Document:

EXHIBIT 10.38

 

LEASE AGREEMENT

 

THIS LEASE
AGREEMENT made and entered into this 15 day of October, 2005, by and
between Sten Corporation, a Minnesota corporation (hereinafter referred to as
the “Lessor”), and OLD Holdings, LLC, a Minnesota limited liability company
(hereinafter referred to as the “Lessee”).

 

WITNESSETH:

 

1.     Leased Premises.  The Lessor in consideration of the rents and
covenants herein contained, to be paid, kept and performed by the Lessee, does
hereby lease and let unto the Lessee and the Lessee does hereby hire and take
from the Lessor the following to-wit:

 

29,202 square
feet of space in a 29,202 Square Foot office and warehouse building located at
13828 Lincoln St. N.E., Ham Lake, MN 55304: 
said space hereinafter called the “Premises,” having a warehouse space
of approximately 20,301 square feet, a warehouse mezzanine storage space of
approximately 1,519 square feet and an office space of approximately 7,382
square feet; such space being measured from the outside walls; all according to
the site plan attached hereto marked Exhibit A and made a part hereof.

 

Said Premises
being commonly known as 13828 Lincoln St. N.E., Ham Lake, MN 55304.

 

2.     Term. 
This Lease shall commence on the date hereof and end the 16th
day of December, 2005 (the “Termination Date”). 
The rent for any partial month shall be prorated and adjusted
accordingly.  Lessee may extend the
Termination Date for three (3) additional months (the “Extension Period”) by
providing written notice to Lessor prior to the expiration of the stated
Termination Date.

 

3.     Holding Over.  In the event Lessee remains in possession of
the Premises after the Termination Date without (1) execution of a new lease,
or (2) Lessor’s written consent, Lessee shall be deemed to be occupying the
Premises as a tenant from month to month. 
During this holding over period, the Lessee shall be subject to all of
the conditions, provisions and obligations of this Lease, except that the rent
payable during the holding over period shall be calculated at $13,333.33 per
month (“Minimum Rent”) and the Additional Rent as set forth herein for the
period during which the Lessee holds over.

 

4.     Use of Premises.  It is agreed that the Premises shall be used
by the Lessee for manufacturing, distribution and related uses, as approved by
Lessor and subject to all local, State, and Federal regulations regarding the
use of the Premises.  The Lessee will not
use or permit any part of the Premises to be used for any dangerous, noxious,
or offensive purpose, or cause or maintain any nuisance on the Premises.  The Lessee agrees

 

 

to confine its
business activities to the Premises described in Paragraph 1 of this Lease and
in that connection further agrees to use the Premises in such manner so as not
to disturb other tenants of the building of which the Premises are a part by
excessive noise, emission of odors or fumes, or other disruptive or
disagreeable activities.  For a violation
of this paragraph Lessor may terminate this Lease with a thirty (30) day notice
given pursuant to the terms as further defined in Section 17.

 

5.     Minimum Rent.  The Minimum Rent to be paid by the Lessee of
this lease agreement shall be due and payable in advance, on or before the
first day of each month, without demand or offset, over the term of the Lease
as follows:

 

(a)                                  From
the date hereof until the Termination Date the Minimum Rent shall be zero.

 

(b)                                 After
the Termination Date (whether during the Extension Period or the holdover
period), the Minimum Rent shall equal monthly installments of Thirteen Thousand
Three Hundred Thirty-three and 33/100 Dollars ($13,333.33).

 

6.     Additional Rent for Property Tax and Insurance.  Lessee shall pay for all real estate taxes
and special assessments allocable to the term of this Lease.  It is mutually understood and agreed that the
total floor area of 29,202 square feet in the Premises is 100% of the total
floor area (of 29,202 square feet) in the building of which the Premises is a
part, and that in addition to the Minimum Rent, the Lessee agrees to pay $1.25
per square foot in 2005 (based on a total annual tax of $36,450.37), this
equals $3,037.53 per month for estimated tax expense for 2005.  Such additional rent as estimated by Lessor
shall be payable by the Lessee to the Lessor in equal monthly installments at the
same time as the monthly Minimum Rent and, at the sole discretion of Lessor,
may be adjusted monthly in order to compensate for unusual expense
variations.  A credit or debit adjustment
shall be made within sixty (60) days following the end of each calendar year to
reflect the actual tax and expenses.  The
obligation of Lessee to pay the additional rent provided for in this section
shall survive the termination of this Lease.

 

All other
building maintenance shall be the responsibility of the Lessee.  This shall include, but is not limited to,
the following:  water and sewer charges,
lawn care, snow removal, parking lot repairs, common area lighting, policing of
grounds for trash removal, roof repairs, management fees and such other costs
of wages, materials and services necessary for the operation and maintenance of
the property of which the Premises are a part, all accrued and based upon a
calendar year operation.

 

7.     Late Charges.  Lessee acknowledges that late payments by
Lessee to Lessor of rent will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of such costs being extremely difficult and
impracticable to fix.  Such costs
include, without limitation, processing and accounting charges, mortgage
interest penalties, utility late charges, etc. 
Therefore, if any installment of rent due from Lessee is not received by
Lessor when due, Lessee shall pay to Lessor an additional sum of $250.00.  The parties agree that this late charge shall
not constitute a waiver of Lessee’s default with respect to

 

 

the overdue amount, nor prevent
Lessor from exercising any of the other rights and remedies available to
Lessor.  Late charges shall be applied
after the fifth of the month.

 

8.     Utilities.  The Lessee shall obtain and pay for all utilities,
including gas, electricity and city water and any other service used by the
Lessee in the Premises during the term of this Lease.  In the event that any utility charge is not
separately metered to the Lessee, then the Lessee shall pay a pro rata share of
such utility charge.  The Lessee’s pro
rata share shall be calculated by dividing the Lessee’s leased square footage
by the total leaseable square footage of the building.

 

9.     Maintenance by Lessee.  The Lessee shall be wholly responsible for
the maintenance, repair and replacement of the Premises, and will keep it in as
good condition as when originally occupied by Lessee, reasonable wear and tear
and damage by fire and the elements excepted; and will keep it in an orderly,
clean and sanitary condition as required by laws and ordinances applicable
thereto; will neither do nor permit to be done therein anything which is in
violation of the terms of insurance policies on said building or the laws or
ordinances applicable thereto; will neither commit nor suffer waste in said
Premises and will pay for all glass, broken by its fault or another’s,
negligence or the fault or negligence of its employees, invitees, customers or
agents.

 

It is agreed
that the obligations of the Lessee hereunder shall extend to all parts or
portions of the Premises including glass, entrance and overhead garage doors
and related hardware, and including all portions of the heating, air
conditioning, plumbing, sprinklers, electrical and mechanical fixtures,
equipment, connections and appurtenances.

 

Lessee shall
at all times keep the Premises in a neat and clean condition and free from
garbage, ashes, waste and accumulation of rubbish or filth, and all garbage,
waste, and rubbish shall be removed promptly by Lessee at its own expense.  Lessee shall keep the sidewalks directly
adjoining the Premises swept and free from ice and snow and other obstructions.

 

In the event
the Lessee fails to perform any act required of Lessee under this Lease after
receiving written notice from Lessor, the Lessor may, in addition to any other
remedy provided herein, perform or satisfy the obligation of Lessee which is in
default and the reasonable cost thereof shall become an amount immediately due
from Lessee to the Lessor with interest thereon at ten percent (10%) per annum
until paid.

 

10.   No Maintenance by Lessor.  The Lessor shall not be responsible for any
maintenance, repair and replacement of any parts or portions of the Premises.

 

11.   Parking.  Parking areas shall be available to the
Lessee, its employees and business invitees as well as to other tenants of the
building, their employees and invitees. 
The Lessee will neither use nor permit the use by its employees of the
outside parking areas for the overnight storage of automobiles or other
vehicles.  Any inoperable, immobile or
abandoned vehicles will be towed away, without notice, by Lessor at the vehicle
owner’s expense.

 

 

12.   Liability Insurance.  The Lessee will maintain in full force and
effect during the term hereof a policy of public liability insurance under
which Lessor and Lessee are named as insureds; that the minimum limits of
liability of such insurance shall be $1,000,000.00 for injury or death to more
than one person and $2,000,000.00 for property damage.  Lessee agrees to deliver a duplicate copy of
said policy to Lessor.  Such policy shall
contain a provision requiring thirty (30) days written notice to the Lessor and
Lessor’s mortgagee before cancellation of the policy can be effective.  Lessee shall also carry, at its own expense, plate
glass insurance for doors and windows.

 

13.   Hazard Insurance.  The Lessee shall pay the pro rata premium for
any property insurance policy Lessor may obtain for the Premises during the
Term of the Lease. The Lessee shall obtain, at its own expense, property
insurance for its own property, and in no event shall Lessor be liable for any
damage to such property by reason of fire or other casualty or the elements,
leakage of water or steam.  If Lessee’s
business shall manufacture, handle, transport, store, dispose or use in any
way, any substance or material classified as hazardous by the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (C.E.R.C.L.A.),
the Minnesota Environmental Response and Liability Act of 1983 (M.E.R.L.A.), the
Clean Air Act, the Solid Waste Disposal Act or the Federal Water Pollution
Control Act, or any other statutory or regulatory provision, then Lessee shall
carry adequate insurance to cover any and all expenses associated with the
clean up of any spill, leak, pumping, pouring, emitting, discharging,
injecting, escaping, leaching, dumping or disposing of any of these
materials.  Lessee further agrees to
indemnify, defend and hold harmless Lessor from any suit or claim as a direct
result of Lessee’s actions.

 

14.   Damage. 
That in case said Premises shall become untenantable or unfit for
occupancy in whole or in part by the total or partial destruction of said
building by fire or other casualty, and said Lessor shall fail or refuse within
thirty (30) days thereafter to agree in writing to restore the same within
ninety (90) days, this Lease may be terminated by either Lessor or Lessee by
notice in writing, and in case said Lessor shall agree in writing to restore
the same within said time, the rent to be paid hereunder pending such
restoration shall be abated in proportion to the loss and impairment of the use
of said Premises, to be determined by agreement between the parties hereto.

 

15.   Claims Against Lessor.  The Lessee will make no claim against the
Lessor for any loss of or damage to property caused by theft, burglary, water,
gas, electricity or other means; provided that the Lessor has taken all
reasonable precautions against such loss or damage.

 

16.   Alterations and Liens.  The Lessee shall not make any alterations in
or additions to the Premises without first procuring the Lessor’s written
consent and delivering to Lessor plans, specifications, names and addresses of
contractors, copies of proposed contracts and the necessary permits, in all
form and substance satisfactory to Lessor, and furnishing indemnification
against liens, costs, damages and expenses as may be required by Lessor.  All additions, improvements, excepting trade
fixtures, which may be made or installed by Lessee upon the Premises shall remain
the property of Lessor at the termination of the Lease.

 

 

17.   Default.  In the event the Lessee should default in the
payment of the rent when due hereunder or default in the keeping or performing
of any other term or condition of this Lease the Lessor is hereby authorized to
re-enter said Premises, to eject the Lessee, and take full possession of said
Premises, to terminate this Lease at its option, and to lease and let said
Premises as to it shall seem best, to remove from said Premises all personal
property of the Lessee, and to store the same to the account and at the
expenses and risk of the Lessee, and to sell said property or any part thereof,
and out of the proceeds to pay all expenses of so removing, storing and selling
the same, and all sums which shall then be in arrears or past due for rent; and
that no such act or acts of the Lessor shall be construed as cancellation of
this Lease or waiver of the right of the Lessor to collect rent hereunder for
the remainder of said term, except said exercise of its option to terminate the
same; and that in case the Lessor shall determine that any action or proceeding
at law or otherwise is necessary to enforce the terms and conditions hereof,
the Lessee agrees that reasonable attorney’s fees and the necessary costs and
disbursements thereof may be allowed and taxed against it.

