

a.                                       Lighting at interior and exterior areas is in accordance with the
following:

1)                                      Interior lighting: 2’x 4’ 3-lamp parabolic light fixtures will be provided
and stockpiled for tenant layout. Fixtures will be provided at a rate of one
per 80 rentable square feet. Additional fixtures will be priced at $120/each.
Lighting control will be based on Tenant layout and will be part of TI budget.

2)                                      Pole mounted parking lot lighting are provided as required to meet
City/code required footcandle levels. Parking lot lighting is time clock and
photo cell controlled.

 

12

 

3)                                      Exterior Building Mounted Lights: Decorative wall mounted fixtures
and wall packs to comply with city requirements.

4)                                      Exit and Emergency Lighting for Shell Building: As required by code
for shell space.

3.                                       Communication.

a.                                       A 3” empty PVC
conduit from the utility room to exterior for
telephone service entry.

4.                                       All further Electrical work associated with tenant build-out will
be part of Tenant Improvement Allowances.

 

III.                                 EXCLUSIONS

1.                                       The following items are not included in the scope of work proposed
herein:

a.                                       Fire Pump

b.                                      Emergency generator

c.                                       On-site water
storage facilities

d.                                      Water treatment or conditioning

e.                                       Automatic operators for entrance doors

f.                                         Special fire protection systems such as ESFR system, in-rack sprinklers,
pre-action systems, halon or dry sprinkler systems

g.                                      Security systems and fire alarm systems, other than code required
systems for Shell Building

h.                                      Dedicated electrical circuits or other special computer wiring

i.                                          Computer Room HVAC requirements

j.                                          Humidification

k.                                       UPS system

l.                                          Explosion-proof equipment

m.                                    Specialty
ventilation hoods

n.                                      Visual screening of Mechanical equipment and trash enclosures

o.                                      Fiberoptics

p.                                      CCTV

q.                                      Firepump

 

13

 

EXHIBIT C

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF                  ,
200  

BETWEEN

NEW BRIGHTON 14TH STREET LLC, AS LANDLORD,

AND

TRANSOMA MEDICAL, INC., AS TENANT (“LEASE”)

 

OPTION PROPERTY PARKING AREA

 

[Property parking diagram.]

 

1

 

EXHIBIT D

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF                     ,
200  

BETWEEN

NEW BRIGHTON 14TH STREET LLC, AS LANDLORD,

AND

TRANSOMA MEDICAL, INC., AS TENANT (“LEASE”)

 

FORM OF SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT 

AGREEMENT AND ESTOPPEL CERTIFICATE

 

SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT AND ESTOPPEL CERTIFICATE

 

THIS AGREEMENT, made effective as of the          
day of                  ,
2007, by and between                                                
(“Tenant”), whose mailing address is                                                ,
and                                 ,
a                           
(“Lender”), whose mailing address is                                    ,
and/or its participants, successors or assigns.

 

W I T N E S S E T H:

 

WHEREAS, by Lease Agreement dated                                  
(hereinafter referred to as the “Lease”), New Brighton 14th Street,
LLC, a Minnesota limited liability company (“Landlord”), leased and rented to
Tenant the real property located in the City of New Brighton at the street
address of                   ,
a legal description of which is attached as Exhibit A
(the “Property”); and

 

WHEREAS, Landlord has obtained loans from
Lender secured by, among other things, a mortgage, security agreement, fixture
financing statement and assignment of leases and rents encumbering, among other
things, the Property (the “Mortgage”), and as a condition to making such loans,
it was agreed between Landlord and Lender that Landlord would obtain from
Tenant certain written agreements; and

 

WHEREAS, Tenant and Lender desire hereby to
establish certain rights, safeguards, obligations and priorities with respect
to their respective interests by means of the following agreement.

 

NOW THEREFORE, for and in consideration of
the premises and of the mutual covenants and promises herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Tenant and Lender agree as follows:

 

The
Lease and the rights of Tenant thereunder are and shall be subject and
subordinate to the lien of the Mortgage and to all of the terms, conditions and
provisions thereof, to all 

 

1

 

advances
made or to be made thereunder, to the full extent of the principal sum,
interest thereon and other amounts from time to time secured thereby, and to
any renewal, substitution, extension, modification or replacement thereof,
including any increase in the indebtedness secured thereby or any supplements
thereto. In the event that Lender or any other person (the Lender, any other
such person and their successors and assigns being referred to herein as the “Purchaser”)
acquires title to the Property pursuant to the exercise of any remedy provided
for in the Mortgage or by reason of the acceptance of a deed in lieu of
foreclosure, Tenant covenants and agrees to attorn to and recognize and be
bound to Purchaser as its new Landlord, and subject to the other terms,
provisions and conditions of this Agreement, the Lease shall continue in full
force and effect as a direct Lease between Tenant and Purchaser.

 

So
long as the Lease is in full force and effect and Tenant shall not be in
default under any provision of the Lease or this Agreement beyond any
applicable cure period, and no event has occurred which has continued to exist
for a period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease or would cause, without further action
by Landlord, the termination of the Lease or would entitle Landlord to
dispossess the Tenant thereunder:

 

the
right of possession of Tenant to the Property shall not be terminated or
disturbed by any steps or proceedings taken by Lender in the exercise of any of
its rights under the Mortgage; and

 

the
Lease shall not be terminated or affected by said exercise of any remedy
provided for in the Mortgage, and Lender hereby covenants that any sale by it
of the Property pursuant to the exercise of any rights and remedies under the
Mortgage or otherwise, shall be made subject to the Lease and the rights of
Tenant thereunder.

 

In no
event shall Lender or any other Purchaser be:

 

liable
for any act or omission of any prior landlord (other than a default that is
continuing in nature for which Tenant has first notified the Lender and
afforded Lender the same amount of time within which to cure such act or
omission of the prior landlord);

 

liable
for the return of any security deposit which has not been delivered to the
Purchaser;

 

subject
to any offsets or defenses which the Tenant might have against any prior
landlord (except offsets or defenses permitted under this Lease arising from
any default or breach of this Lease by any prior landlord of a continuing
nature for which Tenant has first notified the Lender and afforded Lender the
same amount of time within which to cure such default or breach of the prior
landlord);

 

bound
by any payment of rent or additional rent which the Tenant might have paid to
any prior landlord for more than the current month;

 

2

 

bound
by any provisions of the Lease regarding commencement or completion of
construction of the Property; or

 

bound
by any warranties of construction provided by Landlord under the Lease
(provided that nothing contained in the last two clauses shall be deemed to
preclude any right of Tenant against Ryan Companies U.S., Inc pursuant to Section 36
of the Lease).

