Document:

Exhibit
10.9

 

ASSIGNMENT
OF LEASE

 

This
Assignment relates to the tenant’s interest under that certain lease (the “Lease”)
originally entered into June 15, 1998, between Principal Mutual Life
Insurance Company (“Principal”), as landlord, and R.F. Machining, Inc., a
Minnesota corporation (“R.F. Machining”), as tenant, by which the premises
therein (commonly described as 13,548 square feet of net rentable area located
at 7448 West 78th Street, Bloomington, Minnesota, and more
particularly described in the Lease (the “Leased Premises”)) were demised for a
term commencing on June 1, 1998, and ending on May 31, 2005. (The Lease
was subsequently amended to increase the size of the Premises and to change the
termination date of the Lease to December 31, 2008.) The landlord’s
interest under the Lease is presently held by Lakeland Industrial, LLC, a
Delaware limited liability company (“Landlord”), and the tenant’s interest
under the Lease is presently held by BIOMEC Cardiovascular Inc., a Minnesota
corporation (“Tenant”).

 

ASSIGNMENT BY TENANT

 

For value received, Tenant does hereby assign all of
Tenant’s right, title and interest in and to the Lease from and after October 23,
2003 (the “Assignment Date”) unto Medacquisition, Inc., a Minnesota corporation
(“Assignee”), the Leased Premises to be used and occupied for the purposes
permitted under the Lease and for no other purpose, and, in consideration of
Landlord’s consent to this assignment, does hereby guarantee the performance by
Assignee, Assignee’s heirs, successors and assigns all covenants, agreements
and conditions contained in the Lease, on the part of Tenant or Assignee to be
performed.  It is expressly agreed that
this assignment shall not release or relieve Tenant from any liability under
the covenants of the Lease, and in the event of a failure of Assignee to
perform any of

 

 

the
promises, covenants or agreements contained in the Lease, this Assignment shall
not be taken to modify or limit the obligation of Tenant, and Landlord may have
such remedies against Tenant, including any confession of judgment for moneys
due as by the Lease provided, in the same manner as if this assignment had not
been made.

 

 

	
  Dated:

  	
  October 23,
  2003

  	
   

  	
  Tenant:

  
	
   

  	
   

  
	
   

  	
  BIOMEC
  Cardiovascular Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Vincent P. Owens

  	
   

  
	
   

  	
   

  	
  Its:

  	
     President
  & CEO

  	
   

  
							

 

 

ACCEPTANCE
OF TENANT’S ASSIGNMENT

 

In
consideration of the above assignment and of the written consent of Landlord
thereto, Assignee (binding also Assignee’s heirs, successors and assigns)
hereby assumes and agrees to make all payments and to perform and keep all
promises, covenants and conditions and agreements of the Lease by Tenant to be
made, kept and performed commencing on the Assignment Date, expressly adopting
for Assignee the provisions of any confession of judgment clause contained in
the Lease as though here restated.

 

It is further agreed that the taking by Landlord of
any remedy as by confession of judgment against Tenant shall not preclude
Landlord from the exercise of said remedy against Assignee, but Landlord may
have the same remedy against Assignee, its heirs, successors or assigns
simultaneously with that against Tenant, and Landlord shall be limited only and
at all events to one satisfaction for any debts or obligations which may accrue
by virtue of a breach of any covenants, promises or agreement contained in the
Lease.

 

 

	
  Dated:

  	
  October 23,
  2003

  	
   

  	
  Assignee:

  
	
   

  	
   

  
	
   

  	
  Medacquisition,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  James D. Hartman

  	
   

  
	
   

  	
   

  	
  Its: 

  	
     CEO

  	
   

  
								

 

 

CONSENT
TO TENANT’S ASSIGNMENT

 

Landlord
hereby consents to the assignment of the Lease by Tenant to Assignee in
consideration of Tenant’s promises, covenants and agreements herein above
expressed and upon the express condition that Tenant shall remain liable for
the prompt payment of the rent reserved in the Lease and the keeping and
performance of all conditions and covenants of the Lease by the Tenant to be
kept and performed, and in consideration likewise of the covenants, promises
and agreements of Assignee above set forth.  Landlord does not consent to any further
assignment of the Lease nor to any subletting of the Leased Premises or any
part thereof.

 

 

	
  Dated:

  	
                       ,
  2003

  	
   

  	
  Landlord:

  
	
   

  	
   

  
	
   

  	
  Lakeland
  Industrial, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Its:

  	
     V.P.

  	
   

  
								

 

 

idmsmpl:512659_3 (8-06-02) 9:14

 

SECOND AMENDMENT TO LEASE AGREEMENT

 

THIS
SECOND AMENDMENT made this            day
of August, 2002 by and between Lakeland Industrial, LLC, a Delaware
limited liability company, as “Landlord”,
and Biomec Cardiovascular, Inc, a Minnesota corporation, f/k/a
InnoMedica, Inc., f/k/a R. F. Machining, Inc., as “Tenant”.

 

WITNESSETH

 

WHEREAS;
Landlord’s predecessor-in-interest, Principal Life Insurance Company, an Iowa
corporation, f/k/a Principal Mutual Life Insurance Company,
c/o Principal Capital Management, LLC, a Delaware LLC, and Tenant entered into
a certain Lease Agreement (the “Lease”) dated June 15,
1998, for certain premises consisting of approximately 13,548 square feet of
net rentable area located at 7448 W 78th Street, Bloomington,
Minnesota (the “Premises”) and

 

WHEREAS;
the Lease was amended pursuant to a certain First Amendment to Lease dated October 3,
2000, by and between Landlord and Tenant (the “First
Amendment”); and

 

WHEREAS;
Landlord has succeeded to all right, title and interest of Principal Life Insurance
Company, an Iowa corporation, f/k/a Principal Mutual Life Insurance Company,
c/o Principal Capital Management, LLC, a Delaware LLC, as Landlord under the
Lease, and

 

WHEREAS;
Tenant desires to extend and expand the term of the Lease and First Amendment
and Landlord is willing to grant such extension and expansion, subject to the
terms and provisions hereinafter set forth.

 

NOW
THEREFORE, in consideration of the foregoing and for other consideration, the
receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant
agree as follows:

 

1.                                       Expansion Space:  Beginning
September 1, 2002, the Premises shall be expanded by an additional 5,931 square
feet of adjacent space (“Expansion Space”).  The Leased Premises shall then total
24,928 square feet.

 

2.                                       Expiration Date:  The
Expiration Date of the Lease shall be modified from the last day of December, 2005
to the last day of December, 2008.

 

3.                                       Extension of Term:  Commencing
September 1, 2002 and continuing through December 31, 2008 Tenant
shall pay the following monthly base rent for the Leased Premises:

 

	
  Period

  	
   

  	
  Monthly Base Rent

  	
   

  	
  Rent/SF

  	
   

  	
  Total Rent/period

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September 1,
  2002 – October 31, 2002

  	
   

  	
  $

  	
  10,047.00

  	
   

  	
  $

  	
  4.84

  	
   

  	
  $

  	
  20,094.00

  	
   

  
	
  November 1,
  2002 – December 31, 2003

  	
   

  	
  $

  	
  13,151.00

  	
   

  	
  $

  	
  6.33

  	
   

  	
  $

  	
  197,265.00

  	
   

  
	
  January 1,
  2004 – December 31, 2008

  	
   

  	
  $

  	
  14,189.00

  	
   

  	
  $

  	
  6.83

  	
   

  	
  $

  	
  851,340.00

  	
   

  

 

4.                                       Additional Rent: Pursuant to Article 3 of the Lease,
Tenant’s proportionate share of common area maintenance charges and real estate
taxes for the property (“Additional Rent”) shall be
increased from 25.62% to 33.62% effective November 1, 2002.

 

5.                                       Utilities: Beginning September 1, 2002, Tenant
shall be responsible to pay directly all gas and electric bills for services
provided to the Expansion Space.

 

 

6.                                      Improvement Allowance: Landlord agrees to provide an improvement
reimbursement allowance up to $135,000 (the “TIA”) to be used specifically for
improvements to the Premises to be constructed in accordance with plans and
specifications prepared by Genesis Architecture dated July 9, 2002 and
revised July 18, 2002 (the “Approved Plans”).  The TIA shall be applied against all costs and
expenses incurred in connection with the design of the tenant improvements, the
preparation of the Approved Plans and the construction of the tenant
improvements.  Such tenant improvements
include work performed by or at the request of Tenant prior to the date hereof;
provided, however, that the TIA shall not be applied against the cost of any
such work which was not performed in accordance with the Approved Plans.  All improvements in excess of the $135,000
allowance shall be completed at the Tenant’s sole cost and expense, and must
receive the Landlord’s prior written approval, which approval shall not be
unreasonably delayed, conditioned or denied.

 

Tenant,
at Tenant’s sole cost and expense, shall cause any and all construction work at
or about the Premises performed by or at the instance of Tenant, prior to the
date hereof to comply in all respects with city ordinances, building codes and
all other applicable laws.

 

The
Landlord, prior to the commencement of the work, shall approve the general
contractor, which approval shall not be unreasonably delayed, conditioned or
denied.  The Landlord will disburse the
improvement allowance directly to Tenant after the work has been completed and
all lien waivers and a certificate of occupancy (or, if the City of Bloomington
does not issue certificates of occupancy, written approval or “sign off” from
responsible city officials as to compliance of the tenant improvements with
city ordinances and codes) have been delivered to the Landlord evidencing
payment of the improvements and compliance with applicable laws.

 

7.              First Right of Offer as to
Additional Space:

 

a.                                       Provided Tenant is not in default hereunder,
Landlord agrees to notify Tenant of the availability of leasable premises
within the Building (“Available Tenant Space”) prior to marketing or leasing
such available Tenant Space to third parties.  When Landlord determines that any tenant space
is or will within six (6) months thereafter become available for leasing, Landlord
shall provide written notice thereof to Tenant (a “Landlord’s Space
Availability Notice”).  Thereafter,
Landlord agrees to negotiate in good faith and exclusively with Tenant for a
period of thirty (30) days after the giving of such Landlord Space Availability
Notice.  If at the end of such thirty
(30) day period, Landlord and Tenant have not reached agreement on the full and
final terms of the lease of the Available Tenant Space, Landlord shall be free
to pursue leasing opportunities for the Available Tenant Space with third
parties.  Notwithstanding anything
contained herein to the contrary, Landlord shall not be obligated to give
Tenant the right of first offer with respect to any Available Tenant Space
which becomes, or will become, available within the last twelve (12) calendar
months of the term of this Lease, unless such term is extended, whether by
exercise of any available extension options as provided in the Lease or by
other written agreement between Landlord and Tenant.

 

b.                                      If the Lease or Tenant’s right to possession
of the Premises shall terminate in any manner whatsoever before Tenant shall
exercise its rights under this Article 7, then immediately upon such
termination this Article 7 and Tenant’s rights hereunder shall simultaneously
terminate and become null and void.

 

c.                                       The first right of offer set forth in Section 7(a)
above hereby granted is personal to Biomec Cardiovascular, Inc., a Minnesota corporation
(“Biomec”), and is not transferable, except to subsidiaries of Biomec or
affiliates controlled by, or under common control with, Biomec.  In the event of an assignment or sublease (of
more than 25% of the leased premises) of the Lease, the first right of offer
shall automatically become null and void thereafter.

 

 

8.               Signage: Tenant shall have the right to erect a sign
on the side of the building.  Tenant must
first have approval from the City of Bloomington and from the Landlord on the
size and design of the sign, which Landlord approval shall not be unreasonably
delayed, conditioned or denied.  Tenant
agrees to remove said signage upon vacating the building and return the
building to the condition it was in prior to the installation of the signage.

 

9.               Roof: Landlord acknowledges that Tenant has
experienced leakage of water by and to the premises in response, Landlord has,
in addition to roof patching, engaged the services of John A. Dalsin & Son,
Inc. (“Dalsin”), roofing contractor, to perform roof repairs pursuant to a
certain proposal letter dated April 11, 2002, a copy of which has been
provided to and reviewed by Tenant, which roof repairs have been completed.  In the event Tenant experiences further roof
leakage, Tenant shall notify Landlord thereof and Landlord shall diligently
seek to (i) determine the cause of such leaks, and (ii) engage the services of Dalsin
or another roofing contractor to remedy the identified cause of such leaks.

 

10.         Deletion of Articles: The
parties agree that Article 38 (Termination Upon Demolition of Sale of Building)
shall be and hereby is terminated and deemed removed from the Lease.