 

The Lessee agrees not to remove any of its fixtures, equipment and
inventory (other than in the ordinary course of business) from the Premises
without the consent in writing of the Lessor while any installments of rent are
past due, and during any other default in the conditions of this Lease.

 

18.   Condemnation.  If the whole or any part of the Premises
shall be taken by any public authority under the power of eminent domain, the Lessee
shall have no claim to nor shall it be entitled to any portion of any award,
for damages or otherwise for the taking of the real estate.  In the event only a portion of the Premises
is taken, the Lease shall cease as to the part taken, and the rent herein
reserved shall be adjusted for the remainder of the Premises so that the Lessee
shall be required to pay for the balance of the term that portion of the rent
herein reserved which the value of the part of the Premises remaining after
condemnation bears to the value of the Premises immediately prior to the date
of condemnation.  The rent shall be
apportioned as aforesaid by agreement between the parties or by arbitration or
legal proceedings, but pending such determination the Lessee shall pay at the time
and in the manner above provided, the rent herein reserved, and all other
charges herein required to be paid by the Lessee, without deduction, and upon
such determination, the Lessee shall be entitled to credit for any excess rent
paid.  If, however, by reason of the
condemnation there is not sufficient space left in the Premises for the Lessee
to conduct business or the taking of parking and common area is so substantial
as to render the Premises unsuitable and unfit for which they were rented, then
and in such events the Lease shall terminate. 
Nothing herein shall be construed to prevent Lessee from claiming and
recovering from the condemning authority such compensation as may be separately
awarded or recoverable by Lessee in Lessee’s own right.

 

19.   Subordination.  It is expressly understood and agreed that
this Lease is subordinated to any existing mortgages covering said Premises,
and extension or renewal thereof, and to any new mortgages which may be placed
thereon from time to time and the Lessee agrees to make, execute and deliver
any such instruments as may be required subordinating this Lease to such
mortgage including certificates of estoppel.

 

 

20.   Subrogation.  Each party hereto waives all claims and
causes of action against the other party for any loss or damage to any of its
property insured under valid insurance policies to the extent recovery is
collectable thereunder; provided, however, that this waiver shall apply only
when permitted by the applicable policy of insurance.  Each party further agrees to use its best
efforts to have any and all fire, extended coverage or other casualty insurance
policies which may be carried contain a subrogation clause which provides that
this insurance shall not be invalidated should the insured waive, in writing
prior to a loss, any or all right of recovery against any party for loss
occurring to the property described herein.

 

21.   Assignment or Subletting.  Lessee will not assign this Lease, and will
not sublet any part of the Premises without the consent in writing of the
Lessor, which consent is within Lessor’s sole discretion.  Lessee does hereby agree that if the Lessee
shall be declared bankrupt, shall have a receiver appointed of its property,
shall make an assignment for benefit of creditors or its rights hereunder shall
be taken under execution, it shall be construed as an assignment of this Lease
within the meaning thereof.  Any
assignment of this Lease, without the prior written consent of the Lessor shall
be considered an act of default and subject to the remedies provided Lessor in
Section 17 of this Lease.

 

22.   Indemnity.  Lessee agrees to indemnify and hold Lessor
harmless from any and all claims for damages or injury to persons or property
or the loss of property relating to or arising out of the Premises or the
Lessee’s use of the Premises, except for claims for damage or injury occasioned
by Lessor’s neglect or failure to perform its obligations under the terms of
this Lease.

 

23.   Signs. 
That no sign, advertisement or notice will be placed or painted on any
part of the outside of said building or Premises in such manner, style and
places except as designated by the Lessor; and the Lessor reserves the right to
remove all others at the expense of the Lessee.

 

24.   Access. 
Lessor reserves the right to enter upon the Premises at all reasonable
hours for the purpose of inspecting the same, or of making repairs, additions
or alterations to the building in which the Premises are located, to exhibit
the Premises to prospective tenants, purchasers or others, to display during
the last ninety (90) days of the term, without hindrance or molestation by
Lessee, “For Rent” or similar signs on windows or doors in the Premises.  The exercise by Lessor of any of its rights
under this Section shall not be deemed an eviction of disturbance of Lessee’s
use and possession of the Premises.

 

25.   Condition of the Premises.  It is mutually agreed and understood that all
of the improvements installed or contemplated by this Lease are adequate and
satisfactory to meet the needs of the Lessee herein.  That any improvements, leasehold equipment
and/or labor hereafter required under any Federal, State or Municipal statute
or ordinance shall be provided by and at the expense of Lessee and that said
Lessee shall hold the Lessor and the real estate harmless of any claims arising
therefrom, and that said remodeling, improvement and/or leasehold equipment so
required and installed shall

 

 

inure to the
benefit of the Lessor upon the termination of this Lease, unless otherwise agreed
to in writing between the parties.

 

26.   Notices.  All notices, consents, demands and request
which may be or are required to be given by either party to the other, shall be
in writing, and shall be deemed given or served when deposited in the United States
mail by registered or certified mail, postage prepaid, addressed as follows:

 

	
  To Lessor
  at:

  	
   

  	
  Sten
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To Lessee
  at:

  	
   

  	
  OLD
  Holdings, LLC

  
	
   

  	
   

  	
  13828
  Lincoln St. NE

  
	
   

  	
   

  	
  Ham Lake, MN
  55304

  

 

Such addresses
may be changed from time to time by either serving notices as above provided.

 

27.   Relationship of Parties.  Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent or of partnership or of joint venture or of
any association whatsoever between Lessor and Lessee, it being expressly
understood and agreed that neither the method of computation of rent nor any
other provisions contained in this Lease nor any act or acts of the parties
hereto shall be deemed to create any relationship between Lessor and Lessee
other than the relationship of landlord and tenant.

 

28.   No Recordation.  The parties agree that this Lease shall not
be recorded.

 

29.   All Agreements Included.  This Lease (and that certain Purchase
Agreement between the parties dated August    , 2005) embodies
all the agreements between the parties hereto respecting the Premises hereby
leased.  All subsequent changes and
modifications to be valid shall be embodied within a written instrument duly
executed by the parties hereto.

 

30.   Paragraph Headings.  The headings of the several paragraphs
contained herein are for convenience only and do not define, limit or construe
the contents, construction or meaning of the provisions of this Lease.

 

31.   Laws of Minnesota.  The laws of the State of Minnesota shall
govern the validity, performance and enforcement of this Lease.

 

32.   Saving Clause.  The invalidity or unenforceability of any
provision of this Lease shall not affect or impair the validity of any other
provision.

 

33.   Successors and Assigns.  All of the terms, covenants, provisions and
conditions of this Lease shall be binding upon and inure to the benefit of the
parties hereto, their respective successors and assigns.

 

 

34.   Deposit.  Lessee concurrently with the execution of
this Lease, has deposited with Lessor the sum of $25,000.00 as earnest money,
pursuant to the Purchase Agreement to which this Lease Agreement is appended as
Exhibit C.  The receipt of said deposit
is hereby acknowledged by Lessor, and said sum shall be retained by Lessor as
security for the payment by Lessee of the rents herein agreed to be paid by
Lessee and for performance by Lessee of the terms and covenants of this
Lease.  Lessor, at Lessor’s option, may
apply said sum or any part thereof toward the payment of the rents and all
other sums payable by Lessee under this Lease, and toward the performance of
any of Lessee’s covenants under this Lease. 
Lessor may exhaust any or all rights and remedies against Lessee before
resorting to said sum.  In the event this
deposit shall not be utilized for any such purposes, then such deposit shall be
returned to Lessee within twenty-one (21) days after expiration of the term of
the Lease.  Lessor shall not be required
to pay Lessee any interest on the security deposit.

 

35.   Guaranty.  If so required by Lessor, Lessee’s Guarantor
shall execute and deliver to Landlord upon execution of this Lease a Guaranty
in the form attached hereto as Exhibit B.

 

IN WITNESS
WHEREOF, the respective parties hereto have executed this instrument in
duplicate the day and year first above written.

 

	
   

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
  STEN Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LESSEE:

  
	
   

  	
   

  
	
   

  	
  OLD Holdings, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:EXHIBIT 10.39

 

LEASE

BY
AND BETWEEN

 

AMBAR, L.L.C.

 

LANDLORD

 

 

AND

 

STEN CORPORATION

 

TENANT

 

 

13
DAY OF SEPTEMBER, 2005

 

9/2/05

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  COVER SHEET

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DATA SHEET

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE

  	
   

  	
  TITLE

  	
   

  	
  PAGE

  
	
   

  	
  1.

  	
   

  	
  PREMISES:

  	
   

  	
  4

  
	
   

  	
  2.

  	
   

  	
  TENANT IMPROVEMENTS:

  	
   

  	
  4

  
	
   

  	
  3.

  	
   

  	
  TERM:

  	
   

  	
  4

  
	
   

  	
  4.

  	
   

  	
  BASE RENT:

  	
   

  	
  5

  
	
   

  	
  5.

  	
   

  	
  CONTRIBUTION TO OPERATING COSTS:

  	
   

  	
  5

  
	
   

  	
  6.

  	
   

  	
  USE OF PREMISES:

  	
   

  	
  8

  
	
   

  	
  7.

  	
   

  	
  ASSIGNMENT AND SUBLETTING:

  	
   

  	
  9

  
	
   

  	
  8.

  	
   

  	
  MAINTENANCE AND REPAIRS:

  	
   

  	
  11

  
	
   

  	
  9.

  	
   

  	
  ALTERATIONS; SIGNS; EQUIPMENT; MOVING:

  	
   

  	
  11

  
	
   

  	
  10.

  	
   

  	
  RIGHT OF ENTRY:

  	
   

  	
  12

  
	
   

  	
  11.

  	
   

  	
  SERVICES AND UTILITIES:

  	
   

  	
  13

  
	
   

  	
  12.

  	
   

  	
  WAIVER AND INDEMNITY:

  	
   

  	
  14

  
	
   

  	
  13.

  	
   

  	
  INSURANCE:

  	
   

  	
  14

  
	
   

  	
  14.

  	
   

  	
  FIRE OR OTHER CASUALTY:

  	
   

  	
  16

  
	
   

  	
  15.

  	
   

  	
  CONDEMNATION:

  	
   

  	
  17

  
	
   

  	
  16.

  	
   

  	
  SECURITY DEPOSIT:

  	
   

  	
  17

  
	
   

  	
  17.

  	
   

  	
  DEFAULT:

  	
   

  	
  17

  
	
   

  	
  18.

  	
   

  	
  LANDLORD’S RIGHT TO CURE DEFAULT; LATE PAYMENT:

  	
   

  	
  19

  
	
   

  	
  19.

  	
   

  	
  WAIVER:

  	
   

  	
  19

  
	
   

  	
  20.

  	
   

  	
  SUBORDINATION:

  	
   

  	
  20

  
	
   

  	
  21.

  	
   

  	
  RULES AND REGULATIONS:

  	
   

  	
  20

  
	
   

  	
  22.

