Document:

Exhibit 10.6

 

 

 

OUTSOURCING AGREEMENT

 

 

dated as of              , 2012

 

 

TWIN CITIES POWER HOLDINGS, LLC

 

 

and

 

 

REDWATER LLC

 

 

 

 

$50,000,000.00

 

 

Renewable Unsecured Subordinated Notes

 

 

TABLE OF CONTENTS

 

	
ARTICLE I  DEFINITIONS
    	
1
    
	
 
    	
 
    
	
Section 1.01 Defined Terms
    	
1
    
	
Section 1.02 Accounting Terms
    	
4
    
	
 
    	
 
    
	
ARTICLE II APPOINTMENT OF THE AGENT AND RELATED   AGREEMENTS
    	
5
    
	
 
    	
 
    
	
Section 2.01 Appointment; Exclusivity
    	
5
    
	
Section 2.02 Scope of Agency
    	
5
    
	
Section 2.03 Compensation to   the Contractor
    	
6
    
	
Section 2.04 Brokers and Dealers
    	
8
    
	
Section 2.05 The Contractor’s   Unrelated Activities
    	
8
    
	
Section 2.06 Best Efforts; Independent   Contractor
    	
8
    
	
Section 2.07 Issuance and Payment
    	
8
    
	
 
    	
 
    
	
ARTICLE III SERVICES; STANDARD OF CARE
    	
8
    
	
 
    	
 
    
	
Section 3.01 Services for   the Notes
    	
8
    
	
Section 3.02 Maintenance of Files   and Records
    	
11
    
	
Section 3.03 Monthly Reports   to the Company
    	
12
    
	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND COVENANTS OF THE   COMPANY
    	
13
    
	
 
    	
 
    
	
Section 4.01 Representations,   Warranties and Agreements of the Company
    	
13
    
	
Section 4.02 Covenants of   the Company
    	
20
    
	
 
    	
 
    
	
ARTICLE V REPRESENTATIONS AND COVENANTS OF THE AGENT;   CONDITIONS
    	
22
    
	
 
    	
 
    
	
Section 5.01 Representations   and Warranties of the Contractor
    	
22
    
	
Section 5.02 Covenants of   the Contractor
    	
24
    
	
 
    	
 
    
	
ARTICLE VI CONDITIONS
    	
25
    
	
 
    	
 
    
	
Section 6.01 Conditions of   the Contractor’s Obligations
    	
25
    
	
Section 6.02 Conditions of   the Company’s Obligations
    	
31
    
	
 
    	
 
    
	
ARTICLE VII INDEMNIFICATION AND CONTRIBUTION
    	
31
    
	
 
    	
 
    
	
Section 7.01 The Company’s Indemnification   of the Contractor
    	
31
    
	
Section 7.02 The Contractor’s   Indemnification of the Company
    	
32
    
	
Section 7.08 Intellectual Property   Infringement
    	
35
    
	
Section 7.09 Confidentiality
    	
35
    
	
 
    	
 
    
	
ARTICLE VIII TERM AND TERMINATION
    	
36
    
	
 
    	
 
    
	
Section 8.01 Effective Date   of this Agreement
    	
36
    
	
Section 8.02 Termination Prior   to Initial Closing Date
    	
36
    
	
Section 8.03 Notice of Termination
    	
37
    
	
Section 8.04 Termination After   Initial Closing Date
    	
37
    
	
Section 8.05 Termination Without   Termination of Offering
    	
38
    
	
 
    	
 
    
	
ARTICLE IX MISCELLANEOUS
    	
38
    

 

 

	
Section 9.01 Survival
    	
38
    
	
Section 9.02 Notices
    	
38
    
	
Section 9.03 Successors and Assigns;   Transfer
    	
39
    
	
Section 9.04 Cumulative Remedies
    	
39
    
	
Section 9.05 Attorneys’ Fees
    	
39
    
	
Section 9.06  Entire Agreement
    	
39
    
	
Section 9.07 Choice of Law;   Venue
    	
39
    
	
Section 9.08 Rights to Investor   Lists
    	
39
    
	
Section 9.09 Waiver; Subsequent   Modification
    	
40
    
	
Section 9.10 Severability
    	
40
    
	
Section 9.11 Joint Preparation
    	
40
    
	
Section 9.12 Captions
    	
40
    
	
Section 9.13 Counterparts
    	
40
    
	
Section 9.14 Third Party Contractors
    	
40
    

 

ii

 

OUTSOURCING AGREEMENT

 

This OUTSOURCING AGREEMENT is entered into as of this     th day of         , 2012 by and between Twin Cities Power Holdings, LLC, a Minnesota limited liability company (the “Company”), and Redwater LLC, a Minnesota limited liability company (the “Contractor”).

 

RECITALS

 

WHEREAS, the Company has registered for public offer and sale an aggregate principal amount of  $50,000,000.00 of renewable, unsecured, subordinated notes of the Company; and

 

WHEREAS, subject to the termination rights set forth herein, the Company desires to retain the Contractor to perform certain ministerial tasks on behalf of the Company, and Contractor desires to accept such duties, all as provided for by the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the above and for other good and valuable consideration, receipt of which is acknowledged, and in consideration of the mutual promises, covenants, representations and warranties hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01  Defined Terms.  Whenever used in this Agreement, the following terms have the respective meanings set forth below.  The definitions of such terms are applicable to the singular as well as to the plural forms of such terms.

 

Accepted Note Practices.  As applicable to the context in which this term is used, those procedures and practices with respect to the servicing and administration of the Notes that satisfy the following: (i) the use of reasonable care; (ii) compliance with all Governmental Rules; (iii) compliance with the provisions of this Agreement and the Indenture; and (iv) give due consideration to the accepted standards of practice of prudent servicing firms that service or administer comparable programs for publicly offered notes or securities and the reliance of the Company on the Contractor for the servicing and administration of the Renewable Note Program.

 

Contractor.  Redwater LLC, a Minnesota limited liability company, or its successors in interest or assigns, if approved by the Company as provided in Sections 5.02(c) and 9.03, below.

 

Agreement.  This Outsourcing Agreement, including any exhibits or attachments hereto, as originally executed, and as amended or supplemented from time to time in accordance with the terms hereof.

 

Business Day.  Any day other than (a) a Saturday or Sunday or (b) another day on which banking institutions in the the State of Minnesota are authorized or obligated by law, executive order, or governmental decree to be closed.

 

 

Commission or SEC.  The Securities and Exchange Commission.

 

Company.  Twin Cities Power Generation, or its successors or assigns, if approved by Contractor as provided in Section 9.03, below.

 

Due Period.  The monthly, quarterly, semi-annual, or annual periods, or the full term of the Note if interest is due at maturity, for which scheduled payments of interest will be paid on any Note.

 

Exchange Act.  The Securities Exchange Act of 1934, as amended, and as hereafter amended, and the rules and regulations thereunder.

 

Governmental Rules.  Any law, rule, regulation, ordinance, order, code, interpretation, judgment, decree, policy, decision or guideline of any governmental agency, court or authority.

 

Holder.  The registered owner of any Note as it appears on the records of the Registrar, including any purchaser or any subsequent transferee or other holder thereof.

 

Incorporated Documents.  All documents that, on or at any time after the effective date of the Registration Statement, are incorporated by reference therein, in the Prospectus, or in any amendment or supplement thereto.

 

Indenture.  That certain Indenture dated on or about              , 2012, by and between the Company and the Trustee with respect to the Notes as the same may be amended or supplemented in accordance with its terms, and including a supplement dated              , 2012.

 

Investor.  Any person who purchases Notes or who contacts the Contractor expressing an interest in purchasing the Notes or requesting information concerning the Notes.

 

Material Agreement.  With respect to a person, any agreement, contract, joint venture, lease, commitment, guaranty or other contractual arrangement or any bond, debenture, indenture, mortgage, deed of trust, loan or security agreement, note, instrument or other evidence of indebtedness, which in the case of any of the foregoing is material to the business, assets, operations, condition or prospects, financial or otherwise, of such person or which is material to the ability of such person to perform its obligations under this Agreement.

 

FINRA.  Financial Industry Regulatory Authority.

 

Note Confirmation.  With respect to the issuance and ownership of the Notes in book-entry form, an appropriate written confirmation of the issuance and ownership or transfer of ownership of a Note to a Holder, the format of which shall comply with the provisions of the Indenture.

 

2

 

Note Portfolio.  The aggregate of individual Notes, as it exists from time to time, which, unless the context otherwise requires or provides, determined by the principal balances of the outstanding Notes.

 

Notes.  The renewable, unsecured, subordinated notes of the Company that are being offered and sold pursuant to the Registration Statement and that have an aggregate principal amount up to $50,000,000 and such other terms as described in the Prospectus, and any additional principal amount of the same or similar notes as may be registered from time to time pursuant to the Registration Statement.

 

Offering.  The offer and sale of the Notes in accordance with the terms and subject to the conditions set forth in the Registration Statement.

 

Paying Agent.             Bank, National Association or its successors or assigns, or such other paying agent with respect to the Notes as may be subsequently appointed by the Company pursuant to the Indenture.

 

Paying Agent Agreement.  That certain agreement by and between the Company and the Paying Agent relating to the Company’s engagement of the Paying Agent to act as the paying agent for the Notes.

 

Paying Agent Fees.  All fees and expenses payable to the Paying Agent in accordance with the Paying Agent Agreement.

 

Proprietary Rights.  All rights worldwide in and to copyrights, rights to register copyrights, trade secrets, inventions, patents, patent rights, trademarks, trademark rights, confidential and proprietary information protected under contract or otherwise under law, and other similar rights or interests in intellectual or industrial property.

 

Prospectus.  The prospectus included in the Registration Statement at the time it was declared effective by the Commission, as supplemented by all prospectus supplements (including interest rate supplements) related to the Notes that are filed with the Commission pursuant to Rules 424(b) or (c) under the Securities Act.  References to the Prospectus shall be deemed to refer to and include the Incorporated Documents to the extent incorporated by reference therein.

 

Redemption Payment.  The payment of principal plus any accrued and unpaid interest that is being made at the discretion of the Company in accordance with the Indenture.

 

Registration Statement.  That certain Registration Statement on Form S-1 (File No.       -            ) of the Company with respect to the Notes filed with the Securities and Exchange Commission under the Securities Act on or about              , 2012, as amended and declared effective by the Commission, including the respective copies thereof filed with the Commission.  References to the

 

3

 

Registration Statement shall be deemed to refer to and include the Incorporated Documents to the extent incorporated by reference therein.

 

Renewable Note Program.  The marketing, administration, customer service and investor relations, registration of ownership, reporting, payment, repurchase, redemption, renewal and related activities associated with the Notes.

 

Repurchase Payment.  The payment of principal plus any accrued and unpaid interest, less any penalties upon the repurchase of any Note, that is being made at the request of the Holder in accordance with the Indenture.

 

Scheduled Payment.  For any Due Period and any Note, the amount of interest and/or principal indicated in such Note as required to be paid by the Company under such Note for the Due Period and giving effect to any rescheduling or reduction of payments in any insolvency or similar proceeding and any portion thereof.

 

Securities Act.  The Securities Act of 1933, as amended, and as hereafter amended, and the rules and regulations thereunder.

 

Subscription Agreement.  A subscription agreement entered into by a Person under which such Person has committed to purchase certain Notes as identified thereby, in such form and substance as mutually agreed by the parties and as filed as an exhibit to the Registration Statement.

 

Trust Account.  The trust account established by the Trustee pursuant to the Indenture.

 

Trust Indenture Act.  The Trust Indenture Act of 1939, as amended, and as hereafter amended, and the rules and regulations thereunder.

 

Trustee.             Bank, National Association, or its successors or assigns, or any replacement Trustee under the terms of the Indenture.

 

Trustee’s Fees.  All fees and expenses payable to the Trustee in accordance with the Indenture.

 

Section 1.02  Accounting Terms.  Unless otherwise specified in this Agreement, all accounting terms used in this Agreement shall be interpreted, all accounting determinations under this Agreement shall be made, and all financial statements required to be delivered by any person pursuant to this Agreement shall be prepared, in accordance with U.S. generally accepted accounting principles, as in effect from time to time and as applied on a consistent basis.  To the extent such principles do not apply to certain reports or accounting practices of the Contractor, the parties will mutually agree on the accounting practices and assumptions.

 

4

 

ARTICLE II
  RETENTION OF THE CONTRACTOR AND RELATED AGREEMENTS

 

Section 2.01  Retention.   On the basis of the representations, warranties and agreements herein contained, and subject to the terms, conditions and covenants set forth herein during the term of this Agreement, the Company retains the Contractor to perform  the tasks specified herein on behalf of the Company related to servicing of the Notes, in each case, under the Renewable Note Program upon the terms and conditions set forth herein, including, without limitation, compliance and conformity with Accepted Note Practices and Governmental Rules, and the Contractor agrees to use its best efforts perform such tasks until the later of the termination of the Offering or the sale of all of the Notes, or until the termination of this Agreement, if earlier.  In connection with the servicing of the Renewable Note Program, the Contractor will carry out the duties provided for herein.

 

Section 2.02  Scope of Duties.  In the performance of its duties hereunder, the Contractor shall have only such power and authority to take action for purposes of servicing the Notes, under the Renewable Note Program that the Company, in its discretion, deems necessary or appropriate, subject in all respects to compliance and conformity with Accepted Note Practices and Governmental Rules.  Initial instructions of the Company to the Contractor are set forth in Exhibit B to this Agreement, which Company may, in its discretion, amend and supplement from time to time. In the performance of its duties hereunder, the Contractor shall (i) act as the agent of the Company in connection with the Renewable Note Program; (ii) promptly forward to the Company all Subscription Agreements, notices or other documents received by it in connection with the Renewable Note Program for the sole and exclusive use and benefit of the Company; and (iii) make dispositions of the items in clause (ii) only in accordance with this Agreement or at the written direction of the Company.  Except as set forth in this Agreement with respect to the Renewable Note Program, the Contractor shall have no authority, express or implied, to act in any manner or by any means for or on behalf of the Company.

 

Section 2.03  Compensation to the Contractor.

 

(a)                     The Contractor’s Fees.  In consideration of the agreement of the Contractor to provide its services as set forth in this Agreement, the Company will pay the Contractor the following amounts:

 

(i)                                     a monthly service fee of $7.50 per note based on the maximum number of notes outstanding during the month, subject to a monthly minimum of $2,500;

 

(ii)                                  a fee for media services further described in Exhibit A equal to the 15% gross/net differential or the fee equivalent thereof;

 

(iii)                               a fulfillment fee  of $2.00 per investment kit mailed;

 

(iv)                              a fulfillment fee of $1.00 per address for each bonus offer or marketing postcard mailed, subject to a  $10,000 maximum per project.