 

Tenant
agrees to give prompt written notice to Lender of any default by the Landlord
under the Lease which would entitle Tenant to cancel the Lease or abate the
rent payable thereunder, and agrees that notwithstanding any provision of
Lease, no notice of cancellation thereof shall be effective unless Lender has
received the notice aforesaid and has failed within 30 days of the date of
receipt thereof to cure, or if the default cannot be cured within 30 days, has
failed to commence and to pursue diligently the cure of the Landlord’s default
which gave rise to such right of cancellation or abatement. Tenant further
agrees to give such notices to any successor-in-interest of Lender, provided
that such successor-in-interest shall have given written notice to Tenant of its
acquisition of Lender’s interest in the Mortgage and designated the address to
which such notices are to be sent.

 

Tenant
acknowledges that, under the terms of the Mortgage, Landlord has assigned to
Lender the rentals under the Lease as additional security for said loan, and
Tenant hereby expressly consents to and recognizes such assignment, and agrees
to pay the rent to Lender or its nominee whenever Lender claims or requests the
rent under the terms of said Assignment.

 

Tenant
agrees that it will not, without the prior written consent of Lender, do any of
the following, and any such purported action without such consent shall be void
as against Lender:

 

make a
prepayment in excess of one month of rent thereunder;

 

subordinate
or permit subordination of the Lease to any lien subordinate to the Mortgage;
or

 

make
or enter into any amendment or modification to or termination of the Lease that
reduces the rent or term of the Lease, or in any way materially reduces Tenant’s
obligations under the Lease, or materially increases the Landlord’s obligations
under the Lease.

 

Tenant
agrees to certify in writing to Lender, upon request, whether or not any
default on the part of the Landlord exists under the Lease and the nature of
any such default. Tenant states that as of this date, the Lease is in full
force and effect, without modification. Tenant further states as follows:

 

Tenant
is the tenant under the Lease for the Property. The initial monthly base rent
is anticipated to be $                       
per month.

 

3

 

The
Lease term is anticipated to commence on                                            .
The termination date of the Lease term, excluding renewals and extensions, is
anticipated to be                                     .
Tenant * [does not have the right to extend or renew the Lease.] * [has the
right to extend or renew the Lease for                                      
(           )                                      
(               )
year period(s).]

 

The
Lease has not been assigned, modified, supplemented or amended in any way by
Tenant, except as described on the attached sheet (if any). The Lease
constitutes the entire agreement between the parties and there are no other
agreements concerning the Premises, and Tenant is not entitled to receive any
concession or benefit (rental or otherwise) or other similar compensation in
connection with renting the Premises other than as set forth in the Lease.

 

The
Lease is valid and in full force and effect, and, to the best of Tenant’s
knowledge, no party thereto, their successors or assigns is presently in
default thereunder. To Tenant’s knowledge, Tenant has no defense, set-off or
counterclaim against Landlord arising out of the Lease or in any way relating thereto,
and no event has occurred and no condition exists, which with the giving of
notice or the passage of time, or both, will constitute a default under the
Lease.

 

No
rent or other sum payable under the Lease has been paid more than one month in
advance.

 

The
amount of the security deposit, if any, to secure Tenant’s performance under
the Lease is $                       .

 

Tenant
agrees to deliver to Lender, or any other Purchaser, within thirty (30) days
after request therefor, but not more than once per year, a copy of Tenant’s
most recent annual financial statement.

 

The
foregoing provisions shall be self-operative and effective without the
execution of any further instruments on the part of either party hereto. However,
Tenant agrees to execute and deliver to Lender or to any person to whom Tenant
herein agrees to attorn such other instruments as either shall request in order
to effect said provisions.

 

The
agreements herein contained shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors,
successors-in-interest and assigns, and, without limiting such, the agreements
of Lender shall specifically be binding upon any Purchaser of the Property at
foreclosure or otherwise.

 

This
Agreement may not be modified other than by an agreement in writing signed by
the parties hereto or their respective successors-in-interest.

 

This
Agreement may be signed in counterparts.

 

If any
term or provision of this Agreement shall to any extent be held invalid or
unenforceable, the remaining terms and provisions hereof shall not be affected
thereby, 

 

4

 

but
each term and provision hereof shall be valid and enforceable to the fullest
extent permitted by law.

 

All
notices, statements and other communications to be given under the terms of
this agreement shall be in writing and delivered by hand against written
receipt or sent by certified or registered mail, return receipt requested,
postage prepaid and addressed as provided in the first paragraph of this
Agreement, or at such other address as from time to time designated by the
party receiving the notice.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

5

 

IN WITNESS WHEREOF, Tenant and Lender have
caused this instrument to be executed as of the day and year first above
written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  TRANSOMA
  MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

 

[Notary Block]

 

 

[TENANT SIGNATURE PAGE TO
SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT AND ESTOPPEL CERTIFICATE]

 

6

 

	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
								

 

[Notary Block]

 

 

[LENDER SIGNATURE PAGE TO
SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT AND ESTOPPEL CERTIFICATE]

 

7

 

	
   

  	
  AGREED:

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  NEW
  BRIGHTON 14TH STREET, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

[Notary Block]

 

 

[LANDLORD SIGNATURE PAGE TO
SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT AND ESTOPPEL CERTIFICATE]

 

8Exhibit 10.22

 

OPTION
TO LEASE

 

THIS OPTION TO LEASE (“AGREEMENT”) is made and entered into effective as of October 1,
2007 (“Effective Date”) between New Brighton 14th Street LLC, a Minnesota
limited liability company (“NBLLC”), and Transoma Medical, Inc., a Delaware
corporation (“Transoma”).

 

RECITALS

 

A.                                   WHEREAS, simultaneously as of the Effective Date hereof, NBLLC and
Transoma have entered into or intend to enter into, a written lease agreement
(herein, the “Headquarters Lease”) pursuant to which NBLLC will lease and
demise to Transoma an approximately 115,849 square foot building (herein, the “Headquarters
Building”) to be constructed by NBLLC upon that certain premises located in the
City of New Brighton, State of Minnesota legally described on Exhibit A
attached hereto (the “Headquarters Property”).

 

B.                                     WHEREAS, in order to induce the parties to enter into the
Headquarters Lease, the parties have agreed to enter into this Agreement which
pertains to certain land located across the street from the Headquarters
Property comprised of approximately 6.72 acres of real property depicted as
Parcels B-1, C, D, E and F on Exhibit B attached hereto (the “Expansion
Property”).