  	
   

  	
  COVENANT OF QUIET ENJOYMENT:

  	
   

  	
  21

  
	
   

  	
  23.

  	
   

  	
  NO REPRESENTATIONS BY LANDLORD:

  	
   

  	
  21

  
	
   

  	
  24.

  	
   

  	
  NOTICES:

  	
   

  	
  21

  
	
   

  	
  25.

  	
   

  	
  ESTOPPEL CERTIFICATES:

  	
   

  	
  21

  
	
   

  	
  26.

  	
   

  	
  SURRENDER; HOLDING OVER:

  	
   

  	
  22

  
	
   

  	
  27.

  	
   

  	
  ENERGY CONSERVATION:

  	
   

  	
  22

  
	
   

  	
  28.

  	
   

  	
  COMMUNICATION AND COMPUTER LINES:

  	
   

  	
  22

  
	
   

  	
  29.

  	
   

  	
  RELOCATION:

  	
   

  	
  23

  
	
   

  	
  30.

  	
   

  	
  TENANT’S TAXES:

  	
   

  	
  23

  
	
   

  	
  31.

  	
   

  	
  UNIFORM COMMERCIAL CODE:

  	
   

  	
  23

  
	
   

  	
  32.

  	
   

  	
  MISCELLANEOUS:

  	
   

  	
  24

  
	
   

  	
  33.

  	
   

  	
  OPTION TO RENEW:

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  EXHIBITS

  	
   

  	
   

  
	
  A

  	
   

  	
   

  	
  FLOOR PLAN

  	
   

  	
   

  
	
  B

  	
   

  	
   

  	
  BUILDING SITE

  	
   

  	
   

  
	
  C

  	
   

  	
   

  	
  LEASEHOLD IMPROVEMENTS/PLAN

  	
   

  	
   

  
	
  D

  	
   

  	
   

  	
  RULES AND REGULATIONS

  	
   

  	
   

  

 

2

 

DATA SHEET

 

	
  DATE OF
  LEASE:

  	
   

  	
  September 13,
  2005

  
	
   

  	
   

  	
   

  
	
  LANDLORD’S
  ADDRESS

  	
   

  	
  AMBAR, L.L.C.

  
	
  FOR RENT and NOTICES:

  	
   

  	
  In Care Of: Great Lakes Management Co.

  
	
   

  	
   

  	
  1907 East Wayzata Boulevard, Suite 110

  
	
   

  	
   

  	
  Wayzata, MN 55391

  
	
   

  	
   

  	
  (952) 476-0303 phone – (952) 476-0404 fax

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  ADDRESS:

  	
   

  	
  STEN Corporation

  
	
   

  	
   

  	
  Suite 310

  
	
   

  	
   

  	
  10275 Wayzata Boulevard

  
	
   

  	
   

  	
  Minnetonka, MN 55305

  
	
   

  	
   

  	
   

  
	
  LEASE
  PREMISES:

  	
   

  	
  Approximately
  1,142 rentable square feet, as

  
	
   

  	
   

  	
  designated on Exhibit A.

  
	
   

  	
   

  	
   

  
	
  TERM:

  	
   

  	
  Three (3) years
  and two and one-half (2 1⁄2)

  
	
   

  	
   

  	
  months.

  
	
   

  	
   

  	
   

  
	
  SCHEDULED

  	
   

  	
   

  
	
  COMMENCEMENT
  DATE:

  	
   

  	
  October 15,
  2005

  
	
   

  	
   

  	
   

  
	
  EXPIRATION
  DATE:

  	
   

  	
  December 31,
  2008

  
	
   

  	
   

  	
   

  
	
  OPTION TO RENEW:

  	
   

  	
  One 3-year option to renew after December 31,
  2008, to then expire December 31, 2011.

  
	
   

  	
   

  	
   

  
	
  BASE RENT:

  	
   

  	
  Base Rent
  shall be due hereunder as follows,

  
	
   

  	
   

  	
  based on 1,142 rsf:

  

 

	
  Period

  	
   

  	
  Base Rent prsf/Yr.

  	
   

  	
  Per Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  From: 10/15/05 through 12/31/05

  	
   

  	
  Free Gross Rent

  	
   

  	
  $

  	
  00

  	
   

  
	
  From: 01/01/06 through 12/31/08

  	
   

  	
  $14.00 NNN = $15,988.00 =

  	
   

  	
  $

  	
  1,332.33/mo

  	
   

  

 

	
  Option Period:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  From: 01/01/09 through 12/31/11

  	
   

  	
  $16.00 NNN = $18,272.00 =

  	
   

  	
  $

  	
  1,522.67/mo

  	
   

  

 

	
  SECURITY
  DEPOSIT:

  	
   

  	
  Equal to 1
  month of gross rent = $2,460

  
	
   

  	
   

  	
  (1
  mo base rent = $1,332 ÷ 1 mo real estate taxes & CAM of $1,128 =
  $2,460)

  

 

The information in
this Data Share and Exhibits A through D are incorporated in and made a part of
this lease agreement.

 

3

 

THIS OFFICE
LEASE (“Lease”), dated September 13,2005 is made and entered into by and
between AMBAR, LLC. (“Landlord”)
and STEN Corporation, (“Tenant”)
upon the following terms and conditions:

 

1.             PREMISES:
Subject to the terms and conditions of this Lease, Landlord leases to Tenant,
and Tenant rents from Landlord, the leased premises commonly known as
Minnetonka Executive Plaza located at 10275 Wayzata Boulevard, Minnetonka,
Minnesota 55305 consisting of approximately 1,142 square feet of Net Rentable
Area as depicted on Exhibit ”A” which is attached hereto and incorporated
by this reference, hereinafter referred to as the “Premises”, Suite 310,
in the building (hereinafter referred to as the “Building”). The square feet of
Rentable Area shall be determined in accordance with Industry and BOMA
standards and shall be verified by the Landlord’s architect after completion of
construction of the Tenant Improvements (defined below). Any adjustment to the
square feet of Rentable Area shall then be made based on the architect’s
determination. Landlord also hereby leases to Tenant the non-exclusive right,
in common with the other tenants of the Building, and Landlord, its customers,
agents, invitees, licensees, suppliers, employees, guests, and visitors, to use
all “Common Areas” as hereinafter defined. The land upon which the Building and
the Leased Premises are a part is hereinafter referred to as the “Property”
including all buildings and improvements and personal property of Landlord used
in connection with the operation or maintenance thereof located therein and
thereon and the appurtenant parking facilities are hereinafter called the “Property”.
The Property is depicted on Exhibit ”B” which is attached hereto and
incorporated by this reference, and legally described on Exhibit ”B-1”
attached hereto and made a part hereof by reference.

 

2.             TENANT
IMPROVEMENTS: Subject to the terms hereof, at Tenant’s cost and expense and
with no right of reimbursement from Landlord, other than as provided for in
this Lease, Tenant shall construct or cause to be constructed all those certain
improvements on Exhibit C attached hereto and incorporated herein by
reference (the “Tenant Improvements”). Exhibit C shall also consist of a
space plan provided by the Tenant.

 

The
construction of the Tenant Improvements shall be completed in a good and
workmanlike manner, utilizing new and first grade materials, in conformity with
all applicable federal state, and local laws, ordinances, regulations building
codes, fire regulations, and applicable insurance requirements.

 

3.             TERM:
The duration of the Lease shall be for a period of three (3) years and two
and one-half (21⁄2%) months.

 

3.1.          The
term of this Lease shall commence October 15, 2005. Any entry by Tenant
prior to the Commencement Date shall be subject to all of the terms and
conditions of this Lease other than the obligation to pay Base Rent and
additional rent.

 

3.2.          Landlord
may at any time prepare a Supplement to this Lease confirming the Commencement
Date and the Rentable Area of the Premises. Tenant shall execute and return
such Supplement within ten (10) days after submission unless Tenant gives
written notice specifying in reasonable detail Tenant’s objections thereto.

 

4

 

3.3.          Fourteen
(14) days prior to the Scheduled Commencement Date, Landlord shall allow Tenant
to have reasonable access to the Premises, free of rent, for the purpose of
installing trade fixtures and furniture. Tenant agrees to indemnify, defend and
hold Landlord and its partners, officers and employees and property manager
harmless from and against any claim, loss or expense arising out of injury,
death or property loss or damage occurring in the Premises, except only to the
extent caused by the negligent act or intentional misconduct of Landlord or its
partners, officers or employees or property manager.

 

4.             BASE
RENT: Tenant shall pay as monthly “Base Rent” for the Premises one-twelfth of
the product of: (i) the Rental Rate set forth in the Data Sheet, times (ii) the
number of square feet of Rentable Area of the Premises. The Base Rent shall be
paid to Landlord without notice or demand in lawful money of the United States
in monthly installments, in advance, on the first day of each and every
calendar month during the Term. If the initial or final month of the Term of
this Lease is less than a calendar month, Base Rent for such partial month
shall be prorated at the rate of one-thirtieth of the monthly Base Rent for
each day, payable in advance. Tenant will pay said Base Rent, together with
Operating Costs and all other amounts due under this Lease, to Landlord at
Landlord’s Address set forth in the Data Sheet, or to such other party or to
such other address as Landlord may designate from time to time by written
notice to Tenant. Tenant’s obligation to pay the Base Rent, Operating Costs and
other amounts due under this Lease is an independent covenant, and, except as
provided otherwise herein, shall not be subject to any abatement, deduction,
counterclaim, reduction, setoff or defense of any kind whatsoever.

 

5.             CONTRIBUTION
TO OPERATING COSTS:

 

5.1.          Tenant
shall, for the entire Term of this Lease, and, except as provided otherwise
herein, without any abatement, set-off or deduction therefrom, pay to Landlord
as additional rent its Pro Rata Share, as hereinafter defined, of all costs
which Landlord may incur in maintaining and operating the entire Property. Said
costs shall be referred to herein as “Operating Costs” and are hereby defined
with respect to any calendar year to include but not be limited to the
following costs incurred by Landlord in such calendar year with respect to the
Property: all real estate taxes and installments of special assessments which
shall accrue or become a lien against, or are payable in respect of, any part
of the Property during the Term of this Lease; all other governmental
impositions, including but not limited to amounts payable under assessment
agreements, gross receipts taxes and taxes on rentals (other than income taxes)
relating to the Property; the costs of heat, cooling, utilities, insurance
(including but not limited to liability insurance and fire and casualty
insurance with rental abatement endorsement, boiler and pressure vessel
insurance, builders risk insurance, and owners protective liability insurance),
security, landscaping, janitorial and cleaning services; all employment costs
including salaries, wages and fringe benefits; all management fees, including
expenses reimbursable to any manager and rental of property management office;
fees for professional services; charges under maintenance and service
contracts; all supplies purchased for use in the Property; all maintenance and
repair costs; any equipment rental; depreciation of the cost of capital
improvements made to (i) reduce Operating Costs or limit increases
therein, or (ii) required by Landlord’s insurance carrier or (iii) required
by any law, rule, regulation or order of any governmental or quasi-governmental
authority having jurisdiction; all costs, charges, and expenses incurred by
Landlord in connection with any change of any company providing electricity
service, including, without limitation, maintenance, repair, installation, and
service

 

5

 

costs associated therewith; and
any and all other costs of operation, whether ordinary or extraordinary.