 

5

 

(b)                     The Contractor’s Expenses.  Except as otherwise provided in this Agreement, each party shall bear all of its own expenses.  To the extent that the Company agrees herein to pay specified offering-related expenses such as all marketing and advertising costs, the Company will pay or cause to be paid such expenses whether incurred prior or subsequent to the date of this Agreement

 

(c)                      Payment of Fees.  On the first Business Day of each month, or as soon thereafter as practicable, the Contractor shall provide the Company with a written invoice for the previous month’s fees and expenses that are payable with respect to Notes issued up to the last day of such month..  Such fees and expenses will be due and payable by the later of the fifteenth (15th) day of every month or fifteen (15) days after the date such invoice is received.

 

Section 2.04  Brokers and Dealers.  At the discretion of the Company, the Company may, at no additional obligation or expense to the Contractor, use the services of brokers or dealers who are members in good standing of FINRA in connection with the offer and sale of the Notes.  The Company may enter into agreements with any such broker or dealer to act as its agents for the sale of the Notes and shall be solely responsible for the payment of any portion of the Contractor’s compensation hereunder to such broker or dealer.  The Contractor’s administrative services will apply to all notes sold by brokers or dealers and the Company will compensate the Contractor for such services in accordance with Section 2.03.

 

Section 2.05  The Contractor’s Unrelated Activities.  The Company agrees that the Contractor may service renewable note programs for other issuers during the course of the Offering, but such activities shall not prevent the Contractor from promptly and efficiently performing its duties hereunder.  The Contractor (and the Agency as defined in Section 3.01(b) below) may direct other issuers to advertise the securities of other issuers on websites, in print, by radio, or by any other means and at such times as they may determine; provided, however, that any such advertising which refers to the Notes shall not refer to, mention, or advertise any securities or notes of any other issuer, nor include any links to any other issuer, renewable note program or offering.  The Contractor shall have the right to advertise or otherwise disclose to unrelated prospective issuers, at its own expense, its relationship with the Company, the services it provides in connection with the Notes and the amount of money that it raised through the Offering and the performance of the Offering, subject to the Company’s consent, which shall not be unreasonably withheld.

 

Section 2.06  Independent Contractor.  The Contractor shall have no obligation to purchase Notes for its own account.  During the term of this Agreement, all actions taken by the Contractor pursuant to this Agreement shall be in the capacity of an independent contractor, and in no event shall the Contractor have any obligations under the Notes.

 

Section 2.07  Issuance and Payment.  The Notes shall be issued pursuant to the Indenture and all Scheduled Payments, Redemption Payments and Repurchase Payments shall be made by automated clearing house (i.e., ACH) remittance from the Trust Account by the Paying Agent in accordance with the Paying Agent Agreement and the Indenture.

 

6

 

ARTICLE III
  SERVICES; STANDARD OF CARE

 

Section 3.01  Services for the Notes.  The services to be provided to the Company by the Contractor pursuant to and during the term of this Agreement shall include the following:

 

(a)                     Marketing and Advertising.  During the term of this Agreement, the Contractor shall develop and execute a direct response marketing strategy for the Notes designed to meet the Company’s capital goals in a timely manner, which shall be subject to the prior approval of the Company.  The Contractor shall also oversee designing and printing all marketing materials (subject to the prior approval of the Company), in accordance with the Securities Act, including the applicable rules and regulations and any other requirements of the SEC and any other Governmental Rules.  The Contractor will provide the Company with media planning, media buying, media production and media placement services related to the Offering.  All ad placements and use of all marketing materials shall be subject to the prior written approval of the Company.  The Company will pay all marketing and advertising costs related to the offering, including printing, postage, advertising and web site hosting.

 

(i)                                     During the term of this Agreement, the Company hereby grants the Contractor a limited license to use the Company’s logo, corporate colors, trademarks, trade names, fonts, and other aspects of corporate identity in advertisements and marketing materials related to the Notes and on the Contractor’s website, subject to the Company’s prior written approval of the specific use of these items in writing in each instance (which shall not be unreasonably withheld).  The Contractor will not make use of the Company’s logo, corporate colors, trademarks or trade names in any manner that would reasonably be expected to disparage or damage such marks or the reputation of the Company or diminish the Company’s goodwill.  It is expressly agreed that the Contractor is not acquiring any right, title or interest in the Company’s logo, corporate colors, trademarks, trade names or other intellectual property.

 

(b)                     Subscription, Sale and Ownership.  During the term of this Agreement, the Contractor shall promptly forward to the Company each Subscription Agreement for the Notes received from an Investor.  The Company shall be responsible for determining whether (i) such subscription shall be accepted, (ii) such agreement is complete and accurate in all material respects, including without limitation the execution thereof by such Investor, (iii) such Investor timely remits the proper purchase price for the Notes in accordance with the Subscription Agreement, and (iv) the principal amount, interest rate and term to maturity and any other material terms of the Notes are verified for accuracy and completeness.  Upon delivery by each Investor of a completed Subscription Agreement for Notes and full payment of the principal amount of such Notes in accordance with the Investor’s Subscription Agreement, and subject to the acceptance of the Subscription Agreement by the Company, the Company shall promptly notify the Contractor and the Contractor shall promptly (i) verify that the payment of the principal amount of such Investor’s accepted subscription for the Notes

 

7

 

is being remitted to the Company in accordance with the Subscription Agreement in an account established by the Company for such purpose or in such other manner as may be directed by the Company from time to time, and (ii) remit to the Trustee electronic or hard copies of all accepted Subscription Agreements and related records as may be reasonably requested by the Trustee, including without limitation, a record of each deposit relating to the payment of the subscription amount of the Notes.  Pursuant to the preceding sentence, Notes shall be issued by the Contractor as the Company’s Registrar in book-entry form only and the Contractor shall deliver a Note Confirmation to each Holder with respect to such Holder’s respective accepted Subscription Agreement and the receipt of full payment for such Holder’s Notes.  In the event that the Company rejects a Subscription Agreement, the Contractor shall promptly return the Subscription Agreement and the related subscription amount to the related Investor.  The Company hereby appoints the Contractor, and the Contractor hereby accepts such appointment, as its initial Registrar (as such term is defined in the Indenture) for the Notes pursuant to the terms of the Indenture.  For so long as the Contractor shall serve as the Registrar for the Notes, the Contractor shall perform, in accordance with the terms of the Indenture, all of the duties and obligations of the Registrar under the Indenture, including, without limitation, the obligation to maintain a book-entry registration and transfer system for the ownership of the Notes in accordance with the terms of the Indenture.

 

(c)                                  Investor Relations and Reporting.  During the term of this Agreement the Contractor, in conjunction with the Trustee, shall perform ministerial tasks included in the customer service and investor relations functions with respect to the Offering, as directed from time to time by the Company, which may include, but not be limited to, handling inquiries from Investors, mailing investment kits, delivering to each Investor the Prospectus and Subscription Agreement, and processing Subscription Agreements.  The Contractor shall to the best of its knowledge ensure that each person submitting a Subscription Agreement shall have received the Prospectus.  An Investor who visits the offering web site shall be deemed to have received the Prospectus, provided such person either delivers an Electronic Delivery Consent Form with such Investors Subscription Agreement or certifies under penalties of perjury that he, she or it has received the Prospectus.

 

(d)                                 The Contractor shall forward to the Company written or telephonic questions by Investors and Holders relating to the Notes regarding topics that are not addressed in the Prospectus or its supplements or in the marketing materials that accompanied the delivery of the Prospectus, including without limitation questions relating to the Company’s finances and business, the Company’s performance and practices with regard to the Notes, and substantive matters regarding an investment in the Notes, unless such questions can be answered solely by reference to the Company’s SEC filings.  Notwithstanding the foregoing, the Contractor may respond to questions that are purely administrative or ministerial in nature.  The Contractor shall also be responsible for recording changes in Holders’ addresses or accounts, preparing and issuing maturity and renewal notices, quarterly statements, newsletters, reports and analyses to Holders and to the Company, directing the Paying Agent to make Scheduled Payments, Repurchase Payments and Redemption Payments to Holders in a timely manner, and directing the Paying Agent to issue Form 1099INT’s to Holders as required by law.  In addition, the Contractor shall provide the Trustee (and copy the Company) with management reports regarding the Notes as required under the Indenture.

 

8

 

(e)                                  Web Site Development.  Subject to compliance and conformity with Accepted Note Practices by the Contractor, the Contractor (or a third party service provider working at the Contractor’s direction) shall assist the Company in developing a dedicated Internet web site separate from the Company’s corporate site to allow Investors to view online and download copies of the Offering documents (including the Prospectus and Subscription Agreement) and marketing materials that are included in the investment kit or comparable information.

 

(f)                                   Ownership of Web Pages.  Any and all web pages used by Contractor in connection with  the Offering (the “Web Pages”), and all associated Proprietary Rights, shall be owned exclusively by the Company.

 

(g)                                  Daily Payment Reports to Company.  On each Business Day during the term of the Notes, the Contractor shall furnish daily reports to the Company that detail and summarize the amount of cash that is required to pay interest and principal on the Notes.

 

Section 3.02  Maintenance of Files and Records.  The Contractor shall establish and maintain at all times during the term of this Agreement files and records (including, without limitation, computerized records) regarding the Notes and the Note Portfolio, with full and correct entries of all transactions or modifications in a reasonably secure, up-to-date manner and in accordance with the following:

 

(a)                     Location.  All Note and Note Portfolio files and records shall be stored and maintained at the Contractor’s principal place of business, or other location as designated by the Company.  The Contractor shall keep in such files all correspondence received or sent regarding each Note, each Investor, and each Holder, whether upon any purchase or transfer of a Note.

 

(b)                     Original Documents.  The Contractor will store all original Subscription Agreements, Note Confirmations, correspondence from Investors and Holders and other materials relating to the Renewable Note Program in a reasonably secure manner at the Contractor’s principal offices or such other location as may be designated by the Company.  The Contractor shall exercise due care in handling and delivering the original documents and the other documents in the Note files and records.  The Contractor shall not grant or allow any person an interest in original documents or rights thereunder, and all original documents in the possession of the Contractor shall be deemed to be in the possession of the Company.

 

(c)                      Examination.  At any time the Company and its agents and representatives may physically inspect any documents, files or other records relating to the Renewable Note Program and discuss the same with the Contractor’s officers and employees.  The Contractor shall supply copies of any such documents, files, or other records upon the request of the Company, as soon as is reasonably and commercially practicable at the Company’s cost and expense.

 

(d)                     Retention.  Unless otherwise requested by the Company, or unless otherwise required by Governmental Rules, the Contractor shall retain, with respect to

 

9

 

each Note, for a period of 24 months from the date the Note is fully paid, all records, files and documents related to each such Note.  At the end of such 24-month period, unless otherwise directed by the Company, all such items shall be transferred to the Company, or to a third party as designated by the Company, at the Company’s sole cost and expense.  The Contractor shall be permitted to retain copies of any such documents for its own files for its own account and at its own expense.  The Contractor shall maintain the privacy of the Investors and Holders in accordance with all applicable Governmental Rules.

 

(e)                      Return.  If this Agreement is terminated, or otherwise at the instruction of the Company, the Contractor shall promptly deliver to the Company or its designee, as the case may be, all Note files and records (including, without limitation, copies of computerized records and servicing and other software, except as may be prohibited by any third party contract or license) related to the administration of the Notes and all monies collected by it relating to the Renewable Note Program (less any fees or expenses due to the Contractor).  The Contractor shall be entitled to make and keep copies of such records, at its cost and expense.  In addition to delivering such data and monies, the Contractor shall use its best efforts to effect the orderly and efficient transfer of the administration of the Notes to the Company or other party designated by the Company to assume responsibility for such administration, including, without limitation, directing Holders to remit all repurchase or other notices to the address designated by the Company.  All costs of conversion and transfer of such records to the Company or another agent shall be paid by the Company.

 

(f)                       Security.  The parties shall take appropriate security measures to protect customer nonpublic personal information (“NPI”), as defined in the Gramm-Leach-Bliley Act of 1999, Title V, and its implementing regulations, against accidental or unlawful destruction and unauthorized access, tampering, and copying during storage in either party’s computing or paper environment.  Access to NPI must be restricted to only the personnel that have a business need relating to the Renewable Note Program.  NPI must be stored in a secured format within all systems at both parties’ location and any other locations where the data may reside.  Transmission of such NPI between the parties or vendors must be done in a secure manner, in a method mutually agreed upon by both parties.  Each party will engage appropriate and industry-standard measures necessary to meet information security guidelines as required by the Gramm-Leach-Bliley Act, Title V and its implementing regulations as applicable to such party to effectuate this Agreement.

 

Section 3.03  Information to the Company.  As agreed by the parties, the Contractor shall make reports and analyses available to the Company regarding the status of the Note Portfolio, the marketing results and the amount of Notes remaining available for issuance under the Registration Statement.  The Contractor shall also provide interim or custom reports at the Company’s request as is commercially reasonable, including, without limitation, a weekly update via email identifying new Holders by name, address and principal amount of Notes purchased.  The Contractor shall also furnish statements, reports and information to the Paying Agent to the extent that the Company is required to furnish or cause to be furnished such statements, reports or information to the Paying Agent under the Paying Agent Agreement.

 

10

 

ARTICLE IV
  REPRESENTATIONS AND COVENANTS OF THE COMPANY

 

Section 4.01  Representations, Warranties and Agreements of the Company.  The Company represents and warrants to and agrees with the Contractor as follows, which representations and warranties shall be deemed to be made continuously from and as of the date hereof until this Offering is terminated and all then outstanding Notes have been paid in full or such earlier date that this Agreement has been terminated, except for those representations and warranties that address matters only as of a particular date, which representations and warranties shall be deemed to be made as of such date.

 

(a)                     The Company satisfies all of the requirements for the use of Form S-1 with respect to the offer and sale of securities as contemplated by the Offering.  The Commission has not issued any order preventing or suspending the use of the Registration Statement or Prospectus and no proceeding for that purpose has been instituted or, to the Company’s knowledge, threatened by the Commission or the securities authority of any state or other jurisdiction.

 

(b)                     The Company has full requisite power and authority to enter into this Agreement and perform the transactions contemplated hereby.  This Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement on the part of the Company, enforceable against the Company in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.  The performance of this Agreement and the consummation of the transactions herein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under:

 

(i)                                     any Material Agreement to which the Company or any subsidiary is a party or by which the Company or any subsidiary or their respective properties may be bound;

 

(ii)                                  the articles of incorporation or bylaws of the Company, or

 

(iii)                               any applicable law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any subsidiary or their respective properties.