 

C.                                     WHEREAS, NBLLC has obtained or will obtain from the City of New
Brighton, Minnesota (the “City”), an option to purchase the Expansion Property,
or certain portions thereof, pursuant to that certain Contract for Private
Redevelopment executed or to be executed between NBLLC and the City (herein, the
“Developer’s Agreement” or “City Option Agreement”).

 

D.                                    WHEREAS, the purpose of this Agreement is to afford Transoma with
the right and option, subject to the terms and conditions hereof, to lease from
NBLLC a building to be constructed by NBLLC upon the Expansion Property, or so
much thereof as NBLLC is able to acquire from the City pursuant to the City
Option Agreement, or to otherwise obtain an assignment of the developer’s
rights under the City Option Agreement and exercise the option thereunder and
acquire the Expansion Property, subject to and upon the terms and conditions
set forth herein.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the mutual promises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, NBLLC and Transoma hereby agree as follows:

 

1.                                       Grant of Option.

 

1.1                                 Grant of Option; Expansion Property; NBLLC’s Contingency. Upon and subject to the terms and conditions hereinafter set
forth, NBLLC hereby grants to Transoma, and Transoma hereby accepts, the exclusive
option (“Option”) during the Term hereof to lease from NBLLC that certain
premises comprised of a 70,000 to 120,000 square foot building (but in no event
less than 70,000 square feet) to be constructed by NBLLC upon the Expansion
Property as more particularly described in Section 4 herein (the “Expansion
Building”), in conformity with, and subject to, the terms and conditions of
this Agreement and the City Option Agreement. “Term”, when used herein, shall
collectively mean and refer to the Initial Term of this Option, and all
Extension Terms as provided for in this Section 1. If the City has not
acquired title to all of the Expansion Property prior to the receipt of the
option exercise notice from NBLLC, or Transoma as the case may be, then the
Expansion Property shall include only Parcel E as described on Exhibit B
attached hereto.

 

Notwithstanding
anything herein to the contrary, the obligations of NBLLC under this Agreement
are contingent upon NBLLC obtaining the City Option Agreement executed by the
City, not later than October 31, 2007. If NBLLC is not able fulfill or
satisfy the foregoing contingency, then NBLLC may elect to terminate this
Agreement upon written notice to Tenant and upon the giving of such notice,
neither party shall have any further liability or obligation to the other
hereunder.

 

Further, the
parties acknowledge and agree that pursuant to the terms and conditions of the
Developer’s Agreement, the City has certain rights to re-vest title to the
Headquarters Property in the City or repurchase the 

 

 

Headquarters
Property by the City upon the occurrence of certain circumstances. Therefore,
if the City exercises its right to re-vest title in the Headquarters Property
to the City pursuant to the Developer’s Agreement, or if the City repurchases
the Headquarters Property pursuant to the Developer’s Agreement for any reason
permitted therein, other than a default by NBLLC under the Developer’s
Agreement, then the parties agree that this Agreement shall henceforth
terminate as of the date title re-vests in the City and shall be of no further
force and effect, and neither party shall have any further liability or
obligation to the other hereunder, except as otherwise provided herein. However,
if the City terminates the Developer’s Agreement and exercises its right to
re-vest title in the Headquarters Property to the City due to a default by
NBLLC under the Developer’s Agreement (and provided that such default is not
due to a default by the Tenant under the Headquarters Lease), then this Agreement
shall automatically be terminated upon the date title re-vests in the City and
shall be of no further force and effect, and neither party shall have any
further liability or obligations to the other hereunder, provided, however,
Transoma shall have a claim against NBLLC for all losses suffered by Transoma
as a result of such termination and may pursue as against NBLLC all rights and
remedies available to Transoma in law or in equity. This third paragraph of
this Section 1.1. shall be of no further force and effect upon the
recording of that certain Certificate of Completion and Release of Forfeiture
duly executed by the City in the form attached to the Developer’s Agreement as Exhibit D

 

1.2                                 Term of Option.  The
initial term (“Initial Term”) of the Option shall commence on the Effective
Date of this Agreement, and shall expire at 5:00 p.m. Central Time on September 29,
2010, unless Transoma elects to extend the Term pursuant to Section 1.4,
below.

 

1.3                                 Consideration for Initial Term. The
consideration for the Initial Term shall be comprised of the mutual promises
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties.

 

1.4                                 Extension(s) of Term. Transoma may,
prior to the end of the Initial Term, elect to extend the Term of this Option
as follows:

 

A)                                  Initially, Transoma may extend the Initial Term for an additional
period of one (1) year to September 29, 2011 (expiring at 5:00 p.m.
Central Time on said date) (“First Extension Term”) by paying to NBLLC one-half
of the extension fee payable under the City Option Agreement (“First Option
Payment”), not to exceed the amount of Fifty Thousand and No/100 Dollars
($50,000.00) in any event, no later than September 1, 2010.

 

B)                                    Thereafter, if the First Option Payment is paid, Transoma may
further extend the Term to September 27, 2012 (expiring at 5:00 p.m.
Central Time on said date or such earlier date required under the second
paragraph of Section 1.6 herein) (“Second Extension Term”) by paying to NBLLC
one-half of the second extension fee payable under the City Option Agreement (“Second
Option Payment”), not to exceed the amount of One Hundred Thousand and No/100
Dollars ($100,000.00) in any event, no later than September 1, 2011.

 

In the event
Transoma does not make any Option Payment on or prior to a payment date as set
forth above, then this Option shall be conclusively deemed to have lapsed, and
shall be of no further force and effect and neither party shall have any
further obligation to the other hereunder. In such event and upon request by NBLLC,
Transoma shall promptly provide suitable written evidence (e.g. Quit Claim
Deed) to NBLLC that Transoma no longer possesses any interest in the Expansion
Property.

