EXHIBIT 10.18
GREAT PLAINS SOFTWARE, INC.
CORPORATE HEADQUARTERS
LEASE AGREEMENT
DATED: OCTOBER 23, 1997
TENANT: GREAT PLAINS SOFTWARE, INC.,
A MINNESOTA CORPORATION
LANDLORD: IRET PROPERTIES,
A NORTH DAKOTA LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
SUMMARY OF BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . iv
1. DEMISE AND PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. TERM OF LEASE, HOLDOVER AND OPTIONS . . . . . . . . . . . . . . . . . 1
3. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. CONSTRUCTION OF PREMISES . . . . . . . . . . . . . . . . . . . . . . 4
5. COMPLETION OF CONSTRUCTION; RENT COMMENCEMENT . . . . . . . . . . . . 4
6. EVIDENCE OF TITLE, COVENANT OF TITLE AND QUIET POSSESSION . . . . . . 5
7. USE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. REAL ESTATE TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9. MAINTENANCE BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . 8
10. MAINTENANCE BY TENANT . . . . . . . . . . . . . . . . . . . . . . . . 8
11. ALTERATIONS, ADDITIONS AND IMPROVEMENTS . . . . . . . . . . . . . . . 9
12. LANDLORD'S RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . 9
13. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. ASSIGNMENTS AND SUBLEASING . . . . . . . . . . . . . . . . . . . . . 10
15. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
17. RELEASE AND WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . 13
18. FIRE AND CASUALTY DAMAGE . . . . . . . . . . . . . . . . . . . . . . 13
19. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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20. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21. BANKRUPTCY OR INSOLVENCY . . . . . . . . . . . . . . . . . . . . . . 20
22. OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . 20
23. RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . 22
24. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
25. NOTICES TO TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . 23
26. NOTICES TO LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . 23
27. RECORDATION, SHORT FORM . . . . . . . . . . . . . . . . . . . . . . . 23
28. PARTIES BOUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
29. ENTIRE AGREEMENT; MODIFICATION; SEVERABILITY; CONSTRUCTION . . . . . 24
30. NUMBER AND GENDER . . . . . . . . . . . . . . . . . . . . . . . . . . 24
31. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
32. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
33. LAST EXECUTION AND EFFECTIVE DATE . . . . . . . . . . . . . . . . . . 25
34. NO PARTNERSHIP FORMED . . . . . . . . . . . . . . . . . . . . . . . . 25
35. AUTHORITY TO EXECUTE LEASE . . . . . . . . . . . . . . . . . . . . . 25
36. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
37. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
38. HAZARDOUS WASTE . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
39. SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . 27
40. ATTORNEY'S FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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41. ESTOPPEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
42. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ATTACHMENTS AND EXHIBITS
CONSTRUCTION ADDENDUM
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - NOTICE OF LEASE
EXHIBIT C - MEMORANDUM OF LEASE
EXHIBIT D - LANDLORD'S TITLE COMMITMENT
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SUMMARY OF BASIC LEASE PROVISIONS
1. Location: South of 42nd Avenue
Southwest and west of 38th Street
Southwest in the City of Fargo, North
Dakota, as more particularly described
in EXHIBIT A hereto
2. Rent Commencement: See Paragraph 3.3
3. Landlord's Address: IRET Properties
00 Xxxxx Xxxx
Xxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
4. Tenant's Address: Great Plains Software, Inc.
0000 XX 00xx Xx.
Xxxxx, XX 00000
ATTN: Xxxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
5. Property: Corporate headquarters
6. Primary Term: Fourteen (14) years
7. Extension Options: Six (6) extension options for (5) years
each
8. Fixed Annual Rent: YEARS 1-14: 12.5% of Project Costs (as
defined in the Construction Addendum
attached hereto)
EXTENSION PERIODS: as provided in
Paragraph 2.4
9. Purchase Option: See Xxxxxxxxx 00
00. Right of First Refusal: See Paragraph 23
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LEASE AGREEMENT
This Lease Agreement (hereinafter the "LEASE") is made and entered
into by and between:
"LANDLORD": IRET Properties, a North Dakota
Limited Partnership
00 Xxxxx Xxxx
Xxxxx, XX 00000
Federal Tax #00-0000000
"TENANT" Great Plains Software, Inc.,
& a Minnesota corporation
"Developer": 0000 XX 00xx Xx.