 

(c)                      No consent, approval, authorization or order of or qualification with any court, governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties is required for the execution and delivery of this Agreement and the consummation by the Company of the transactions herein contemplated, except such as may be required under the Securities Act, the Exchange Act, the Trust Indenture Act, or under state or other securities or blue sky laws, all of which requirements have been satisfied.

 

11

 

Section 4.02  Covenants of the Company.  The Company hereby covenants and agrees with the Contractor as follows:

 

(a)                     The Company will notify the Contractor promptly of the time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or additional information. In the event that the Company files any amendment or supplement to the Registration Statement or Prospectus to which the Contractor shall reasonably object, the Contractor will be relieved of its obligations with respect to the Offering (but not the administration) of the Notes until such time as the Company shall have filed such further amendments or supplements such that the Contractor is reasonably satisfied with the Registration Statement and the Prospectus, as then amended or supplemented.

 

(b)                     The Company will advise the Contractor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Notes for offering or sale in any jurisdiction, or of the initiation or receipt of any specific threat of any proceeding for any such purpose.

 

(c)                      The Company will furnish to the Contractor copies of the Registration Statement, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Contractor may from time to time reasonably request.

 

(d)                     For such period as this Agreement may be in effect, the Company shall make available to the Contractor, as soon as the same shall be sent to its stockholders generally, copies of all annual or interim stockholder reports of the Company and will, for the same period, also furnish the Contractor one copy of any report, application or document (other than exhibits, which, however, will be furnished on the Contractor’s request) filed by the Company with the Commission, The Nasdaq Stock Market or any other securities exchange.

 

(e)                      At all times during the term of this Agreement, the Company shall provide all information reasonably requested by the Contractor that relates to the Renewable Note Program in a timely manner and shall use its best efforts to insure that such information is complete and accurate.

 

(f)                       The Company will, during the term of this Agreement, furnish directly to the Contractor quarterly profit and loss statements and reports of the Company’s cash flow as reported on the applicable quarterly report on Form 10-Q.

 

12

 

ARTICLE V

REPRESENTATIONS AND COVENANTS OF THE CONTRACTOR; CONDITIONS

 

Section 5.01  Representations and Warranties of the Contractor.  The Contractor hereby represents and warrants to the Company as follows, which representations and warranties shall be deemed to be made continuously from and as of the date hereof until this Offering is terminated or such earlier date that this Agreement has been terminated:

 

(a)       The Contractor (i) has been duly organized, is validly existing and in good standing as a Minnesota limited liability company, (ii) has qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of its properties or the nature of its activities (including without limitation activities of the Contractor hereunder) makes such qualification necessary, and (iii) has full power, authority and legal right to own its property, to carry on its business as presently conducted, and to enter into and perform its obligations under this Agreement.

 

(b)       The Contractor has full requisite power and authority to enter into this Agreement and perform the transactions contemplated hereby.  This Agreement has been duly authorized, executed and delivered by the Contractor and is a valid and binding agreement on the part of the Contractor, enforceable against the Contractor in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.  The performance of this Agreement and the consummation of the transactions herein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under:

 

(i)            any Material Agreement to which the Contractor is a party or by which the Company or its properties may be bound;

 

(ii)           the articles of incorporation or bylaws of the Contractor, or

 

(iii)          any applicable law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Contractor or over its properties.

 

(c)       The Contractor has obtained all governmental consents, licenses, approvals and authorizations, registrations and declarations which are necessary for the execution, delivery, performance, validity and enforceability of the Contractor’s obligations under this Agreement.

 

(d)       The Contractor has operated and is operating in compliance with all authorizations, licenses, certificates, consents, permits, approvals and orders of and from all state, federal and other governmental regulatory officials and bodies necessary to conduct its business as contemplated by and described in this Agreement, all of which are, to the Contractor’s knowledge, valid and in full force and effect.  The

 

13

 

Contractor is conducting its business in compliance with all applicable Governmental Rules, laws, rules and regulations of the jurisdictions in which it is conducting business, and the Contractor is not in violation of any applicable Governmental Rules, law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Contractor or over its properties.

 

(e)       The Contractor maintains insurance, which is in full force and effect, with insurers of recognized financial responsibility of the types and in the amounts generally deemed adequate for its business and, to the best of the Contractor’s knowledge, in line with the insurance maintained by similar companies and businesses; and the Contractor has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the financial condition or business operations of the Contractor.

 

Section 5.02  Covenants of the Contractor.  The Contractor hereby covenants to the Company as follows, which covenants shall be deemed in force unless and until this Agreement is terminated as provided herein:

 

(a)       The Contractor shall punctually perform and observe all of its obligations and agreements contained in this Agreement.

 

(b)       The Contractor shall conduct its business in compliance with all applicable Governmental Rules, and its activities shall not violate any governmental rules relating to the registration or the activities of securities brokers and dealers. To the extent that this covenant to comply with all Governmental Rules conflicts with any other covenant contained in this Agreement, the covenant to comply with all Governmental Rules shall control.

 

(c)       Except as provided in this Agreement, the Contractor shall not take any action, or permit any action to be taken by others, which would excuse any person from any of its covenants or obligations under any Note, or under any other instrument related to a Note, or which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any Note or any such instrument or any right in favor of the Company in a Note or such instrument, without the written consent of the Company.

 

(d)       The Contractor shall not assign this Agreement or any of its rights, powers, duties or obligations hereunder without the express prior written consent of the Company, which shall not be unreasonably withheld.

 

(e)       At all times during the term of this Agreement, the Contractor shall provide all information relating to the Offering, the Renewable Note Program or the Note Portfolio reasonably requested by the Company in a timely manner and shall use its best efforts to insure that such information is complete and accurate in all material respects.

 

14

 

(f)        The Contractor shall take such additional action as is reasonably requested by the Company in order to carry out the purposes of this Agreement.  Such reasonable additional action includes, but is not limited to, cooperating with Company in verification of Contractor’s compliance, such as by providing copies of certificates of insurance and of other books and records of Contractor, and by permitting inspection of the premises, books and records of Contractor.

 

ARTICLE VI
  CONDITIONS

 

Section 6.01  Conditions of the Contractor’s Obligations.  The obligation of the Contractor to administer the Offering on a best efforts basis as provided herein shall be subject to the accuracy of the representations and warranties of the Company, to the performance by the Company of its obligations hereunder, and to the satisfaction of the following additional conditions:

 

(a)       The Registration Statement shall be effective, and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company, or the Contractor, threatened by the Commission or any state securities commission or similar regulatory body.  Any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Contractor and the Contractor’s counsel.

 

(b)       The Contractor shall not have advised the Company of its reasonable belief that the Registration Statement or Prospectus, or any amendment thereof or supplement thereto, contains any untrue statement of a fact which is material or omits to state a fact which is material and is required to be stated therein or is necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, or, if the Contractor has so advised the Company, the Company shall not have taken reasonable action to investigate such belief and, where appropriate, amend the Registration Statement or supplement the Prospectus so as to correct such statement or omission or effect such compliance.

 

(c)       The Indenture shall have been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act.

 

(d)       All corporate proceedings and other legal matters in connection with this Agreement, the form of Registration Statement and the Prospectus, and the registration, authorization, issue, sale and delivery of the Notes shall have been reasonably satisfactory to the Contractor’s counsel, in all material respects, and the Contractor’s counsel shall have been furnished with such papers and information as it may reasonably have requested to enable it to pass upon the matters referred to in this Section.

 

15

 

ARTICLE VII
  INDEMNIFICATION AND CONTRIBUTION

 

Section 7.01  The Company’s Indemnification of the Contractor.  The provisions of Exhibit A hereto, entitled “Responsibility of and Indemnification by Agency” are hereby incorporated herein by reference.

 

Section 7.02  The Contractor’s Indemnification of the Company.  The provisions of Exhibit A hereto, entitled “Responsibility of and Indemnification by Company” are hereby incorporated herein by reference.

 

Section 7.03  Intellectual Property Infringement.  The Contractor agrees that it shall defend, indemnify and hold harmless, at its own expense, all suits and claims against the Company and any officers, directors, employees and affiliates of the Company (collectively, the “Company Indemnified Parties”), for infringement or violation of any patent, trademark, copyright, trade secret or other intellectual property rights of any third party that relates to this Agreement or the Offering, or servicing of the Notes.  The Contractor agrees that it shall pay all sums, including without limitation, reasonable attorneys’ fees and other costs incurred by the Company, in defense of, by final judgment or decree, or in settlement of any suit or claim asserted or assessed against, or incurred by, any of the Company Indemnified Parties on account of such infringement or violation, provided that the Company Indemnified Parties involved shall cooperate in all reasonable respects with the Contractor and its attorneys in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom; provided, however, that the Company Indemnified Parties may, at their own cost, participate in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom. The parties shall cooperate with each other in any notifications to insurers.

 

Section 7.04  Confidentiality.  The parties to this Agreement acknowledge and agree that all information, whether oral or written, concerning a disclosing party and its business operations, prospects and strategy, which is furnished by the disclosing party to the other party is deemed to be confidential, restricted and proprietary to the disclosing party (the “Proprietary Information”).  Proprietary Information supplied shall not be disclosed, used or reproduced in any form except as required to accomplish the intent of, and in accordance with the terms of, this Agreement and the Indenture.  The receiving party shall provide the same care to avoid disclosure or unauthorized use of Proprietary Information as it provides to protect its own proprietary information, including without limitation retaining Proprietary Information in a secure place with limited access, but in no event shall the receiving party fail to use reasonable care under the circumstances to avoid disclosure or unauthorized use of Proprietary Information.  Unless otherwise specified in writing, all Proprietary Information shall (i) remain the property of the disclosing party, (ii) be used by the receiving party only for the purpose for which it was intended under this Agreement and the Indenture, and (iii) together with all copies of such information, be returned to the disclosing party or destroyed upon request of the disclosing party, and, in any event, upon termination of this Agreement, except as otherwise provided or contemplated by this Agreement, including Sections 3.02(b) and (e) and 8.05 hereof.  Proprietary Information does not include information which is: (a) published or included as disclosure within the Registration Statement or otherwise available in the public domain through no fault of the receiving party; (b) lawfully received from a third party having rights in the information without

 

16

 

restriction of the third party’s right to disseminate the information and without notice of any restriction against its further disclosure; or (c) produced under order of a court of competent jurisdiction or other similar requirement of a governmental agency or authority, so long as the party required to disclose the information provides the other party with prior notice of such order or requirement and its cooperation to the extent reasonable in preserving its confidentiality.  Because damages may be difficult to ascertain, and without limiting any other rights and remedies specified herein, an injunction may be sought against the party who has breached or threatened to breach this Section.

 

ARTICLE VIII
  TERM AND TERMINATION

 

Section 8.01  Effective Date of this Agreement.  This Agreement shall become effective as of the date first set forth above, and shall continue in full force and effect until terminated as provided below.

 

Section 8.02  Termination.  The Company or the Contractor may terminate this Agreement at any time in whole or in part as more specifically provided below, and in such case, the Contractor will be paid fees incurred up to the date of such termination plus its expenses accrued as of such date within 30 days of such termination. The Company will have the ability to terminate this Agreement by giving 60 days’ prior written notice to the Contractor. The Contractor will have the ability to terminate this Agreement by giving 90 days’ prior written notice to the Company.

 

Section 8.03  Termination Without Termination of Offering.  Anything to the contrary notwithstanding, the termination of this Agreement shall not prevent the Company from commencing or cause the Company to terminate the Offering.  In the event this Agreement is terminated without a termination of the Offering, then the Company, or its agents, shall be entitled to use all materials developed by the Contractor related to the Notes as provided elsewhere herein.

 

ARTICLE IX
  MISCELLANEOUS

 

Section 9.01  Survival.  The respective indemnity and contribution agreements of the Company and the Contractor set forth herein and the respective representations, warranties, covenants and agreements of the Company and the Contractor set forth herein, shall remain operative and in full force and effect, regardless of any investigation made by, or on behalf of, the Contractor, the Company, any of its officers and directors, or any controlling person referred to in Article VII and shall survive the sale of the Notes and any termination or cancellation of this Agreement.  Any successor of any party or of any such controlling person, or any legal representative of such controlling person, as the case may be, shall be entitled to the benefit of the respective indemnity and contribution agreements.

 

Section 9.02  Notices.  All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed, delivered or transmitted by any standard form of telecommunication, as follows:

 

17

 

	
If   to the Contractor, to:
    	
 
    	
Redwater   LLC 

5400   Opportunity Court 

Suite 160   

Minneapolis,   Minnesota 55343 

Attention:   K. Edward Elverud 

Tel.   (952) 345-3385
    
	
 
    	
 
    	
 
    
	
If   to the Company, to:
    	
 
    	
 

Twin   Cities Power Holdings, LLC 

16233   Kenyon Avenue 

Suite 210   

Lakeville,   Minnesota 55044 

 

Attn:   Chief Executive Officer 

 

Tel.   952-431-0400
    
	
 
    	
 
    	
 
    
	
with   a copy to:
    	
 
    	
Leonard,   Street and Deinard 

150   South Fifth Street — Suite 2300 

Minneapolis,   Minnesota 55402 

 

Attention:   Mark S. Weitz 

 

Tel.   612-335-1517
    

 

Section 9.03  Successors and Assigns; Transfer.  This Agreement shall inure to the benefit of and be binding upon the Contractor and the Company and their respective successors and permitted assigns.  Nothing expressed in this Agreement is intended or shall be construed to give any person or corporation, other than the parties hereto, their respective successors and assigns, any legal or equitable right, remedy or claim under, or in respect of, this Agreement or any provision herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective executors, administrators, successors, and for the benefit of no other person or corporation.  Neither party may assign its rights and obligations under this Agreement without the written consent of the other party.

 

Section 9.04  Cumulative Remedies.  Unless otherwise expressly provided herein, the remedies of the parties provided for herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of the party for whose benefit such remedy is provided, and may be exercised as often as occasion therefor shall arise.

 

Section 9.05  Attorneys’ Fees.  In the event of any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs, whether or not such action proceeds to judgment.

 

18

 

Section 9.06  Entire Agreement.  Except as otherwise expressly provided herein, this Agreement constitutes the entire agreement of the parties hereto with respect to the matters addressed herein and supersedes all prior or contemporaneous contracts, promises, representations, warranties and statements, whether written or oral (including, but not limited to, the Proposal), with respect to such matters.

 

Section 9.07  Choice of Law; Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to conflict of law principles. Any dispute shall be heard in the courts of the state of Minnesota.

 

Section 9.08  Rights to Investor Lists.  The parties acknowledge that the Offering will produce a list of investors that purchase Notes, a list of prospects that respond to advertisements, but do not purchase any Notes, a list of former investors who redeemed their Notes, and a list of former investors whose Notes the Company redeemed.  Subject to any privacy laws, both the Company and the Contractor will be able to use these lists for their own business purposes as long as doing so does not interfere with the marketing, sale or administration of the Notes.