 

11.         Brokers: Each
of the parties represents and warrants that except as hereafter provided, there
are no claims for brokerage commissions or finder’s fees (collectively “Leasing Commissions”) in connection with this Lease
Amendment, and agrees to indemnify the other against, and hold it harmless from
all liabilities arising from any such claim, including without limitation, the
cost of attorney’s fees in connection therewith.  Landlord agrees to pay any Leasing Commission
payable to Landlord’s broker, Welsh Companies on account of this Lease
Amendment.  Landlord further agrees to
pay a Leasing Commission to Tenant’s broker, Staubach Company pursuant to the
Lease Proposal Letter dated May 9, 2002 from Welsh Companies to Mr. Mark
Evenson.

 

12.         Option to Renew: Landlord
acknowledges that Tenant shall continue to have the right and option to renew
pursuant to Article 42 of the Lease, except it shall be applicable with
respect to the end of the Term as extended pursuant to Paragraph 2 above, or if
an Extended Term becomes applicable pursuant to Article 7 above, then at
the end of such Extended Term.

 

Except
as hereinabove amended, all other terms, covenants and conditions of the Lease
shall remain in full force and effect and the same are hereby ratified and
confirmed.

 

IN
WITNESS WHEREOF, Landlord and Tenant respectively have duly signed and sealed
these presents as of the day and year first above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
  Lakeland
  Industrial, LLC a Delaware limited

  	
   

  	
  Biomec
  Cardiovascular, Inc.,

  
	
  liability
  company

  	
   

  	
  a
  Minnesota corporation

  
	
   

  	
   

  	
   

  
	
  By: 

  	
     /s/
  Dennis Doyle

  	
   

  	
   

  	
  By:

  	
     /s/
  Vincent P. Owens

  	
   

  
	
     Dennis
  Doyle

  	
   

  	
      Vincent Owens

  
	
   

  	
   

  	
   

  
	
  Its:

  	
     V.P.

  	
   

  	
   

  	
  Its:

  	
     President
  & CEO

  	
   

  

 

 

FIRST AMENDMENT TO LEASE

 

This
First Amendment to Lease is made this 3rd day of October, 2000, by and between
Principal Life Insurance Company (an Iowa corporation), f/k/a Principal Mutual
Life Insurance Company, c/o Principal Capital Management, LLC, (a Delaware
limited liability company), as “Landlord” and Biomec Cardiovascular, Inc. (a
Minnesota corporation), f/k/a InnoMedica, Inc., f/k/a R.F. Machining, Inc., as “Tenant”.

 

W I T N E S S E T H :

 

WHEREAS, Landlord and Tenant have heretofore entered
into a certain lease dated June 3, 1998 of a certain space consisting of
approximately 13,548 square feet, located at 7448 West 78th Street,
Bloomington, Minnesota (the “Premises”), upon terms and conditions described in
the Lease; and

 

WHEREAS,
Landlord and Tenant desire to amend said Lease as described below:

 

NOW THEREFORE, in consideration of rents reserved
and of the covenants and agreements set forth, it is agreed that the Lease be
hereby amended from and after the date hereof as follows:

 

1.               Expansion Space: Beginning January 1,
2001, the Premises shall be expanded by an additional 5,449 square feet (1,880
square feet of office and 3,569 square feet of warehouse) of adjacent space (“Expansion
Space”).

 

2.               Expiration Date: The Expiration Date of the
Lease shall be modified from the last day of May, 2005 to the last day of
December, 2005.

 

3.               Base Rent: The Base Rent for the Premises
shall be as follows:

 

	
  Period

  	
   

  	
  Monthly

  Base Rent

  	
   

  	
  Total

  Per Period

  	
   

  
	
  January 1,
  2001 thru and

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Including December 31, 2003

  	
   

  	
  $

  	
  10,047.00

  	
   

  	
  $

  	
  361,692.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2004 thru and

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Including December 31, 2005

  	
   

  	
  $

  	
  10,839.00

  	
   

  	
  $

  	
  260.136.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  Base Rent

  	
   

  	
  $

  	
  621,828.00

  	
   

  

 

4.               Additional Rent: Pursuant to Article 3 of
the Lease, Tenant’s proportionate share of common area maintenance charges and
real estate taxes for the property (“Additional Rent”) shall be increased from
18.27% to 25.62% effective January 1, 2001.

 

5.               Utilities: Beginning January 1, 2001,
Tenant shall be responsible to pay directly all gas and electric bills for
services provided to the Expansion Space.

 

6.               The Landlord agrees to provide an improvement
allowance up to $54,000.00 to be used specifically for Landlord approved
improvements to the Premises and the completion of any additional space planning
or construction drawings.  The
improvements to the Premises shall be substantially the same

 

 

Amendment
to Lease

 

as
those described on the preliminary space plan and construction bid shown in
Exhibit “A”.  All improvements in excess
of the $54,000.00 allowance shall be completed at the Tenant’s sole cost and
expense, and must receive the Landlord’s prior written approval.

 

Any
code items or upgrades which may be required by the City of Bloomington must be
completed within the improvement allowance, or in the event the allowance is
exceeded, at the Tenant’s expense.

 

The
Landlord will disburse the improvement allowance after the work as been
completed by a contractor which has been previously approved by the Landlord
and all lien waivers have been delivered.

 

7.               Contingency: This First Amendment to Lease is
contingent upon the Landlord executing an acceptable lease termination with the
existing tenant in the Expansion Space, Spectralytics, Inc., no later than October 31,
2000.  In the event such agreement is not
executed on or before October 31, 2000, this agreement shall be null and
void.

 

Except
as is hereinabove set forth, all terms, provisions and covenants of the Lease
shall remain unchanged and in full force and effect.

 

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

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
  BIOMEC CARDIOVASCULAR, INC.

  	
   

  	
  PRINCIPAL LIFE INSURANCE

  
	
  (A
  Minnesota corporation)

  	
   

  	
  COMPANY

  
	
   

  	
   

  	
  (f/k/a
  Principal Mutual Life Ins. Co.)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /s/
  Vincent P. Owens

  	
   

  	
   

  	
  By:

  	
  Principal
  Capital Management, LLC

  
	
   

  	
   

  	
   

  	
  A Delaware limited liability company

  
	
  Its:

  	
     President
  & CEO

  	
   

  	
   

  	
  Its:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  Mark Scholz

  
	
   

  	
   

  	
   

  	
     MARK
  SCHOLZ

  
	
   

  	
   

  	
  Its:

  	
     DIRECTOR

  

 

2

 

EXHIBIT “A”

 

09/07/00

	
  WELSH CONSTRUCTION

  	
   

  	
   

  
	
  PROJECT COST ESTIMATE

  	
   

  	
  Requested By: Jeff Jiovanazzo

  
	
  Innomedica Expansion

  	
   

  	
  7456 W 78th Street

  
	
  Preliminary Estimate

  	
   

  	
   

  

 

	
  Proj. Mgr./Est Dave Laumb

  	
   

  	
    Plan Date:

  

 

5200 Use S.F.

	
  ACTIVITY

  CODE

  	
   

  	
  DESCRIPTION

  	
   

  	
  PRELIM

  ESTIMATE

  	
   

  	
   

  	
   

  	
  COST PER

  SQ. FT.

  	
   

  
	
  0210

  	
   

  	
  Demolition

  	
   

  	
  $

  	
  864.00

  	
   

  	
  • Remove door. VCT
  at restroom, remove cabinets.

  	
   

  	
  $

  	
  0.17

  	
   

  
	
  0925

  	
   

  	
  Carpentry Drywall

  	
   

  	
  $

  	
  8,824.00

  	
   

  	
  • New demising wall
  (104 if), 9' wall at new restrooms, install 2 doors.

  	
   

  	
  $

  	
  1.70

  	
   

  
	
  0622

  	
   

  	
  Millwork

  	
   

  	
  $

  	
  0.00

  	
   

  	
   

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  0810/0870

  	
   

  	
  Doors/ Frames /Hardware

  	
   

  	
  $

  	
  3,025.00

  	
   

  	
  • 2-3070 doors, 2- 8x8 overhead doors, lever
  latches.

  	
   

  	
  $

  	
  0.58

  	
   

  
	
  0885

  	
   

  	
  Ceramic Tile

  	
   

  	
  $

  	
  2,100.00

  	
   

  	
  • Standard grade floor and wall tile @
  restrooms.

  	
   

  	
  $

  	
  0.40

  	
   

  
	
  0950

  	
   

  	
  Acoustical ceiling

  	
   

  	
  $

  	
  1,882.00

  	
   

  	
  • Replace existing ceiling tile.

  	
   

  	
  $

  	
  0.36

  	
   

  
	
  0980

  	
   

  	
  Flooring

  	
   

  	
  $

  	
  4,216.00

  	
   

  	
  • Carpet and wall base, $15.00/sy installed.

  	
   

  	
  $

  	
  0.81

  	
   

  
	
  0990/0995

  	
   

  	
  Painting / VWC/ SSV

  	
   

  	
  $

  	
  3,429.00

  	
   

  	
  • Paint office walls, ssv new doors.  Clean warehouse ceiling.  Paint ne wdemising wall only.

  	
   

  	
  $

  	
  0.66

  	
   

  
	
   

  	
   

  	
  Specialties

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Restroom
  Accessories

  	
   

  	
  $

  	
  330.00

  	
   

  	
  • Grab bars, accessories.

  	
   

  	
  $

  	
  0.06

  	
   

  
	
  1530

  	
   

  	
  Plumbing

  	
   

  	
  $

  	
  5,800.00

  	
   

  	
  • Plumbing rough in and concrete work.

  	
   

  	
  $

  	
  1.12

  	
   

  
	
  1551

  	
   

  	
  Sprinkler Adjust

  	
   

  	
  $

  	
  830.00

  	
   

  	
  • Add sprinklers as required.

  	
   

  	
  $

  	
  0.16

  	
   

  
	
  1595

  	
   

  	
  HVAC

  	
   

  	
  $

  	
  7,150.00

  	
   

  	
  • Add 3 unit heaters, separate warehouse
  distribution, gas piping.

  	
   

  	
  $

  	
  1.38

  	
   

  
	
  1601

  	
   

  	
  Electrical

  	
   

  	
  $

  	
  4,679.00

  	
   

  	
  • Relocate distribution for service separation,
  switches for new restroom 2 exit lights.

  	
   

  	
  $

  	
  0.90

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Conditions

  	
   

  	
  $

  	
  5,631.00

  	
   

  	
  • Cleanup, supervision, insurance, permits,
  dumpster.

  	
   

  	
  $

  	
  1.08

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUBTOTAL

  	
   

  	
  $

  	
  48,760.00

  	
   

  	
  NOTE:

  	
   

  	
  $

  	
  9.38

  	
   

  
	
  1700

  	
   

  	
  CM FEE

  	
   

  	
  $

  	
  4,876.00

  	
   

  	
  • Existing ceiling and floor coverings to
  remain.

  	
   

  	
  $

  	
  0.94

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  • No allowance for removal of existing
  warehouse equipment. To include air lines, exhaust piping or fans, electrical
  disconnects or panels.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  • Two separate electrical services are existing,
  metering to remain as is.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  • No allowance for ADA strobes or horns.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
  $

  	
  53,636.00

  	
   

  	
  • Existing VCT flooring to remain.

  	
   

  	
  $

  	
  10.31

  	
   

  

 

 

LANDLORD’S WAIVER AND AGREEMENT

 

WHEREAS,
Principal Mutual Life Insurance Company, an Iowa corporation, (hereinafter “Landlord”),
is the landlord and R.F. Machining, Inc., a Minnesota corporation, (hereinafter
Tenant”), is the tenant by executed lease date June 1,1998 (hereinafter “Lease”)
covering a portion or all of the real property located at 7452 West 78th
Street, Minneapolis, Minnesota 55439-2513, as more particularly described in
Exhibit A hereto (hereinafter “Property”); and

 

WHEREAS,
Riverside Bank (hereinafter “Lender”) has made or will make a certain loan or
will sell subject to and be secured by a security interest in the personal
property or equipment described in Exhibit B hereto (hereinafter “personal
property”) which is now or about to be located on the real property.