 

1.5                                 Option Payments. The Option Payments
shall be applied to the purchase price payable by NBLLC for the Expansion
Property (which is a component of “Total Project Costs” (defined in Section 4.E)
herein)) in the event of a closing on the purchase of the Expansion Property
pursuant to the terms of City Option Agreement. The Option Payments constitute
one half of the option payments required under the City Option Agreement to
extend the term of the option thereunder (i.e. Transoma and NBLLC shall each
bear one half the cost of said option payments, but Transoma’s share of such
payments not to exceed $50,000.00 for the First Option Payment and $100,000.00
for the Second Option Payment). Therefore, so long as the Option Payments
payable by Transoma pursuant to 1.4 above are timely received by NBLLC, NBLLC
shall have five (5) business days after receipt of each such payment from
Transoma to determine whether NBLLC will continue to proceed with this
Agreement and pay the entire amount of the applicable option payment to the
City as required under the City Option Agreement. If NBLLC 

 

2

 

determines
not to proceed, then NBLLC must notify Transoma of such election not to proceed
by written notice delivered to Transoma prior to expiration of said five (5) business
day period, which notice shall include a full refund to Transoma of the
applicable Option Payment made by Transoma to NBLLC (but excluding any Option
Payment previously paid over to the City as an option payment under the City
Option Agreement), and upon receipt of such notice from NBLLC, then (i) this
Agreement shall be deemed terminated without further action or notice between
the parties and neither party shall have any further liability hereunder, and (ii) Transoma
shall have the right to demand delivery from escrow agent of the assignment
described in Section 1.8 below. If NBLLC does not deliver written notice
to Transoma of NBLLC’s election not to proceed within said five (5) business
day period described above, then NBLLC shall be responsible for timely paying
the entire amount of the applicable option payment payable to the City as required
under the City Option Agreement and NBLLC
shall provide Transoma with satisfactory written evidence of payment of such
sums within two (2) business days after making any such payment but no
later than September 20, 2010 (with respect to the First Extension Term)
or September 20, 2011 (with respect to the Second Extension Term),
provided that Transoma shall have previously paid NBLLC Transoma’s share of the
applicable payment in a timely manner. If NBLLC fails to
provide Transoma with evidence of payment of the First Option Payment by September 20,
2010 or of payment of the Second Option Payment by September 20, 2011, as
the case may be, so long as Transoma previously paid NBLLC Transoma’s share of
the applicable payment in a timely manner, Transoma shall have the right to
demand delivery from the escrow agent of the assignment described in 1.8,
below.

 

1.6                                 Exercise of Option; Closing Date. Transoma
may exercise the Option by written notice of its intention to exercise the
Option delivered to NBLLC at any time during the Term of this Agreement,
subject to the limitations set forth in the second paragraph of this Section 1.6
herein. If Transoma timely exercises the Option, the Closing (defined in Section 2
herein) shall occur not later than thirty (30) days after Transoma exercises
the Option (“Closing Date”). The following are conditions precedent of Transoma’s
right to exercise the Option: (i) that Transoma, and/or a Transoma Entity
(defined herein) is the tenant under the Headquarters Lease and is not in
default beyond any applicable cure period with respect to any material term of
the Headquarters Lease, (ii) that the Headquarters Lease is in full force
and effect, (iii) that the Headquarters property is occupied and operated
by Transoma and/or a Transoma Entity, and (iv) that Transoma and/or a
Transoma Entity will be the tenant under the lease for the Expansion Property.

 

So long as
Transoma has timely elected to extend the Term of the Option to September 27,
2012 as provided in Section 1.4 B), then at any time prior to March 31,
2012, Transoma may notify NBLLC of Transoma’s non-binding intention to exercise
the Option (the “Tentative Exercise Notice”). The Tentative Exercise Notice
must be delivered to NBLLC not later than March 31, 2012 or the Option
shall automatically lapse and be of no further force and effect in the same
manner as provided in Section 1.7 herein. Upon timely delivery of the Tentative
Exercise Notice, NBLLC and Transoma shall commence good faith diligent
negotiations, discussions and meetings to establish a scope of work for the
Expansion Building (within limits set by the City and the terms of Section 4
herein) and the estimated Total Project Costs and tentative schedule for
completion of construction of the Expansion Building. At any time during the
Term, subject to the limitations set forth in Section 1.5 above and as
follows, NBLLC may elect not to proceed with the project, by delivering written
notice to Transoma promptly upon such determination, in which event (i) this
Agreement shall be deemed terminated without further action or notice between
the parties and neither party shall have any further liability hereunder, and (ii) Transoma
shall have the right to demand delivery from escrow agent of the assignment
described in Section 1.8 below. NBLLC shall deliver to Transoma an
estimate of anticipated design and engineering costs that NBLLC reasonably
anticipates that it will incur to fulfill its obligations under this paragraph
within thirty (30) days after receipt of the Tentative Exercise Notice.
Further, NBLLC shall give Transoma a proposed scope of work, construction schedule and
estimated Total Project Costs (based on the agreed upon formula set forth in Section 4
herein), prior to the date that is the earlier of (a) July 31, 2012,
or (b) one hundred twenty (120) days after Transoma gives NBLLC the
Tentative Exercise Notice. Transoma shall have until the date that is ten (10) days
after receipt of NBLLC’s notice regarding the scope of work, scheduling, and
Total Project Costs, or July 31, 2012, whichever is later to exercise the
Option by irrevocable written notice to NBLLC. If Transoma fails to exercise
the Option by delivering NBLLC said written notice within the applicable
deadline set forth in the immediately preceding sentence, then the Option and
this Agreement shall automatically lapse in the manner provided in Section 1.7
herein and Transoma shall reimburse NBLLC for its design and engineering costs
incurred in fulfillment of its obligations under this paragraph, provided
however, NBLLC delivered to Transoma the estimate of such design and
engineering costs within thirty (30) days after receipt of the Tentative Exercise
Notice as provided above. If Transoma timely delivers written notice of
Transoma’s 

 

3

 

exercise of
the Option prior to expiration of said ten (10) day period, then NBLLC
shall have until the date that is fifteen (15) days after receipt of said
Option exercise notice, but not later than August 24, 2012, to notify
Transoma whether NBLLC intends to proceed with the project and the transaction
contemplated by this Agreement. If NBLLC does not give said notice to Transoma,
then NBLLC will be presumed to have elected to proceed with the transaction and
the parties shall diligently proceed to Closing in accordance with the terms of
this Agreement, except that notwithstanding anything herein to the contrary,
the Closing shall occur not later than September 10, 2012. Nothing
contained in this Section 1.6 shall be deemed to reduce or otherwise alter
Transoma’s rights under Section 4.H.

 

1.7                                 Expiration of Option. If Transoma
fails to exercise the Option on or before expiration of the Term, or if
Transoma fails to deliver the Tentative Exercise Notice to NBLLC by March 31,
2012, then the Option and this Agreement shall automatically lapse, NBLLC shall
not be obligated to refund to Transoma any portion of any option payments
previously paid to the City  and Transoma
and NBLLC shall have no further liability to each other. In such event and upon
request by NBLLC, Transoma shall promptly provide suitable written evidence
(e.g. Quit Claim Deed) to NBLLC that Transoma no longer possesses any interest
in the Expansion Property.