 

Section 9.09  Waiver; Subsequent Modification.  Except as expressly provided herein, no delay or omission by any party in insisting upon the strict observance or performance of any provision of this Agreement, or in exercising any right or remedy, shall be construed as a waiver or relinquishment of such provision, nor shall it impair such right or remedy, and no waiver by any party or any failure or refusal of the other party to comply with its obligations under this Agreement shall be deemed a waiver of any other or subsequent failure or refusal to so comply by such other party.  No waiver or modification of the terms hereof shall be valid unless in writing and signed by the party to be charged, and then only to the extent therein set forth.

 

Section 9.10  Severability.  If any term or provision of this Agreement or application thereof to any person or circumstance shall, to any extent, be found by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term or provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

Section 9.11  Joint Preparation.  The preparation of this Agreement has been a joint effort of the parties and the resulting document shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.

 

Section 9.12  Captions.  The title of this Agreement and the headings of the various articles, section and subsections have been inserted only for the purpose of convenience, are not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement.

 

Section 9.13  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

Section 9.14  Third Party Contractors.  In the event that the Company engages a third party to perform any of the obligations of the Contractor under this Agreement, the Company 

 

19

 

shall provide written notice to the Contractor of such engagement, the Contractor shall thereafter be relieved of any such obligations for which the third party was engaged.

 

[Remainder of page intentionally left blank]

 

20

 

IN WITNESS WHEREOF, this Outsourcing Agreement is hereby entered into by the undersigned parties as of the date first set forth above.

 

	
 
    	
TWIN   CITIES POWER HOLDINGS, LLC 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:   
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REDWATER   LLC. 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Name:   
    	
K.   Edward Elverud 
    
	
 
    	
Title:   
    	
Manager
    

 

21

Exhibit A

 

Media Services

 

The following describes the advisory services to be provided by Redwater LLC (“Contractor”) to Twin Cities Power Generation (“Company”) in connection with the administration of Company’s renewable, unsecured, subordinated notes (the “Notes”), as more specifically defined in, and pursuant to the terms of, the Outsourcing Agreement to which this description is an exhibit.

 

1.             Agent Services.

 

Agent will perform the following services for Company:

 

·                  Acting on the study, analysis and knowledge of the product described above, formulate and recommend a media plan to the Company and coordinate the execution of such a plan as directed by the Company.

 

·                  Check and verify insertions, displays, broadcasts or other means used.

 

·                  Audit invoices for space and time and other marketing services performed on Company’s behalf.

 

·                  Coordinate creative and copy development, direct mail services, literature fulfillment, commercial printing, list management, list brokering, efficiency analysis and other similar activities.

 

2.             General Provisions.

 

Approval of Expenditures:  Contractor agrees to secure Company’s written approval of all expenditures in connection with Company’s plans.

 

Cancellation of Plans:  Company reserves the right to modify, reject, cancel or stop any and all plans, schedules or work in progress.  In such event Contractor shall take reasonable steps to carry out Company’s instructions as promptly as practicable.  Company agrees to assume liability for all commitments made by Contractor on its behalf, and to reimburse Contractor for any losses (including cancellation penalties) that Contractor may sustain derived therefrom and for all expenses incurred in connection with Company approved plans on its authorization, and to pay Contractor any service charges relating thereto, in accordance with the provisions hereof.

 

Failure of Suppliers to Perform:  Contractor will endeavor to the best of its knowledge and ability guard against any loss to Company through failure of media or suppliers to properly execute their commitments, but shall not be held responsible for any failure on their part.

 

Confidentiality:  Contractor acknowledges its responsibility to use all reasonable efforts to preserve the confidentiality of any proprietary or confidential information or data developed by Contractor on behalf of Company or disclosed by Company to Contractor.

 

22

 

Responsibility of and Indemnification by Agency:  Contractor agrees to indemnify and hold Company, its officers, directors, agents and employees harmless from and against any claims, liabilities, losses, costs, expenses, or the like, including reasonable attorneys’ fees, incurred in respect to any material breach by Contractor hereof or Contractor’s negligence and/or intentional wrongdoing in connection with the services.

 

Responsibility of and Indemnification by Company:  Company agrees to indemnify and hold Contractor, its officers, managers, directors, agents and employees harmless from and against any claims, liabilities, losses, costs, expenses, or the like, including reasonable attorneys’ fees, incurred in respect to any material breach by Company of this Agreement or Company’s negligence and/or intentional wrongdoing in connection with the services.  Company shall be responsible for the accuracy, completeness and propriety of information concerning its products and services that it furnishes to Contractor in connection with the performance of the services.

 

3.             Expenses and Fees.

 

·                  Company agrees to pay or prepay advertising, graphic design and printing  expenses either directly to the respective vendors or to the Contractor as required. The Company will pay the Contractor the difference between the published gross rates and the net rates for all advertisements, graphic design services or printing services or an equivalent mark-up. All Contractor fees will be subject to the approval of the Company.

 

·                  Refunds:  Contractor shall refund or credit Company any other refunds received in connection with advertisements.

 

·                  Other Marketing Expenses.  Subject to its prior approval, the Company agrees to pay Contractor for all reasonable out of pocket, non-media charge marketing expenses related to the development and production of all direct marketing and promotional materials.

 

5.             Termination.

 

·                  Period of Services:  The services described herein to be provided by Agency shall begin upon execution and delivery of the Outsourcing Agreement and shall continue until termination of Contractor’s activities to administer the Notes thereunder.

 

·                  Payment for Purchases and Work Done:  Any materials, services, etc. Contractor has committed to purchase for Company’s account, or with Company’s approval (or any uncompleted work previously approved by Company either specifically or as part of a plan) prior to termination of the Services shall be paid for by Company in accordance with the provisions of this Agreement.

 

23

Exhibit B

 

Service Standards

 

Initial Instructions of Company to Contractor pursuant to that certain Outsourcing Agreement dated as of              , 2012, between Twin Cities Power Holdings, LLC and Redwater LLC.

 

Geographical Limitations.  Contractor shall not communicate with Investors resident in any state that is identified in the then-current Prospectus as a state in which the Notes are not offered, other than to communicate, in substance, that the Notes are not offered to persons resident in such states.  The initial list of such states is as follows, but the Company may, in its discretion, amend such list by filing an amended Prospectus or a supplement to Prospectus:

 

.      [TBD]

 

24Exhibit 10.7

 

OFFICE LEASE

 

THIS LEASE is made this 13th day of May, 2009, by and between Kenyon Crossings, LLC, (“Landlord”), and Twin Cities Power LLC or assigns (“Tenant”)

 

WI T N E S S E T H:

 

ARTICLE 1 - LEASE OF PREMISES

 

Section 1.01           Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject to all of the terms and conditions hereinafter set forth, office and warehouse space in the building described below which is commonly known as Kenyon Crossings, LLC at 16233 Kenyon A venue, Lakeville, Dakota County, Minnesota, and which is situated on the tract of land described in Exhibit A-1 attached hereto (the “Building”) for the term hereinafter specified. The space in the Building hereby leased to Tenant is set forth in Item A of the Basic Lease Provisions and is outlined in red on Exhibit A-2 attached hereto (the “Leased Premises”) . Elevators shall not be leased to Tenant and shall remain under Landlord’s control.

 

Section 1.02           Basic Lease Provisions.

 

A.            Building Address: 16233 Kenyon Avenue, Lakeville, Minnesota 55044; Floor: -2-; Suite 200/204;

 

B.            Rentable Area: approximately 6,378 square feet consisting of approximately 6,378 square feet of office;

 

Landlord shall measure from the outside of the outside walls to the center of the interior demising walls to determine the Rentable Area and from the outside of the outside walls to determine the rentable area of the Building.

 

C.            Building Expense Percentage: 24.67%;

 

D.            Minimum Annual Rent:

 

	
Minimum Annual Base Rent Beginning 08/01/09:
    	
 
    	
$
    	
95,670.00
    	
 per year
    
	
Estimated Operating Expenses (2009):
    	
 
    	
24,300.00
    	
 per year
    
	
Estimated Annual Rent Beginning 08/01/09:
    	
 
    	
$
    	
119,970.00
    	
 per year
    

 

E.             Monthly Rental Installments:

 

	
Minimum Monthly Base Rent Beginning 08/01/09:
    	
 
    	
$
    	
7,972.50   
    	
 per year
    
	
Estimated Monthly Operating Expenses (2009):
    	
 
    	
2,025.00   
    	
 per year
    
	
Estimated Monthly Rent Beginning 08/01/09:
    	
 
    	
$
    	
9,997.50 
    	
 per year
    

 

Amounts in Items D and E above do not include individually metered utilities, telephone, or any of the services as defined in Section 3.02 that are provided by Tenant.

 

1

 

F.             Term: Five (5) Years, Zero (0) Months;

 

G.            Commencement Date: 08/01/09;

 

H.            Security Deposit: $7,972.50

 

I.              Broker: EFH Realty Advisors, Inc. representing Landlord, None representing Tenant;

 

J.             Permitted Use: General Office;

 

K.            Working Drawings Approval Date: 05/15/09;

 

L.             Landlord to provide space with improvements as shown: See Exhibit B

 

M.           Landlord to provide a $32.50/square foot tenant improvement allowance. Any costs over this amount will be paid by tenant.

 

N.            Address for payments and notices as follows:

 

	
Landlord:
    	
 
    	
Kenyon   Crossings, LLC
   2999 W. County Road 42, Suite 206
   Burnsville, MN 55306
    
	
 
    	
 
    	
 
    
	
With   Rental Payments to:
    	
 
    	
Kenyon   Crossings, LLC
   2999 W. County Road 42, Suite 206
   Burnsville, MN 55306
    
	
 
    	
 
    	
 
    
	
Tenant:
    	
 
    	
Twin   Cities Power, LLC
   16233 Kenyon Avenue
   Lakeville, MN 55044
    

 

O.            Landlord agrees to cap CAM, taxes, and utility expenses at $8.00 for term of lease, in addition Landlord agrees to cap the CAM, taxes and utility expenses at $24,300.00 for the first twelve months of this lease.

 

P.             Tenant shall have the right of first refusal on adjacent office space. Tenant shall have 5 business days to accept or decline additional offer of space notice by landlord.

 

Q.            Tenant shall have the option of renewing lease for an additional 5 years at then market rates.

 

R.            Tenant shall have Ten (10) parking spaces in underground parking structure available for their use in conjunction with this lease. Landlord will also allow tenant the use of additional parking spaces while available. Tenant shall have the right of first refusal for 10 additional spaces in parking garage.

 

2

 

S.             Tenant shall the option to cancel lease after year three with a 120 day notice and payment of outstanding tenant improvement and real estate commission amortization immediately upon vacating premise.

 

T.            Tenant and their employees shall have the right to use the onsite fitness center, provided tenant is not in default. Landlord will provide daily janitorial of this space and equipment along with all common areas. Landlord will also provide maintenance as required for fitness equipment.

 

U.            Tenant shall be allowed signage on monument sign(size and location to be determined), tenant will have the opportunity to display a minimum of two (2) companies on this sign.

 

ARTICLE 2 - TERM AND POSSESSION

 

Section 2.01.          Term. The term of this Lease shall be the period of time specified in Item F of the Basic Lease Provisions (“Original Term”) and shall commence on the Commencement Date as provided in Item G of the Basic Lease Provisions The date of commencement as defined above, hereinafter called the “Commencement Date,” and the “Expiration Date” shall be confirmed by Tenant as provided in Section 2.03. As used in this Lease, “Lease Term” shall include the Original Term and any renewal thereof.

 

Section 2.02.          Construction of Tenant Finish Improvements and Possession. Tenant has personally inspected the building shell Leased Premises and accepts the same “as is” without representation or warranty by Landlord of any kind and with the understanding that Landlord shall have no responsibility with respect thereto.

 

Section 2.03.          Tenant’s Acceptance of the Leased Premises. Promptly after the Commencement Date, Tenant shall execute a letter of understanding acknowledging (i) the Commencement Date and Expiration Date of this Lease, and (ii) that Tenant has accepted the Leased Premises for occupancy and that the condition of the Leased Premises and the Building was at the time satisfactory and in conformity with the provisions of this Lease in all respects. Such letter of understanding shall become a part of this Lease. If Tenant takes possession of and occupies the Leased Premises, Tenant shall be deemed to have accepted the Leased Premises in the manner described in this Section 2.03, even though the letter of understanding provided for herein may not have been executed by Tenant.

 

Section 2.04.          Surrender of the Premises. Upon the expiration or earlier termination of this Lease, or upon the exercise by Landlord of its right to re-enter the Leased Premises without terminating this Lease, Tenant shall immediately surrender the Leased Premises to Landlord, together with all alterations, improvements and other property as provided elsewhere herein, in broom-clean condition and in good order, condition and repair, except for ordinary wear and tear and damage which Tenant is not obligated to repair, failing which Landlord may restore the Leased Premises to such condition at Tenant’s expense. Upon such expiration or termination, Tenant shall have the right to remove its personal property (as described in Article 7), and shall, upon Landlord’s request, remove all computer equipment in the Leased Premises, at its sole cost and expense. Any property remaining in the Leased Premises after the expiration or termination of this Lease shall be deemed abandoned and Landlord shall have the right to remove and

 

3

 

dispose of such property at Tenant’s sole cost and expense. Tenant shall, at its expense, promptly repair any damage caused by any such removal, and shall restore the Leased Premises to the condition existing prior to the installation of the items so removed.

 

Section 2.05.          Holding Over. If Tenant retains possession of the Leased Premises after the expiration or earlier termination of this Lease, Tenant shall become a Tenant from month to month at One Hundred Fifty Percent (150%) of the then prevailing market rate (as determined by Landlord in its sole and absolute discretion) for the Leased Premises in effect upon the date of such expiration or earlier termination (subject to adjustment as provided in Article 3 hereof and prorated on a daily basis), and otherwise upon the terms, covenants and conditions herein specified, so far as applicable. Acceptance by Landlord of rent after such expiration or earlier termination shall not result in a renewal of this Lease. Notwithstanding the foregoing provision, no holding over by Tenant shall operate to extend this Lease, and Tenant shall vacate and surrender the Leased Premises to Landlord upon Tenant being given thirty (30) days prior written notice from Landlord to vacate. The foregoing provisions of this Section 2.05 are in addition to and do not affect Landlord’s right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law.