 

Operating
Costs shall not include direct out-of-pocket costs of the following: leasing
commissions and costs of marketing; the cost of constructing leasehold
improvements; payments of principal and interest on any mortgages, deeds of
trust or other encumbrances upon the Property; depreciation of the capital cost
of the Property except as provided above; the cost of any items for which
Landlord is directly reimbursed by insurance proceeds, condemnation awards, a
tenant of the Property or the like; wages, salaries or other compensation paid
to executive employees of Landlord or the property manager ranking above the
highest-ranking, on-site employee; costs associated with the operation of the
business of the entity which constitutes Landlord, which costs are not directly
related to maintaining or operating the Property (by way of example, the
formation of the entity, internal accounting and legal matters, including but
not limited to preparation of tax returns and financial statements and
gathering of data therefor, costs of defending any lawsuits related to
maintaining or operating the Property, costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the
Property, and costs of any disputes between Landlord and its employees); any
expense representing an amount paid for products or services (other than
overall property management) to a person or entity related to or affiliated
with Landlord which is in excess of the fair market value of such services and
products; fees incurred in disputes with tenants; costs of remediation of
Hazardous Materials which are (i) in or on the Property as of the date of
this Lease and which are classified as Hazardous Materials as of the date of
this Lease under laws in effect as of the date of this Lease, or (ii) which
are subsequently brought onto the Property by Landlord or with the express
consent of Landlord and which are on the date of their introduction onto the
Property classified as Hazardous materials under laws in effect as of the date
of such introduction, excluding in the case of both (i) and (ii) above,
lawful use and disposition of reasonable quantities of supplies used in the
ordinary course of operation and maintenance of like projects.

 

5.2.          As
frequently hereafter as Landlord shall deem appropriate, Landlord may give
Tenant notice of Landlord’s estimate of Operating Costs for the then-current
calendar year (“Estimated Operating Costs”). Tenant shall pay on the first day
of each calendar month during the Term, as additional rent hereunder,
one-twelfth (or portion thereof for partial months) of Tenant’s Pro Rata Share
of Estimated Operating Costs.

 

5.3.          Tenant’s
“Pro Rata Share” is a fraction, the numerator of which is the Rentable Area of
the Premises, and the denominator of which is the Rentable Area of all areas in
the Property designated by Landlord for lease, excluding separately leased
storage and parking areas. Landlord may reasonably redetermine Tenant’s Pro
Rata Share from time to time to reflect reconfiguration, additions or
modifications to the Building.

 

5.4.          Within
a reasonable time after the expiration of each calendar year, Landlord shall
submit to Tenant a statement (“Landlord’s Statement”) setting forth the actual
Operating Costs of the Property for such calendar year (“Actual Operating Costs”),
(a) Tenant’s Pro Rata Share of Actual Operating Costs, and (b) the
aggregate of Tenant’s payments of Estimated Operating Costs for such year.
Within thirty (30) days after the delivery of such statement (including any
statement delivered after the expiration or termination of the Term of this
Lease), the party in

 

6

 

whose favor the difference, if
any, between (a) and (b) exists shall pay the amount of such
difference to the other; provided, however, that overpayments by Tenant may at
Landlord’s option be credited against future payments of Estimated Operating
Costs except with respect to the last year of the Term.

 

Provided that
Tenant is not then in default beyond any applicable cure period of its
obligations to pay Base Rent, or any other payments required to be made by it
under this Lease and provided further that Tenant strictly complies with the
provisions of this Section 5.4, Tenant shall have the right, once each
calendar year, to reasonably review supporting data for any portion of a
Landlord’s Statement (provided, however Tenant may not have an audit right to
all documentation relating to Building operations as this would far exceed the
relevant information necessary to properly document a pass through billing
statement, but real estate tax statements and information on utilities,
repairs, maintenance and insurance will be available), in accordance with the
following procedure:

 

(A)          Tenant shall, within ten
(10) business days after any such Landlord’s Statement is delivered,
deliver a written notice to Landlord specifying the portions of the Landlord’s
Statement that are claimed to be incorrect, and Tenant shall simultaneously pay
to Landlord all amounts due from Tenant to Landlord as specified in the
Landlord’s Statement. Except as expressly set forth in subsection (C) below,
in no event shall Tenant be entitled to withhold, deduct, or offset any
monetary obligation of Tenant to Landlord under the Lease (including, without
limitation, Tenant’s obligation to make all payments of Base Rent and all
payments of Tenant’s Pro Rata Share of Tax and Operating Costs) pending the
completion of and regardless of the results of any review of record under this Section 5.4.
The right of Tenant under this Section 5.4 may only be exercised once per
calendar year for any Landlord’s Statement, and if Tenant fails to meet any of
the above conditions as a prerequisite to the exercise of such right, the right
of Tenant under this Section 5.4 for a particular Landlord’s Statement
shall be deemed waived.

 

(B)           Tenant acknowledges
that Landlord maintains its records for the Building at Landlord’s manager’s
corporation offices presently located at the address set forth in the Data
Sheet and Tenant agrees that any review of the records under this Section 5.4
shall be at the sole expense of Tenant and shall be conducted by an independent
firm of certified public accounts which will be engaged by Tenant on a fee, not
contingency basis. Tenant may exercise the right to audit only during normal
business hours, at Landlord’s offices. Tenant acknowledges and agrees that any
records reviewed under this Section 5.4 constitute confidential
information of Landlord, which shall not be disclosed to anyone other than the
accountants performing the review and principals of Tenant who receive the
result of the review. The disclosure of such information to any person, whether
or not caused by the conduct of Tenant shall constitute a material breach of
this Lease,

 

(C)           Any errors disclosed by
the review shall be promptly corrected by Landlord, provided, however, that if
Landlord disagrees with any such claimed

 

7

 

errors, Landlord shall have the right to cause another review to be
made by an independent firm of certified public accountants of national
standing. In the event of a disagreement between the two accounting firms, the
review that discloses the least amount of deviation from the Landlord’s
Statement shall be deemed to be correct. In the event that the result of the
review of records (taking into account, if applicable, the result of any
additional review caused by Landlord) reveal that Tenant has overpaid
obligations for a preceding period the amount of such overpayment shall be
credited against Tenant’s subsequent installment obligations to pay the
estimated Tax and Operating Expense Adjustment. In the event that such results
shows that Tenant has underpaid its obligation for a preceding period, Tenant
shall be liable for Landlord’s actual accounting fees, and the amount of such
underpayment shall be paid by Tenant to Landlord with the next succeeding
installment obligation of estimated Tax and Operating Costs.

 

5.5.          Landlord
may at its option by thirty (30) days written notice to Tenant Change its
accounting year hereunder from the calendar year to a fiscal year, making such
adjustments from the end of the last calendar year to the commencement of the
first full fiscal year as shall be appropriate pursuant to generally accepted
accounting principles. Upon such change, references in this Section 5.5 to
a calendar year shall be deemed to be references to a fiscal year.

 

5.6.          When
in the reasonable determination of Landlord any service, including but not
limited to HVAC, electrical, janitorial and property management service, is
provided disproportionately either to the Premises or to any other premises
within the Property, then the Operating Cost per square foot payable hereunder
may be increased or reduced, as the case may be, by Landlord’s determination of
the increased or reduced cost per square foot of such disproportionate service.
Other than the actual increase in utility costs for the disproportionate
service, as determined by Landlord, Landlord shall not charge any fee for the
disproportionate service. Tenant agrees to pay for any additional HVAC and
utility usage beyond the Buildings normal hours of operation. A cost per hour
fee for the additional HVAC and utilities usage shall be determined by and
between the parties. The cost per hour fee shall be equal to an amount to be
determined based upon mechanical engineering estimates and current market
estimates for similar Class Buildings. In the case of unoccupied space,
those elements of Operating Costs that increase with occupancy shall be
adjusted upward to the amount that would be incurred if the Project were fully
occupied; provided, however, in no event shall such adjustment permit Landlord
to collect from tenants in the Project as Operating Costs, more than 100% of
actual Operating Costs attributable to such adjusted elements.

 

6.             USE
OF PREMISES: Tenant will use and occupy the Premises for purposes of conducting
the business of: General Office Use.

 

6.1.          Tenant
will not use or occupy the Premises for any unlawful purpose, and will comply
with all present and future laws, ordinances, regulations and orders of all
governmental units having jurisdiction over the Premises. Tenant shall not
cause or permit any unusual noise, vibrations, odors or nuisance in or about
the Premises. Landlord disclaims any warranty that the Premises are suitable
for Tenant’s use and Tenant acknowledges that it has had a full opportunity to
make its own determination in this regard.

 

8

 

6.2.          Tenant
will not conduct or permit to be conducted any activity, or place any equipment
in or about the Premises, which will in any way increase the rate of fire
insurance or other insurance on the Property; and if any increase in the rate
of fire insurance or other insurance is stated by any insurance company or by
the applicable Insurance Rating Bureau to be due to activity or equipment of
Tenant in or about the Premises, such statement shall be conclusive evidence
that such increase in such rate is due to such activity or equipment and, as a
result thereof, Tenant shall be liable for such increase and shall reimburse
Landlord therefor and, further, shall discontinue or cause the discontinuance
of such conduct or shall remove such equipment upon Landlord’s demand made at
any time thereafter.

 

6.3.          Tenant
shall not install, use, generate, store or dispose of in or about the Premises
any hazardous substance, toxic chemical, pollutant or other material regulated
by the Comprehensive Environmental Response, Compensation and Liability Act of
1985 or the Minnesota Environmental Response and Liability Act or any similar
law or regulation, including without limitation any material containing
asbestos, PCB, CFC or HCFC (collectively “Hazardous Materials”) without
Landlord’s written approval of each Hazardous Material. Landlord shall not
unreasonably withhold its approval of use by Tenant of immaterial quantities of
Hazardous Materials customarily used in office business operations so long as
Tenant uses such Hazardous Materials in accordance with all applicable laws.
Tenant shall indemnify, defend and hold Landlord harmless from and against any
claim, damage or expense arising out of Tenant’s installation, use, generation,
storage, or disposal of any Hazardous Materials, regardless of whether Landlord
has approved the activity.

 

6.4.          To
the best of Landlord knowledge, the Building is new construction and no
Hazardous Materials were utilized in the construction of the Building.

 

6.5.          To
the best of Landlord knowledge, the Building was constructed in accordance with
the requirements imposed under the Americans with Disabilities Act (ADA).

 

7.             ASSIGNMENT
AND SUBLETTING:

 

7.1.          Tenant
will not assign, transfer, mortgage or encumber this Lease or sublet or rent or
permit occupancy or use of the Premises, or any part thereof by any third
party; nor shall any assignment or transfer of this Lease be effectuated by
operation of law or otherwise, (any of the foregoing being hereinafter referred
to as an “Assignment”) without in each such, case obtaining the prior written
consent of Landlord, which consent shall be subject to Landlord s sole
discretion. The consent by Landlord to any Assignment shall not be construed as
a waiver or release of Tenant from the terms of any covenant or obligation
under this Lease, nor shall the collection or acceptance of rent from any
transferee under an Assignment constitute an acceptance of the Assignment or a
waiver or release of Tenant or any transferee of any covenant or obligation
contained in this Lease, nor shall any Assignment be construed to relieve
Tenant from the requirement of obtaining the consent in writing of Landlord to
any further Assignment.