 

1.8                                 Assignment of City Option.
Notwithstanding anything herein to the contrary, NBLLC, in its sole discretion,
may elect at any time not to proceed with the City Option Agreement or the
transaction contemplated by this Agreement, which election shall be made by
written notice to Transoma, provided, however, the giving of such election
notice by NBLLC shall be subject to the limitations set forth in Section 1.5
above and the second paragraph of Section 1.6 above, and provided, further,
that NBLLC may not make such election later than thirty (30) days prior to the
expiration of the term of the City Option Agreement, so as to afford Transoma
enough time to take an assignment of the City Option Agreement as provided
herein and timely tender performance thereunder. If NBLLC notifies Transoma of
its election not to proceed with the transaction contemplated hereby, or if NBLLC
does not commence construction within six (6) months after execution of
the Expansion Lease (defined in Section 4 herein) and receipt of Transoma’s
written notice to proceed (for any reason other than default by Transoma or
delays caused by Transoma), then NBLLC shall assign the City Option Agreement
to Transoma. Further, because the parties recognize that time is of the essence
with respect to timely performance under the City Option Agreement to preserve
the option rights thereunder, then simultaneously with the execution of this
Agreement, NBLLC agrees to escrow with Old Republic Title Insurance Company (“Title
Company”), pursuant to fully executed written escrow instructions mutually
acceptable to the parties and to the Title Company executed simultaneously with
this Agreement, a written assignment of the City Option Agreement to Transoma.
The assignment shall remain in escrow and may only be released if NBLLC is
required to assign the City Option Agreement to Transoma pursuant to the terms
of this Agreement and Transoma notifies the escrow agent in writing, with copy
delivered to NBLLC, of NBLLC’s obligation to assign the City Option Agreement
to Transoma. If Transoma is entitled to an assignment pursuant to the terms of
this Agreement and notifies the escrow agent to release the assignment, then
upon delivery of such assignment neither party shall have any further
obligation to the other under this Agreement, except in the event of a default
under this Agreement.

 

2.                                       Closing Date. The term “Closing” shall
mean and refer to the act of execution and delivery between the parties of the
Expansion Lease. Closing shall be held at the offices of NBLLC, or at such
other place as NBLLC and Transoma may mutually determine. Subject to the
fulfillment or waiver of the conditions hereof, the Closing shall take place on
the Closing Date set forth in Section 1.6 of this Agreement.

 

3.                                       Covenants of Cooperation. The
following obligations shall apply to the parties upon Closing and execution of
the Expansion Lease:

 

A)                                  NBLLC shall prepare the final plans and specifications for the
Expansion Building and ancillary improvements and shall use its best commercially
reasonable efforts to obtain all necessary permits and approvals for the
construction of the Expansion Building upon the Expansion Property from the
City and other governmental and quasi-governmental authorities having
jurisdiction, including without limitation building permits and permits to
construct a skyway access between the Expansion Building and the Headquarters
Building, and shall negotiate in good faith with Transoma to develop mutually
acceptable plans for the Expansion Building, provided that NBLLC acknowledges
that so long as Transoma’s Expansion Building plans are not inconsistent with
the PUD Agreement for the Headquarters Property and/or the Expansion Property,
the Contract for Redevelopment for the 

 

4

 

                                                Headquarters Property and/or the Expansion Property (including the
terms and conditions therein pertaining to the option for the Expansion
Property), and the City’s and other governmental and quasi-governmental
authorities’ use, building and other applicable laws, codes, ordinances, and restrictions
and are not otherwise commercially unreasonable, and provided that Transoma or a
Transoma Entity confirms its willingness to satisfy its financial obligations
in connection with the buildout and payment of rental obligations with respect
to the proposed Expansion Building, NBLLC shall not withhold consent to
Transoma’s development plans and proposals. Promptly after the Closing occurs, NBLLC
shall use diligent good faith commercially reasonable efforts to obtain the
above-described approvals.

 

B)                                    Transoma shall timely perform its obligations hereunder and under
the Expansion Lease, and shall cooperate in all respects with NBLLC in its
efforts to develop the Expansion Property and obtain all necessary permits and
approvals for the construction of the Expansion Building and a skyway access
between the Expansion Building and the Headquarters Building. Without limiting
the generality of the foregoing, Transoma shall timely and diligently respond
to requests by NBLLC for any information necessary or germane to the approval
process. Further, representatives of Transoma shall attend meetings required by
the City or reasonably requested by NBLLC concerning the approval process or
the design and construction of the Expansion Building and ancillary
improvements. Further, Transoma shall negotiate in good faith and diligently
respond to requests by NBLLC for any input or decisions concerning the design
or construction of the Expansion Building and ancillary improvements. Transoma
acknowledges that so long as Transoma’s Expansion Building plans are
commercially reasonable and are not inconsistent with the City Option
Agreement, the PUD Agreement for the Headquarters Property and/or the Expansion
Property, the Contract for Redevelopment for the Headquarters Property and/or
the Expansion Property, and the City’s and other governmental and
quasi-governmental authorities’ use, building and other applicable laws, codes,
ordinances, and restrictions and the terms of Section 4 of this Option,
and such plans are materially consistent with Transoma’s plans and proposals
approved by NBLLC as described in Section 3.A) above, Transoma shall not
unreasonably withhold consent to the development plans and proposals for the
Expansion Building.

 

4.                                       Terms of Lease for Expansion Building.
If Transoma timely exercises the Option hereunder, the terms of the lease
between NBLLC, as Landlord, and Transoma, as Tenant, for the Expansion Building
(the “Expansion Lease”) shall be on substantially the same form and on
substantially the same terms and conditions as the lease for the Headquarters
Building attached hereto as Exhibit C except the exclusions noted
therein and except as follows:

 

A)                                  Leased Premises: The Expansion
Building shall consist of 70,000 to 120,000 gross square feet (but in no event
less than 70,000 square feet) and shall be a two or three story building, with
surface or structured parking, with minimum project costs per square foot (including
land, building and development costs) of substantially the same value and
quality as the Headquarters Building, subject to approval by the City. Further,
the Expansion Building and ancillary improvements shall be constructed (i) substantially
similar in nature to the Headquarters Building in terms of overall design,
level of finish, exterior materials, landscaping, amenities, floor plan and
scope of tenant improvements, and (ii) under substantially the same terms
and conditions as set forth in the Headquarters Lease. The Expansion Building
shall be designed and located on the Expansion Property in a manner to maximize
the amount of surface parking on the Expansion Property and to minimize the need
for any parking structures on the site. To the extent that the City fails to
acquire or to convey Parcels C, D or F as contemplated in the City Option
Agreement, and it becomes necessary to construct a parking structure to
accommodate the applicable parking ratios for the Expansion Building, then the
parties agree that two (2) additional factors in the determination of rent
payable under the Expansion Lease as determined pursuant to Section 4.C)
(and Section 4.E)) herein, shall be the cost of such parking structure and
the reduction in purchase price paid to the City pursuant to the City Option
Agreement.