 

ARTICLE 3 - RENT

 

Section 3.01.          Base Rent. Tenant shall pay to Landlord as Minimum Annual Rent for the Leased Premises the sum specified in Item D of the Basic Lease Provisions, payable in equal consecutive Monthly Rental Installments as specified in Item E of the Basic Lease Provisions, in advance, without deduction or offset, on or before the first day of each and every calendar month during the Lease Term; provided, however, that if the Commencement Date shall be a day other than the first day of a calendar month or the Expiration Date shall be a day other than the last day of a calendar month, the Monthly Rental Installment for such first or last fractional month shall be prorated on the basis of the number of days during the month this Lease was in effect in relation to the total number of days in such month.

 

Section 3.02.          Annual Rental Adjustment.

 

A.            Definitions. For purposes of this Section 3.02, the following definitions shall apply:

 

1. “Annual Rental Adjustment” - shall mean the amount of Tenant’s Proportionate Share of Operating Expenses for a particular calendar year.

 

2. “Operating Expenses” - shall mean the amount of all of Landlord’s direct costs and expenses paid or incurred in operating and maintaining the Building (including the Exterior Common Areas and Interior Common Areas as defined in Section 19.03 and the land described in Exhibit A-1) for a particular calendar year as determined by Landlord in accordance with generally accepted accounting principles, consistently app lied, including all additional direct costs and expenses of operation and maintenance of the Building which Landlord reasonably determines that it would have paid or incurred during such year if the Building had been fully occupied, including by way of illustration and not limitation: all general real estate taxes and all special assessments levied against the Building (hereinafter called “real estate taxes”), other than penalties for late payment;

 

4

 

costs and expenses of contesting the validity or amount of real estate taxes; insurance premiums, water, sewer, electrical and other utility charges other than the separately billed electrical and other charges paid by Tenant as provided in this Lease; service and other charges incurred in the operation and maintenance of the elevators and the heating, ventilation and air-conditioning system for common areas; cleaning and other janitorial services for common areas; tools and supplies; repair costs; landscape maintenance costs; security services; license, permit and inspection fees; management fees(which shall not exceed 5% of tenant’s net annual rent); wages and related employee benefits payable for the maintenance and operation of the Building; amortization of capital improvements that produce a net reduction in operating costs together with interest at the rate of twelve percent (12%) per annum on the unamortized balance thereof; maintenance and repair costs, dues, fees and assessments incurred under any owners association agreement applicable to the Building and in general all other costs and expenses which would, under generally accepted accounting principles, be regarded as operating and maintenance costs and expenses, including those which would normally be amortized over a period not to exceed five (5) years. There shall also be included in Operating Expenses the cost or portion thereof reasonably allocable to the Building, amortized over such period as Landlord shall reasonably determine, together with interest at the rate of twelve percent (12%) per annum on the unamortized balance, of any capital improvements made to the Building by Landlord after the date of this Lease which are required under any governmental law or regulation that was not applicable to the Building at the time it was constructed. These expenses are estimated under Section 1.02. D of the lease.

 

3. “Building Expense Percentage” - shall mean the percentage specified in Item C of the basic Lease Provisions. This percentage was determined by dividing the rentable area in the Leased Premises by the total rentable area in the Building.

 

4. “Tenant’s Proportionate Share of Operating Expenses” -shall be an amount equal to the product of Tenant’s Building Expense Percentage as provided in Item C of the Basic Lease Provisions times the Operating Expenses.

 

B.            Payment Obligation. In addition to the Minimum Annual Rent specified in this Lease, Tenant shall pay to Landlord as additional rent for the Leased Premises, in each calendar year or partial calendar year, during the term of this Lease, an amount equal to Tenant’s Proportionate Share of Operating Expenses for such calendar year.

 

1. Payment of Estimated Annual Rental Adjustment - The Annual Rental Adjustment shall be estimated annually by Landlord, and written notice thereof shall be given to Tenant. In the case of the calendar year in which the Lease Term commences, written notice of the estimated Operating Expenses shall be given to Tenant prior to the Commencement Date. Tenant shall pay to Landlord each month, at the same time the Monthly Rental Installment is due, an amount equal to one-twelfth (1/12) of the estimated Annual Rental Adjustment. Landlord agrees that estimated operating expenses will be fixed at $24,300.00 f or the first 12 months of this lease.

 

2. Increases in Estimated Annual Rental Adjustment — If real estate taxes or the cost of utility or janitorial services increase during a calendar year, Landlord may increase the

 

5

 

estimated Annual Rental Adjustment during such year by giving Tenant written notice to that effect, and thereafter Tenant shall pay to Landlord, in each of the remaining months of such year, an amount equal to the amount of such increase in the estimated Annual Rental Adjustment divided by the number of months remaining in such year.

 

3. Adjustment to Actual Annual Rental Adjustment - Within a reasonable time after the end of each calendar year, Landlord shall prepare and deliver to Tenant a statement showing the actual Annual Rental Adjustment. Within thirty (30) days after receipt of the aforementioned statement, Tenant shall pay to Landlord, or Landlord shall credit against the next rent payment or payments due from Tenant, as the case may be, the difference between the actual Annual Rental Adjustment for the preceding calendar year and the estimated amount paid by Tenant during such year. If this Lease shall commence, expire or be terminated on any date other than the last day of a calendar year, then the Annual Rental Adjustment for such partial calendar year shall be prorated on the basis of the number of days during the year this Lease was in effect in relation to the total number of days in such year.

 

4. Tenant Verification - Tenant or its accountants shall have the right to inspect, at reasonable times and in a reasonable manner, during the ninety (90) day period following the delivery of Landlord’s statement of the actual amount of the Annual Rental Adjustment, such of Landlord’s books of account and records as pertain to and contain information concerning such costs and expenses in order to verify the amounts thereof.

 

Section 3.03.          Late Charges. In the event Tenant fails to pay within ten (10) days after the same is due and payable any installment of Minimum Annual Rent or any other sum or charge required to be paid by Tenant to Landlord under this Lease, such unpaid rent shall bear a late payment charge in the amount of five percent (5%) of the past due amount.

 

ARTICLE 4 - SECURITY DEPOSIT

 

A security deposit equal to one month’s rent shall be collected at the time of lease signature. The security deposit shall be held until the expiration of the Term at which time an inspection of Leased Premises shall take place. If it is determined that Leased Premises are in the condition as set forth in Section 2.04, Tenant will receive a refund in the amount of the original security deposit. If the Leased Premises are not in acceptable condition as set forth in Section 2.04, Landlord shall provide a letter stating the reasons for withholding the Security Deposit in accordance with State Law.

 

ARTICLE 5 - OCCUPANCY AND USE

 

Section 5.01    Occupancy. Tenant shall use and occupy the Leased Premises for the purposes set forth in Item J of the Basic Lease Provisions and shall not use the Leased Premises for any other purpose whatsoever.

 

Section 5.02    Covenants of Tenant Regarding Use. In connection with its use of the Leased Premises, Tenant agrees to do the following:

 

6

 

A.            Tenant shall (i) use and maintain the Leased Premises and conduct its business thereon in a safe, careful, reputable and lawful manner, (ii) comply with the Covenants and all laws, rules, regulations, orders, ordinances, directions and requirements of any governmental authority or agency, now in force or which may hereafter be in force, including without limitation those which shall impose upon Landlord or Tenant any duty with respect to or triggered by a change in the use or occupation of, or any improvement or alteration to, the Leased Premises, (iii) comply with and obey all reasonable directions of the Landlord, including the Building Rules and Regulations attached hereto as Exhibit C and as may be modified from time to time by Landlord on reasonable notice to Tenant, and (iv) shall not do or permit anything to be done in or about the Leased Premises which will in any way obstruct or interfere with the rights of other Tenants or occupants of the Building or injure or annoy them. Landlord shall not be responsible to Tenant for the non-performance by any other Tenant or occupant of the Building of any of the Building Rules and Regulations, but agrees to take reasonable measures to assure such other Tenant’s compliance.

 

B.            Landlord reserves the right to direct the positioning of all heavy equipment, furniture and fixtures which Tenant desires to place in the Leased Premises so as to distribute properly the weight thereof, and to require the removal of any equipment or furniture which exceeds the weight limit specified herein.

 

C.            Tenant shall not use the Leased Premises, or allow the Leased Premises to be used, for any purpose or in any manner which would, in Landlord’s opinion, invalidate any policy of insurance now or hereafter carried on the Building or increase the rate of premiums payable on any such insurance policy. Should Tenant fail to comply with this covenant, Landlord may, at its option, require Tenant to stop engaging in such activity or to reimburse Landlord as additional rent for any increase in premiums charged on the insurance carried by Landlord on the Leased Premises and attributable to the use being made of the Leased Premises by Tenant.

 

D.            Tenant shall not inscribe, paint, affix or display any signs, advertisements or notices on the Building, except for such Tenant identification information as Landlord permits to be included or shown on the directory board in the main lobby and on or adjacent to the access door or doors to the Leased Premises.

 

Section 5.03.          Landlord’s Rights Regarding Use. In addition the rights specified elsewhere in this Lease, Landlord shall have the following rights regarding the use of the Leased Premises or the Common Areas by Tenant, its employees, agents, customers and invitees, each of which may be exercised without notice or liability to Tenant:

 

A.            Landlord may install such signs, advertisements or notices or Tenant identification information on the directory board or Tenant access doors as it shall deem necessary or proper.

 

B.            Landlord shall approve or disapprove, prior to installation, all types of drapes, shades and other window coverings used in the Leased Premises, and may control all internal lighting that may be visible from outside the Leased Premises.

 

7

 

C.            Landlord shall approve or disapprove all sign painting and lettering used on the Leased Premises and the Building.

 

D.            Landlord may grant to any person the exclusive right to conduct any business or render any service in the Building, provided that such exclusive right shall not operate to limit Tenant from using the Leased Premises for the use permitted in Item J of the Basic Lease Provisions.

 

E.             Landlord may control the Common Areas in such manner as it deems necessary or proper, but such control shall not preclude tenant’s use of its premises.

 

Section 5.04.          Access to and Inspection of the Leased Premises. Landlord, its employees and agents and any mortgagee of the Building shall have the right to enter any part of the Leased Premises with tenant’s consent at reasonable times for the purposes of examining or inspecting the same, showing the same to prospective purchasers, mortgagees or Tenants and making such repairs, alterations or improvements to the Leased Premises or the Building as Landlord may deem necessary or desirable. If representatives of Tenant shall not be present to open and permit such entry into the Leased Premises at any time when such entry is deemed an emergency by Landlord and its employees and agents may enter the Leased Premises by means of a master or pass key or otherwise. Landlord shall incur no liability to Tenant for such entry, nor shall such entry constitute an eviction of Tenant or a termination of this Lease, or entitle Tenant to any abatement of rent therefor.

 

ARTICLE 6 - UTILITIES AND OTHER BUILDING SERVICES NEED

 

Section 6.00.          Tenant Responsibility For Utilities and Interior Maintenance. Tenants shall be wholly responsible, and shall bear all costs associated with, the operation and maintenance of all interior parts or portions of the Leased Premises, including entrances, heating, plumbing, electrical and mechanical fixtures and equipment except as such items may be covered by manufacturer warranties. Tenants shall be responsible for individually metered utilities (including but not limited to electricity and gas) and provide and pay for Tenants own telephone, and/or any other utility services or energy sources furnished to the Leased Premises during the term of this Lease or any renewal or extension thereof. Tenants shall also pay their prorata share of all other operating expenses (including but not limited to costs associated with the operation and maintenance of Interior and Exterior Common Areas), as defined in Section 3.02, A.2.

 

Section 6.01.          Services to be Provided. Provided Tenant is not in default, Landlord shall furnish to Tenant, and Tenant shall pay for the following other building services to the extent reasonably necessary for Tenant’s comfortable use and occupancy of the Leased Premises for general office use or as may be required by law or directed by governmental authority.

 

A.            Exterior Building maintenance including but not limited to lawn care, snow removal, parking lot maintenance, and monument signage;

 

B.            Water in the Common Areas for lavatory and drinking purposes and exterior sprinkler systems;

 

C.            Washing of windows at intervals reasonably established by Landlord;

 

8

 

D.                                    Repair and maintenance to the extent specified elsewhere in this Lease.

 

E.                                      Daily Janitorial service of all common areas and tenant space unless otherwise specified, along with waste removal services as needed.

 

Section 6.02.                             Additional Services. If Tenant requests any other utilities or building services in addition to those identified above or any of the above utilities or building services in frequency, scope, quality or quantity substantially greater than those which Landlord determines are normally required by other Tenants in the Building for general office use, then Landlord shall use reasonable efforts to attempt to furnish Tenant with such additional utilities or building services. In the event Landlord is able to and does furnish such additional utilities or building services, the costs thereof shall be borne by Tenant, who shall reimburse Landlord monthly for the same as additional rent at the same time Monthly Rental Installments and other additional rent is due.

 

If any lights, machines or equipment (including but not limited to computers) used by Tenant in the Leased Premises materially affect the temperature otherwise maintained by the Building’s air-conditioning system or generate substantially more heat in the Leased Premises than that which would normally be generated by the lights and business machines typically used by other Tenants in the Building or by Tenants in comparable office buildings, then Landlord shall have the right to install any machinery or equipment which Landlord considers reasonably necessary in order to restore the temperature balance between the Leased Premises and the rest of the Building, including equipment which modifies the Building’s air-conditioning system. All costs expended by Landlord to install any such machinery and equipment and any additional costs of operation and maintenance occasioned thereby shall be borne by Tenant, who shall reimburse Landlord for the same as provided in this Section 6.02.

 

Tenant shall not install or connect any electrical equipment other than the business machines and equipment typically used for general office purposes by Tenants in office buildings comparable to the Building (a computer not being an example of such a typical business machine with the exception of personal computers and word processors) without Landlord’s prior written consent. If Landlord determines that the electricity used by the equipment to be so installed or connected exceeds the designed load capacity of the Building’s electrical system or is in any way incompatible therewith, then Landlord shall have the right, as a condition to granting its consent, to make such modifications to the electrical system or other parts of the Building or Leased Premises, or to require Tenant to make such modifications to the equipment to be installed or connected, as Landlord considers to be reasonably necessary before such equipment may be so installed or connected. The cost of any such modifications shall be borne by Tenant, who shall reimburse Landlord for the same (or any portion thereof paid by Landlord) as provided in this Section 6.02.

 

Section 6.03.                             Interruption of Services. Tenant understands, acknowledges and agrees that any one or more of the utilities or other building services identified in Section 6.01 may be interrupted by reason of accident, emergency or other causes beyond Landlord’s control, or may be discontinued or diminished temporarily by Landlord or other persons until certain repairs, alterations or improvements can be made; that Landlord does not represent or warrant the uninterrupted availability of such utilities or building services, and that any such interruption

 

9

 

shall not be deemed an eviction or disturbance of Tenant’s right to possession, occupancy and use of the Leased Premises or any part thereof, or render Landlord liable to Tenant for damages by abatement of rent or otherwise, or relieve Tenant from the obligation to perform its covenants under this Lease.