Xxxxx, XX 00000
Federal Tax # 00-0000000
W I T N E S S E T H:
1. DEMISE AND PREMISES
1.1. Landlord, in consideration of the rents hereinafter reserved
and agreed to be paid by Tenant, hereby leases to Tenant, and Tenant hereby
leases from Landlord, all of the land situated within the County of Cass and
State of North Dakota, as more particularly described with full legal
description in EXHIBIT A (the "LAND"), and all buildings and improvements now or
hereafter constructed or located thereon ( collectively the "BUILDING") (the
Land and Building hereinafter collectively referred to as the "PREMISES"),
together with, and the term Premises shall include, all Landlord's rights,
privileges, easements, hereditament and appurtenances appertaining thereto,
including without limitation any such rights, privileges, easements,
hereditament and appurtenances in, over and upon adjoining and adjacent public
and private land, highways, roads and streets required for ingress and egress to
and from the Premises.
2. TERM OF LEASE, HOLDOVER AND OPTIONS
2.1. Tenant shall have and hold the same for a term (the "Lease
Term") commencing on the date hereof and ending on the last day of the
fourteenth (14th) Lease Year (as such term is defined in Paragraph 3.4), unless
extended or terminated in accordance with the provisions hereof; provided,
however, that Tenant's obligation to pay Rent shall not commence until the Rent
Commencement Date (as defined in Article 5 below).
2.2. Landlord and Tenant agree to sign, within 10 days following
the Rent Commencement Date, a document titled "Notice of Lease" in the form set
forth in EXHIBIT B, reciting the Rent Commencement Date and expiration date of
the Lease Term and the commencement of Tenant's liability for the payment of
Rent, and such Notice of Lease shall be conclusive as to the Lease Term.
2.3. Should Tenant continue to occupy the Premises, or any part
thereof, after the expiration of the initial or extended term of this Lease,
unless otherwise agreed in writing, such occupancy shall constitute and be
construed as a tenancy from month to month on the same terms and conditions of
this Lease then in effect, and Landlord or Tenant may thereafter terminate such
tenancy upon thirty (30) days' prior written notice to the other.
2.4. Provided that a Tenant Default (as defined in Paragraph 20.1
hereof) is not in existence at the time of exercise of such option and the time
of commencement of the extension term, Tenant shall have the right to extend the
Lease Term for six (6) additional successive periods of five (5) years each,
upon the same terms and conditions as set forth in this Lease, except that Fixed
Rent shall be as set forth below:
First Extension Term: 12-1/2% of the Fair Market Value
(Years 15-19) (as defined in Paragraph 22.1 below) of
the Premises as of the date one (1) year
prior to the first day of the First
Extension Term, as determined in
accordance with the provisions of
Paragraph 22 below
Second Extension Term: 12-1/2% of the Fair Market Value (as
(Years 20-24) defined in Paragraph 22.1 below) of the
Premises as of the date one (1) year
prior to the first day of the Second
Extension Term, as determined in
accordance with the provisions of
Paragraph 22 below
Third Extension Term: 12-1/2% of the Fair Market Value (as
(Years 25-29) defined in Paragraph 22.1 below) of the
Premises as of the date one (1) year
prior to the first day of the Third
Extension Term, as determined in
accordance with the provisions of
Xxxxxxxxx 00 xxxxx
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Xxxxxx Xxxxxxxxx Xxxx: 12-1/2% of the Fair Market Value (as
(Years 30-34) defined in Paragraph 22.1 below) of the
Premises as of the date one (1) year
prior to the first day of the Fourth
Extension Term, as determined in
accordance with the provisions of
Paragraph 22 below
Fifth Extension Term: 12-1/2% of the Fair Market Value (as
(Years 35-39) defined in Paragraph 22.1 below) of the
Premises as of the date one (1) year
prior to the first day of the Fifth
Extension Term, as determined in
accordance with the provisions of
Paragraph 22 below
Sixth Extension Term: 12-1/2% of the Fair Market Value (as
(Years 40-44) defined in Paragraph 22.1 below) of the
Premises as of the date one (1) year
prior to the first day of the Sixth
Extension Term, as determined in
accordance with the provisions of
Paragraph 22 below
Tenant shall exercise the extension option set forth herein by giving written
notice of such exercise to Landlord on or before the date six (6) months prior
to the expiration of the initial Lease Term or the then current extension term,
as the case may be.