 

NOW,
THEREFORE, so long as the aforementioned Lease exists on the Property and the
loan secured by Lender’s security interest in the personal property remain
outstanding and in consideration of the mutual covenants and agreements herein
contained, Landlord, Tenant and Lender hereby covenant and agree as follows:

 

1.                                       Except as limited in this waiver and
agreement, Landlord waives its interest in the personal property and agrees
that the personal property shall not become part of the Property regardless of
the manner in which the personal property may be attached or affixed to the
Property provided that the Property is not materially damaged or altered
thereby.  This waiver and agreement shall
be effective only to the extent of the principal indebtedness owed to the
Lender.  To the extent such principal
indebtedness is less than the fair market value of the personal property, this
waiver and agreement shall be void and in effective and Landlord’s lien or
other interest in or to the Property shall control with respect to such excess.
 Furthermore, full payment of the
principal indebtedness shall render this waiver and agreement void and
ineffective and not subject to renewal without a written agreement of the
parties hereto.

 

2.                                       Landlord agrees it will not prevent Lender or
its designee upon written request to Landlord from entering upon the Property
at all reasonable times to inspect or remove the personal property and Lender
agrees to promptly and fully repair any resulting damage to the Property.  Upon written request and notification by
Landlord of the termination of the Lease or the exercise of its rights to
possession of the property by virtue thereof, Lender agrees to cause the
personal property to be removed from the Property and any resulting damage to
the Property to be promptly repaired.  Lender
further agrees to pay Landlord a per diem fee based upon the average monthly rental
provided for in the Lease for each day that Lender is in possession of the
Property after termination of the Lease for purposes of removing the personal
property.  Within thirty (30) days after written
request and notice to Lender, if the personal property has not been removed and
Lender is not prohibited from removing its because of bankruptcy or other legal
proceedings, Landlord may remove the personal property and repair any resulting
damage to the Property, at Lender’s expense, wholly without liability to Lender
for any damage to the personal property or impairment of Lender’s security
interest.

 

3.                                       All requests, notices or service provided for
or permitted to be given or made pursuant to this waiver and agreement shall be
deemed to have been properly given or made by depositing the same in the United
States Mail, postage prepaid and registered or certified return receipt
requested and addressed to the addresses set forth below, or to such other
addresses as may from time to time be specified in writing by either party to
the other:

 

	
   

  	
  RESA 63

  	
  BRAEMAR

  
	
   

  	
   

  	
  7424-7500 78TH STREET

  BLOOMINGTON, MN

  

 

 

	
  If
  to Lender:

  	
   

  	
   

  	
  If
  to Tenant:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Riverside
  Bank

  	
   

  	
   

  	
  R.F.
  MACHINING

  	
   

  
	
  7760
  France Aves.

  	
   

  	
   

  	
  7452
  W 70TH STREET

  	
   

  
	
  Bloomington
  MN 55435 

  	
   

  	
   

  	
  MINNEAPOLIS
  MN 55439

  	
   

  
	
   

  	
   

  	
   

  

and
to Landlord:

 

711
High Street

Des
Moines IA 50392-1370

Attn:
Commercial Real Estate Equities (RESA# 63)

 

4.                                       In no
event shall Leasing Company/Lender cause to be recorded any financing statements,
Uniform Commercial Code filings or their equivalents in connection with this
Agreement which affect or otherwise impair title to Landlord’s fixtures and
real or personal property located on the Property.

 

5.                                       This waiver and agreement is binding upon and
inures to the benefit of Landlord and Lender and their respective successors
and assigns, and to no other person or entities, and shall become effective on
the date it is fully executed and acknowledged by Landlord, Tenant and Lender
and Landlord has been served with a fully executed and acknowledged copy.

 

 

	
  Lender:

  	
   

  	
  Landlord:

  	
   

  
	
  RIVERSIDE
  BANK

  	
   

  	
  PRINCIPAL
  MUTUAL LIFE INS. CO.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
     /s/
  [ILLEGIBLE]

  	
   

  	
   

  	
  By:

  	
     /s/
  Mark Scholz

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
     Mark
  Scholz

  	
   

  	
   

  
	
  Its:

  	
     Vice
  President

  	
   

  	
   

  	
  Its:

  	
     Senior
  Regional Asset Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
          6-30-98

  	
   

  	
   

  	
  Date:

  	
             6/30/98

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant:

  	
   

  
	
   

  	
   

  	
  R.F.
  MACHINING, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  [ILLEGIBLE]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
     CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
            6-30-98

  	
   

  	
   

  
												

 

 

EXHIBIT “A”

 

 

 

EXHIBIT B

 

PERSONAL PROPERTY

 

Personal
property shall include all corporate assets.

 

Notwithstanding anything in this Exhibit B to the
contrary, personal property shall expressly exclude those fixtures not owned or
acquired by Tenant and that are required solely for the operation of the
building(s) located on the Property described in Exhibit A including, without
limitation, the HVAC system, flooring, plumbing and electrical systems and
other items of similar nature.

 

 

 

LEASE AGREEMENT

 

BY AND BETWEEN

 

 

THE PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, as
LANDLORD

 

AND

 

R.F. MACHINING, INC., as TENANT

 

 

	
   

  	
  RESA 63

  	
  BRAEMAR

  
	
   

  	
   

  	
  7424-7500
  78TH STREET 

  
	
   

  	
   

  	
  BLOOMINGTON,
  MN

  

 

 

INDUSTRIAL

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Demise

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Permitted Use

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Operating
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Additional Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Repairs and Maintenance

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Sorting and
  Separation of Refuse and Trash

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Hazardous Waste

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Damage or
  Restoration

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Assignment and Subletting

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Care of Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Alteration by Tenant

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Condemnation

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Subordination

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Access to Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Rules and
  Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Covenants of Right to Lease

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Mechanic’s Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Expiration of Lease and Surrender of
  Possession

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Default-Remedies

  	
   

  

 

 

	
  24.

  	
  Re-Entry by Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Additional Rights to Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Successors, Assigns and Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Mortgagee’s Approval

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Estoppel Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  Default Rate of
  Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  32.

  	
  Exculpatory
  Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  Mortgage Protection

  	
   

  
	
   

  	
   

  	
   

  
	
  34.

  	
  Reciprocal Covenant on Notification
  of ADA Violations

  	
   

  
	
   

  	
   

  	
   

  
	
  35.

  	
  Laws that Govern

  	
   

  
	
   

  	
   

  	
   

  
	
  36.

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  37.

  	
  Relocation of Tenant

  	
   

  
	
   

  	
   

  	
   

  
	
  38.

  	
  Upon
  Demolition or Sale of Building

  	
   

  
	
   

  	
   

  	
   

  
	
  39.

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  40.

  	
  Contingency

  	
   

  
	
   

  	
   

  	
   

  
	
  41.

  	
  Handicapped
  Parking

  	
   

  
	
   

  	
   

  	
   

  
	
  42.

  	
  Option to Renew

  	
   

  

 

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT by and between The Principal
Mutual Life Insurance Company, whose address for the purpose of this lease
shall be 711 High Street, Des Moines, Iowa 50392, collectively
hereinafter referred to as “Landlord”, and R.F. Machining, Inc. (a Minnesota
corporation), whose address for the purpose of this lease (Lease) shall be 7448
West 78th Street, Bloomington, Minnesota 55439, hereinafter
referred to as “Tenant”.

 

IT IS AGREED AS FOLLOWS:

 

1.             DEMISE.

 

Landlord does hereby
lease to Tenant and Tenant hereby rents the premises (Premises) described as: 13,548
square feet of net rentable area consisting of approximately 5,135
square feet of office space and 8,413 square feet of warehouse space
located at 7448 West 78th Street, Bloomington, Minnesota
which, more particularly, includes the space and Premises shown on the site
plan attached hereto and marked Exhibit “A”.

 

Improvements.
 Landlord shall prepare and furnish the
drawings and specifications as needed for all improvements set forth in Exhibit
“B”. which is attached hereto and made a part hereof.  The total cost for space planning,
construction drawings, the actual construction and construction management is
to be paid by Landlord up to a maximum amount of $500.00 (“the Allowance”).
 In the event total costs exceed the
Allowance, Tenant shall be responsible for paying to Landlord within 30 days of
the lease commencement date, costs exceeding the Allowance or, at the sole
option of Landlord, execute a lease amendment providing for an increase in Base
Rent over the lease term equal to the costs that exceed the Allowance when
amortized at N/A%.

 

2.             TERM.

 

The term of this Lease
shall be for a period of seven (7) years, commencing on the first
day of June, 1998 and ending at midnight on the last day
of May, 2005 (Lease Term).  Notwithstanding said commencement date, if for
any reason Landlord cannot deliver possession of the leased Premises to the
Tenant on or by June 1, 1998.  Tenant shall not be obligated to pay rent
until possession of the Premises is tendered to Tenant.  In such event, the term of the Lease shall be
extended so that the term remains eighty-four months.  If the leased Premises are delivered on a date
other than the 1st day of the month, rent for that month shall be prorated and
the term extended for the full term from the first day of the following month.  In the event that the delay of delivery of
possession results from Tenant’s failure to perform work for which Tenant is
responsible, or fails to furnish or approve, as agreed, the plans and
specifications as provided above, or fails to make timely selections of
materials, color choices or other matters for which Tenant is responsible, the
rent shall, nonetheless, commence on the commencement date stated above.  If Tenant occupies the Premises prior to said commencement
date, such occupancy shall be subject to all provisions hereof and shall not
advance the termination date, and Tenant shall pay rent for such period at the
initial monthly rate set forth below.

 

1

 

3.             RENT.

 

(A)          Rent.
 Tenant shall pay for the use and
occupancy of the Premises a base rental sum (Rent) as follows:

 

	
  Months

  	
   

  	
  Monthly
  Rent

  	
   

  	
  Annual
  Rent

  	
   

  
	
  1 - 12

  	
   

  	
  $

  	
  6,353.00

  	
   

  	
  $

  	
  76,236.00

  	
   

  
	
  13 - 24

  	
   

  	
  $

  	
  6,793.00

  	
   

  	
  $

  	
  81,516.00

  	
   

  
	
  25 - 36

  	
   

  	
  $

  	
  6,793.00

  	
   

  	
  $

  	
  81,516.00

  	
   

  
	
  37 - 48

  	
   

  	
  $

  	
  6,793.00

  	
   

  	
  $

  	
  81,516.00

  	
   

  
	
  49 - 60

  	
   

  	
  $

  	
  7,358.00

  	
   

  	
  $

  	
  88,296.00

  	
   

  
	
  61 - 72

  	
   

  	
  $

  	
  7,358.00

  	
   

  	
  $

  	
  88,296.00

  	
   

  
	
  73 - 84

  	
   

  	
  $

  	
  7,358.00

  	
   

  	
  $

  	
  88,296.00

  	
   

  

 

Such Rent shall be
payable on the first day of each month in advance without demand during the
Lease Term.  Rent of any period during
the Lease Term hereof which is less than one month shall be a pro-rata portion
of the monthly installment.  Rent shall
be payable in lawful money of the United States to Landlord at the address
stated herein or to such other persons or at such other places as Landlord may
designate in writing.

 

(B)           Place
of Payment.  All such rentals shall
be paid to Landlord at c/o Welsh Companies, CM 9660. St. Paul, Minnesota
55170-9660  or at such place as
Landlord may designate from time to time, in writing addressed to Tenant.

 

(C)           Late
Charge.  Tenant hereby acknowledges
that late payment by Tenant of Rent or other sums due thereunder will cause
Landlord to incur costs not contemplated by this Lease.  Therefore, if any installment of Rent or any
other sum due from Tenant shall not be received by Landlord within ten (10) days
after such amount is due, Tenant shall pay to Landlord a late charge of six
percent (6%) of such overdue amount.  Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant’s default with respect to such
overdue amount or prevent Landlord from exercising any other right or remedy
available to Landlord.

 

(D)           Receipt.
 Receipt is hereby acknowledged of the
sum of $6,353.00 in payment of the base monthly Rent for the first month
of the Lease Term.