 

ARTICLE 7 - REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES

 

Section 7.01.                             Repair and Maintenance of Building. Subject to Section 7.02 and except for any repairs made necessary by the negligence, misuse, or default of Tenant, its employees, agents, customers and invitees, Landlord shall make all necessary repairs to the exterior walls, exterior doors, windows, corridors and other common areas of the Building, and Landlord shall keep the Building in a safe, clean and neat condition and use reasonable efforts to keep all equipment used in common with other Tenants, such as elevators, plumbing, heating, air conditioning and similar equipment, in good condition and repair. Except as provided in Article 6, Article 8 and Article 10 hereof, there shall be no abatement of rent and no liability of Landlord by reason of any injury to, or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Leased Premises or in or to any fixtures, appurtenances and equipment therein or thereon.

 

Section 7.02.                             Repair and Maintenance of Leased Premises. Tenant shall keep and maintain the Leased Premises in good order, condition and repair. Except for ordinary wear and tear and damage which Tenant is not obligated to repair as provided elsewhere in this Lease, the cost of all repairs and maintenance to the Leased Premises shall be borne by Tenant, who shall be separately billed and shall reimburse Landlord for the same as additional rent, or as a part of Operating Expenses as set forth in Section 3.02.

 

Section 7.03.                             Alterations or Improvements. Tenant shall not make or permit alterations of or upon any part of the Leased Premises or additions to the Leased Premises without first obtaining the written consent of Landlord. Tenant shall at its sole expense and cost, ensure that all permitted alterations and additions which are made or necessitated thereby (whether inside or outside the Leased Premises) shall be made in accordance with all applicable laws, rules, codes, ordinances and regulations in a good and workmanlike manner and in quality equal to or better than the original construction of the Leased Premises or Building, and Tenant shall comply with such requirements as Landlord considers necessary or desirable. Landlord’s consent to any such alterations or additions shall create no responsibility or liability on the part of Landlord for the completeness, design, sufficiency, or compliance with laws, rules, codes, ordinances, or regulations of such alterations or additions of the plans, specifications or working drawings therefor.

 

Tenant shall promptly pay all costs attributable to such alterations and additions and shall promptly repair any damage to the Leased Premises, Building or Common Areas caused by or resulting from such alterations and additions. Any such alterations and additions shall remain for the benefit of Landlord, provided, however, that Landlord may elect upon ninety (90) days prior written notice to Tenant to require that Tenant, at its expense, remove at the expiration or earlier termination of this Lease all or a portion of the alterations or additions made by Tenant and repair any damage caused by such removal. Tenant’s obligations under this Section shall survive

 

10

 

the expiration or earlier termination of this Lease. Tenant shall indemnify and save harmless Landlord from all costs, loss or expense in connection with any construction or installation. No person shall be entitled to any lien directly or indirectly derived through or under Tenant or through or by virtue of any act or omission of Tenant upon the Leased Premises for any improvements or fixtures made thereon or installed therein or for or on account of any labor or material furnished to the Leased Premises or for or on account of any matter or thing whatsoever; and nothing in this Lease contained shall be construed to constitute a consent by Landlord to the creation of any lien. In the event any lien is filed against the Leased Premises, or any part thereof, for work claimed to have been done for or material claimed to have been furnished to Tenant, Tenant shall cause such lien to be discharged of record within thirty (30) days after filing by bonding or as provided or required by law or in any other lawful manner. Tenant shall indemnify and save harmless Landlord from all costs, losses, expenses, and attorneys’ fees in connection with any such lien.

 

Section 7.04.                             Trade Fixtures. Any trade fixtures installed on the Leased Premises by Tenant at its own expense, such as movable partitions, counters, shelving, showcases, mirrors and the like, may, and, at the request of Landlord, shall be removed on the expiration or earlier termination of this Lease, provided that Tenant is not then in default, that Tenant bears the cost of such removal, and further that Tenant repairs at its own expense any and all damage to the Leased Premises resulting from such removal. If Tenant fails to remove any and all such trade fixtures from the Leased Premises on the expiration or earlier termination of this Lease, all such trade fixtures shall become the property of Landlord unless Landlord elects to require their removal, in which case Tenant shall, at its expense, promptly remove the same and restore the Leased Premises to their prior condition.

 

ARTICLE 8 - FIRE OR OTHER CASUALTY; CASUALTY INSURANCE

 

Section 8.01.                             Substantial Destruction of the Building or the Leased Premises. If either the Building or the Leased Premises should be substantially destroyed or damaged (which as used herein, means destruction or material damage to at least 50% of the Building or the Leased Premises) by fire or other casualty insured under the fire and extended coverage insurance provided by Landlord in accordance with Section 8.03 hereof, then Landlord or Tenant may, at its option, terminate this Lease by giving written notice of such termination to the other party within thirty (30) days after the date of such casualty. In such event, rent shall be apportioned to and shall cease as of the date of such casualty. If neither party exercises this option, then the Leased Premises shall be reconstructed and restored, at Landlord’s expense, to substantially the same condition as they were prior to the casualty; provided however, that Landlord’s obligation hereunder shall be limited to the reconstruction of such of the Tenant finish improvements as were originally required to be made by Landlord to the extent of the availability of insurance proceeds therefor; and further provided that if Tenant has made any additional improvements pursuant to Section 7.03. Tenant shall reimburse Landlord for the cost of reconstructing the same. In the event of such reconstruction, rent shall be abated from the date of the casualty until substantial completion of the reconstruction repairs; and this Lease shall continue in full force and effect for the balance of the Term.

 

Section 8.02.                             Partial Destruction of the Leased Premises. If the Leased Premises should be damaged by fire or other casualty insured under the fire and extended coverage insurance

 

11

 

provided by Landlord in accordance with Section 8.03 hereof, but not substantially destroyed or damaged to the extent provided in Section 8.01, then such damaged part of the Leased Premises shall be reconstructed and restored, at Landlord’s expense, to substantially the same condition as it was prior to the casualty; provided however, that Landlord’s obligation hereunder shall be limited to the reconstruction of such of the Tenant finish improvements as were originally required to be made by Landlord to the extent of the availability of insurance proceeds therefor; and further provided that if Tenant has made any additional improvements pursuant to Section 7.03, Tenant shall reimburse Landlord for the cost of reconstructing the same. In such event, if the damage is expected to prevent Tenant from carrying on its business in the Leased Premises to an extent exceeding 30% of its normal business activity, rent shall be abated in the proportion which the approximate area of the damaged part bears to the total area in the Leased Premises from the date of the casualty until substantial completion of the reconstruction repairs; and this Lease shall continue in full force and effect for the balance of the Term. Landlord shall use reasonable diligence in completing such reconstruction repairs, but in the event Landlord fails to substantially complete the same within one hundred eighty (180) days from the date of the casualty, Tenant may, at its option, terminate this Lease by giving Landlord written notice of such termination, whereupon both parties shall be released from all further obligations and liability hereunder.

 

Section 8.03.                             Casualty Insurance. Landlord shall at all times during the Lease Term carry a policy of insurance which insures the Building, including the Leased Premises, against loss or damage by fire or other casualty (namely, the perils against which insurance is afforded by a standard fire insurance policy and extended coverage endorsement); provided, however, that Landlord shall not be responsible for, and shall not be obligated to insure against, any loss of or damage to any personal property of Tenant or which Tenant may have in the Building or the Leased Premises or any trade fixtures installed by or paid for by Tenant on the Leased Premises or any additional improvements which Tenant may construct on the Leased Premises, and Landlord shall not be liable for any loss or damage to such property, regardless of cause, including the negligence of Landlord and its employees, agents, customers and invitees. If the Tenant finish improvements which are in excess of the Building standard Tenant finish improvements or any alterations or improvements made by Tenant pursuant to Section 7.03 result in an increase in the premiums charged during the Lease Term on the casualty insurance carried by Landlord on the Building, then the cost of such increase in insurance premiums shall be borne by Tenant, who shall reimburse Landlord for the same as additional rent after being separately billed therefor.

 

Section 8.04.                             Waiver of Subrogation. Landlord and Tenant hereby release each other and each other’s employees, agents, customers and invitees from any and all liability for any loss of or damage or injury to person or property occurring in, on or about or to the Leased Premises, the Building or personal property within the Building by reason of fire or other casualty or any other risk which is or which is required to be insured against under this Lease, regardless of cause, including the negligence of Landlord or Tenant and their respective employees, agents, customers and invitees, and agree that all insurance carried by either of them shall contain a clause whereby the insurer waives its right of subrogation against the other party. Because the provisions of this Section 8.04 are intended to preclude the assignment of any claim mentioned herein by way of subrogation or otherwise to an insurer or any other person, each party to this Lease shall give to each insurance company which has issued to it one or more policies of fire

 

12

 

and extended coverage insurance notice of the provisions of this Section 8.04 and have such insurance policies properly endorsed, if necessary, to prevent the invalidation of such insurance by reason of the provisions of this Section 8.04.

 

ARTICLE 9 - GENERAL PUBLIC LIABILITY, INDEMNIFICATION AND INSURANCE

 

Section 9.01.                             Tenant’s Responsibility. Tenant shall assume the risk of, be responsible for, have the obligation to insure against, and indemnify Landlord and hold it harmless from any and all liability for any loss of or damage or injury to any person (including death resulting therefrom) or property occurring in, on or about the Leased Premises, regardless of cause, except for any loss or damage from fire or other casualty as provided in Section 8.03 and except for that caused directly by the sole negligence of Landlord and its employees, agents, customers and invitees; and Tenant hereby releases Landlord from any and all liability for the same. Tenant’s obligation to indemnify Landlord hereunder shall include the duty to defend against any claims asserted by reason of such loss, damage or injury and to pay any judgments, settlements, costs, fees and expenses, including attorneys’ fees, incurred in connection therewith. Notwithstanding anything herein to the contrary, Tenant shall bear the risk of any loss or damage to its property as provided in Section 8.03.

 

Section 9.02.                             Tenant’s Insurance. Tenant, in order to enable it to meet its obligation to insure against the liabilities specified in this Lease, shall at all times during the Lease Term carry, at its own expense, one or more policies of general public liability and property damage insurance, issued by one or more insurance companies acceptable to Landlord, with the following minimum coverages:

 

A.                                   Worker’s Compensation — minimum statutory amount.

 

B.                                     Comprehensive General Liability Insurance, including Blanket, Contractual Liability, Broad Form Property Damage, Personal Injury, Completed Operations, Products Liability Fire Damage. Not less than $1,000,000 Combined Single Limit for both bodily injury and property damage.

 

C.                                     Fire and Extended Coverage, Vandalism and Malicious Mischief, and Sprinkler Leakage insurance, for the full cost of replacement of Tenant’s property.

 

Such insurance policy or policies shall protect Tenant and Landlord as their interests may appear, naming Landlord and Landlord’s managing agent and mortgagee as additional insureds and shall provide that they may not be cancelled on less than thirty (30) days prior written notice to Landlord. Tenant shall furnish Landlord with Certificates of Insurance evidencing such coverage within thirty (30) days after a request to do so. Should Tenant fail to carry such insurance and furnish Landlord with such Certificates of Insurance, Landlord shall have the right, but not the obligation, to obtain such insurance and collect the cost thereof from Tenant as additional rent.

 

Section 9.03.                             Landlord’s Responsibility. Landlord shall assume the risk of, be responsible for, have the obligation to insure against, and indemnify Tenant and hold it harmless from, any and all liability for any loss of or damage or injury to person (including death resulting therefrom) or property (other than Tenant’s property as provided in Section 8.03) occurring in, on or about the

 

13

 

Common Areas, regardless of cause, except for that caused by the sole negligence of Tenant and its employees, agents, customers and invitees; and Landlord hereby releases Tenant from any and all liability for the same. Landlord’s obligation to indemnify Tenant hereunder shall include the duty to defend against any claims asserted by reason of such loss, damage or injury and to pay any judgments, settlements, costs, fees and expenses, including attorneys’ fees, incurred in connection therewith.

 

ARTICLE 10 - EMINENT DOMAIN

 

If the whole or any part of the Leased Premises shall be taken for public or quasi-public use by a governmental or other authority having the power of eminent domain or shall be conveyed to such authority in lieu of such taking, and if such taking or conveyance shall cause the remaining part of the Leased Premises to be unTenantable and inadequate for use by Tenant for the purpose for which they were leased, then either Landlord or Tenant may, at their respective option, terminate this Lease as of the date Tenant is required to surrender possession of the Leased Premises by giving written notice of such termination to the other party. If a part of the Leased Premises shall be taken or conveyed but the remaining part is Tenantable and adequate for Tenant’s use, then this Lease shall be terminated as to the part taken or conveyed as of the date Tenant surrenders possession; Landlord shall make such repairs, alterations and improvements as may be necessary to render the part not taken or conveyed Tenantable to the extent the condemnation award proceeds received by Landlord are sufficient therefor; and the rent shall be reduced in proportion to the part of the Leased Premises so taken or conveyed. All compensation awarded for such taking or conveyance shall be the property of Landlord without any deduction therefrom for any present or future estate of Tenant, and Tenant hereby assigns Landlord all its right, title and interest in and to any such award. However, Tenant shall have the right to recover from such authority, but not from Landlord, such compensation as may be awarded to Tenant on account of moving and relocation expenses and depreciation to and removal of Tenant’s property.

 

ARTICLE 11 - LIENS

 

If, because of any act or omission of Tenant or any person claiming by, through, or under Tenant, any mechanic’s lien or other lien shall be filed against the Leased Premises or the Building or against other property of Landlord (whether or not such lien is valid or enforceable as such) , Tenant shall, at its own expense, cause the same to be discharged of record within thirty (30) days after the date of filing thereof, and shall also indemnify Landlord and hold it harmless from any and all claims, losses, damages, judgments, settlements, costs and expenses, including attorneys’ fees, resulting therefrom or by reason thereof. Landlord may, but shall not be obligated to, pay the claim upon which such lien is based so as to have such lien released of record; and, if Landlord does so, then Tenant shall pay to Landlord, as additional rent, upon demand, the amount of such claim, plus all other costs and expenses incurred in connection therewith, plus interest thereon at the rate of twelve percent (12%) per annum until paid.