 

B)                                    Term. The term of the Expansion Lease
shall expire coterminous with the term of the Headquarters Lease, provided,
however, in no event shall the term of either the Expansion Lease or the
Headquarters Lease be less than ten (10) years (for example, if the then
unexpired term of the Headquarters Lease (excluding renewal options) is less
than 10 years at the time of commencement of the term of the Expansion Lease,
then so long as NBLLC is still the owner of the Headquarters 

 

5

 

                                                Building, the parties shall execute an Amendment to the
Headquarters Lease to extend the term thereof to expire coterminous with the
Expansion Lease)  and if an extension is
so required, the net rental rate to be paid pursuant to the Headquarters Lease
shall continue to increase by two percent (2%) over the prior year net rental
rate beginning on the commencement of the extension term and thereafter upon
each one (1) year anniversary of the extended term thereof.

 

C)                                    Net Rent. The annual net rental rate
for the Expansion Lease shall be determined by the product of (a) the
Total Project Costs for the Expansion Building multiplied by a rent constant of
(b) i) four hundred twenty-five (425) basis points if at the time of
execution of the Expansion Lease (x) Transoma’s market capitalization is
greater than Two Hundred Million Dollars ($200,000,000), (y) Transoma is a
public company, and (z) Transoma’s net worth as shown in its most recent financial
statement is more than Fifty Million Dollars ($50,000,000), or ii) four hundred
eighty-eight (488) basis points over the yield of the ten (10) year
treasury notes at the time the Expansion Lease is executed if any of the above
three criteria in (x), (y) or (z) are not true as of the time of execution of
the Expansion Lease. The net rent shall increase two percent (2%) annually on
the first (1st) through ninth (9th) anniversaries of the
commencement date of the term of the Expansion Lease;

 

D)                                   Commencement Date. The Commencement
Date, shall be the earliest of (a) one hundred fifty (150) days after the
date Transoma is afforded access to the Expansion Building for the construction
of its tenant leasehold improvements if NBLLC does not construct the tenant
leasehold improvements, (b) sixty (60) days after the completion of the
tenant leasehold improvements if NBLLC constructs the tenant improvements, or (c) the
date Transoma commences doing regular business in substantially all of the
Expansion Building. Transoma may or may not hire NBLLC to complete its tenant
improvements in its sole discretion, provided, however, if Transoma wishes NBLLC
to construct the tenant improvements, Transoma must do so no later than the
time the Expansion Lease is signed. Further, during any period of construction
of the Expansion Building by NBLLC (i.e. until NBLLC is completely finished
with its construction work on the Expansion Building), Transoma must use union
contractors recognized and approved by the Building Trades Council having
jurisdiction over Minneapolis, Minnesota to construct any tenant improvements
which Transoma elects to install and to otherwise perform any installation of
tenant trade fixtures, equipment, etc...

 

E)                                     Total Project Costs. The “Total
Project Costs” will be based on the actual costs incurred by NBLLC to develop
and construct the Expansion Building, including without limitation, the parking
lot, landscaping, site lighting, signage, and the skyway access connecting the
Expansion Building to the Headquarters Building, subject to the following:

 

a.               Architectural and engineering design fees shall equal four percent
(4%) of the construction cost.

b.              The construction fee (profit and overhead) shall equal seven
percent (7%) of the construction cost.

c.               Market real estate brokerage fees to Keewaydin shall be included as
applicable under Section 7 of this Agreement.

d.              The development fee shall be $3.50 per rentable square foot
contained in the Expansion Building.

 

All major
contracts shall be competitively bid to no less than three subcontractors who
shall be approved by the Building Trades Council having jurisdiction over
Minneapolis, Minnesota. In the event NBLLC uses any of its own labor, a
proposal must first be submitted with pricing to Transoma prior to NBLLC
submitting the proposal for competitive bid. Transoma shall have the right to
exclude any or all of the subcontractors invited to bid on the work so long as
Transoma and NBLLC can agree on a minimum of three subcontractors in each major
trade area who shall be approved by the Building Trades Council having
jurisdiction over Minneapolis, Minnesota from which to obtain bids, a minimum
of one of which is nominated for inclusion by NBLLC. Transoma shall also
participate with NBLLC in the review of bids and selection of subcontractors to
construct the Tenant Improvements.

 

F)                                     Use. Tenant may use
the Expansion Building for the purposes described in Section 5.1 of the
Headquarters Lease, and may not use or occupy the Expansion Building for any
use in violation of the Developer’s Agreement or any Planned Unit Development
Agreement or other City approvals now or hereafter encumbering the Expansion
Property.

 

6

 

G)                                    Lease Contingencies. NBLLC’s obligations under the Expansion
Lease will be subject to the following conditions precedent:

 

1.                                       NBLLC acquiring fee title to the Expansion Property pursuant to the
City Option Agreement (or such portion thereof as is necessary to construct the
Expansion Building, parking areas and ancillary site improvements pursuant to
final governmentally approved plans for same).

 

2.                                       NBLLC obtaining all necessary permits and approvals for the
construction of the Expansion Building, parking areas and ancillary site
improvements upon the Expansion Property from the City and other governmental
and quasi-governmental authorities having jurisdiction, including without
limitation building permits and permits to construct a skyway access between
the Expansion Building and the Headquarters Building, Minnesota Pollution
Control Agency (“MPCA”) approvals, and approvals from the watershed district
having jurisdiction over the Expansion Property.

 

3.                                       Transoma timely performing its obligations under the Expansion
Lease, subject to applicable cure periods provided therein, and under this
Agreement, including without limitation, Section 3 hereof (the terms of
which shall be included in the Expansion Lease).

 

The Expansion
Lease will further provide that if NBLLC is not able to fulfill or satisfy the
foregoing contingencies, then NBLLC may terminate the Expansion Lease by
written notice to Transoma, and upon receipt of such written notice from NBLLC,
so long as NBLLC was not able to satisfy the foregoing conditions due to a
reason other than Transoma’s default under the Lease or this Agreement beyond
applicable cure period, Transoma shall have the right to demand delivery from
the escrow agent, of the assignment described in 1.8.