 

(E)           Security
Deposit.  Tenant shall deposit with
Landlord upon execution hereof $15.000.00 as security for Tenant’s
faithful performance of Tenant’s obligation hereunder.  If Tenant fails to pay Rent or other charges
due hereunder or otherwise defaults with respect to any provision of the Lease,
Landlord may use, apply or retain all or any portion of said deposit for the
payment of any Rent or other charge in default or for the payment of any other
sum to which Landlord may become obligated by reason of Tenant’s default, or to
compensate Landlord for any loss or damage which Lessor may suffer thereby.  If Landlord so uses or applies all or any
portion of said deposit, Tenant shall within ten (10) days after written demand
therefor deposit cash with Landlord in an amount sufficient to restore said
deposit to me full amount herein above stated and Tenant’s failure to do so
shall be a material breach of this Lease. 
If the monthly Rent shall, from time to time increase during the Lease
Term, Tenant shall thereupon deposit with Landlord additional security deposit
so that the amount of security deposit held by Landlord shall at all times bear
the same proportion to current rent as the original security deposit bears to
the original monthly Rent set forth in Paragraph 3A hereof.  Landlord shall not be required to keep said
deposit separate from its general accounts. 
If Tenant performs all of Tenant’s obligations hereunder, said deposit,
or so much

 

2

 

thereof as has not theretofore been applied by
Landlord shall be returned, without payment of interest or other increment for
its use to Tenant (or at Landlord’s option, to the last assignee, if any, of
Tenant’s interest hereunder) at the expiration of the Lease Term hereof, and
after Tenant has vacated the Premises.  No
trust relationship is created herein between Landlord and Tenant with respect
to said Security Deposit.

 

Tenant hereby agrees not
to look to any mortgagee as mortgagee, mortgagee-in-possession or successor in
title to the Premises for accountability for any security deposit required by
Landlord hereunder, unless said sums have actually been received by said
mortgagee as security for Tenant’s performance of this Lease.  Landlord may deliver the funds deposited
hereunder by Tenant to the purchaser of Landlord’s interest in the Premises, in
the event that such interest is sold, and thereupon Landlord shall be
discharged from any further liability with respect to said security deposit.

 

(F)           Pro
Rata Share.  Tenant’s proportionate
share shall be the percentage which the square footage of the Premises bears to
the total square footage of the following-described building(s): 13,548
square feet of 74,142 total square feet = 18.27%

 

(G)           Guarantee.  The Landlord has required, as a condition of
this Lease, execution of a Guarantee of Lease, shown as Exhibit C.

 

4.             PERMITTED USE.

 

Tenant covenants that the
Premises will be used as general office and warehouse (Permitted Use)
together with the incidental activities of Tenant, its affiliated companies or
other subsidiary companies and for no other use or purpose.  Tenant further covenants that the Premises
will not be used or occupied for any unlawful purposes.  Tenant agrees to and shall use the Premises
solely for the purpose of conducting the Permitted Use and for no other
business or purpose.  Tenant also agrees
not to conduct any catalogue, mail or telephone order sales in or from the
Premises, except of merchandise which Tenant is permitted to sell “over the
counter” in the Premises.  Tenant agrees
to conduct Tenant’s business in the Premises under Tenant’s Trade Name, which
Tenant represents that it has the right to use.  Tenant acknowledges that the Permitted Use is
not a use granted exclusively to Tenant and that Landlord reserves the right to
lease premises in the building to others for the same or a similar Permitted
Use.  Tenant further acknowledges that it
has received no written or oral inducements from Landlord or any of Landlord’s
representatives concerning this Lease (other than as specifically set forth
herein) or that Tenant will be granted any such exclusive rights.

 

5.             OPERATING EXPENSES.

 

TAXES, UTILITIES,
REPAIRS, MAINTENANCE AND REPLACEMENT

 

(1)           Taxes

 

(a)           The
Landlord shall pay all taxes payable during the Lease Term before the same are delinquent.

 

(b)           If
in the future a tax or other charge on Rents shall be imposed by any governing
body having the authority to impose such tax or charge, then such tax or charge
shall likewise be the obligation of the Landlord.

 

3

 

(c)            As
used herein, the term “taxes” shall mean real estate taxes, assessments
(whether they be general or special), sewer rents, rates and charges, transit
and transit district taxes, taxes based upon the receipt of rent, and any other
federal, state or local governmental charge, general, special, ordinary or
extraordinary (but not including income or franchise taxes or any other taxes
imposed upon or measured by Landlord’s income or profits, except as provided
herein), which may now or hereafter be levied, assessed or imposed against the
Premises.

 

(2)           Tenant
shall be separately metered and pay all utility bills incurred for which the
Tenant is not separately metered including but not limited to water, gas,
electricity, fuel, light, heat and power bills.

 

(3)           Landlord
shall be responsible for providing the following: (a) trash removal for the
building common areas; (b) any vendor services to the building common areas;
(c) landscaping; (d) all labor costs and supply costs involved in the operation
of the building; (e) all other services of any kind and nature which may be
used in or upon the Premises (except as provided for elsewhere in this Lease);
(f) management fees paid for the management of the Premises; (g) and the
repair, maintenance and replacement of the building and improvements as
follows: (i) the roof; (ii) all interior and exterior components of the
building and improvements both structural or otherwise; (iii) parking lot, (iv)
sidewalks, alleys and any and all access drives, including the removal of snow
and ice therefrom; (v) heating and air conditioning equipment, lines and
fixtures; (vi) plumbing equipment, lines and fixtures, including but not
limited to fire sprinkler and fire control systems; (vii) electrical equipment,
lines and fixtures; (viii) all ingress-egress doors; (ix) plate glass; (x) all
utility lines and services; (xi) preventive maintenance to all the building
heating and air conditioning systems; (xii) and any and all other repairs,
maintenance and replacements to the building and improvements during the term
of this Lease.

 

(4)           Landlord
shall be responsible for providing Property and Liability Insurance for the
Premises.  Should Landlord choose to
self-insure, the cost of maintaining such self insurance shall be considered an
expense of the property.  In no event
will the cost exceed the cost of maintaining first dollar coverage.

 

(5)           Tenant,
at Tenant’s sole expense, shall comply with all laws, rules, orders, ordinances,
directions, regulations and requirements of federal, state, county, and
municipal authorities now in force or which may hereafter be in force, which
shall impose any duty upon the Landlord or Tenant with respect to the use,
occupation or alteration of the Premises.

 

(6)           All
items listed in this paragraph 5(1) through paragraph 5(5) shall hereinafter be
referred to as “Operating Expenses.”

 

6.             ADDITIONAL RENT.

 

It is understood that the
Rent set forth in paragraph 3 of the Lease was negotiated in anticipation that
the Tenant pays for a pro-rata share of the Operating Expenses not paid
directly by Tenant, defined in paragraph 5 of the Lease.  Therefore, in order that Rent payable throughout
the term of this Lease shall reflect such costs, Tenant shall pay its pro-rata
share of the Operating Expenses defined in paragraph 5.  At the beginning of the Lease Term and within
60 days after the first day of each calendar year.  Landlord shall furnish to Tenant an estimate
of Tenant’s

 

4

 

pro-rata share of
Operating Expenses, not paid directly by Tenant, defined in Paragraph 5 for the
ensuing calendar year.  Tenant shall pay
to Landlord 1/12th of said estimate at the same time and place as the base rent
is to be paid pursuant to paragraph 3, above.  Landlord will furnish a statement of the
actual cost with respect to the reimbursable expenses no later than sixty (60)
days following the calendar year-end including the year following the year in
which the Lease terminates.  In the event
that Landlord is, for any reason, unable to furnish the accounting for the
prior year within the time specified above, the Landlord will furnish such
accounting as soon thereafter as practicable with the same force and effect as
the statement would have had if delivered within the time specified above.  Tenant will pay any deficiency to Landlord as
shown by such statement within thirty (30) days after receipt of statement.  If the total amount paid by Tenant during any
calendar year exceeds the actual amount of its share of the Operating Expenses
due for such calendar year, the excess will be refunded by Landlord within
thirty (30) days of the date of the statement.  Landlord will keep books and records showing
the Operating Expenses in accordance with generally accepted accounting
principles.  Upon five (5) business days
notice, Tenant shall have the right to inspect the books and records at the
office of the Landlord or its Manager.

 

7.             REPAIRS AND MAINTENANCE

 

Notwithstanding anything
to the contrary contained herein, the Tenant will keep, maintain and preserve
the Premises in a first class condition.  The Tenant at its sole cost and expense will
provide janitorial and window washing for the interior of the Premises.  When and if needed, at the Tenant’s sole cost
and expense, the Tenant will make all interior repairs and replacements
including but not limited to interior walls, doors and windows, floors, floor
coverings, light bulbs, plumbing fixtures, and electrical fixtures.  The Tenant will also repair and replace at its
sole cost and expense any broken windows and/or damage to the building or
Premises caused by the negligence of the Tenant or its employees, agents,
guests or invitees during the Lease Term hereof.  The above repairs, replacements, and/or
services must be performed by an approved contractor of the Landlord.  Should Tenant fail to perform all interior
repairs and replacements to Tenant’s Premises such repairs may be performed by
the Landlord and charged to the Tenant at the Tenant’s sole cost and expense.  Tenant will comply with all ordinances of the
City of Bloomington, rules and regulations of the Board of Health and
the laws of the State of Minnesota.  The tenant is also responsible for compliance
with all laws, rules and regulations of any governmental authority required of
either the Landlord or the Tenant relative to the repair, maintenance and
replacement in the Premises.

 

8.             SORTING AND SEPARATION OF REFUSE
AND TRASH.

 

(A)          The
Tenant covenants and agrees, as its sole cost and expense, to comply with all
present and future laws, orders and regulations of all state, federal,
municipal and local governments, departments, commissions and boards regarding
the collection, sorting, separation and recycling of waste products, garbage,
refuse and trash.  The Tenant shall sort
and separate waste products, garbage, refuge and trash into such categories as
provided by law.  Each separately sorted
category of waste products, garbage, refuse and trash shall be placed in
separate receptacles reasonably approved by the Landlord.  Such separate receptacles may, at the
Landlord’s option, be removed from the Premises in accordance with a collection
schedule prescribed by law.

 

(B)           The
Landlord reserves the right to refuse to collect or accept from the Tenant any
waste products, garbage, refuse or trash that is not separated and sorted as
required by law, and to require the Tenant arrange for such collection at the
Tenant’s sole cost and expense, utilizing a contractor satisfactory to the Landlord.  The Tenant shall pay all costs, expenses,
fines, penalties or damages that may be imposed on the Landlord or the Tenant
by reason of the Tenant’s failure to comply with the provisions of this paragraph
8(B), and, at the Tenant’s sole cost and expense, shall indemnify, defend and
hold the Landlord

 

5

 

harmless (including legal
fees and expenses) from and against any actions, claims and suits arising from
such noncompliance, utilizing counsel reasonably satisfactory to the Landlord.

 

9.             HAZARDOUS WASTE.

 

The term “Hazardous
Substances”, as used in this lease shall mean pollutants, contaminants, toxic
or hazardous wastes, or any other substances, the use and/or the removal of
which is required or the use of which is restricted, prohibited or penalized by
any “Environmental Law”, which term shall mean any federal, state or local law,
ordinance or other statute of a governmental or quasi-governmental authority
relating to pollution or protection of the environment.  Tenant hereby agrees that (A) no activity will
be conducted on the Premises that will produce any Hazardous Substance, except
for such activities that are part of the ordinary course of Tenant’s business
activities (the “Permitted Activities”) provided said Permitted Activities are
conducted in accordance with all Environmental Laws and have been approved in
advance in writing by Landlord; Tenant shall be responsible for obtaining any
required permits and paying any fees and providing any testing required by any
governmental agency; (B) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for the temporary storage of such
materials that are used in the ordinary course of Tenant’s business (the “Permitted
Materials”) provided such Permitted Materials are properly stored in a manner
and location meeting all Environmental Laws and approved in advance in writing
by Landlord; Tenant shall be responsible for obtaining any required permits and
paying any fees and providing any testing required by any governmental agency;
(C) no portion of the Premises will be used as a landfill or a dump; (D) Tenant
will not install any underground tanks of any type; (E) Tenant will not allow
any surface or subsurface conditions to exist or come into existence that
constitute, or with the passage of time may constitute a public or private
nuisance; (F) Tenant will not permit any Hazardous Substances to be brought
onto the Premises, except for the Permitted Materials described above, and if
so brought or found located thereon, the same shall be immediately removed,
with proper disposal, and all required cleanup procedures shall be diligently
undertaken pursuant to all Environmental Laws.  Landlord or Landlord’s representative shall
have the right but not the obligation to enter the Premises for the purpose of
inspecting the storage, use and disposal of Permitted Materials to ensure
compliance with all Environmental Laws.  Should
it be determined, in Landlord’s sole opinion, that said Permitted Materials are
being improperly stored, used, or disposed of, then Tenant shall immediately
take such corrective action as requested by Landlord.  Should Tenant fail to take such corrective
action within 24 hours, Landlord shall have the right to perform such work and
Tenant shall promptly reimburse Landlord for any and all costs associated with
said work.  If at any time during or
after the term of the Lease Term, the Premises are found to be so contaminated
or subject to said conditions, Tenant shall diligently institute proper and
thorough cleanup procedures at Tenant’s sole cost, and Tenant agrees to
indemnify, defend and hold harmless Landlord, its lenders, any managing agents
and leasing agents of the Premises, and their respective agents, partners,
officers, directors and employees, from all claims, demands, actions,
liabilities, costs, expenses, damages (actual or punitive) and obligations of
any nature arising from or as a result of the use of the Premises by Tenant.  The foregoing indemnification and the
responsibilities of Tenant shall survive the termination or expiration of this
Lease.