3. RENT
3.1. Tenant agrees and covenants to pay to Landlord, without offset
or deduction, except as provided herein, or to such other persons or entities at
such place or places as Landlord may from time to time designate in writing, an
annual fixed rent in the amount computed in accordance with in Paragraph 3.2
below (hereinafter "FIXED RENT"). Fixed Rent shall be payable in advance on the
first day of each calendar month in equal monthly installments and shall not be
increased, abated or diminished unless set forth herein. If the Rent
Commencement Date is not the first day of a calendar month, the Fixed Rent for
the month in which the Rent Commencement Date occurs shall be prorated, and
shall be payable with the first full monthly Fixed Rent due hereunder.
3.2. Annual Fixed Rent for the initial term of this Lease shall be
12 1/2 % of the Project Costs paid by Landlord pursuant to the Construction
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Addendum attached hereto and hereby made a part hereof (the "Construction
Addendum").
3.3. Tenant's obligation to pay Fixed Rent and all other charges
payable by Tenant hereunder ("ADDITIONAL RENT") (Fixed Rent and Additional Rent
being sometimes hereinafter collectively called "RENT") shall commence on the
Rent Commencement Date.
3.4. "LEASE YEAR" shall mean the period ending on the first
anniversary of the last day of the calendar month in which the Rent Commencement
Date occurs, or the first anniversary of the last day of the day one day prior
to the Rent Commencement Date if the Rent Commencement Date occurs on the first
day of a month, and each twelve- month period thereafter.
4. CONSTRUCTION OF PREMISES
4.1. Tenant has furnished Landlord with two (2) original copies of
a complete set of the plans and specifications prepared as of the date hereof
for construction of the Building and related sitework, and Landlord has approved
such plans and specifications in writing and initialled the same (the
construction of the Building is being done on a "fast-track" basis, and such
plans and specifications will be supplemented and modified from time to time,
and as the same may be changed from time to time in accordance herewith and with
the Construction Addendum are herein referred to as the "Plans").
4.2. As provided in the Construction Addendum, Tenant will
construct the Building and related improvements in accordance with the Plans,
and Landlord will pay, or reimburse Tenant for, the costs thereof in accordance
with the Construction Addendum.
5. COMPLETION OF CONSTRUCTION; RENT COMMENCEMENT
5.1. Completion of construction of the Building shall be deemed to
have occurred on the date (the "Completion Date") on which:
5.1.1. The Architect which prepared the Plans has issued a
Certificate of Substantial Completion certifying that the Premises has been
substantially completed in accordance with the Plans; AND
5.1.2. The City of Fargo, North Dakota has issued a permanent
or temporary certificate of occupancy certifying that the Premises may be
lawfully occupied for the conduct of business.
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5.2. Tenant's obligation to pay Rent shall commence on the date
(the "Rent Commencement Date") that is the later to occur of: (i) the date
thirty (30) days after the Completion Date, or (ii) the date on which Landlord
has paid, or reimbursed Tenant for, all Project Costs which Landlord is required
to pay, in accordance with the terms and conditions of the Construction
Addendum. If Landlord fails to pay, or reimburse Tenant for, any such Project
Costs within thirty (30) days after the Completion Date in accordance with the
terms and conditions of the Construction Addendum, Tenant may pursue and enforce
whatever rights and remedies it may have against Landlord at law or in equity or
otherwise arising out of such failure by Landlord.