 

H)                                   Tenant’s Right to Assignment. If,
notwithstanding both parties compliance with the cooperative efforts described
under Section 1.6 and Section 3 above, the parties are not able to
agree on a mutually acceptable plan for the Expansion Building, or if NBLLC
defaults in its obligations under the City Option Agreement, or NBLLC defaults beyond
any applicable cure period in its obligations under the Expansion Lease or this
Agreement, then Transoma shall have the right to demand delivery from the
escrow agent, of the assignment described in 1.8.

 

5.                                       Obligations At Closing. Upon timely
exercise of the Option, both NBLLC and Transoma shall negotiate diligently and
in good faith with each other to consummate the Expansion Lease. At Closing,
subject to the terms and conditions of this Agreement, NBLLC shall deliver to
Transoma a duly executed copy of the Expansion Lease, and Transoma shall
deliver to NBLLC a duly executed copy of the Expansion Lease.

 

6.                                       Failure of Closing. If, despite good
faith negotiation efforts by the respective parties, the Closing does not occur
because the parties are unable to consummate the Expansion Lease, then this
Option shall automatically lapse and neither party shall have any further
obligation hereunder.

 

7.                                       Brokerage. Subject to the Closing
occurring and fulfillment of the contingencies of NBLLC set forth herein, NBLLC
shall pay a “market rate” brokerage fee to Keewaydin Real Estate Advisors,
payable one half upon lease execution and one half upon the due date of the
first payment of rent by Transoma under the Expansion Lease, provided, however,
no brokerage fee shall be payable to Keewaydin if NBLLC and Keewaydin are
notified by Transoma that another company has been hired to represent Transoma
in the transaction and NBLLC is thereby obligated to pay a fee to such company.

 

8.                                       Remedies.

 

8.1                                 NBLLC Default. If NBLLC defaults in
the performance of this Agreement (and said default was not caused by Transoma’s
default under this Agreement), then unless NBLLC shall cure such default within
thirty (30) days after receipt of written notice of default from Transoma,
provided, however, said thirty (30) day cure period shall not apply to NBLLC’s
default in making a required option payment under the City Option Agreement or
NBLLC’s default in failing to timely exercise the option under the City Option
Agreement when required hereunder, Transoma’s sole and exclusive 

 

7

 

remedy shall
be to either (i) cancel this Agreement by written notice to NBLLC, in
which event neither party shall have any further obligation to the other under
this Agreement, or (ii) cancel this Agreement and obtain an assignment of
the City Option Agreement as provided in 1.8 above and thereafter, neither
party shall have any further obligation to the other under this Agreement.

 

8.2                                 Transoma Default. If Transoma defaults
in the performance of this Agreement prior to exercising the Option hereunder
(for any reason other than nonpayment of any Option Payments or failure to
exercise the Option), NBLLC shall have the right to terminate this Agreement upon
thirty (30) days’ prior written notice to Transoma, unless within such thirty
(30) day period Transoma shall cure such default. In the event of such
termination, neither party shall have any further obligation to the other under
this Agreement, and upon such termination, NBLLC (or the City as the case may
be) may retain all Option Payments previously made by Transoma. Notwithstanding
anything herein to the contrary, failure by Transoma to make any required
Option Payment or to timely exercise the Option in the manner required by this
Agreement shall cause the Option to lapse automatically without further notice
or action required of either party, and in such event, neither party shall have
any further obligation to the other under this Agreement. If Transoma defaults in
the performance of this Agreement after exercising the Option hereunder and
prior to Closing, then NBLLC may terminate this Agreement upon thirty (30) days’
prior written notice to Transoma, unless within such thirty (30) day period
Transoma shall cure such default, and in addition to NBLLC’s right to retain
all Option Payments previously made by Transoma, NBLLC shall have the right to
recover from Transoma (and Transoma shall promptly reimburse NBLLC upon
request) for Total Project Costs and all other reasonable, out-of-pocket costs
incurred prior to such termination to develop the Expansion Property and
construct the Expansion Building and ancillary improvements thereon, including
without limitation, all predevelopment and development costs, engineering fees,
architectural fees, construction fees, brokerage fees, developer’s fees, and
fees and costs incurred by NBLLC prior to such termination in connection NBLLC’s
efforts to obtain permits and approvals for the Expansion Building. Notwithstanding
anything herein to the contrary, if Transoma obtains an improper assignment of
the City Option Agreement or an assignment in violation of the terms of the
City Option Agreement, this Agreement, or the written escrow instructions
between the parties and the Title Company, then such assignment shall
constitute a default by Transoma under the terms of this Agreement and NBLLC
shall be entitled to any and all remedies that may be available under this
Agreement, at law or in equity by reason of such default, including without
limitation, monetary damages and injunctive relief, said remedies being
cumulative.

 

9.                                       Successors and Assigns. Except as
otherwise provided herein, this Agreement shall be binding upon and inure only
to the benefit of each of the parties hereto. Upon written notice given to NBLLC,
Transoma’s interest under this Agreement may be assigned or transferred by
Transoma at any time, without consent of NBLLC, to any Transoma Entity (as
hereafter defined), provided, however, the assignee or transferee assumes the
obligations of Transoma under the Headquarters Lease and this Agreement and
agrees to be bound by the terms of the Headquarters Lease and this Agreement,
all in writing delivered to NBLLC within ten (10) days after the
assignment or transfer is made. For the purposes of this Agreement, an “Transoma
Entity” means any entity that: (a) is either of Transoma’s two divisions
(the Implantable Diagnostic Division or Data Sciences International, or (b) has
acquired substantially all the assets of Transoma or either of said divisions,
provided, that at the time Transoma or a Transoma Entity acquires the Expansion
Property, the Headquarters Property is entirely occupied and operated by
Transoma or a Transoma Entity.

 

10.                                 Calculation of Time Periods. Unless
otherwise specifically provided herein, in computing any period of time
described in this Agreement, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included, unless such last day is a
Saturday, Sunday or legal holiday under the laws of the State of Minnesota, in
which event the period shall run until the end of the next day which is neither
a Saturday, Sunday or legal holiday. The final day of such period shall be
deemed to end at 5:00 p.m., Central Time, except as otherwise provided
herein.

 

11.                                 Attorneys’ Fees. If any dispute arises
between the parties regarding this Agreement or the subject matter thereof, the
prevailing party in any court action, administrative proceeding or alternative
dispute resolution commenced or maintained to resolve such dispute, shall be
entitled to an award of reasonable attorneys’ fees, disbursements and court
costs in addition to any other remedy to which the parties are entitled.