 

During the Lease Term,
Tenant shall promptly provide Landlord with copies of all summons, citations,
directives, information inquiries or requests, notices of potential
responsibility, notices of violation or deficiency, orders or decrees, claims,
complaints, investigations, judgments, letters, notice of environmental liens,
and other communications, written or oral, actual or threatened, from the
United States Environmental Protection Agency, Occupational Safety and Health
Administration, The State of Minnesota Environmental Protection Agency
or other federal, state or local agency or authority, or any other entity or
individual, concerning (i) any Hazardous Substance and the Premises; (ii) the
imposition of any lien on the Premises; or (iii) any alleged violation of or
responsibility under any Environmental Law.

 

6

 

10.           INSURANCE.

 

(A)          INSURANCE
BY LANDLORD.

 

Landlord shall, during
the Lease Term, procure and keep in force the following insurance, the cost of
which may be deemed as additional Rent payable, by Tenant pursuant to Paragraph
5 or Paragraph 6:

 

(1)            PROPERTY
INSURANCE. “All Risk” property insurance, including, without limitation,
coverage for earthquake and flood; and machinery (if applicable); sprinkler
damage; vandalism; malicious mischief.  Such
Insurance shall not cover Tenant’s equipment, trade fixtures, inventory,
fixtures or personal property located on or in the Premises;

 

(2)            LIABILITY
INSURANCE.  Commercial general liability
(lessor’s risk) insurance against any and all claims for bodily injury, death
or property damage occurring in or about the Building or the Land.  Such insurance shall have a combined single
limit of not less than One Million Dollars ($1,000,000) per occurrence per
location with a Two Million Dollar ($2,000,000) aggregate limit; and

 

(3)           OTHER.
 Such other insurance as Landlord deems
necessary and prudent.

 

(B)           INSURANCE
BY TENANT.

 

Tenant shall, during the
Lease Term, procure and keep in force the following insurance:

 

(1)            Personal
Property Insurance.  “All Risk”
property insurance, including, without limitation, coverage for earthquake and
flood; boiler and machinery (if applicable); sprinkler damage; vandalism;
malicious mischief on all equipment, trade fixtures, inventory, fixtures and
personal property located on or in the Premises, including fixtures hereinafter
constructed or installed on the Premises. 
Such insurance shall be in an amount equal to the full replacement cost
of the aggregate of the foregoing and shall provide coverage comparable to the
coverage in the standard ISO all risk form, when such form is supplemented with
the coverages required above.

 

(2)            Liability
Insurance.  Commercial general
liability insurance for the mutual benefit of Landlord and Tenant, against any
and all claims for personal injury, death or property damage occurring in, or about
the Premises (and Tenant’s operations on the Premises), or arising out of
Tenant’s or Tenant’s agents’ use or occupancy of the Premises.  Such insurance shall have a combined single
limit of not less than One Million Dollars ($1,000,000) per occurrence per
location with Two Million Dollars ($2,000,000) aggregate limit.  Such insurance shall contain a
cross-liability (severability of interests) clause and an extended (“broad form”)
liability endorsement, including contractual coverage.  The minimum limited specified above are the minimum
amounts required by Landlord, and may be revised by Landlord from time to time
to meet changed circumstances, including without limitation to reflect (i) changes in the purchasing power of the
dollar, (ii) changes indicated by the amount of plaintiff’s verdicts in
personal injury actions in the State of Minnesota or (iii) changes
consistent with the standards required by other landlords in the county in
which the Premises are located.  Such
liability insurance shall be primary and not contributing to any insurance
available to Landlord, and Landlord’s insurance (if any) shall be in excess
thereto.

 

7

 

(3)           Other.  Such other insurance as required by law,
including, without limitation, workers’ compensation insurance.

 

(4)           Form
of the Policies.  The policies
required to be maintained by Tenant pursuant to Paragraphs 10(B)(1), (2), and
(3) above shall be with companies rated A10 or better in Best Insurance Guide,
licensed to do business in the State of Minnesota and domiciled in USA,
on forms, with deductible amounts (if any), and loss payable clauses
satisfactory to Landlord, shall include Landlord and the beneficiary or
mortgagee of any deed of trust or mortgage encumbering the Premises as
additional insureds, and shall provide that such parties may, although
additional insureds, recover for any loss suffered by Tenant’s negligence.  Certified copies of policies or certificates
of insurance shall be delivered to Landlord prior to the Commencement Date; a
new policy or certificates shall be delivered to Landlord at least thirty (30)
days prior to the expiration date of the old policy.  Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms hereof
in a blanket policy, provided such blanket policy expressly affords coverage to
the Premises and to Tenant as required by this Lease.  Tenant shall obtain a written obligation on
the part of Tenant’s insurer(s) to notify Landlord and any beneficiary or
mortgagee of a deed of trust or mortgage encumbering the Premises in writing of
any delinquency in premium payments and at least thirty (30) days prior to any
cancellation or modification of any policy.

 

(5)           An
amount equal to five percent (5%) of the monthly minimum base Rental shall be
charged as additional Rent for each month in which Tenant fails to deliver to
Landlord a current certificate(s) evidencing that the insurance required
hereunder is being maintained.  Each such
policy and certificate shall provide for at least thirty (30) days prior
written notice to Landlord in the event of cancellation.

 

(C)         FAILURE
BY TENANT TO OBTAIN INSURANCE.

 

If Tenant does not take
out the insurance required pursuant to Paragraph 10(B) or keep the same in full
force and effect, Landlord may, but shall not be obligated to take out the
necessary insurance and pay the premium therefor, and Tenant shall repay to
Landlord, as additional Rent, the amount so paid promptly upon demand.  In addition, Landlord may recover from Tenant
and Tenant agrees to pay, as additional Rent, any and all reasonable expenses
(including attorneys’ fees) and damages which Landlord may sustain by reason of
the failure to Tenant to obtain and maintain such insurance, it being expressly
declared that the expenses and damages of Landlord shall not be limited to the
amount of the premiums thereon.

 

(D)         SUBROGATION.

 

In the event of loss or
damage to the Premises, each party will look first to any insurance in its
favor before making any claim against the other party.  The Tenant will obtain for each policy in
effect a provision permitting waiver of any claim against the Landlord for loss
or damage within the scope of the insurance.  In addition, each party, its agents, employees
or guests to the extent permitted, for itself and its insurers waives all such
insured claims against the other party.

 

11.           DAMAGE OR RESTORATION.

 

If, prior to or during
the Lease Term, or any extension thereof, the Premises or the building of which
the Premises may be a part, shall be so damaged or destroyed by fire or other
casualty so as to render them untenantable for the

 

8

 

purposes set forth in
Paragraph 4 hereof, then Landlord, at its sole option, shall have the right to
cancel and terminate this Lease.  If not
terminated, then Landlord shall repair and restore the Premises with all
reasonable speed to substantially the same condition as immediately prior to
such damage or destruction, and the Rent or a just and proportionate part
thereof, according to Tenant’s ability to utilize the Premises in its damaged
condition, shall be abated until the Premises shall have been repaired and
restored by Landlord.  But if the
Premises shall be so lightly damaged by fire or other casualty as not to be
rendered untenantable, then Landlord agrees to repair the Premises with
reasonable promptness and the rent accrued and accruing, shall not cease. “Untenantable”
Premises shall be such as to not allow Tenant to transact and effectuate its
operations in the ordinary course of business.

 

12.           INDEMNIFICATION.

 

Tenant shall indemnify,
hold harmless, and defend Landlord (except for Landlord’s gross negligence or
willful misconduct) against all claims, losses or liabilities for injury or
death to any person or for damage to or loss of use of any property arising out
of any occurrence in, on or about the Building or land, if caused or
contributed to by Tenant or Tenant’s agents, or arising out of any occurrence
in, upon or at the Premises or on account of the use, condition, occupational
safety or occupancy of the Premises.  It
is the intent of the parties hereto that the indemnity contained in this
Paragraph 12 shall not be limited or barred by reason of any negligence on the
part of Landlord or Landlord’s agents, except as expressly provided herein.  Such indemnification shall include and apply
to attorneys’ fees, investigation costs, and other costs actually incurred by
Landlord.  Tenant shall further
indemnify, defend and hold harmless Landlord from and against any and all
claims arising from any breach or default in the performance of any obligation
on Tenant’s part to be performed under the terms of this Lease.  The provisions of this Paragraph 12 shall
survive Lease Termination with respect to any damage, injury, death, breach or
default occurring prior to such termination.  This Lease is made on the express conditions
that Landlord shall not be liable for, or suffer loss by reason of, injury to
person or property, from whatever cause, in any way connected with the
condition, use, occupational safety or occupancy of the Premises specifically
including, without limitation, any liability for injury to the person or
property of Tenant or Tenant’s agents.

 

13.           ASSIGNMENT AND SUBLETTING.

 

Tenant may assign, sublet
or transfer this Lease to any person, firm or corporation with the written
consent of Landlord which consent shall not be unreasonably withheld, provided,
however, that no such assignment, sublease or transfer shall act as a release
of Tenant from any of the obligations and agreements on its part to be kept and
performed hereunder.  Any assignment,
sublease or transfer without the prior written consent of Landlord shall be
null and void at Landlord’s option.  Landlord’s
approval of any subtenant or assignee is conditioned upon there being no
additional compliance required with any laws, rules and regulations of any
governmental authority required of either the Landlord or the Tenant and such
approval shall create no responsibility or liability on the part of the
Landlord for any non-compliance with laws, rules and regulations of any
governmental authority.

 

Request for consent to
assign Tenant’s interest or to sublease the Premises shall be accompanied by a
statement setting forth the name of the prospective assignee or sublessee, the
financial details of the assignment or sublease (i.e. the rental and security
deposit), the term, other relevant information concerning the proposed assignee
or sublessee.  Landlord shall have the
right within ten (10) days after receipt of such written request from Tenant to
(A) withhold consent to the assignment or sublease if the withholding of such
consent is reasonable, or (B) consent to such sublease or Assignment, in which
case any rent payable by the assignee or sublessee (including any lump sum of
additional payment or other consideration for the assignment or sublease) which
exceeds the rent payable by Tenant hereunder shall be shared fifty percent
(50%) by Tenant and fifty percent (50%) by Landlord, or (C) terminate this
Lease, effective as of the commencement date of the term of such sublease or
the effective date of such assignment in which case Landlord shall have the
right to enter into a direct Lease with such proposed assignee

 

9

 

or sublessee.  If Landlord elects to so terminate the Lease,
then this Lease shall be canceled and terminated as of the effective date of
the proposed assignment or the commencement date of the proposed sublease, as
set forth in Tenant’s notice.

 

14.           CARE OF PREMISES.

 

Tenant further covenants
and agrees that during said Lease Term it will keep said Premises and every
part thereof and all buildings at any time situated thereon in a clean and
wholesome condition and generally that it will in all respects and at all times
duly comply with all lawful health and police regulations and also that it will
keep the improvements at any time situated upon the Premises safe, secure and
comfortable to the lawful and valid requirements applicable thereto.

 

15.           ALTERATION BY TENANT.

 

(A)          Tenant
is hereby given the right, at its sole cost and expense, at any time during the
term hereof, to make any alterations or improvements to the interior of the
demised premises which the Tenant may deem necessary or desirable for its
purposes; provided, however, that no alterations or improvements shall be made
without the written approval of the Landlord, which written approval shall not
be unreasonably withheld.  Landlord’s
approval of any plans, specifications or work drawings shall create no
responsibility or liability on the part of the Landlord for their completeness,
design sufficiency or compliance with any laws, rules and regulations of
governmental agencies or authorities.