6. EVIDENCE OF TITLE, COVENANT OF TITLE AND QUIET POSSESSION
6.1. There shall be attached hereto as EXHIBIT D a copy of
Landlord's commitment for title insurance with respect to the Premises.
6.2. Landlord represents and warrants to Tenant that, as of the
date hereof, Landlord is vested with fee simple title to the Premises and has
full rights and lawful authority to lease the Premises to Tenant. Landlord
further represents and warrants to Tenant that there are and will be no liens,
encumbrances, mortgages or other instruments affecting title to the Premises
except (i) as are shown in EXHIBIT D, (ii) any mortgage loan which Landlord
hereafter enters into to acquire and improve the Premises; and (iii) any utility
easements which may be granted by Landlord which do not interfere with the
operation of Tenant's business. Landlord further warrants that any such liens
shall not affect the rights granted to Tenant under this Lease, including but
not limited to the right to quiet possession of the Premises as provided below.
If at any time Landlord's title or right to receive Rent hereunder is disputed,
or if there is a change of ownership of Landlord's estate by act of the parties
or operation of law, Tenant may deposit Rent thereafter accruing into the
registry of a court of competent jurisdiction until Tenant is furnished proof,
satisfactory to it, as to the party entitled thereto. Landlord covenants with
Tenant to keep Tenant in quiet possession of the Premises during the Lease Term
and any extensions thereof, provided Tenant is not in default hereunder beyond
any applicable cure period.
7. USE OF PREMISES
7.1. Tenant may use the Premises for office purposes and any other
related lawful business. No portion of the Premises shall be used for any
business, establishment or purpose which violates any applicable city ordinance,
rule or regulation or any other rule, regulation or restriction of any
governmental agency having jurisdiction (Tenant hereby representing and
warranting to Landlord that Tenant's proposed use, as described in this
paragraph, will not violate any applicable
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city ordinance, rule or regulation or any other rule, regulation or restriction
of any governmental agency having jurisdiction) or which, as a result of its
hazardous or extra-hazardous nature, would cause the casualty insurance for the
Premises to be cancelled or the premiums for such insurance to be increased.
Tenant shall be solely responsible, at its own expense, for obtaining any
licenses or permits required for the operation of or any use of the Premises.
7.2. Tenant hereby represents and warrants that on the Rent
Commencement Date the Premises and all parts thereof shall be in substantial
compliance with all applicable laws, orders and regulations of all federal,
state, county and municipal authorities having jurisdiction including Title III
of the Americans With Disabilities Act of 1990 (collectively, "LEGAL
REQUIREMENTS"). Except as otherwise set forth herein, Tenant, at its sole cost
and expense, shall be required to comply with Legal Requirements including any
changes enacted subsequent to the date hereof, relating to the physical
condition of all parts of the Premises, including, but not limited to, any
changes in Legal Requirements that apply to (i) Tenant's specific use of, or
manner of operation in, the Premises, or (ii) any alteration to the Premises
made by Tenant.
8. REAL ESTATE TAXES
8.1. (a) For purposes of this Article 8, "real property taxes
and assessments" shall mean any and all taxes, assessments, impositions, fees,
maintenance or other assessments and other levies of every kind or nature
commonly levied or assessed by municipal, county, district, state, federal and
other governmental authorities, whether ordinary or extraordinary, against the
owners or occupants of real property. Real property taxes and assessments for
the first and last Lease Years hereunder shall, if necessary, be prorated based
on a three hundred sixty-five (365) day year and apportioned between Landlord
and Tenant to coincide with the date hereof and vacation by Tenant of the
Premises, as the case may be, such that Tenant only pays those real property
taxes and assessments solely allocable to the Lease Term. Nothing contained in
this Lease, however, shall be deemed or construed to require Tenant to pay or
discharge: (i) any tax which may be levied as a result of the voluntary or
involuntary assignment or transfer of all or any portion of Landlord's interest
in the Premises (Tenant acknowledges, however, that the appraised value of the
Premises may increase as a result of a sale of the Premises and Tenant would be
obligated to pay any increase in taxes based upon the increase in appraised
value), (ii) any tax upon the income, profits or business of Landlord, or (iii)
any personal property taxes, capital levy, franchise, gross receipts, revenue,
inheritance or estate taxes, income or profit, gift, payroll or stamp tax which
may be levied against the estate or interest of Landlord, however such taxes may
be designated, even though such taxes may become a lien against the Premises.