 

Landlord’s
consent to a proposed assignment or subletting shall not be unreasonably
withheld; but, in addition to any other ground for denial, Landlord’s consent
shall be deemed reasonably withheld if, in Landlord’s good faith judgement: (i) the
proposed assignee or subtenant does not have the financial strength to perform
its obligations under this Lease or any proposed sublease;

 

9

 

(ii) the
business and operations of the proposed assignee or subtenant are not of
comparable quality to the business and operations being conducted by other
tenants in the Building; (iii) the proposed assignee or subtenant intends
to use any part of the Premises for a purpose not permitted under this Lease; (iv) either
the proposed assignee or subtenant, or any person which directly or indirectly
controls, is controlled by, or is under common control with the proposed
assignee or subtenant occupies space in the Building, or is negotiating with
Landlord to lease space in the Building; (v) the proposed assignee or
subtenant is disreputable; or (vi) the use of the Premises or the Building
by the proposed assignee or subtenant would, in Landlord’s reasonable
judgement, impact the Building in a negative manner including but not limited
to significantly increasing the pedestrian traffic in and out of the Building
or requiring any alterations to the Building to comply with applicable laws; (vii) the
subject space is not regular in shape with appropriate means of ingress and
egress suitable for normal renting purposes; (viii) the transferee is a
government (or agency or instrumentality thereof) or (ix) Tenant has
failed to cure a default at the time Tenant requests consent to the proposed
Transfer.

 

7.2.          Notwithstanding
the foregoing, Tenant shall have the right to assign or sublet, with Landlord’s
consent, to a) any entity resulting from a merger or consolidation with Tenant,
b) any partnership succeeding to the business and assets of Tenant, and c) any
subsidiary or Affiliate of Tenant. Affiliate means any person or entity that
controls is controlled by, or is under common control with Tenant with “control”
meaning ownership of fifty percent (50%) or more of the voting interests in
Tenant.

 

7.3.          If
Tenant desires at any time to make an Assignment, it shall first notify
Landlord of its desire to do so and shall submit in writing to Landlord (i) the
name of the proposed assignee, mortgagee, subtenant or other transferee (any of
the foregoing being hereinafter referred to as an “Assignee”), (ii) the
nature of the proposed Assignee’s business to be carried on the Premises, (iii) a
copy of the proposed Assignment agreement and any other agreements to be
entered into concurrently with such Assignment, including full disclosure of
all financial terms, and (iv) such financial information as Landlord may
reasonably request concerning the proposed Assignee. Tenant shall pay to
Landlord a reasonable fee for Landlord’s expenses, including attorneys’ fees,
in reviewing such proposed Assignment. Neither the furnishing of such
information nor the payment of such fee shall limit any of Landlord’s rights or
alternatives under this Section.

 

7.4.          Upon
any request for Landlord’s consent under this Section, Landlord shall have the
option, to be exercised by giving written notice to Tenant within fourteen (14)
days after receipt by Landlord of the information concerning such Assignment
required by this Section, to terminate this Lease as to the portion of the
Premises for which Tenant proposes an Assignment, effective as of the date
Tenant proposes the Assignment to take place. Upon termination of this Lease as
to such portion of the Premises, (i) the Base Rent shall be reduced by the
lesser of (x) the then-current Base Rent per square foot of Rentable Area,
multiplied by the number of square feet of Rentable Area for which Tenant
proposes an Assignment and (y) the Base Rent stated in Tenant’s notice under Section 7.3;
(ii) Tenant’s Pro Rata Share shall be reduced in proportion to the
reduction of the Rentable Area of the Premises; (iii) such portion of the
Premises shall, at Tenant’s expense, be a separately demised area complying
with all codes and with a reasonable and appropriate entrance separate from the
entrance for the remainder of the Premises; (iv)

 

10

 

Tenant shall at all times
provide non-exclusive use of any common facilities; and (v) Landlord shall
have the right to use such portion of the Premises for any legal purpose
compatible with a first class office building, in its sole discretion, and the
right to further assign or sublease the portion of the Premises shall be
subject to Landlord’s election without the consent of Tenant. Upon termination
of this Lease as to all or any portion of the Premises, any option to extend
the term of this Lease with respect to such portion of the Premises shall also
terminate, whether or not such options have been exercised. Non-exercise by
Landlord of its rights under this Section shall not limit any of Landlord’s
other rights and alternatives under this Section.

 

7.5.          Whether
or not Landlord has consented to the applicable Assignment, the amount by which
the income received by Tenant with respect to any Assignment exceeds, in any
month, the Base Rent and Operating Costs payable by Tenant to Landlord, shall
be payable by Tenant directly to Landlord, as additional rent hereunder on or
before the last day of each such month. Tenant shall make full disclosure to
Landlord of a consideration paid or payable, agreements and other relevant
understandings with respect to any such Assignment.

 

8.             MAINTENANCE
AND REPAIRS: Without limitation of Landlord’s obligation to provide routine
janitorial services as set forth in Section 11 Tenant agrees to keep and
maintain the Premises and the fixtures and equipment therein in first class,
properly, functioning, safe, orderly and sanitary condition, will make all
necessary replacements thereto, will suffer no waste or injury thereto, and
will at the expiration or other termination of the Term of this Lease,
surrender the same with all improvements in the same order and condition in
which they were on the Commencement Date, or in such better condition as they
may hereafter be put, ordinary wear and tear and casualty damage to the extent
covered by insurance, excepted. Landlord shall make all necessary repairs to
the outer walls, roof, downspouts, gutters and basic structural elements and
common areas of the Property. Landlord shall also make all necessary repairs to
the portions of the building systems (plumbing, sewage, heating, air
conditioning and electrical) providing service jointly to the Premises and
other portions of the Property. Notwithstanding anything apparently to the
contrary in this Section, any cost of repairs or improvements to the Property,
to the Premises or to any common areas which are occasioned by the negligence
or the fault of Tenant, its officers, employees, agents or invitees, and which
arise out of the nature of Tenant’s use and occupancy of the Premises or the
installations of Tenant in the Premises shall be paid for by Tenant, as
additional rent hereunder, immediately upon billing.

 

9.             ALTERATIONS;
SIGNS; EQUIPMENT; MOVING:

 

9.1.          Tenant
will not make or permit anyone to make any alterations, decorations, additions
or improvements, structural or otherwise, in or to the Premises or the Property
without the prior written consent of Landlord. Landlord shall not unreasonably
withhold consent to Tenant’s interior decorations provided they comply with Section 2
of this Lease. As a condition precedent to consent of Landlord hereunder,
Tenant agrees to obtain and deliver to Landlord such security against mechanic’s
liens, as Landlord shall reasonably request. If any mechanic’s lien is filed
against any part of the Property for work claimed to have been done for, or
materials claimed to have been furnished to, Tenant, such mechanic’s lien shall
be discharged by Tenant within ten (10) days thereafter, at Tenant’s sole
cost and expense, by the payment thereof or by making any deposit required by
law. Regardless of whether Landlord’s consent is required or obtained
hereunder: (i) all alterations shall be made in accordance with applicable
laws, codes and insurance guidelines, and shall be

 

11

 

performed in a good and
workmanlike manner, and (ii) if the construction or Installation of Tenant’s
alterations or fixtures causes any labor disturbance; Tenant shall immediately
take any action necessary to end such labor disturbance. All alterations,
decorations, additions or improvements in or to the Premises or the Property
made by Tenant shall become the property of Landlord upon expiration of the
Term and shall remain upon and be surrendered with the Premises as a part
thereof without disturbance or injury, unless Landlord requires specific items
thereof to be removed by Tenant at Tenant’s sole expense, in which event Tenant
shall do so prior to the expiration of the Term at its expense, and shall
repair any damage caused thereby. Notwithstanding the foregoing, if (i) Tenant
is not in default in the performance of any of its obligations under this
Lease, (ii) if any and all damage resulting therefrom be repaired, and (iii) Tenant
shall post such security with respect to damage as Landlord may reasonably
request, Tenant shall have the right to remove, during the last ninety (90)
days of the term of this Lease, all movable furniture, furnishings or trade
fixtures installed in the Premises at the direct expense of Tenant, provided
the same is completed with no damage to the Premises.

 

9.2.          Tenant
shall not place any signs on the Building without first obtaining the written
consent of Landlord. Any allowed signs shall comply with the Building structure
and the City Code. Such signs shall also comply with the following: (i) such
place, number, size, color and style as has been approved in writing by
Landlord and (ii) in accordance with the sign criteria to be developed by
Landlord. Any such signs shall be at the sole expense of Tenant. Tenant shall
remove all signs at the expiration or termination of this lease and restore the
affected area to its original condition.

 

9.3.          Tenant
shall not install any equipment which will or may necessitate any changes,
replacements or additions to, or in the use of, the heating, ventilating or air
conditioning system, or electrical system of the Premises or the Property nor
any equipment containing Hazardous Materials without first obtaining the prior
written consent of Landlord. Equipment belonging to Tenant which causes noise
or vibration that may be transmitted to the structure of the Property or to any
space therein to such a degree as to be objectionable to Landlord or to any
tenant in the Property shall be installed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devices sufficient to eliminate
noise and vibration. Landlord shall have the right at any time to limit the
weight and prescribe the position of safes, concentrated filing systems and
other heavy equipment or fixtures.

 

9.4.          No
furniture, equipment or other bulky matter of any description will be received
into the Property or carried in the elevator except as approved by Landlord.
All moving of furniture, equipment and other material shall be done at other
than normal business hours, after notification to Landlord who shall, however,
not be responsible for any damage to or charges for moving the same unless
damage is the direct result of Landlord’s sole and gross negligence. Any and
all damage or injury to the premises or the Property caused by moving the
property of Tenant in or out of the Premises, or due to the same being on the
Premises, shall be repaired by, and at the sole cost of, Tenant. No deliveries
or pickups shall be left unattended at the loading dock.

 

10.           RIGHT
OF ENTRY: Tenant will permit Landlord, or its representative, to enter the
Premises, to examine, inspect and protect the Premises, and to make such
alterations,

 

12

 

renovations, restorations
and/or repairs as in the judgment of Landlord may be deemed necessary or
desirable for the Premises, for any other premises in the Property, or the
Property itself (including access to distribution systems above the ceiling of
the Premises), or to exhibit the same to prospective tenants during the last
year of the Term of this Lease or during any period Tenant is in default
hereunder, or to prospective purchasers or lenders at any time. Landlord shall
use reasonable efforts to not unreasonably interfere with the conduct of Tenant’s
business, but Landlord shall in no event be liable to Tenant for any damages in
connection with such entry or installation.

 

11.           SERVICES
AND UTILITIES:

 

11.1.        During
the Property business days and hours as established by Landlord from time to
time, Landlord shall furnish reasonably adequate water service and heat and air
conditioning during such seasons of the year when such services are normally
furnished in office buildings in the metropolitan area. Landlord shall provide
reasonable evening cleaning and janitorial service to the Premises, Saturdays,
Sundays and holidays excluded, provided that the Premises are used exclusively
for office purposes and are kept reasonably in order by Tenant. Tenant shall
pay to Landlord the non-typical costs for special cleaning and trash removal.
Landlord shall provide reasonable access to electric and telephone service.
Landlord shall not be liable for, and there shall be no abatement of rent by
reason of, failure to furnish, or for delay or suspension in furnishing, any
services to be provided by Landlord, caused by breakdown, maintenance, and/or
repairs or causes beyond Landlord’s control. Tenant shall conserve heat, air
conditioning, water and electricity and shall use due care in the use of the
Premises and of the public areas in the Property. All thermostats within the
Premises shall be under the sole control of Landlord, and Tenant shall not, nor
shall it permit any of its employees, agents, representatives, guests or
invitees, to open, change or tamper with any thermostats. If permitted by Law,
Landlord shall have the right at any time and from time to time during the
Lease Term, to either contract for service from a different company or
companies providing electricity service, “Alternative Service Provider”.