 

(B)           All
work herein permitted shall be done and completed by the Tenant in a good and
workmanlike manner and in compliance with all requirements of law and of
governmental rules and regulations. 
Tenant agrees to indemnify the Landlord against all mechanics’ or other
liens arising out of any of such work, and also against any and all claims for
damages or injury which may occur during the course of any such work.  The Landlord agrees to join with the Tenant in
applying for all permits necessary to be secured from governmental authorities
and to promptly execute such consents as such authorities may require in
connection with any of the foregoing work.

 

(C)           Landlord
may require that Tenant remove any or all said alterations, improvements or
additions at the expiration of the term, and restore the Premises to their
prior condition.  Unless Landlord
requires their removal, all alterations, additions and improvements which may
be made on the Premises, shall become the property of Landlord and remain upon
and be surrendered with the Premises at the expiration of the Lease Term.  Tenant shall repair any damage to the
Premises caused by the installation or removal of Tenant’s trade fixtures,
furnishings and equipment.

 

16.           CONDEMNATION.

 

(A)          If
the leased Premises shall be wholly taken by exercise of right of eminent
domain, then this Lease shall terminate from the day the possession of the
whole of the Premises shall be required under the exercise of such power of
eminent domain.  Any award for the taking
of all or part of the Premises under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of the
Landlord.  Tenant reserves such separate
rights as it may have against the condemning authority to claim damages for
loss of its trade fixtures and the cost of removal and relocation expenses.

 

(B)           If
such part of the building or buildings in which Tenant’s business is operated
shall be condemned so as to the substantially and materially hamper the
operation of Tenant’s business, then the Rent payable

 

10

 

hereunder shall be
reduced in the proportion that the remaining area of the Premises bears to the
original area of the entire Premises leased hereunder.  If the parties are unable to agree upon the
amount of the reduction in Rent within seven (7) days from the date the Tenant’s
business is substantially and materially hampered, then it shall be arrived at
by arbitration, each party to select an arbitrator and if the two arbitrators
are unable to agree they shall select a third arbitrator and the three
arbitrators so selected shall determine the amount of such reasonable
reduction.  It is agreed that the
findings of the arbitrators shall be binding upon the parties.

 

17.           SUBORDINATION.

 

Tenant shall, upon the
written request of Landlord, agree to the subordination of this Lease and the
lien hereof to the lien of any present or future mortgage upon the premises
irrespective of the time of execution or the time of recording of any such
mortgage.  In the event of subordination
of this Lease, Landlord will attempt to obtain from the holder of any such
mortgage, a written agreement with Tenant to the effect that (A) in the event
of a foreclosure or other action taken under the mortgage by the holder
thereof, this Lease and the rights of Tenant hereunder shall not be disturbed
but shall continue in full force and effect so long as Tenant shall not be in
default hereunder; and (B) such holder will agree that in the event it or any
successor assign shall be in possession of the premises, that so long as Tenant
shall observe and perform all of the obligations of Tenant to be performed
pursuant to this Lease, such Mortgagee will perform all obligations of Landlord
required to be performed under this Lease.  The word “Mortgage” as used herein includes
mortgages, deeds of trust and any sale-leaseback transactions, or other similar
instruments, and modifications, extensions, renewals, and replacements thereof,
and any and all advances thereunder.

 

18.           ACCESS TO PREMISES

 

Landlord and its
authorized agents shall have free access to said Premises at any and all
reasonable times to inspect the same and for the purposes pertaining to the
rights of the Landlord.

 

19.           RULES AND REGULATIONS.

 

Tenant agrees to comply
with all rules and regulations promulgated by Landlord concerning the use and
enjoyment of the Premises.  Among other
things, the rules and regulations specifically prohibit outdoor storage.

 

20.           COVENANTS OF RIGHT TO LEASE.

 

Landlord covenants that
it has good and sufficient right to enter into this Lease and that they alone
have full right to lease the Premises for the Lease Term aforesaid.  Landlord further covenants that upon
performing the terms and obligations of Tenant under this Lease, Tenant will
have quite enjoyment throughout the Lease Term and any renewal or extension
thereof.

 

21.           MECHANIC’S LIENS.

 

Neither the Tenant nor
anyone claiming by, through, or under the lease, shall have the right to file
or place any mechanic’s lien or other lien of any kind or character whatsoever
upon said Premises or upon any building or improvement thereon, or upon the
leasehold interest of the Tenant therein, and notice is hereby given that no
contractor, subcontractor, or anyone else who may furnish any material, service
or labor for any building, improvements, alteration repairs or any part
thereof, shall at any time be or become entitled to any lien thereon, and for
the further security of the Landlord, the Tenant covenants and agrees to give
actual notice thereof in

 

11

 

advance, to any and all
contractors and subcontractors who may furnish or agree to furnish any such
material, service or labor.

 

22.           EXPIRATION OF LEASE AND SURRENDER OF
POSSESSION.

 

(A)          Holding
Over.  Tenant will, at the termination of
this Lease by lapse of time or otherwise, yield up immediate possession to
Landlord.  If Tenant retains possession
of the Premises or any part thereof after such termination, then Landlord may,
at its option, serve written notice upon Tenant that such holding over
constitutes any one of (i) renewal of this Lease for one year, and from year to
year thereafter, or (ii) creation of a month-to-month tenancy, upon the terms
and conditions set forth in this Lease, or (iii) creation of a tenancy at
sufferance, in any case upon the terms and conditions set forth in this Lease;
provided, however, that the monthly Rent (or daily Rent under (iii)) shall, in
addition to all other sums which are to be paid by Tenant hereunder, whether or
not as additional Rent, be equal to double the Rent being paid monthly to
Landlord under this Lease immediately prior to such termination (prorated in
the case of (iii) on the basis of a 365-day year for each day Tenant remains in
possession).  If no such notice is
served, then a tenancy at sufferance shall be deemed to be created at the Rent
in the preceding sentence.  Tenant shall
also pay to Landlord all damages sustained by Landlord resulting from retention
of possession by Tenant, including the loss of any proposed subsequent tenant
for any portion of the Premises.  The
provisions of this paragraph shall not constitute a waiver by Landlord of any
right of re-entry as herein set forth; nor shall receipt of any Rent or any
other act in apparent affirmance of the tenancy operate as a waiver of the
right to terminate this Lease for a breach of any of the terms, covenants, or
obligations herein on Tenant’s part to be performed.

 

(B)           Upon
the expiration of this Lease, by lapse of time or otherwise, any and all
buildings, improvements or additions erected on said Premises by Tenant shall
be and become the property of the Landlord without any payment therefor and
Tenant shall surrender said Premises, together with all buildings and
improvements thereon, whether erected by Tenant or Landlord, ordinary wear and
tear and damage by fire or other casualty excepted.

 

(C)           Tenant
may install adequate equipment, fixtures and machinery for the carrying on of
its business and upon the termination of this Lease by lapse of time or
otherwise, provided all Rents and other amounts that may be due and owing to
Landlord have been paid and the provisions of this Lease complied with, the
Tenant may remove such equipment, fixtures and machinery installed by it at Tenant’s
cost.  However, upon removal of such
equipment, fixtures and machinery, the Tenant shall also repair any damage
caused by such removal or installation.

 

23.           DEFAULT-REMEDIES.

 

The occurrence of one or
more of the following events shall constitute a material default and breach of
this Lease by Tenant:

 

(A)          Failure
by Tenant to make payment of any Rent herein agreed to be paid or any other
payment required to be made by Tenant hereunder, as and when due, and such a
failure shall continue for a period of ten (10) days;

 

(B)          The
making by Tenant of any assignment or arrangement for the benefit of creditors;

 

12

 

(C)           The
filing by Tenant of a petition in bankruptcy or for any other relief under the
Federal Bankruptcy Law or any other applicable statute;

 

(D)           The
levying of an attachment, execution of other judicial seizure upon the Tenant’s
property in or interest under this lease, which is not satisfied or released or
the enforcement thereof stayed or superseded by an appropriate proceeding
within thirty (30) days thereafter;

 

(E)            The
filing of an involuntary petition in bankruptcy or for reorganization or
arrangement under the Federal Bankruptcy Law against Tenant and such
involuntary petition is not withdrawn, dismissed, stayed or discharged within
sixty (60) days from the filing thereof;

 

(F)            The
appointment of a Receiver or Trustee to take possession of the property of
Tenant or of Tenant’s business or assets and the order or decree appointing
such Receiver or Trustee shall have remained in force undischarged or unstayed
for thirty (30) days after the entry of such order or decree;

 

(G)            The
vacating or abandonment of the Premises.

 

(H)           The
failure by Tenant to perform or observe any other term, covenant, agreement or
condition to be performed or kept by the Tenant under the terms, conditions, or
provisions of this lease, and such a failure shall continue uncorrected for
thirty (30) days after written notice thereof has been given by Landlord to the
Tenant.

 

Then and in any such
event Landlord shall have the right, at the option of the Landlord, then or at
any time thereafter while such default or defaults shall continue, to elect
either (1) to cure such default or defaults at its own expense and without prejudice
to any other remedies which it might otherwise have, any payment made or
expenses incurred by Landlord in curing such default with interest thereon at
eighteen percent (18%) per annum to be and become additional Rent to be paid by
Tenant with the next installment of Rent falling due thereafter; or (2) to
re-enter the Premises, without notice, and dispossess Tenant and anyone
claiming under Tenant by summary proceedings or otherwise, and remove their
effects, and take complete possession of the Premises and either (a) declare
this Lease forfeited and the Lease Term ended, or (b) elect to continue this
Lease in full force and effect, but with the right at any time thereafter to
declare this Lease forfeited and the Lease Term ended.  In such re-entry the Landlord may, with or
without process of law, remove all persons from the Premises, and Tenant hereby
covenants in such event, for itself and all others occupying the Premises under
Tenant, to peacefully yield up and surrender the Premises to the Landlord.  Should Landlord declare this Lease forfeited
and the Lease Term ended, the Landlord shall be entitled to recover from Tenant
the Rent and all other sums due and owing by Tenant to the date of termination,
plus the costs of curing all of Tenant’s defaults existing at or prior to the
date of termination, plus the
cost of recovering possession of the Premises, plus the deficiency, if any,
between Tenant’s Rent for the balance of the Lease Term provided hereunder and
the Rent obtained by Landlord under another lease for the Premises for the
balance of the Lease Term remaining under this lease.  Landlord shall use its best efforts to rent
the Premises with or without advertising, and on the best terms available for
the remainder of the Lease Term hereof, or for such longer or shorter period as
Landlord shall deem advisable.  Tenant
shall remain liable for payments of all Rent and other charges and costs
imposed on Tenant herein, in the amounts, at the times and upon the conditions
as herein provided, but Landlord shall credit against such liability of the
Tenant all amounts received by Landlord from such reletting after first
reimbursing itself for all costs incurred in curing Tenant’s defaults and
re-entering, preparing and refinishing the Premises for reletting, and
reletting the Premises, and for the payment of any procurement fee or
commission paid to obtain another tenant, and for the attorney fees and legal
costs incurred by Landlord.

 

13

 

24.           RE-ENTRY BY LANDLORD.

 

No re-entry by Landlord
or any action brought by Landlord to oust Tenant from the Premises shall
operate to terminate this Lease unless Landlord shall have given written notice
of termination to Tenant, in which event Tenant’s liability shall be as above
provided.  No right or remedy granted to
Landlord herein is intended to be exclusive of any other right or remedy, and
each and every right and remedy herein provided shall be cumulative and in
addition to any other right or remedy hereunder or now or hereafter existing in
law or equity or by statute.  In the
event of termination of this Lease, Tenant waives any and all rights to redeem
the Premises either given by any statute now in effect or hereafter enacted.

 

25.           ADDITIONAL RIGHTS TO LANDLORD.

 

(A)          In
addition to any and all other remedies, Landlord may restrain any threatened
breach of any covenant, condition or agreement herein contained but the mention
herein of any particular remedy or right shall not preclude the Landlord from
any other remedy or right it may have either at law or equity, or by virtue of
some other provision of this Lease; nor shall the consent to one act, which
would otherwise be a violation or waiver of or redress for one violation either
of covenant, promise agreement undertaking or condition, prevent a subsequent
act which would originally have constituted a violation from having all the
force and effect of any original violation.

 

(B)           Receipt
by Landlord of Rent or other payments from the Tenant shall not be deemed to
operate as a waiver of any rights of the Landlord to enforce payment of any
Rent, additional Rent, or other payments previously due or which may thereafter
become due, or of any rights of the Landlord to terminate this Lease or to
exercise any remedy or right which otherwise might be available to the
Landlord, the right of Landlord to declare a forfeiture for each and every
breach of this Lease is a continuing one for the life of this Lease.