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(b) From and after the date hereof, Tenant shall pay, as
Additional Rent, any and all real property taxes and assessments covering the
Premises before delinquency, provided, that if the tax xxxx is not sent to the
Premises, Tenant shall not be responsible for any delinquent payment penalties
unless Landlord has provided Tenant with a copy of the tax xxxx at least thirty
(30) days prior to its due date.
(c) If a tax on rentals received from Tenant under this
Lease is ever imposed during or which is applicable to the Lease Term, Tenant
shall be responsible for the same.
8.2. (a) If any general or special assessment is assessed
against the Premises, the following shall apply: Regardless of whether Landlord
elects to pay the assessment in installments, assessments shall be computed as
if Landlord had elected to pay the same in installments over the longest period
of time allowed by applicable law and only those installments (or partial
installments) attributable to installment periods (or partial periods) falling
within the Lease Term shall be considered in determining Tenant's tax liability.
(b) If at any time during the Lease Term any governmental
subdivision shall undertake to create an improvement or special assessment
district the proposed boundaries of which include the Premises, Tenant, without
prejudice to the rights of Landlord with regard thereto, shall be entitled to
appear in any proceeding relating thereto and present its position as to whether
the Premises should be included or excluded from the proposed improvement or
assessment district and as to the degree of benefit to the Premises resulting
from inclusion. Landlord shall promptly advise Tenant in writing of the receipt
of any notice or other information relating to the proposed creation of any such
improvement or special assessment district, the boundaries of which include the
Premises.
(c) To the extent permitted by law, Tenant or its designees
shall have the right to apply to have any assessment for local improvements
assessed during the Lease Term payable in annual installments. Landlord shall
permit any such application to be filed in its name, if necessary or
appropriate, and shall execute any and all documents reasonably requested by
Tenant to accomplish the foregoing result.
8.3. Tenant shall receive the entire amount of any real property
tax and assessment refunds or rebates paid to Landlord and attributed to the
Lease Term or any extension thereof except Landlord may deduct from such refund
the reasonable costs incurred by Landlord in contesting any real property taxes
and assessments.
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8.4. If Tenant desires to contest any ad valorem assessment or the
validity of any tax and gives Landlord written notice of this intention, then
Tenant may contest the assessment or tax without being in default hereunder.
Tenant agrees to indemnify Landlord and hold Landlord harmless from all costs,
expenses and damages of whatsoever nature arising out of any contest made by
Tenant. Tenant further agrees to comply with all applicable laws, statutes and
ordinances governing tax appeals. In any event, Tenant will not take or fail to
take any action which will subject all or part of the Premises to forfeiture or
loss or permit any lien to become affixed thereto.
9. MAINTENANCE BY LANDLORD
Notwithstanding anything to the contrary contained herein, Landlord
shall, at its cost and expense, make any repairs to or replacements of the roof,
foundations, exterior walls and other structural components of the Premises, and
improvements to and alterations of the Premises required by Legal Requirements,
if the useful life of the portion of the Premises so repaired, replaced,
improved or altered would extend beyond the initial Lease Term or the then
current extension term, provided, however, that in such case Tenant shall pay
that portion of such cost and expense which bears the same ratio to the total of
such cost and expense as the number of years (including any partial year)
remaining in the Lease Term, as it may have been extended, bears to the number
of years of the useful life of the portion of the Premises in question. The
portion of such cost and expense to be paid by Tenant shall be paid, at Tenant's
option, either in full within thirty (30) days after Tenant's receipt of an
invoice therefor from Landlord, together with such supporting documentation as
Tenant may reasonably request, or in equal monthly installments payable at the
same time as monthly installments of Fixed Rent are payable, commencing on the
first day of the first full month following the date thirty (30) days after
Tenant's receipt of such invoice, in an amount sufficient to fully amortize
Tenant's portion of such cost and expense, together with interest thereon at the
rate of twelve and one-half percent (12 1/2%) per annum, over the number of
months then remaining in the Lease Term, as it may have been previously
extended. In the further event that Tenant thereafter exercises an extension
option, Tenant's portion of such cost and expense shall be increased in
accordance with the formula set forth above and shall be payable, at Tenant's
option, as provided above.