 

11.2.        As
long as space remains available, Landlord agrees to make available for rental
to Tenant, lower level storage space, consisting of 226 square feet. Tenant
shall pay $9.00 per square foot gross per year for the storage space at such
times and in the manner Base Rent is payable pursuant to the terms of this
Lease. The lease of storage space shall be subject to a separate agreement to
be executed by Landlord and Tenant, and is subject to rate increases if the
Landlord so determines. Landlord and Tenant
agree that upon sixty (60) days written notice to Tenant, Landlord may cancel
the storage space agreement.

 

11.3.        Tenant
shall have access to the Building and Premises 24 hours per day, seven (7) days
per week, 52 weeks per year. Employee access outside of the normal hours of
operation for the Building shall be through the issuance of card keys for a
designated exterior door.

 

11.4.        Landlord
shall provide to Tenant, Tenant employees and customers, free shared in common
surface level parking. So long as stalls remain available, Landlord shall make
available to Tenant two (2) parking stalls in the underground parking ramp
serving the Building for rental by Tenant. The rental rate shall be $80.00 per
stall per month and shall be payable at such times and in the manner Base Rent
is payable pursuant to this Lease. The lease of the underground

 

13

 

parking stalls shall be subject
to a separate agreement to be executed by Landlord and Tenant, and are subject
to rate increases if the Landlord so determines.

 

11.5.        Landlord
reserves the right to impose such security restrictions in the Common Areas as
it deems appropriate. The parties acknowledge that safety and security devices,
services and programs provided by Landlord, if any, while intended to deter
crime and ensure safety, may not in given Instances prevent theft or other
criminal’s acts, or ensure safety of persons or property. The risk that any
safety or security device, service or program may not be effective, or may
malfunction, or be circumvented by a criminal, is assumed by Tenant with
respect to Tenant property and interest, and Tenant shall obtain insurance
coverage to the extent Tenant desires protection against such criminal acts and
other losses, as further described in this Lease. Tenant agrees to cooperate in
any reasonable safety or security program developed by Landlord or required by
Law.

 

12.           WAIVER
AND INDEMNITY:

 

12.1.        Notwithstanding
anything apparently to the contrary in this Lease, Landlord and Tenant hereby
release one another and their respective partners, officers and employees and
property manager from any and all liability (to the other or anyone claiming
through or under them by way of subrogation or otherwise) for any loss or
damage covered by property insurance or coverable by a customary policy of
insurance required by Section 13, even if such loss or damage shall have
been caused by the fault or negligence of the other party, or anyone for whom
such party may be responsible.

 

12.2.        Notwithstanding
anything apparently to the contrary in this Lease, Landlord and its partners,
officers and employees and property manager shall not be liable to Tenant, and
Tenant hereby releases such parties from all damage, compensation or claims
from any cause other than the intentional misconduct of Landlord or its
partners, officers or employees or property manager arising from: loss or
damage to personal property or trade fixtures in the Premises including books,
records files, computer equipment, computer data, money, securities, negotiable
instruments or other papers; lost business or other consequential damage
arising out of interruption in the use of the Premises; and any criminal act by
any person other than Landlord or its partners, officers or employees.

 

12.3.        Tenant
agrees to indemnify, defend and hold Landlord and its partners, officers and
employees and property manager harmless from and against any claim, loss or
expense arising out of injury, death or property loss or damage occurring in
the Premises, except only to the extent caused by the negligent act or
intentional misconduct of Landlord or its partners, officers or employees or
property manager.

 

12.4.        Landlord
agrees to indemnify, defend and hold Tenant and its partners, officers and
employees harmless from and against any claim, loss or expense arising out of
injury, death or property loss or damage occurring in the Common Areas of the
Property, except to the extent caused by the negligent act or intentional
misconduct of Tenant or its partners, officers or employees.

 

13.           INSURANCE:

 

13.1.        Tenant
agrees to purchase, in advance, and to carry in full force and effect the
following insurance.

 

14

 

(A)          “All risk” property
insurance covering the full replacement value of all of Tenant’s leasehold
improvements, trade fixtures and personal property within the Premises.
Landlord shall be named as loss payee under all such policies.

 

(B)           At all times during the
lease Term, Tenant shall procure and maintain business interruption insurance
in such amount as will reimburse Tenant for direct or indirect loss of earning
attributable to all perils insured against in Section 13.

 

(C)           Commercial general
liability insurance, providing coverage on an “occurrence” rather than a “claims
made” basis, which policy shall include coverage for Bodily Injury, Property
Damage, Personal Injury, Contractual Liability (applying to this Lease), and
Independent Contractors, in current Insurance Services Office form or other
form which provides coverage at least as broad. Tenant shall maintain a
combined policy limit of at least One Million and 00/l00ths Dollars
($1,000,000.00) applying to Bodily Injury, Property Damage and Personal Injury,
which limit may be satisfied by Tenant’s basic policy, or by the basic policy
in combination with umbrella or excess policies so long as the coverage is at
least as broad as that required herein. Such liability umbrella and/or excess
policies may be subject to aggregate limits so long as the aggregate limits
have not at any pertinent time been reduced to less than the policy limit
stated above, and provided further that any umbrella or excess policy provides
coverage from the point that such aggregate limits in the basic policy become
reduced or exhausted. Landlord and its managing agent shall be named as an
additional insured under all such policies.

 

(D)          Prior to the sale,
storage, use or giving away of alcoholic beverages on or from the Premises by
Tenant or another person, Tenant, at its own expense, shall obtain a policy or
policies of insurance issued by reasonable insurance company and in a form
acceptable to Landlord saving harmless and protecting Landlord, its managing
agent, and the Premises against any and all damages, claims liens, judgements,
expenses and costs, including actual attorneys fees, arising under any present
or future law, statute, or ordinance of State of Minnesota or other
governmental authority having jurisdiction of the Premises, by reasons of any
storage, sale, use or giving away of alcoholic beverages on or from the
Premises. Such policy or policies of insurance shall have a minimum combined
single limit of One Million Dollars ($1,000,000) per occurrence and shall apply
to bodily injury, fatal or non fatal; injury to means of support; and injury to
property of any person. Such policy or policies of insurance shall name
Landlord and its agents, beneficiaries, partners, employees and any mortgagee
of Landlord or any ground lessor of Landlord as additional insured.

 

(E)           Failure to insure. If
Tenant fails to maintain any insurance which Tenant is required to maintain
pursuant to this Section 13, Tenant shall be liable to Landlord for any
loss or cost resulting from such failure to maintain. Tenant may not
self-insure against any risks required to be covered by insurance without
Landlord’s prior written consent.

 

15

 

13.2.        At
least ten (10) days prior to entry by Tenant on the Premises, Tenant shall
deliver to Landlord evidence that the insurance required by this Lease is in
full force and effect. At least ten (10) days prior to expiration of any
such coverage, Tenant shall deliver evidence that the coverage in question will
be renewed or replaced upon expiration. Such evidence of insurance shall
contain sufficient information to enable Landlord to determine whether Tenant’s
insurance complies with the requirements of this Lease. Upon request, Tenant
shall also furnish insurer-certified copies of all pertinent policies. All
polices used to provide the coverage required by this Lease shall (i) be
endorsed to require the insurer to provide at least ten (10) days notice
to Landlord prior to cancellation or non-renewal, and (ii) be issued by
financially sound companies having an A.M. Best Company rating of at least
A: VII.

 

13.3.        Landlord
agrees to purchase in advance, and to carry in full force and effect the
following insurance:

 

(A)          “All risk” property
insurance coverage on the Property exclusive of Tenant’s Leasehold
Improvements, in such amount as Landlord deems prudent.

 

(B)           Commercial general
public liability insurance covering the Property in a combined single limit
amount of at east One Million and 00/l00ths Dollars ($1,000,000.00) and written
on an “occurrence” basis.

 

13.4.        If
any insurance required hereunder ceases to be available, or is available on
terms so unacceptable that prudent landlords or tenants, as the case may be,
generally do not carry such insurance, then in lieu of such insurance the
pertinent party may carry the most comparable insurance which is available and
generally carried by prudent parties.

 

14.           FIRE
OR OTHER CASUALTY: If the Premises or the Property shall be damaged by fire or
other cause Landlord shall at its option either (a) undertake to restore
such damage with all due diligence, or (b) in the event the Premises or
the Property are damaged by fire or other cause to such extent that damage
cannot, in Landlord’s sole judgment, be economically repaired within ninety
(90) days after the date of such damage (taking into account the time necessary
to effectuate a satisfactory settlement with any insurance company and using
normal construction methods without overtime or other premium), terminate this
Lease, by notice given to Tenant within sixty (60) days after the date of the
damage. Any termination hereunder by reason of damage to the Premises shall be
effective as of the date of the damage. Any termination by reason of damage to
the Property but not the Premises shall be effective as of the date notice is given.
If Landlord elects to restore, Landlord shall not be obligated to restore any
improvements in the Premises which were not owned and constructed by Landlord.
Upon substantial completion by Landlord of its work, Tenant shall undertake to
restore its leasehold improvements and trade fixtures with all due diligence.
This Lease shall, unless terminated by Landlord pursuant to this Section,
remain in full force and effect following such damage, and, in the case of
damage to the Premises, the Base Rent and additional rent, prorated to the
extent that the Premises are rendered untenantable, shall be equitably abated
until such repairs are completed; provided, however, that if Tenant does not
restore its leasehold improvements and trade fixtures with due diligence,
abatement shall cease as of the date restoration could have been completed
using due diligence.

 

16

 

15.           CONDEMNATION:
If the whole or any substantial part of the Premises shall be taken or
condemned or purchased under threat of condemnation by any governmental
authority, then the Term of this Lease shall cease and terminate as of the date
when the condemning authority takes possession of the Premises and Tenant shall
have no claim against the condemning authority, Landlord or otherwise for any
portion of the amount that may be awarded as damages as a result of such taking
or condemnation or for the value of any unexpired term of this Lease provided,
however, that Landlord shall not be entitled to any separate award made to
Tenant for loss of business or costs of relocation. In the event part of the
Property, but not the Premises, is condemned to the extent that the Property
cannot, in Landlord’s sole judgment, be economically restored within a
reasonable time, Landlord shall have the option by notice given to Tenant
within ninety (90) days after the date the condemning authority takes
possession to terminate this Lease as of the date of such possession.

 

16.           SECURITY
DEPOSIT: Upon the execution of this Lease, Tenant shall deposit with Landlord a
security deposit equal to one month of Gross Rent, as defined herein. The
deposit is for securing Tenant’s full and faithful performance of all of the
terms of this Lease. Landlord shall return such sum, without Interest, after
the expiration of this Lease. Landlord may apply any part of such deposit to
cure any Tenant default. If there is a sale of the Property, Landlord may
transfer the deposit to the Purchaser. Tenant has submitted a security deposit
of $2,460 with Landlord. If Landlord so uses or applies any portion of the
Security Deposit, for the purpose of covering delinquent rent, Tenant shall
immediately upon written demand deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the full amount herein stated. If
Tenant is in default under the Lease more than two (2) times within any
twelve- month period, irrespective of whether or not such default is cured,
then, without limiting Landlord’s other rights and remedies provided for in this
Lease, or at law or equity, the Security Deposit shall automatically be
increased by an amount equal to two (2) times the original Security
Deposit.