 

26.           SUCCESSORS, ASSIGNS AND LIABILITY.

 

The terms, covenants,
conditions and agreements herein contained and as the same may from time to
time hereafter be supplemented, modified or amended, shall apply to, bind, and
inure to the benefit of the parties hereto and their legal representatives,
successors and assigns, respectively.  In
the event either party now or hereafter shall consist of more than one person,
firm or corporation, then and in such event all such person, firms and/or
corporations shall be jointly and severally liable as parties hereunder.

 

27.           NOTICES.

 

All notices required
under this Lease shall be in writing and shall be deemed to be properly served
when posted by certified United States mail, postage prepaid, return receipt
requested, addressed to the party to whom directed at the address herein set
forth or at such other address as may be from time to time designated in
writing by the party changing such address.

 

	
  Landlord

  	
   

  	
  Tenant

  
	
    The Principal Mutual Ins. Co.

  	
   

  	
    R.F. Machining, Inc.

  	
   

  
	
    711 High Street

  	
   

  	
    7448 West 78th Street

  	
   

  
	
    Des Moines. IA 50392

  	
   

  	
    Bloomington, MN 55439

  	
   

  

 

14

 

28.           MORTGAGEE’S APPROVAL.

 

If Landlord’s mortgagee
shall require modifications of the terms and provisions of this Lease, Tenant
agrees to execute and deliver to Landlord the agreements required to affect
such Lease modification within thirty (30) days after Landlord’s request
therefor.  In no event, however, shall
Tenant be required to agree to any modification of the provision of this Lease
relating to: the amount of Rent or other charges reserved herein; the size
and/or general location of the Premises; the duration and/or commencement date
of the Lease Term; or reducing the improvements to be made by Landlord to the
Premises prior to the delivery of possession.

 

29.           ESTOPPEL CERTIFICATES.

 

Tenant agrees that at any
time within ten (10) days following written notice from Landlord, it will
execute, acknowledge and deliver to Landlord or any proposed mortgagee or
purchaser a statement in writing certifying whether this Lease is in full force
and effect and, if it is in full force and effect, what modifications have been
made to the date of the certificates and whether or not any defaults or offsets
exist with respect to this Lease and, if there are, what they are claimed to be
and setting forth dates to which Rent or other charges have been paid in
advance, if any, and stating whether or not Landlord is in default, if so,
specifying what the default may be.  The
failure of Tenant to execute, acknowledge, and deliver to Landlord a statement
as above shall constitute an acknowledgment by Tenant that this Lease is
unmodified and in full force and effect and that the Rent and other charges
have been duly and fully paid to and including the respective due dates
immediately preceding the date of Landlord’s notice to Tenant and shall
constitute as to any person, a waiver of any defaults which may exist prior to
such notice.

 

30.           MISCELLANEOUS.

 

(A)          In
the event that Tenant desires to store or maintain the type or character of
goods or materials in the Premises which cause an increase in insurance
premiums, Tenant shall first obtain the written consent of Landlord and Tenant
shall reimburse Landlord for any increase in premiums caused thereby.

 

(B)           If
any term or provision of this Lease is declared invalid or unenforceable, the
remainder of this Lease shall not be affected by such determination and shall
continue to be valid and enforceable.

 

(C)           This
agreement contains the entire Lease contract between the parties hereto.  A short form of this Lease, for the purpose of
recording, may be executed by the parties simultaneously herewith and if either
party desires to record this Lease, the short form shall be used for that
purpose.

 

(D)           The
parties executing this Lease warrant that this agreement is being executed with
full corporate authority and that the officers whose signatures appear hereon
are duly authorized and empowered to make and execute this Lease in the name of
the corporation by appropriate and legal resolution of its Board of Directors.

 

(E)           Unless
the context clearly denotes the contrary, the word “Rent” or “Rental” as used
in this Lease not only includes cash Rental, but also all other payments and
obligations to pay assumed by the Tenant, whether such obligations to pay run
to the Landlord or to other parties.

 

(F)           It
is mutually agreed by and between Landlord and Tenant that the respective
parties hereto shall, and they hereby do, waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant’s use of or occupancy of
the Premises or any claim of

 

15

 

injury or damage and any
emergency statutory or any other statutory remedy.  If Landlord commences any summary proceeding
for nonpayment of Rent, Tenant will not interpose any counterclaim of whatever
nature or description in any such proceeding.

 

31.           DEFAULT RATE OF INTEREST

 

All amounts owed by
Tenant to Landlord pursuant to any provision of this Lease shall bear interest
from the date due until paid at eighteen percent (18%) per annum, unless a
lesser rate shall then be the maximum rate permissible by law with respect
thereto, in which event said lesser rate shall be charged.

 

32.           EXCULPATORY PROVISIONS

 

It is expressly
understood and agreed by and between the parties hereto, anything herein to the
contrary notwithstanding, that each and all of the representations, warranties,
covenants, undertakings and agreements herein made on the part of Landlord
while in form purporting to be the representations, warranties, covenants,
undertakings and agreements of Landlord are nevertheless each and every one of
them made and intended, not as personal representations, warranties, covenants,
undertakings and agreements by Landlord or for the purpose or with the
intention of binding Landlord personally, but are made and intended for the
purpose only of subjecting Landlord’s interest in the Premises to the terms of
this Lease and for no other purpose whatsoever, and in case of default
hereunder by Landlord, Tenant shall look solely to the interests of Landlord in
the Premises; and that Landlord shall not have any personal liability to pay
any indebtedness accruing hereunder or to perform any covenant, either express
or implied, herein contained, all such personal liability, if any, being
expressly waived and released by Tenant and by all persons claiming by, through
or under Tenant.

 

33.           MORTGAGE PROTECTION

 

Tenant agrees to give any
holder of any first mortgage or first trust deed in the nature of a mortgage
(both hereinafter referred to as a “First Mortgage”) against the Premises, or
any interest therein, by registered or certified mail, a copy of any notice or
claim of default served upon Landlord by Tenant, provided that prior to such
notice Tenant has been notified in writing (by way of service on Tenant of a
copy of an assignment of Landlord’s interest in leases, or otherwise) of the
address of such First Mortgage holder.  Tenant
further agrees that if Landlord shall have failed to cure any such default
within twenty (20) days after such notice to Landlord (or if such default
cannot be cured or corrected within that time, then such additional time as may
be necessary if Landlord has commenced within such twenty (20) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default), then the holder of the First Mortgage shall have an additional thirty
(30) days within which to cure or correct such Default (or if such default
cannot be cured or corrected within that time, then such additional time as may
be necessary if such holder of the First Mortgage has commenced with such
thirty (30) days and is diligently pursuing the remedies or steps necessary to
cure or correct such default, including the time necessary to obtain possession
if possession is necessary to cure or correct such default.

 

34.           RECIPROCAL COVENANT ON NOTIFICATION OF ADA
VIOLATIONS

 

Within ten (10) days
after receipt, Landlord and Tenant shall advise the other party in writing, and
provide the other with copies of (as applicable), any notices alleging
violation of the Americans with Disabilities Act of 1990 (“ADA”) relating to
any portion of the property or the Premises; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
property or the Premises; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA
and relating to any portion of the property or the Premises.

 

16

 

35.           LAWS THAT GOVERN.

 

Landlord and Tenant agree
that the term and conditions of this Lease shall be governed by the Laws of the
State of Minnesota.

 

36.           FINANCIAL STATEMENTS

 

Within
ten (10) business days after Landlord’s request, Tenant shall deliver to
Landlord the current financial statements of Tenant, and financial statement of
the two (2) years prior to the current financial statements year, with an
opinion of a certified public accountant.  This information includes a balance sheet and
profit and loss statement for the most recent prior year, all prepared in
accordance with generally accepted accounting principles consistently applied.

 

37.           RELOCATION OF TENANT

 

At any time hereafter,
Landlord may substitute for the Premises other premises (herein referred to as “the
new Premises”) provided:

 

a)          the
new Premises shall be similar to the Premises in area and use for Tenant’s
purposes and shall be located in the Building; and, if Tenant is already in
occupancy of the Premises, then in addition:

 

b)          Landlord
shall pay the expenses of Tenant for moving from the Premises to the new
Premises so that they are substantially similar to the Premises;

 

c)          such
move shall be made during evenings, weekends or otherwise, so as to incur the
least inconvenience to Tenant; and

 

d)          Landlord
shall first give the tenant at least thirty (30) day’s notice before making
such change.  If Landlord shall exercise
its right hereunder, the new Premises shall thereafter be deemed for the
purposes of this Lease as the Premises.

 

38.           UPON DEMOLITION OR SALE OF BUILDING

 

Landlord shall have the
right to terminate this Lease at any time if Landlord, or the holder of legal
title to the Building proposes or is required, for any reason, to remodel or
demolish the Building or any substantial portion of the Building or if Landlord
decides to sell or cause to be sold the Building by conveyance of a deed or by
assignment of the beneficial interest in the land trust holding legal title to
the Building or, Landlord’s stockholders decide to sell at least sixty-six and
two-thirds percent of Landlord’s capital stock (if Landlord is a corporation),
or if Landlord decides to convey or cause to be conveyed its interest in the
ground lease affecting the Building (if any), or to make or cause to be made a
ground lease, or to lease or cause to be leased to one tenant for a term of ten
years or more either all the Building or all the Building except the ground
floor.  Such termination shall become
effective and conclusive by notice of such termination to the tenant.  If Landlord sells or causes to be sold the
Building by conveyance of a deed or by assignment of the beneficial interest in
the land trust holding legal title to the land thereunder, then the purchaser
of the Building or the ground lessee under such ground lease shall also have
the right to terminate this Lease.  Such
termination shall become effective and conclusive of such sale, or not more
than ninety (90) days after execution of such ground lease, as the case may be,
and not less than ninety (90) days prior to the effective date of such
termination.  No money or other
consideration shall be payable by Landlord or such purchaser

 

17

 

or ground lessee to
Tenant for this right and the right hereby reserved to Landlord, the purchaser
of ground lessee shall inure to all purchasers, assignors, lessees, transferees
and ground lessees, as the case may be, and in addition to all other rights of
Landlord.

 

39.           CONFIDENTIALITY

 

Tenant agrees that this
Agreement of Lease will be kept confidential and shall not, without Landlord’s
prior written consent, be disclosed by the Tenant or by its agents,
representatives and employees who have a need to know and who are informed by
Tenant of the confidential nature of the Agreement of Lease.

 

40.           CONTINGENCY

 

The Lease shall be
contingent upon Landlord obtaining an acceptable Termination of Lease Agreement
from Innovex, Inc.

 

41.           HANDICAPPED PARKING STALL

 

Landlord agrees to
provide, at its expense, one (1) handicapped parking stall and curb cut in
front of the Premises.

 

42.           OPTION TO RENEW

 

Provided Tenant has not been
in default and has performed all of its covenants and obligations hereunder,
Tenant shall have the option to extend the Term of this Lease (hereinafter, the
“Option”) for one consecutive period of three (3) years upon the same terms and
conditions, except the Base Rent shall be at the then current market rates.  Tenant shall provide Landlord with six (6)
months prior written notice of it’s intent to exercise said Option.

 

It is understood and
agreed that this Option is personal to R.F. Machining, Inc. and is not
transferable; in the event of any assignment or subleasing of any or all of the
Demised Premises said Option shall be null and void.

 

If and from the date
Tenant exercises the Option, Tenant agrees that it waives any right it may have
to assign or sublet all or part of the Demised Premises.

 

18

 

IN WITNESS WHEREOF, the
parties hereto may execute this Lease in counterpart copies, each of which
shall be deemed originals or Landlord and Tenant have executed this Lease the
date and year noted below.

 

Signed at
              ,
on this 15th day of June, 1998.

 

	
   

  	
  LANDLORD:

  
	
   

  	
  PRINCIPAL
  MUTUAL LIFE INS. CO.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  [ILLEGIBLE]

  	
  Title

  
	
   

  	
  Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Dennis D. Ballard

  	
   

  
	
   

  	
   

  	
  DENNIS D. BALLARD, Counsel

  	
  Title

  
						

 

 

Signed at
             ,
on this         day of
                          ,
1998.

 

 

	
   

  	
  TENANT:

  
	
   

  	
  R.F. MACHINING,
  INC.