10. MAINTENANCE BY TENANT
10.1. Except as set forth in Paragraph 9 hereof, Tenant shall, at
its sole expense, maintain the Premises in good repair and condition. This is a
net lease with Landlord having no obligation whatsoever for repairs, except as
set forth in Paragraph 9 hereof.
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10.2. Tenant shall keep and maintain the Premises free from waste or
nuisance and shall deliver the Premises to Landlord broom clean at the
expiration of this Lease, with the exception of (i) reasonable wear and tear and
(ii) casualty repairs which Tenant is not obligated to perform. Tenant further
agrees not to deface or injure the Building or overload the floor, roof,
structural, mechanical, electrical or plumbing systems beyond those loads
contemplated by the Plans and Specifications.
11. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
11.1. Tenant shall not create any openings in the roof or exterior
walls, not make any structural alterations, additions or improvements to the
Premises without prior written consent of Landlord, which consent shall not be
unreasonably withheld.
11.2. All alterations, additions or improvements made by Tenant
which are permanently attached to and made part of the Premises, unless removed
by Tenant prior to the expiration of the Lease Term, shall become the property
of the Landlord at the expiration of the Lease Term and any extensions thereof.
11.3. Tenant, in its sole discretion, shall have the right to make
any alterations, additions or improvements other than the type described in
Paragraph 11.1, without the consent of Landlord, provided that such alterations
do not diminish the value of the Premises.
11.4. Notwithstanding the ownership of the alterations, additions or
improvements to the Premises, Tenant retains the right to depreciation
deductions of all such alterations, additions or improvements made at Tenant's
expense.
12. LANDLORD'S RIGHT OF ENTRY
12.1. Subject to Tenant's consent, which shall not be unreasonably
withheld, Landlord and its authorized agents may enter the Premises during
Tenant's normal business hours for the following purposes: (a) to inspect the
general condition and state of repair of the Premises; and (b) to show the
Premises to any prospective purchaser or mortgagee. Any such entry by Landlord
shall be preceded by at least two business days' prior notice to Tenant and
shall be under the supervision of Tenant. Landlord shall not interfere with, or
create a hazard to, Tenant's normal business operations during such entry.
12.2. Within twelve (12) months prior to the expiration of the Lease
Term, including extensions thereof, Landlord may enter the Premises during
Tenant's normal business hours to show the Premises to prospective tenants.
During the final four (4) months of the Lease Term, including extensions
thereof,
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Landlord and its authorized agents may erect on, or about, the Premises its
customary sign advertising the property for sale or lease, provided such sign
does not interfere with or create a hazard to Tenant's normal business
operation.
13. UTILITIES
13.1. From and after the Rent Commencement Date, Tenant will pay
before delinquency all charges for gas, water, electricity, and any other
utility services used solely on the Premises during the Lease Term hereof by
Tenant.
13.2. In the event of any interruption in service, Tenant shall
diligently pursue the resumption of service, and Tenant shall not be entitled to
any abatement of Rent or other claim (including, but not limited to, loss of
business) as a result thereof.
14. ASSIGNMENTS AND SUBLEASING
14.1. Tenant may assign this Lease or sublease the Premises, in
whole or in part, without the consent of Landlord. No assignment or subletting
shall operate to release Tenant of liabilities and obligations arising
hereunder, which shall continue in full force and effect.