 

17.           DEFAULT:

 

17.1.        Any
one of the following events shall constitute an Event of Default:

 

(i)            Tenant shall fail to
pay any monthly installment of Base Rent or Additional Rent as herein provided,
and such default shall continue for a period of five (5) days after the
due date therefor;

 

(ii)           The abandonment or
vacation of the Premises by Tenant for fourteen (14) consecutive days (with or
without payment of rent).

 

(iii)          Tenant shall violate or
fail to perform any of the other conditions, covenants or agreements herein
made by Tenant and such default shall continue for fifteen (15) days after
notice from Landlord; provided however, that if the nature of such default is
such that Tenant can cure the default, but not within fifteen (15) days, then
the Event of Default shall be suspended for a period not in excess of thirty
(30) additional days so long as Tenant commences cure within fifteen (15) days
and thereafter diligently and continuously prosecutes the curing of the
default, and so long as continuation of the default does not create material
risk to the Property or to persons using the Property.

 

17

 

(iv)          Tenant shall file or
have filed against it or any guarantor of this Lease any bankruptcy or other
creditor’s action, or make an assignment for the benefit of its creditors.

 

17.2.        If
an Event of Default shall have occurred and be continuing, Landlord may at Its
sole option by written notice to Tenant, terminate this Lease. Neither the
passage of time after the occurrence of the Event of Default nor exercise by
Landlord of any other remedy with regard to such Event of Default shall limit
Landlord’s rights under this Section 17.

 

17.3.        If
an Event of Default shall have occurred and be continuing, whether or not
Landlord elects to terminate this Lease, Landlord may enter upon and repossess
the Premises (said repossession being hereinafter referred to as “Repossession”)
and may remove Tenant and all other persons and property therefrom.

 

17.4.        From
time to time after Repossession of the Premises, whether or not this Lease has
been terminated, Landlord may, but shall not be obligated to, attempt to relet
the Premises for the account of Tenant in the name of Landlord or otherwise,
for such term or terms (which may be greater or less than the period which
would otherwise have constituted the balance of the Term) and for such terms
(which may include concessions or free rent) and for such uses as Landlord, in
its uncontrolled discretion, may determine, and may collect and receive the
rent therefor. Any rent received shall be applied against Tenant’s obligations
hereunder, but Landlord shall not be responsible or liable for any failure to
collect any rent due upon any such reletting.

 

17.5.        No
termination of this Lease and no Repossession of the Premises shall relieve
Tenant of its liabilities and obligations under this Lease, all of which shall
survive any such termination or Repossession. In the event of any such
termination or Repossession, whether or not the Premises shall have been relet,
Tenant shall pay to Landlord the Base Rent and other sums and charges to be
paid by Tenant up to the time of such termination or Repossession, and
thereafter Tenant, until the end of what would have been the Term in the
absence of such termination or Repossession, shall pay to Landlord, as and for
liquidated and agreed current damages for Tenant’s default, the equivalent of
the amount of the Base Rent and such other sums and charges which would be
payable under this Lease by Tenant if this Lease were still in effect, less the
net proceeds if any, of any reletting effected pursuant to the provisions of Section 17.4
after deducting all of Landlord’s expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage and management
commissions, operating expenses, legal expenses, attorneys’ fees, alteration
costs, and expenses of preparation for such reletting. Tenant shall pay such
current damages to Landlord monthly on the days on which the Base Rent would
have been payable under this Lease if this Lease were still in effect, and
Landlord shall be entitled to recover the same from Tenant on each such day. At
any time after such termination or Repossession, whether or not Landlord shall
have collected any current damages as aforesaid, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord on demand, as and for
liquidated and agreed final damages for Tenant’s default, an amount equal to
the then present value of the excess of the Base Rent and other sums or charges
reserved under this Lease from the day of such termination or Repossession for
what would be the then unexpired term if the same had remained in effect, over
the amount of rent Tenant demonstrates that Landlord

 

18

 

could in all likelihood
actually collect for the Premises for the same period, said present value to be
arrived at on the basis of a discount of nine percent (9%) per annum.

 

17.6.        In
addition to all other remedies of Landlord, Landlord shall be entitled to
reimbursement upon demand of all reasonable attorneys fees incurred by Landlord
in connection with any Event of Default.

 

17.7.        Landlord
shall in no event be considered to be in default of Landlord’s obligations
hereunder until the expiration of a reasonable time after notice of default
from Tenant.

 

17.8.        In
addition to all other remedies of Landlord, Tenant acknowledges that its late
payment of any monthly installment of rent will cause Landlord to incur certain
costs and expenses not contemplated under this Lease, the exact amount of which
is extremely difficult or impractical to fix. Such costs and expenses will
include, without limitations, loss of use of money, administrative and
collection costs, and processing and accounting expenses. Therefore, if any
installment of rent is not received by Landlord from Tenant by the fifth (5th)
day of the month for which such installment is due, Tenant shall immediately
pay to Landlord (i) a late charge equal to 5 percent of such installment
and (ii) the unpaid balance due Landlord shall bear interest at the
Interest Rate, defined in Section 18 herein, from the date such
installment became due and payable to the date of payment thereof by Tenant,
and such interest shall constitute additional to any interest due pursuant to
this Lease. The “Interest Rate” as used herein means the maximum rate permitted
by law. Landlord and Tenant agree that this rate charge represents a reasonable
estimate of costs and expenses incurred by Landlord, and is in fair
compensation to Landlord for its loss suffered by such non-payment by Tenant.
Acceptance of this late charge shall not constitute a waiver of Tenant’s
default with respect to such non-payment by Tenant, nor prevent Landlord from
exercising any other rights and remedies available to Landlord under this
Lease.

 

18.           LANDLORD’S
RIGHT TO CURE DEFAULT; LATE PAYMENT: If Tenant commits an Event of Default (or
if any default exists and Landlord has good cause for action prior to
expiration of Tenant’s grace period), then Landlord may, but shall not be
required to, make such payment or do such act, or correct any damage caused by
such prohibited act and to enter the Premises as appropriate in connection
therewith, and the amount of the expense thereof, if made or done so by
Landlord, with interest thereon at the Interest Rate (as hereinafter defined)
from the date paid by Landlord, shall be paid by Tenant to Landlord and shall
constitute additional rent hereunder due and payable with the next monthly
installment of rent; but the making of such payment or the doing of such act by
Landlord shall not operate to cure such default or to stop Landlord from the
pursuit of any remedy of which Landlord would otherwise be entitled. The “Interest
Rate” as used herein means the maximum rate permitted by law.

 

19.           WAIVER:
No waiver by either party of any breach of any agreement herein contained shall
operate as a waiver of such agreement itself, or of any subsequent breach
thereof. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly installments of rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated rent nor shall any endorsement or
statement on any check or letter accompanying a check for payment of rent be
deemed an accord and satisfaction, nor shall acceptance of rent with

 

19

 

knowledge of breach constitute
a waiver of the breach, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such rent, to terminate
this Lease, to Repossess the Premises or to pursue any other remedy provided in
this Lease. No re-entry by Landlord, and no acceptance by Landlord of keys from
Tenant, shall be considered an acceptance of a surrender of the Lease.

 

20.           SUBORDINATION:

 

20.1.        For
the purposes of this Section, the term “Mortgage” shall mean at any time, any
mortgage of record now or hereafter placed against the Property, any increase,
amendment, extension, refinancing or recasting of a Mortgage and, in the case
of a sale or lease and leaseback by Landlord of all or any part of the
Property, the lease creating the leaseback. For the purposes hereof a mortgage
shall be deemed to continue in effect after foreclosure thereof and during the
period of redemption therefrom.

 

20.2.        This
Lease is subject and subordinate to the lien of any Mortgage, which may now or
hereafter encumber the Property or any development of which the Property is a
part. In confirmation of such subordination, Tenant shall, at Landlord’s
request from time to time, promptly execute any certificate or other document
requested by the holder of the Mortgage, including but not limited to, Tenant’s
most recently completed fiscal year-end income statement and balance sheet.
Tenant shall submit these documents to landlord within ten (10) days written
notice to Tenant. Tenant agrees that in the event that any proceedings are
brought for the foreclosure of any Mortgage, Tenant shall immediately and
automatically attorn to the purchaser at such foreclosure sale, as the landlord
under this Lease, and Tenant waives the provisions of any statute or rule of
law, now or hereafter in effect, which may give or purport to give Tenant any
right to terminate or otherwise adversely affect this Lease or the obligations
of Tenant hereunder in the event that any such foreclosure proceeding is
prosecuted or completed. Neither the holder of the Mortgage (whether it
acquires title by foreclosure or by deed in lieu thereof) nor any purchaser at
foreclosure sale shall be liable for any act or omission of Landlord, subject
to any offsets or defenses which Tenant might have against Landlord or bound by
any prepayment by Tenant of more than one month’s installment of Base Rent and
additional rent or by any modification of this Lease made subsequent to the
granting of the Mortgage. Notwithstanding anything to the contrary in this
Section, Tenant’s rights to quiet possession of the Premises shall not be
disturbed so long as Tenant shall pay the rent and observe and perform all of
the provisions of this Lease to be observed and performed by Tenant, unless
this Lease is terminated pursuant to specific provisions relating to
termination contained in this Lease. With respect to future mortgages, Tenant
will agree to subordinate the Lease so long as the Lender agrees (i) in
the event of foreclosure, the Lease will not be terminated so long as Tenant is
not in default (ii) the Lease will continue in effect and the Lender (or
any purchaser at the foreclosure sale) will perform the obligations of Landlord
under the Lease following the date of foreclosure; and (iii) with respect
to any “continuing defaults” of Landlord existing as of the date of foreclosure
(e.g., failure to maintain, failure to repair), the Lender acquiring title
shall correct such conditions.

 

21.           RULES
AND REGULATIONS: Tenant shall use the Premises and the Common Areas of the
Property in accordance with the terms of this Lease and such additional rules and
regulations as may from time to time be reasonably made by Landlord for the
general safety, comfort and convenience of the owners, occupants and tenants of
the Property, and Tenant shall use its best efforts to cause Tenant’s
customers, employees and invitees to abide by such rules

 

20

 

and regulations. Landlord shall
in no event be responsible to Tenant for enforcement of such rules and
regulations against other tenants. ‘These rules and regulations are
further outlined in Exhibit D attached to this lease.

 

22.           COVENANT
OF QUIET ENJOYMENT: Landlord covenants that it has the right to make this Lease
for the term aforesaid and covenants that if Tenant shall pay the rent and
perform all of the covenants, terms and conditions of this Lease to be
performed by Tenant, Tenant shall, during the Term hereby created, freely,
peaceably and quietly occupy and enjoy the full possession of the Premises. The
liability of the original Landlord and any successor Landlord under this Lease
is limited to its interest in the Building and Property.