 

12.                                 Notices. All notices and demands given
or required to be given by any party hereto to any other party shall be deemed
to have been properly given if and when hand delivered or deposited with the
U.S. Postal Service and sent by 

 

8

 

certified
mail, return receipt requested, postage prepaid, addressed as follows (or to
such other address as any party has notified the other party pursuant to the
provisions of this Section):

 

	
  TO NBLLC:

  	
   

  	
  TO TRANSOMA:

  
	
   

  	
   

  	
   

  
	
  NEW
  BRIGHTON 14TH STREET LLC

  	
   

  	
  Prior to
  commencement of Headquarters Lease:

  
	
  ATTN: MARK
  NORDLAND

  	
   

  	
  Transoma
  Medical, Inc.

  
	
  50 SOUTH
  TENTH STREET

  	
   

  	
  4211
  Lexington Avenue North

  
	
  SUITE 300

  	
   

  	
  Suite 2244

  
	
  MINNEAPOLIS,
  MN 55403

  	
   

  	
  St. Paul,
  MN 55126

  
	
   

  	
   

  	
  Attn: Vice
  President Manufacturing Operations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  After
  commencement of Headquarters Lease:

  
	
   

  	
   

  	
  [to address
  of Headquarters Building]

  

 

13.                                 Miscellaneous. The waiver by either
party hereto of any condition or the breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of any other condition or
of any subsequent breach of the same or of any other term, covenant or
condition herein contained. No waiver shall be binding upon either party unless
made by written notice to the other party. Time is of the essence of this
Agreement. This Agreement is made and executed under and in all respects to be
governed and construed by the laws of the State of Minnesota and the parties
hereto hereby agree and consent and submit themselves to any court of competent
jurisdiction situated in the State of Minnesota. If for any reason any term or
provision of this Agreement shall be declared void and unenforceable by any
court of law or equity it shall only affect such particular term or provision
of this Agreement and the balance of this Agreement shall remain in full force
and effect and shall be binding upon the parties hereto. This Agreement may be
executed in one or more counterparts each of which when so executed and
delivered shall be an original, but together shall constitute one and the same
instrument. All understandings and agreements heretofore had between the
parties are merged into this Agreement which alone fully and completely
expresses their agreement. This Agreement may be changed only in writing signed
by both of the parties hereto and shall apply to and bind the permitted
successors and assigns of each of the parties hereto.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

 

	
  NEW
  BRIGHTON 14TH STREET LLC

  	
  TRANSOMA
  MEDICAL, INC.

  
	
   

  	
   

  
	
  BY:

  	
    /s/

  	
   

  	
  BY:

  	
    /s/
  Charles T. Coggin

  	
   

  
	
   

  	
   

  
	
  ITS: 

  	
    Manager/Secretary

  	
   

  	
  ITS: 

  	
    VP &
  CFO

  	
   

  
								

 

9

 

E
X H I B I T   A

 

LEGAL
DESCRIPTION OF HEADQUARTERS PROPERTY

 

All of Lot 2, Block 1, that part of Lot 1, Block 1 and
Block 5 lying easterly of the following described line:

 

Commencing at a point in the south line of
said Lot 1 distant 51.00 feet westerly along said south line from the southeast
corner of said Lot 1, thence northerly to a point in the north line of said
Block 5 distant 107.35 feet East along said north line from the northwest
corner of said Block 5 and lying West of the east line of Lot 3, Block 1,
extended northerly to Butcher Street, all in Butchers Allotment No. 1 of
Grounds in Section 21, Township 30 North, Range 23 West, Ramsey County,
Minnesota.

 

AND

 

Lot 3, Block 1, Butchers Allotment No. 1 of
Grounds in Section 21, Township 30 North, Range 23 West, Ramsey County,
Minnesota.

 

AND

 

Lots 4 and 5, Block 1, and that part of Block 5 lying
West of extended east line of Lot 5 and East of extended west line of Lot 4,
except that part of Lots 4 and 5, Block 1 and that part of Block 5 adjoining
said Lot 5 which lies easterly of a line run parallel with and distant 175 feet
westerly of the following described line:

 

Beginning at a point on the south line of
said Section 21, distant 498.99 feet east of the southwest corner thereof;
thence run northeasterly at an angle of 84 degrees 1 minute 15 seconds with
said south section line for 2800 feet and terminating, all in Butchers
Allotment No. 1 of Grounds in Section 21, Township 30 North, Range 23
West, Ramsey County, Minnesota.

 

AND

 

That part of the Southeast Quarter of Section 20,
Township 30, Range 23, Ramsey County, Minnesota which lies Northeasterly of the
Minnesota Transfer Railway Company’s 100 foot wide right-of-way, which lies
southerly of 14th Street North, and which lies east and southeast of the
following described line:

 

Commencing at the Northeast corner of the
Southeast Quarter of said Section 20, thence on an assumed bearing of
South 89 degrees 57 minutes 27 seconds West along the north line of said
Southeast Quarter, a distance of 33.00 feet to the intersection with the
west line of the east 33.00 feet of said Southeast Quarter and to the point of
beginning of the line to be described; thence South 00 degrees 29 minutes 05
seconds East along said west line a distance of 322.91 feet; thence
southwesterly along a tangential curve concave to the northwest, with a radius
of 267.00 feet and a central angle of 45 degrees 09 minutes 12 seconds, a
distance of 210.4 feet more or less, to the northerly right of way line of said
Minnesota Transfer Railway Company and said line there terminating.

 

AND

 

That part of Lot 1, Block 1, and that part of Block 5,
Butchers Allotment No. 1 of Grounds in Section 21, Township 30, Range
23, lying Westerly of the following described line:

 

Commencing at a point on the South line of
said Lot 1, distant 51.00 feet Westerly along said South line from the
Southeast corner of said Lot 1, thence Northerly to a point in the North line
of said Block 5, distant 107.35 feet East along said North line from the
Northwest corner of said Block 5, together with that portion of vacated First
Avenue North (Cleveland Avenue) accruing thereto by the reason of the vacation
thereof, according to the recorded plat thereof, and situated in Ramsey County,
Minnesota.

 

10

 

E
X H I B I T   B

 

DEPICTION
OF EXPANSION PROPERTY

 

[Diagram
of building and surrounding parcels of land.]

 

11

 

EXHIBIT C

 

FORM OF
LEASE AGREEMENT

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]