 

ARTICLE 12 - RENTAL, PERSONAL PROPERTY AND OTHER TAXES

 

Tenant shall pay before delinquency any and all taxes, assessments, fees or charges, including any sales, gross income, rental, business occupation or other taxes, levied or imposed upon

 

14

 

Tenant’s business operations in the Leased Premises and any personal property or similar taxes levied or imposed upon Tenant’s trade fixtures, leasehold improvements or personal property located within the Leased Premises. In the event any such taxes, assessments, fees or charges are charged to the account of, or are levied or imposed upon the property of Landlord, Tenant shall reimburse Landlord for the same as additional rent. Notwithstanding the foregoing, Tenant shall have the right to contest in good faith any such item and to defer payment until after Tenant’s liability therefor is finally determined. If any Tenant finish improvements, trade fixtures, alterations or improvements or business machines and equipment located in, on or about the Leased Premises, regardless of whether they are installed or paid for by Landlord or Tenant and whether or not they are affixed to and become a part of the realty and the property of Landlord, are assessed for real property tax purposes at a valuation higher than that at which other such property in other leased space in the Building is assessed, then Tenant shall reimburse Landlord as additional rent for the amount of real property taxes shown on the appropriate county official’s records as having been levied upon the Building or other property of Landlord by reason of such excess assessed valuation.

 

ARTICLE 13 - ASSIGNMENT AND SUBLETTING

 

Tenant may not assign this Lease or sublet the Leased Premises or any part thereof, without the prior written consent of Landlord, which consent shall not be unreasonably withheld; and any attempted assignment or subletting without such consent shall be invalid. In the event of a permitted assignment or subletting, Tenant shall nevertheless at all times remain fully responsible and liable for the payment of rent and the performance and observance of all of Tenant’s other obligations under the terms, conditions and covenants of this Lease. No assignment or subletting of the Leased Premises or any part thereof shall be binding upon Landlord unless such assignee or subtenant shall deliver to Landlord an instrument (in recordable form, if requested) containing an agreement of assumption of all of Tenant’s obligations under this Lease. Upon the occurrence of an event of default, if all or any part of the Leased Premises are then assigned or sublet, Landlord, in addition to any other remedies provided by this Lease or by law, may, at its option, collect directly from the assignee or subtenant all rent becoming due to Landlord by reason of the assignment or subletting. Any collection by Landlord from the assignee or subtenant shall not be construed to constitute a waiver or release of Tenant from the further performance of its obligations under this Lease or the making of a new lease with such assignee or subtenant.

 

Landlord may, in its sole discretion, refuse to give its consent to any proposed assignment or subletting for any reason, including, but not limited to Landlord’s determination that its interest in the Lease or the Leased Premises would be adversely affected by (i) the financial condition, creditworthiness or business reputation of the proposed assignee or subtenant, (ii) the prevailing market or quoted rental rates for space in the Building or other comparable buildings or (iii) the proposed use of the Leased Premises by, or business of, the proposed assignee or subtenant. All reasonable costs incurred by Landlord in connection with any request for consent to a proposed assignment or sublease, including costs of investigation and attorneys’ fees, shall be paid by Tenant upon demand as a further condition of any consent which may be given.

 

15

 

ARTICLE 14 - TRANSFERS BY LANDLORD

 

Section 14.01.                       Sale and Conveyance of the Building. Landlord shall have the right to sell and convey the Building at any time during the Lease Term, subject only to the rights of Tenant hereunder; and such sale and conveyance shall operate to release Landlord from liability hereunder after the date of such conveyance as provided in Section 15 .04.

 

Section 14.02.                       Subordination. Tenant’s rights under this Lease are and shall always be subordinate to the operation and effect of any mortgage, deed of trust, ground lease or master lease now or hereafter placed upon or governing the Building or the tract of land described in Exhibit A-I hereto or any part or parts thereof by Landlord. This clause shall be self-operative, and no further instrument of subordination shall be required. In confirmation thereof, Tenant shall execute such further assurance as may be required. Any mortgagee, ground lessor or trustee under any such mortgage, deed of trust, ground lease or master lease may elect that this Lease shall have priority over its mortgage, deed of trust, ground lease or master lease; and upon notification to Tenant of such election. by such mortgagee, ground lessor or trustee, this Lease shall be deemed to have priority over said mortgage, deed of trust, ground lease or master lease whether this Lease is dated prior to or subsequent to the date of such mortgage, deed of trust, ground lease or master lease. Notwithstanding the foregoing, no default by Landlord under any such mortgage, deed of trust, ground lease or master lease shall affect Tenant’s rights hereunder so long as Tenant is not in default under this Lease. Tenant hereby attorns to any successor to Landlord’s interest in this Lease and shall recognize such successor as Landlord hereunder. Tenant agrees to execute, within ten (10) days after Landlord’s request, all instruments as may be reasonably required by such successor to confirm such attornment.

 

ARTICLE 15 - DEFAULTS AND REMEDIES

 

Section 15.01.                       Defaults by Tenant. The occurrence of any one or more of the following events shall be a default under and breach of this Lease by Tenant:

 

A.                                   Tenant shall fail to pay any Monthly Rental Installment of Minimum Annual Rent or the Annual Rental Adjustment within ten (10) days after the same shall be due and payable, or any other amounts due Landlord from Tenant as additional rent or otherwise including any amounts owed by Tenant for Building Non-Standard Work within thirty (30) days after the same shall be due and payable.

 

B.                                     Tenant shall fail to perform or observe any term, condition, covenant or obligation required to be performed or observed by it under this Lease for a period of ten (10) days after written notice thereof from Landlord; provided, however, that if the term, condition, covenant or obligation to be performed by Tenant is of such nature that the same cannot reasonably be performed within such ten-day period, such default shall be deemed to have been cured if Tenant commences such performance within said ten-day period and thereafter diligently undertakes to complete the same and does so complete the required action within a reasonable time.

 

C.                                     Tenant shall vacate or abandon the Leased Premises for any period, or fail to occupy for a period of ten (10) days the Leased Premises or any substantial portion thereof.

 

16

 

D.                                    A trustee or receiver shall be appointed to take possession of substantially all of Tenant’s assets in, on or about the Leased Premises or of Tenant’s interest in this Lease (and Tenant does not regain possession within sixty (60) days after such appointment); Tenant makes an assignment for the benefit of creditors; or substantially all of Tenant’s assets in, on or about the Leased Premises or Tenant’s interest in this Lease are attached or levied under execution (and Tenant does not discharge the same within sixty (60) days thereafter)

 

E.                                      A petition in bankruptcy, insolvency, or for reorganization or arrangement is filed by or against Tenant pursuant to any federal or state statute (and, with respect to any such petition filed against it, Tenant fails to secure a stay or discharge thereof within sixty (60) days after the filing of the same).

 

Section 15.02.                       Remedies of Landlord. Upon the occurrence of any event of default set forth in Section 15 .01, Landlord shall have the following rights and remedies, in addition to those allowed by law, any one or more of which may be exercised without further notice to or demand upon Tenant:

 

A.                                   Landlord may re-enter the Leased Premises and cure any default of Tenant, in which event Tenant shall reimburse Landlord as additional rent for any costs and expenses which Landlord may incur to cure such default; and Landlord shall not be liable to Tenant for any loss or damage which Tenant may sustain by reason of Landlord’s action, regardless of whether caused by Landlord’s negligence or otherwise.

 

B.                                     1.                                       Landlord may terminate this Lease as of the date of such default, in which event (i) neither Tenant nor any person claiming under or through Tenant shall thereafter be entitled to possession of the Leased Premises, and Tenant shall immediately thereafter surrender the Leased Premises to Landlord; (ii) Landlord may re-enter the Leased Premises and dispossess Tenant or any other occupants of the Leased Premises by any means permitted by law, and may remove their effects, without prejudice to any other remedy which Landlord may have for possession or arrearages in rent; and (iii) notwithstanding the termination of this Lease( Landlord may declare all rent which would have been due under this Lease for the balance of the Term to be immediately due and payable, whereupon Tenant shall be obligated to pay the same to Landlord, together with all loss or damage which Landlord may sustain by reason of such termination, it being expressly understood and agreed that the liabilities and remedies specified in this subsection B I of Section 15 .02 shall survive the termination of this Lease; or

 

2.                                       Landlord may, without terminating this Lease, re-enter the Leased Premises and re-let all or any part of the Leased Premises for a term different from that which would otherwise have constituted the balance of the Lease Term and for rent and on terms and conditions different from those contained herein, whereupon Tenant shall be obligated to pay to Landlord as liquidated damages the difference between the rent provided for herein and that provided for in any lease covering a subsequent re-letting of the Leased Premises, for the period which would otherwise have constituted the balance of the Lease Term, together with all of Landlord’s reasonable costs and expenses for preparing the Leased Premises for re-letting, including without limitation, all repairs, Tenant finish 

 

17

 

improvements, brokers’ and attorneys’ fees, and all loss or damage which Landlord may sustain by reason of such re-entry and re-letting. In no event shall Tenant receive any offsets or rebates due to re-letting of premises at a higher rate than the rate pertaining to the Tenant’s lease. 

 

C.                                     Landlord may sue for injunctive relief or to recover damages for any loss resulting from the breach.

 

Section 15.03.                       Default by Landlord and Remedies of Tenant. It shall be a default under and breach of this Lease by Landlord if it shall fail to perform or observe any term, condition, covenant or obligation required to be performed or observed by it under this Lease for a period of thirty (30) days after notice thereof from Tenant; provided, however, that if the term, condition, covenant or obligation to be performed by Landlord is of such nature that the same cannot reasonably be performed within such thirty-day period, such default shall be deemed to have been cured if Landlord commences such performance within said thirty-day period and thereafter diligently undertakes to complete the same. Upon the occurrence of any such default, Tenant may sue for injunctive relief or to recover damages for any loss resulting from the breach, but Tenant shall not be entitled to terminate this Lease or withhold or abate any rent due hereunder.

 

Section 15.04.                       Limitation of Landlord’s Liability. If Landlord shall fail to perform or observe any term, condition, covenant or obligation required to be performed or observed by it under this Lease as provided in Section 15.03 and if Tenant shall, as a consequence thereof; recover a money judgment against Landlord, Tenant agrees that it shall look solely to Landlord’s right, title and interest in and to the Building for the collection of such judgment; and Tenant further agrees that no other assets of Landlord shall be subject to levy, execution or other process for the satisfaction of Tenant’s judgment and that Landlord shall not be liable for any deficiency.

 

The references to “Landlord” in this Lease shall be limited to mean and include only the owner or owners, at the time, of the fee simple interest in the Building. In the event of a sale or transfer of such interest (except a mortgage or other transfer as security for a debt) , the “Landlord” named herein, or, in the case of a subsequent transfer, the transferor, shall, after the date of such transfer, be automatically released from all liability for the performance or observance of any term, condition, covenant or obligation required to be performed or observed by Landlord hereunder; and the transferee shall be deemed to have assumed all of such terms, conditions, covenants and obligations accruing after the date of transfer.

 

Section 15.05.                       Non-Waiver of Defaults. The failure or delay by either party hereto to exercise or enforce, at any time, any of the rights or remedies or other provisions of this Lease shall not be construed to be a waiver thereof, nor affect the validity of any part of this Lease or the right of either party thereafter to exercise or enforce each and every such right or remedy or other provision. No waiver of any default and breach of the Lease shall be deemed to be a waiver of any other default and breach. The receipt by Landlord of less than the full rent due shall not be construed to be other than a payment on account of rent then due, nor shall any statement on Tenant’s check or any letter accompanying Tenant’s check be deemed an accord and satisfaction, and Landlord may accept such payment without prejudice to Landlord’s right to recover the balance of the rent due or to pursue any other remedies provided in this Lease. No act or omission by Landlord or its employees or agents during the Lease Term shall be deemed an 

 

18

 

acceptance of a surrender of the Leased Premises, and no agreement to accept such a surrender shall be valid unless in writing and signed by Landlord.

 

Section 15.06.                       Attorneys’ Fees. In the event Tenant or Landlord defaults in the performance or observance of any of the terms, conditions, covenants or obligations contained in this Lease and Landlord or Tenant employs attorneys to enforce all or any part of this Lease, Tenant or Landlord as the case might be, agrees to reimburse the non-defaulting party for the Attorney’s fees, thereby, whether or not suit is filed. Tenant agrees that if Landlord retains an attorney to collect any rent due or to become due or recover possession of the Leased Premises, Tenant agrees to reimburse Landlord for the attorneys’ fees incurred thereby, whether or not suit is actually filed.

 

ARTICLE 16 - LANDLORD’S RIGHT TO RELOCATE TENANT

 

This section is deleted in its entirety

 

ARTICLE 17 - NOTICE AND PLACE OF PAYMENT

 

Section 17.01.                       Notices. Any notice required or permitted to be given under this Lease or by law shall be deemed to have been given if it is written and delivered in person or mailed by Registered or Certified mail, postage prepaid, to the party who is to receive such notice at the address specified in Item M of the Basic Lease Provisions. When so mailed, the notice shall be deemed to have been given as of the date it was mailed. The address specified in Item L of the Basic Lease Provisions may be changed by giving written notice thereof to the other party.

 

Section 17.02.                       Place of Payment. All rent and other payments required to be made by Tenant to Landlord shall be delivered or mailed to Landlord’s management agent at the address specified in Item L of the Basic Lease Provisions or any other address Landlord may specify from time to time by written notice given to Tenant.

 

ARTICLE 18 - TENANT’S RESPONSIBILITY REGARDING ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES

 

Section 18.01.                       Definitions.

 

a.                                       “Environmental Laws” - All federal, state and municipal laws, ordinances, rules and regulations applicable to the environmental and ecological condition of the Leased Premises, including, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended; the Federal Resource Conservation and Recovery Act; the Federal Toxic Substance Control Act; the Clean Air Act; the Clean Water Act; the rules and regulations of the Federal Environmental Protection Agency, or any other federal, state or municipal agency or governmental board or entity having jurisdiction over the Leased Premises.

 

b.                                      “Hazardous Substances” - Includes: 

 

(i) Those substances included within the definitions of “hazardous substances,” “hazardous materials,” “toxic substances” “solid waste” or “infectious waste” in any of the Environmental Laws; and 

 

19

 

(ii) Such other substances, materials and wastes which are or become regulated under applicable local, state or federal law, or which are classified as hazardous, toxic or infectious under present or future Environmental Laws or other federal, state, or local laws or regulations.

 

Section 18.02.                       Compliance. Tenant, at its sole cost and expense, shall promptly comply with the Environmental Laws which shall impose any duty upon Tenant with respect to the use, occupancy, maintenance or alteration of the Leased Premises. Tenant shall promptly comply with any notice from any source issued pursuant to the Environmental Laws or with any notice from any insurance company pertaining to Tenant’s use, occupancy, maintenance or alteration of the Leased Premises, whether such notice shall be served upon Landlord or Tenant.

 

Section 18.03.                       Restrictions on Tenant. Tenant shall not cause or permit to occur:

 

a.                                       Any violation of the Environmental Laws related to environmental conditions on, under, or about the Leased Premises, or arising from Tenant’s use or occupancy of the Leased Premises, including, but not limited to, soil and ground water conditions.