 

23.           NO
REPRESENTATIONS BY LANDLORD: Neither Landlord nor any agent or employee of
Landlord has made any representations or promises with respect to the Premises
or the Property except as herein expressly set forth, and no right, privileges,
easements or licenses are acquired by Tenant except as herein expressly set
forth. No exhibit, not attached to this Lease nor any other materials provided
by Landlord, shall constitute a warranty or agreement as to the configuration
of the Property or the occupants thereof. Landlord reserves the right from time
to time to modify the Property, including common areas, appurtenances and
rentable areas, without in any case reducing the obligations of Tenant
hereunder. Tenant has no right to light or air over any premises adjoining the
Property. Tenant, by taking possession of the Premises, shall accept the same “as
is” except as expressly provided in this Lease and such taking of possession
shall be conclusive evidence that the Premises and the Property are in good and
satisfactory condition at the time of such taking of possession. In addition to
and without limitation of the immediately preceding sentence, Tenant agrees
that it is leasing the Premises on an “as is”, “where is” and “with all faults”
basis, based upon its own judgment, and hereby disclaims any reliance upon any
statement or representation whatsoever made by Landlord. Landlord makes no
warranty with respect to the premises, the property or any part thereof,
express or implied, and landlord specifically disclaims any warranty of
merchantability and of fitness for a particular purpose and any liability for
consequential damages arising out of the use of or the inability to use the
premises, the project or any part thereof.

 

24.           NOTICES:
All notices or other communications hereunder shall be in writing and shall be
hand delivered or sent by registered or certified first-class mail, postage
prepaid, or by overnight air express service, (i) if to Landlord at
Landlord Address set forth on the Data Sheet, and (ii) if to Tenant, at
the Premises, unless notice of a change of address is given pursuant to the
provisions of this Section. The day notice is given by mail shall be deemed to
be the day following the day of mailing.

 

25.           ESTOPPEL
CERTIFICATES: Tenant agrees at any time and from time to time, upon not less
than five (5) days prior written notice by Landlord, to execute,
acknowledge and deliver to Landlord or a party designated by Landlord a
statement in writing (i) certifying that this Lease is unmodified and in
full force and effect, or if there have been modifications, that the Lease is
in full force and effect as modified and stating the modifications, (ii) stating
the dates to which the rent and other charges hereunder have been paid by
Tenant, (iii) stating whether or not Landlord is in default in the performance
of any covenant, agreement or condition contained in this Lease, and, if so,
specifying each such default (iv) agreeing that Tenant and Landlord will

 

21

 

not thereafter modify the Lease
without the approval of any mortgagee identified by Landlord, and (v) agreeing
that, except for any security deposit required herein, Tenant shall not prepay
any rent more than thirty (30) days in advance, and (vi) such other
matters relating to this Lease as may reasonably be requested. Any such
statement delivered pursuant hereto may be relied upon by any owner of the
Property, any prospective purchaser of the Property, any mortgagee or
prospective mortgagee of the Property or of Landlord’s interest, or any
prospective assignee of any such mortgagee. Tenant acknowledges that failure to
comply with this Section on a timely basis could result in loss of a
favorable sale or financing and Tenant agrees to be liable for any
consequential damages resulting from Tenant’s breach hereunder.

 

26.           SURRENDER;
HOLDING OVER: Upon the expiration of this Lease or the earlier termination of
Tenant’s right to possession, Tenant shall immediately vacate the Premises,
remove all of its property therefrom, remove any Hazardous Materials installed,
used, generated, stored or disposed of by Tenant, and leave the Premises in the
condition required by this Lease. Any property not removed shall be deemed
abandoned, and Tenant shall be liable for all costs of removal. Should Tenant
continue to occupy the Premises, or any part thereof, after the expiration or
termination of the Term, whether with or without the consent of Landlord, such
tenancy shall be from month to month and the monthly Base Rent shall be twice
that which would otherwise be payable under Section 4. If Tenant’s
holdover is without the consent of Landlord, neither this Section nor the
acceptance of any rent hereunder shall prevent Landlord from exercising any
remedy to regain immediate possession of the Premises.

 

27.           ENERGY
CONSERVATION: Wherever in this Lease any terms, covenants or conditions are
required to be kept or performed by Landlord, Landlord shall be deemed to have
kept and performed such terms, covenants and conditions notwithstanding any act
or omission of Landlord, if such act or omission is pursuant to any
governmental regulations, requirements, directives or requests. Without
limiting the generality of the foregoing, Landlord may reduce the quantity and
quality of all utility and other services and impose such regulations as
Landlord deems necessary in order to conserve energy.

 

28.           COMMUNICATION
AND COMPUTER LINES: Tenant may, in a manner consistent with the provisions and
requirements of this Lease, install, maintain, replace, remove or use any
communications or computer wires, cables and related devices (collectively the
Lines) at the Building in or serving the Premises, provided: (a) Tenant
shall obtain Landlord’s prior written consent, which consent may be conditioned
as required by Landlord, (b) if Tenant any time uses any equipment that
may create an electromagnetic field exceeding the normal insulation ratings of
ordinary twisted pair riser cable or cause radiation higher than normal
background radiation, the Lines therefore (including riser cables) shall be
plenum rated and appropriately insulated to prevent such excessive
electromagnetic field or radiation, and (c) Tenant shall pay all costs in
connection therewith. Landlord reserves the right to require that Tenant remove
any Lines which are installed in violation of these provisions.

 

Landlord may
(but shall not have the obligation to): (i) install new Lines at the
Property, and (ii) create additional space for Lines at the Property, and
adopt reasonable uniform rules and regulations with respect to the Lines.

 

22

 

Notwithstanding
anything to the contrary contained in Section 28, Landlord reserves the
right to require that Tenant remove any or all Lines installed by or for Tenant
within or serving the Premises upon termination of this Lease. Tenant shall
not, without the prior written consent of Landlord in each instance, grant to
any third party a security interest or lien in or on the Lines, and such
security interest or lien granted without Landlord written consent shall be
null and void. Except to the extent arising from the intentional or negligent
acts of Landlord or Landlord agents or employees, Landlord shall have no
liability for damages arising from, and Landlord does not warrant that Tenant’s
use of any Lines will be free from the following (collectively called “Line
Problems”: (a) any eavesdropping or wire-tapping by authorized parties, (b) any
failure of any Lines to satisfy Tenant’s requirements, or (c) any
shortages, failures, variations, interruptions, disconnections, loss or damage
caused by the installation, maintenance, replacement, use or removal of Lines
by or for other tenants or occupants at the Property. Under no circumstances
shall any Line Problems be deemed an actual or constructive eviction of Tenant,
render Landlord liable to Tenant for abatement of Rent, or relieve Tenant from
performance of Tenant obligation under this Lease. Landlord in no event shall
be liable for damages by reason of loss of profits, business interruption or
other consequential damage arising from any Line Problems.

 

29.           RELOCATION:
Landlord may from time to time upon not less than thirty (30) days written
notice require Tenant to relocate to substitute premises within the building,
provided: (i) Rentable Area of the substitute premises is not less than 90
percent (90%) of the Rentable Area of the Premises; (ii) at Landlord’s
option the Rentable Area of the substitute premises may be greater than that of
the Premises, but if the increase in the Rentable Area is more than 10 percent
(10%) of Rentable Area of the Premises, then for purposes of computing Base
Rent and Tenant’s Pro Rata Share the Rentable Area shall be deemed to increase
only 10 percent (10%); and (iii) Landlord shall at its sole expense
provide leasehold improvements in the substitute premises which are reasonably
comparable to those in the Premises. Except as expressly provided herein
Landlord shall have no further obligations with respect to such relocation.
Upon the date of relocation as specified in Landlord’s notice: (i) Tenant
shall promptly vacate and surrender its previous premises in the condition
required by this Lease, time being of the essence; and (ii) the new
substitute premises shall become the Premises for purposes of this Lease.

 

30.           TENANT’S
TAXES: At least ten (10) days prior to delinquency, Tenant shall pay all
taxes levied or assessed upon (i) Tenant’s equipment, furniture and other
personal property located in or about the Premises, and (ii) this Lease or
the rent paid hereunder or any portion thereof, excluding any tax measured by
Landlord’s net income. If any such taxes are imposed upon Landlord, Tenant
shall pay to Landlord, at least twenty (20) days before the date each
installment is due to the taxing authority, the portion allocable to Tenant
pursuant to this Section.

 

31.           UNIFORM COMMERCIAL
CODE: The Tenant grants to the Landlord a lien upon all personal property of
the Tenant in the Leased Premises during said term to secure payment of the
rent payable hereunder, and agrees that no such property shall be removed from
the Leased Premises without the consent of the Landlord while any installments
of rent are past due, and during any other default in the conditions hereof.

 

23

 

To the extent
this Lease grants Landlord, or recognizes in Landlord, any lien or rights
greater than provided by the laws of the State of Minnesota pertaining to “Landlord’s
Liens,” this Lease is intended and does constitute a security agreement within
the meaning of the Uniform Commercial Code of the State of Minnesota, and
Landlord, in addition to the rights prescribed herein, shall have the rights,
titles, liens and interests in and to Tenant’s property now or hereafter
located in or upon the Leased Premises which are granted a “secured party”, as
the term is defined under such Uniform Commercial Code, to secure the payment
to Landlord of amounts and monies due under this Lease. Tenant will execute, on
request of Landlord, and will deliver to Landlord, a financing statement for
the purpose of perfecting Landlord’s security interest under this Lease, so
that the Landlord may file this Lease as a security agreement.

 

32.           MISCELLANEOUS:

 

(A)          This is a Minnesota
contract and shall be construed according to the laws of Minnesota.

 

(B)           The submission of this
Lease to Tenant or its broker or other agent does not constitute an offer to
Tenant to lease the Premises. This Lease shall have no force and effect until, (i) it
is executed and delivered by Tenant to Landlord and (ii) it is fully
reviewed and executed by Landlord; provided, however, that upon execution of
this Lease by Tenant and delivery to Landlord, such execution and delivery by
Tenant shall, in consideration of the time and expense incurred by Landlord in
reviewing the Lease and Tenant credit, constitute an offer by Tenant to Lease
the Premises upon the terms and conditions set forth herein (which offer to
Lease shall be irrevocable for ten (10) business days following the date
of delivery).

 

(C)           The captions in this
Lease are for convenience only and are not a part of this Lease.

 

(D)          If more than one person
or entity shall sign this Lease as Tenant, the obligations set forth herein
shall be deemed joint and several obligations of each such party.

 

(E)           Time is of the essence.

 

(F)           The provisions of this
Lease which relate to periods subsequent to the expiration of the Term shall
survive expiration.

 

(G)           If any provision of
this Lease is invalid or unenforceable to any extent, then such provision and
the remainder of this Lease shall continue in effect and be enforceable to the
fullest extent permitted by law.

 

(H)          This Lease contains the
entire agreement of the parties hereto with respect to the Premises and
Property. This Lease may be modified only in writing, executed and delivered by
both parties.

 

24

 

(I)            Nothing contained in
this Lease shall be deemed or construed to create a partnership or joint
venture of or between Landlord and Tenant, or to create any other relationship
between the parties other than that of landlord and tenant.

 

(J)            This Lease shall be
binding upon and inure to the benefit of the parties hereto and, subject to the
restrictions and limitations herein contained their respective heirs,
successors and assigns.

 

33.           OPTION
TO RENEW: Providing Tenant is not in default of Lease, and providing Tenant
gives Landlord six (6) months prior written notice, Tenant has the right
to renew the Lease for one term of three (3) years. The Base Rent during
this Option Period shall be at $16.00 per rentable square foot.

 

	
  Landlord

  	
   

  	
  Tenant

  
	
   

  	
   

  	
   

  
	
  AMBAR, L.L.C.

  	
   

  	
  STEN Corporation

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Frank Dunbar

  	
   

  	
   

  	
  Kenneth Brimmer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Chief Manager

  	
   

  	
  Its:

  	
  Chief Executive Officer

  

 

25

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