  
	
   

  	
  (a
  Minnesota corporation)

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  CEO

  	
  Title

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title

  
							

 

 

	
  State of Minnesota

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  County of Hennepin

  	
  )

  	
   

  

 

 

On
this 3 day of June, 1998, before
me, the undersigned, Notary Public in and for the State of Minnesota personally
appeared [ILLEGIBLE] and                        , to me personally known, who being by me
duly sworn, did say that they are the CEO and                                 respectively
of said corporation executing the within and foregoing instrument, that the
seal affixed thereto is the seal of the said corporation; that the instrument
was signed and sealed on behalf of the corporation by authority its Board of
Directors; and that the said CEO and                              as
such officers acknowledged the execution of said instrument to be the voluntary
act and deed of the corporation by it and by them voluntarily executed.

 

 

	
   

  	
  /s/ Lynne Plowman

  	
   

  
	
   

  	
  Notary Public in and
  for the State of Minnesota

  	
   

  

 

 

	
   

  	
  [SEAL]

  	
  LYNNE PLOWMAN

  
	
   

  	
  NOTARY PUBLIC - MINNESOTA

  
	
   

  	
  HENNEPIN COUNTY

  
	
   

  	
  My
  Commission Expires Jan 31, 2000

  

 

19

 

EXHIBIT B

 

The
Landlord agrees to re-key the Leased Premises and service and certify that the
HVAC unit(s) serving the Leased Premises are in good working condition as of
the Commencement Date.

 

Other
than the improvements described above, Tenant agrees to accept the Leased
Premises in its “AS-IS” condition.

 

20

 

EXHIBIT C

 

GUARANTY OF LEASE

 

In consideration of and as an inducement to
Lessor to enter into that certain Lease dated the     
day of June, 1998, (“Lease”) between The Principal Mutual Life Insurance
Company, (“Landlord”) and R.F. Machining, Inc., (a Minnesota corporation), (“Tenant”)
and in reliance on this Guaranty, Innovex, Inc., a Minnesota corporation, (“Guarantor”)
hereby unconditionally guarantees the due and punctual payment of all Rent,
both Basic and Additional, if any (as defined in the Lease), and all the other
sums due (including interest and penalties) and to be paid by Tenant pursuant
to the Lease and the performance by Tenant of all the terms, conditions,
covenants and agreements of the Lease, and Guarantor agrees to pay all of
Landlord’s costs, expenses and reasonable attorney’s fees incurred in enforcing
the covenants and agreement of Tenant in the Lease or incurred by Landlord in
enforcing this Guaranty.

 

Guarantor waives notice of the acceptance of
this Agreement, presentment, protest, notice of protest and any and all demand
for performance of any and all notices of nonperformance which might otherwise
be a condition precedent to the liability of Guarantor, without first
proceeding or making claim or exhausting any remedy against Tenant or pursuing
any particular remedy or remedies available to Landlord.

 

Guarantor agrees that in the event of any one
of the following: (a) Tenant shall become insolvent or shall be adjudicated a
bankrupt; (b) Tenant shall file a petition for reorganization, arrangement or
similar relief under any present or future provision of the Bankruptcy Code;
(c) such a petition filed by creditors of Tenant shall be approved by court;
(d) Tenant shall see a judicial readjustment of the rights of its creditors
under any present or future federal or state law; or (e) a receiver of all or
part of its property and assets is appointed by any state or federal court, and
in any such proceeding the Lease shall be terminated or rejected or the
obligations of Tenant hereunder shall be modified, the Guarantor will
immediately pay to Landlord, or its successors or assigns (i) an amount equal
to all Rent accrued to the date of such termination, rejection or modification,
plus (ii) an amount equal to the then cash value of all Rent which would have
been payable under the Lease for the unexpired portion of the term thereby
demised, less the then cash rental value of the Leased Premises for such
unexpired portion of the term, together with interest on the amounts designated
(i) and (ii) above at the highest rate then payable in the state in which the
Leased Premises are located or, in the absence of such a maximum rate, at the
rate of fourteen percent (14%) per annum from the date of such termination,
rejection or modification to the date of payment.

 

Neither Guarantor’s obligation to make
payment in accordance with the terms of this Agreement nor any remedy for the
enforcement thereof shall be impaired, modified, changed, released or limited
in any manner whatsoever by an impairment, modification, change, release or
limitation of the liability of Tenant or its estate in bankruptcy or of any
remedy for the enforcement thereof resulting from the operation of any preset
or future provision of the national Bankruptcy Act or the decisions of any
court.

 

 

The Landlord agrees that this Guaranty shall
terminate on December 31, 1999 provided, however, that Guarantor shall remain
liable for any defaults which occur on or before December 31, 1999.

 

This Guaranty of Lease shall be binding upon
the successors and assigns of the Guarantor and inure to the benefit of the
successors and assigns of the Landlord (including any assignee of the Lease,
which may be assigned as additional security for a loan).

 

IN WITNESS WHEREOF, Guarantor has caused the
Agreement to be executed and notarized this 4th day of June, 1998.

 

	
   

  	
  INNOVE.
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  [ILLEGIBLE]

  

 

 

	
  STATE OF MINNESOTA

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS:

  
	
  COUNTY OF HENNEPIN

  	
  )

  	
   

  

 

 

On
this 4th day
of June 1998, before me, a Notary Public in and for said County, appeared Timothy
S. McIntee, to me personally known, who being duly sworn, did say that he is
the person named in an who executed the within instrument, and that said
instrument was made and executed of his/her free act and will.

 

 

	
   

  	
   

  	
  /s/
  Lois E. McKenzie

  
	
   

  	
  LOIS E MCKENZIE

  	
   

  	
   

  	
  Notary Public

  
	
  [SEAL]

  	
  NOTARY
  PUBLIC - MINNESOTA

  	
   

  	
   

  	
   

  
	
   

  	
  HENNEPIN
  COUNTY

  	
   

  	
   

  	
   

  
	
   

  	
  My
  Commission Expires Jan 31, 2000

  	
   

  	
   

  	
  My Commission Expires:

  	
  1-31-2000

  

 

2Exhibit
10.10

 

ENPATH
MEDICAL, INC.

INCENTIVE STOCK OPTION AGREEMENT

 

THIS AGREEMENT is by and between Enpath Medical, Inc. (“Company”)
and                 (“Optionee”).

 

RECITALS:

 

The Company’s 1999 Incentive Stock Option Plan (“Plan”),
as amended through October 23, 2003, was created for the purpose of
encouraging ownership of shares of the Common Stock of the Company (“Common
Shares”) by key employees. The option is intended to qualify as an incentive
stock option under Section 422A of the Internal Revenue Code of 1986, as
amended.

 

NOW, THEREFORE, in consideration of the promises and
covenants contained herein, Company and Optionee hereby agree as follows:

 

1.                                       OPTION. 
Company grants to Optionee on                    
(“Date of Grant”) the option (“Option”) to purchase an aggregate of           of
the Common Shares (“Shares”) of the Company upon the terms and conditions set
forth herein and in the Plan.

 

2.                                       OPTION PRICE. 
Subject to any adjustments pursuant to the provisions of Section 7,
the purchase price of the Shares subject to the Option (“Option Price”) is          
per share, which represents the fair market value on the Date of Grant.

 

3.                                       TIME OF EXERCISE.  This
Option will be exercisable, in accordance with the vesting schedule set
forth in Section 4, any time prior to                        
(“Exercise Period”) unless terminated prior thereto pursuant to the provisions
of Section 6.   The Option will
become void and expire as to all unexercised Shares at 12:00 a.m. (midnight,
Central Standard Time) at the end of the Exercise Period.

 

4.                                       VESTING OF OPTIONS.  This
Option is   0%  vested as of the Date of
Grant and will vest in amounts of one-fifth of the shares on                    and
on each of the succeeding one-year anniversaries thereafter, until 100%
vested.  In the event the Company or the
stockholders of the Company enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company by means of a sale,
merger, reorganization, liquidation or otherwise, the Option shall become
immediately exercisable with respect to the full number of Shares.

 

5.                                       EXERCISE OF OPTION - MANNER. 
Subject to the terms and conditions hereof, the Option may be exercised
by written notice to the Company at its offices in Plymouth, Minnesota, signed
by Optionee (or Optionee’s heirs, legal representative(s) or guardian).  Notice of exercise of the Option must be
accompanied by payment in full of the Option Price of the Shares as to which
the Option is to be exercised and the Company will issue and deliver a
certificate or certificates representing such Shares as soon as practicable
after such notice and payment are received. 
Payment of such Option Price will be made by a check payable to the
order of the Company.

 

6.                                       TERMINATION OF EMPLOYMENT.

 

(a)                                  This Option will terminate and may no longer
be exercised in the event and at the time Optionee’s employment is
involuntarily terminated for “cause”.  “Cause”
shall include gross negligence, gross neglect of duties, gross insubordination,
dishonesty, disloyalty to the Company, public conduct detrimental to employees
or the Company’s reputation, willful violation of any law applicable to the
conduct of the Company’s business and affairs, and conviction of or pleas of no
contest to any crime other than minor traffic offenses.

 

 

(b)                                 In the event of termination of employment by
reason of death or Permanent Disability of the Optionee, (“Permanent Disability”
means complete inability to engage in one’s regular occupation or employment
and under the regular care and attendance of a licensed physician for in excess
of six (6) consecutive months,) the estate, successors or legal representative
of the Optionee may exercise the Option within one (1) year after such
termination (but not thereafter) on any Options vested in the Optionee at such
termination of employment.

 

(c)                                  In the event of voluntary termination or
involuntary termination but not for cause, Optionee may exercise all vested
Options within three (3) months after termination (but not thereafter).

 

7.                                       ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION.  In the event of a merger, consolidation,
reorganization, stock dividend, stock split, or any other change in corporate
structure or capitalization affecting the Company’s shares, appropriate
adjustment shall be made in the maximum number of shares available under the
Plan or to any one individual and in the number, kind, option, price, etc. of
shares subject to options granted under the Plan.

 

8.                                       NON-TRANSFERABILITY OF
OPTION.  The Option granted under this Agreement may
not be sold, pledged, assigned or transferred by the Optionee except by will or
the laws of descent and distribution. 
Any attempt to do so will void the Option.  The Option is exercisable during an Optionee’s
lifetime only by the Optionee, subject to Section 6(b) above.

 

9.                                       WITHHOLDING TAXES.

 

(a)                                  The Company is entitled to withhold and
deduct from future wages of the Optionee or from other amounts due from the
Company to the Optionee all legally required amounts necessary to satisfy any
or all federal, state and local withholding and employment-related tax
requirements attributable, directly or indirectly, to the Optionee’s exercise
of this Option or otherwise incurred with respect to this Option; or to require
the Optionee to promptly remit the amount of such withholding and
employment-related taxes to the Company before acting on the Optionee’s notice
of exercise of this Option or before taking any further action with respect to
this Agreement.  In the event that the
Company is unable to withhold such amounts, for whatever reason, the Optionee
hereby agrees to pay to the Company an amount equal to the amount the Company
would otherwise be required to withhold under federal, state and local
law.  Until the required withholding is
remitted to the Company by the employee, the Company will retain the stock
associated with the exercise of this Option.

 

(b)                                 If the Optionee exercises the Option subsequent to leaving the Company,
then the obligation to comply with related taxes is the Optionee’s.

 

10.                                 RIGHTS AS A SHAREHOLDER.  No
rights of a shareholder of the Company will attach to Optionee with respect to
any of the Shares until this Option is duly exercised as to such Shares and the
person has become holder of record of such Shares.  No adjustments will be made for cash
dividends or other distributions or other rights as to which there is a record
date preceding the date such person becomes the holder of record of such
Shares.

 

11.                                 LIMITATION OF LIABILITY. 
Nothing in this Agreement will be construed to:

 

(a)                                  Limit in any way the right of the Company or
any of its subsidiaries to terminate the employment of Optionee at any time and
for any reason.

 

(b)                                 Be evidence of any agreement or
understanding, express or implied, that the Company or one of its subsidiaries
will employ the Optionee in any particular position at any particular rate of
compensation or for any particular period of time.

 

 

12.                                 GOVERNING LAW. This Agreement will be construed in
accordance with and governed by the laws of the State of Minnesota.

 

13.                                 CONTROLLING AUTHORITY. 
Options granted hereunder are subject to the Plan.  If inconsistencies exist between this
Agreement and the Plan, the Plan provisions will be the controlling
determinant.  The Board of Directors
retains full authority to interpret or modify the Plan.

 

 

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

 

 

	
   

  	
   

  	
   

  	
   

  	
  ENPATH MEDICAL, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
    Its CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
    Optionee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]