 

b.                                      The use, generation, release, manufacture, refining, production, processing, storage or disposal of any Hazardous Substances on, under, or about the Leased Premises, or the transportation to or from the Leased Premises of any Hazardous Substances, except as necessary and appropriate for general office and warehouse use in which case the use, storage or disposal of such Hazardous Substances shall be performed in compliance with the Environmental Laws and the highest standards prevailing in the industry.

 

Section 18.04.                       Notices, Affidavits, Etc.

 

a.                                       Tenant shall immediately notify Landlord of (i) any violation by Tenant, its employees, agents, representatives, customers, invitees or contractors of the Environmental Laws on, under or about the Leased Premises, or (ii) the presence or suspected presence of any Hazardous Substances on, under or about the Leased Premises and shall immediately deliver to Landlord any notice received by Tenant relating to (i) and (ii) above from any source.

 

b.                                      Tenant shall execute affidavits, representations and the like from time to time, within five (5) days of Landlord’s request therefor, concerning Tenant’s best knowledge and belief regarding the presence of any Hazardous Substances on, under or about the Leased Premises.

 

Section 18.05.                       Landlord’s Rights.

 

a.                                       Landlord and its agent shall have the right, but not the duty, upon advance notice (except in the case of emergency when no notice shall be required) to inspect the Leased Premises and conduct tests thereon at any time to determine whether or the extent to which there has been a violation of Environmental Laws by Tenant or whether there are Hazardous Substances on, under or about the Leased 

 

20

 

Premises. In exercising its rights herein, Landlord shall use reasonable efforts to minimize interference with Tenant’s business but such entry shall not constitute an eviction of Tenant, in whole or in part, and Landlord shall not be liable for any interference, loss, or damage to Tenant’s property or business caused thereby.

 

b.                                      If Landlord, any lender or governmental agency shall ever require testing to ascertain whether there has been a release of Hazardous Substances on, under or about the Leased Premises or a violation of the Environmental Laws, and such requirement arose in whole or in part because of an act or omission on the part of Tenant, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as Additional Rent.

 

Section 18.06.                       Tenant’s Indemnification. Tenant shall indemnify and hold harmless Landlord and Landlord’s managing agent from any and all claims, loss, liability, costs, expenses or damage, including attorneys’ fees and costs of remediation, incurred by Landlord in connection with any breach by Tenant of its obligations under this Article 18. The covenants and obligations of Tenant under this Article 18 shall survive the expiration or earlier termination of this Lease.

 

ARTICLE 19 - MISCELLANEOUS GENERAL PROVISIONS

 

Section 19.01.                       Condition of Premises. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Leased Premises or the Building or with respect to the suitability or condition of any part of the Building for the conduct of Tenant’s business except as provided in this Lease.

 

Section 19.02.                       Insolvency or Bankruptcy. In no event shall this Lease be assigned or assignable by operation of law, and in no event shall this Lease be an asset of Tenant in any receivership, bankruptcy, insolvency, or reorganization proceeding.

 

Section 19.03.                       Common Areas. The term “Exterior Common Areas,” as used in this Lease, refers to the exterior areas of the Building and the land described in Exhibit A-I which are designed for use in common by all Tenants of the Building and their respective employees, agents, customers, invitees and others, and includes, by way of illustration and not limitation, the parking areas, driveways, sidewalks, dock accesses, and landscaped areas. Tenants shall have the non-exclusive right, in common with others, to the use of the Exterior Common Areas, subject to such nondiscriminatory rules and regulations as may be adopted by Landlord including those set forth in Section 5.02 and Exhibit C of this Lease.

 

The term “Interior Common Areas,” as used in this lease, refers to the building entrances and exits, hallways and stairwells, elevators, restrooms, maintenance rooms and other areas as may be designated by Landlord as part of the Interior Common Areas of the Building. Tenants shall have the non-exclusive right, in common with the other Tenants, to use the Interior Common Areas of the building, subject to such nondiscriminatory rules and regulations as may be adopted by Landlord including those set forth in Section 5.02 and Exhibit C of this Lease.

 

Section 19.04.                       Choice of Law. This Lease shall be governed by and construed pursuant to the laws of the State of Minnesota.

 

21

 

Section 19.05.                       Successors and Assigns. Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.

 

Section 19.06.                       Name. Tenant shall not, without the written consent of Landlord, use the name of the Building for any purpose other than as the address of the business to be conducted by Tenant in the Leased Premises, and in no event shall Tenant acquire any rights in or to such names.

 

Section 19.07.                       Examination of Lease. Submission of this instrument for examination or signature to Tenant does not constitute a reservation of or option for Lease, and it is not effective as a Lease or otherwise until execution by and delivery to both Landlord and Tenant.

 

Section 19.08.                       Time. Time is of the essence of this Lease and each and all of its provisions.

 

Section 19.09.                       Defined Terms and Marginal Headings. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. If more than one person is named as Tenant, the obligations of such persons are joint and several. The marginal headings and titles to the articles of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.

 

Section 19.10.                       Prior Agreements. This Lease and the letter of understanding executed pursuant to Section 2.03 hereof contain all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest.

 

Section 19.11.                       Payment of and Indemnification for Leasing Commissions. The parties hereby acknowledge, represent and warrant that the only real estate broker or brokers involved in the negotiation and execution of this Lease is that, or are those named in Item I of the Basic Lease Provisions; that Landlord is obligated to pay to it or them or for their benefit a leasing commission under its Leasing Agreement with EFH Realty Advisors, Inc.; and that no other broker or person is entitled to any leasing commission or compensation as a result of the negotiation or execution of this Lease. Each party shall indemnify the other party and hold it harmless from any and all liability for the breach of any such representation and warranty on its part and shall pay any compensation to any other broker or person who may be deemed or held to be entitled thereto. Landlord will not pay a broker commission to any broker representing Tenant for any extensions of the Lease Term and/or expansions of the Leased Premises outside the original term of the Lease.

 

Section 19.12.                       Severability of Invalid Provisions. If any provision of this Lease shall be held to be invalid, void or unenforceable, the remaining provisions hereof shall not be affected or impaired, and such remaining provisions shall remain in full force and effect.

 

Section 19.13.                       Definition of the Relationship between the Parties. Landlord shall not, by virtue of the execution of this Lease or the leasing of the Leased Premises to Tenant, become or be 

 

22

 

deemed a partner of or joint venture with Tenant in the conduct of Tenant’s business in the Leased Premises or otherwise.

 

Section 19.14.                       Estoppel Certificate. Tenant shall, within ten (10) days following receipt of a written request from Landlord, execute, acknowledge and deliver to Landlord or to any lender, purchaser or prospective lender or purchaser designated by Landlord a written statement, in the form attached hereto as Exhibit D or in such other form as Landlord may reasonably request, certifying (i) that this Lease is in full force and effect and unmodified (or, if modified, stating the nature of such modification), (ii) the date to which rent has been paid, (iii) that there are not, to Tenant’s knowledge, any uncured defaults (or specifying such defaults if any are claimed), and (iv) any other matters or state of facts reasonably required respecting the Lease or Tenant’s occupancy of the Leased Premises. Any such statement may be relied upon by any prospective purchaser or mortgagee of all or any part of the Building. Tenant’s failure to deliver such statement within such period shall be conclusive upon Tenant that this Lease is in full force and effect and unmodified, and that there are no uncured defaults in Landlord’s performance hereunder.

 

Section 19.15.                       Declaration. This Lease shall be subject in all respects to any applicable Declaration of Development Standards, Covenants and Restrictions or similar document relating to the Building.

 

Section 19.16.                       Force Majeure. This Lease and the obligations of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to fulfill or is delayed in fulfilling any of its obligations when such inability or delay is occasioned by causes beyond its control, including, but not limited to, war, invasion or hostility; work stoppages, boycotts, slowdowns or strikes; shortages of materials, equipment, labor or energy; manmade or natural casualties; adverse weather conditions or other acts of God; acts of omissions of governmental or political bodies; or civil disturbances or riots.

 

Section 19.17.                       Financial Statements. During the Lease Term and any extensions thereof, Tenant shall provide to Landlord within thirty (30) days of Landlord’s request therefor, a copy of Tenant’s most recent financial statements prepared as of the end of Tenant’s most recent fiscal year. Such financial statements shall be signed by Tenant or an authorized officer or representative of Tenant who shall attest to the truth and accuracy of the information set forth in such statements. All financial statements provided by Tenant to Landlord hereunder shall be prepared in conformity with generally accepted accounting principles, consistently applied. Financial statements disclosed by Tenant will be subject to a confidentiality clause signed by all receiving parties.

 

Section 19.18.                       Representations and Indemnifications. Any representations and indemnifications of Landlord contained in the Lease shall not be binding upon (i) any mortgagee having a mortgage presently existing or hereafter placed on the Building, or (ii) a successor to Landlord which has obtained or is in the process of obtaining fee title interest to the Building as a result of a foreclosure of any mortgage or a deed in lieu thereof.

 

23

 

Section 19.19.                       Tenant’s Representations and Warranties. The undersigned represents and warrants to Landlord that (i) Tenant is duly organized, validly existing and in good standing in accordance with the laws of the state under which it was organized; (ii) all action necessary to authorize the execution of this Lease has been taken by Tenant; and (iii) the individual executing and delivering this Lease on behalf of Tenant has been authorized to do so, and such execution and delivery shall bind Tenant. Tenant, at Landlord’s request, shall provide Landlord with evidence of such authority.

 

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

 

	
 
    	
LANDLORD:
    
	
 
    	
 
    	
 
    
	
 
    	
KENYON   CROSSINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gene Happe
    
	
 
    	
Gene   Happe
    
	
 
    	
Chairman
    
	
 
    	
 
    	
 
    
	
ATTEST:
    	
 
    	
 
    
	
 
    	
TENANT:
    
	
 
    	
 
    	
 
    
	
 
    	
TWIN   CITIES POWER, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Timothy S. Kreiger
    
	
 
    	
Title:
    	
CEO
    

 

24

 

LEASE ADDENDUM

 

This document dated May 12, 2009, is an addendum to the lease, by and between Kenyon Crossings, LLC “Landlord” and Twin Cities Power, LLC “Tenant”:

 

Where Landlord and Tenant entered into a lease for certain space in a building located at 16233 Kenyon Avenue, Lakeville, Minnesota, and the parties wish to amend said lease to provide for “Tenant” to provide for an option to rent additional underground parking stalls.

 

Landlord and Tenant agree to a modification of rent structure to allow for an increase in rent.

 

Now, therefore, the parties hereto agree as follows:

 

Additional parking stalls shall be leased at a rate of $500.00/year.

 

“Tenant” shall be offered a right of first refusal on additional parking spaces and will be notified in writing with a 48 hour response time.

 

All other provisions of the original lease shall remain unchanged.

 

IN WITNESS WHEREOF, the parties have put their hand to this addendum the day and year first written above.

 

 

	
ATTEST:
    	
 
    
	
 
    	
LANDLORD:
    
	
 
    	
 
    
	
 
    	
KENYON   CROSSINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Gene Happe
    
	
 
    	
Gene   Happe
    
	
 
    	
Chairman
    
	
 
    	
 
    
	
ATTEST:
    	
 
    
	
 
    	
TENANT:
    
	
 
    	
 
    
	
 
    	
TWIN   CITIES POWER, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Timothy S. Kreiger
    
	
 
    	
Title:   
    	
CEO
    

 

 

SECOND AMENDMENT TO LEASE

 

That certain Lease dated May 12, 2009 by and between Kenyon Crossings, LLC, a Minnesota limited liability company (“Landlord”) and Twin Cities Power, L.L.C., a Minnesota limited liability company (“Tenant”) is hereby amended by this Second Amendment to the Lease as follows:

 

A.                                   ARTICLE 1 - LEASE OF PREMISES, is hereby amended by deleting Section 1.02, letter B, and substituting the following language:

 

B.                                     Rentable Area from Commencement through 10/31/11: approximately 6,378 square feet consisting of approximately 6,378 square feet of office space.

 

Rentable Area from and after 11/01/11: approximately 8,333 square feet consisting of approximately 8,333 square feet of office space.

 

Landlord shall measure from the outside of the outside walls to the center of the interior demising walls to determine the Rentable Area and from the outside of the outside walls to determine the rentable area of the Building.

 

Tenant shall have the option to rent all vacant office space on the second floor. This option must be exercised on or before October 31, 2013.  Starting 11/01/11, Tenant shall make an option payment equivalent to CAM charges on the unrented space on the second floor at the per square foot rate that CAM is charged to all tenants, subject to Section 1.02, paragraph O in the Lease.

 

B.                                     ARTICLE 1 - LEASE OF PREMISES, is hereby amended by deleting Section 1.02, letter C, and substituting the following language:

 

C.                                     Building Expense Percentage from Commencement through 10/31/11: 24.67%; Building Expense Percentage from and after 11/01/11: 32.23%;

 

C.                                     ARTICLE 1 - LEASE OF PREMISES, is hereby amended by adding to Section 1.02, letter D the following language:

 

	
Minimum Annual Base Rent Beginning 11/01/11:
    	
 
    	
$
    	
124,995.00 
    	
 per year
    
	
Estimated Operating Expenses (2011):
    	
 
    	
57,256.92 
    	
 per year
    
	
Estimated Annual Rent Beginning 11/01/11:
    	
 
    	
$
    	
182,251.92 
    	
 per year
    

 

D.                                    ARTICLE 1 - LEASE OF PREMISES, is hereby amended by adding to Section 1.02, letter E the following language:

 

	
Minimum Monthly Base Rent Beginning 11/01/11:
    	
 
    	
$
    	
10,416.25
    	
 per month
    
	
Estimated Monthly Operating Expenses (2011):
    	
 
    	
4,771.41
    	
 per month
    
	
Estimated Monthly Rent Beginning 11/01/11:
    	
 
    	
$
    	
15,187.66
    	
 per month
    

 

 

E                                         ARTICLE 1 - LEASE OF PREMISES, is hereby amended by deleting Section 1.02, letter F, and replacing it with the following:

 

F.             Term: Seven (7) years, three (3) months;

 

	
LANDLORD:
    	
TENANT:
    
	
 
    	
 
    
	
KENYON   HOLDINGS, LLC
    	
TWIN   CITIES POWER, L.L.C.
    
	
 
    	
 
    
	
By:
    	
/s/   Keith Sperbeck
    	
 
    	
By:   
    	
/s/   Timothy Krieger
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
VP   Manager
    	
Title:   
    	
CEO
    
	
 
    	
 
    	
 
    	
 
    
	
Dated:
    	
11/21/2011
    	
Dated:   
    	
11/21/2011

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00199-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00199-of-00352.parquet"}]]