14.2. Subsequent to the Rent Commencement Date, Landlord shall have
the absolute right to assign or otherwise transfer its interest in this Lease,
the Premises or any part thereof. Tenant shall make all payments required under
this Lease to Landlord, or its successors in interest, unless and until Tenant
is notified in writing of an assignment, and Tenant shall not be liable to any
assignee for any Rent due hereunder until Tenant is so notified. The term
"Landlord" as used in this Lease so far as covenants or obligations on the part
of Landlord are concerned, shall be limited to mean and include only the owner
or owners of the Premises at the time in question. In the event of any transfer
or transfers of the title thereto, the Landlord herein named (and, in the case
of any subsequent transfer of conveyance, the then transferor) shall be
automatically freed and relieved from and after the date of such performance of
any covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed, and any such transferee shall be deemed without any
further action to have assumed the covenants and obligations on the part of
Landlord contained in this Lease arising after the date of such transfer. The
Landlord who has been relieved from all liability with respect to the
performance of covenants or obligations on the part of Landlord contained in
this Lease after the transfer shall remain liable to Tenant for all obligations
of Landlord arising prior to such transfer (and the same shall survive the
transfer and/or any subsequent termination of the Lease).
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15. INSURANCE
15.1. Tenant shall, at all times during the Lease Term, or any
extension thereof, at Tenant's sole cost and expense, maintain full and adequate
insurance for the Premises including, but not limited to, insurance of the
following character:
(a) Insurance against loss by fire and lightning and
insurance against risks customarily covered by extended coverage endorsement
including, but not limited to, loss by windstorm, hurricane, earthquake,
typhoon, hail, explosion, riot (including riot attending a strike), civil
commotion, aircraft, vehicles, smoke damage and vandalism and malicious mischief
in amounts sufficient to prevent Landlord or Tenant from being a co-insurer of
any loss under the applicable policies, but in any event in amounts not less
than the full insurable value of all buildings and other improvements
constituting a part of the Premises. The term "full insurable value" as used
herein means the current value for actual replacement costs, including cost of
debris removal, provided that such insurance may include deductibles that under
the circumstances are reasonable in amount. Such policy of insurance shall be
endorsed so as to provide loss of rental income coverage to Landlord for a
period of not less than one (1) year.
(b) Comprehensive general public liability insurance with
broad form endorsement covering the legal liability of Landlord and Tenant
against claims for bodily injury, death or property damage occurring on, in or
about the Premises in the minimum amounts of $1,000,000.00 for each claim for
bodily injury or death with respect to one occurrence and $2,000,000.00 in the
aggregate, and $250,000.00 for all claims for property damage with respect to
any one occurrence and $500,000.00 in the aggregate.
(c) Excess liability (umbrella) policy of insurance in an
amount not less than $2,000,000.00.
15.2. Such insurance shall be written by companies of recognized
financial standing which are well rated by national rating organizations and
have an A.M. Best rating of A-10 or better, and are legally qualified to issue
such policies of insurance in the State of North Dakota, and shall name as the
insured parties: (i) Landlord as loss payee under the property policy and as an
additional insured under the liability insurance policy for the Premises; (ii)
any mortgagee of Landlord holding a lien or security interest against the
Premises or this Lease under standard mortgagee's endorsements; and (iii)
Tenant as its interest may appear. The foregoing coverage shall be reviewed
annually upon request by either Landlord or Tenant and adjusted to reflect
increases in replacement or other costs to levels consistent with sound property
management.
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15.3. Every policy of insurance required hereunder shall provide
that thirty (30) days prior written notice of cancellation shall be given to
Landlord and any mortgagee of Landlord and shall not be invalidated by any act
or neglect of Landlord or Tenant or any owner of the Premises or any interest
therein, nor by any foreclosure or any other proceedings or notices thereof
relating to the Premises or any interest therein, nor by any change in the title
or ownership of the Premises or interests therein. Tenant shall promptly deliver
to Landlord original or duplicate policies or certificates of insurance
evidencing all the insurance which is required to be maintained by Tenant.
Tenant shall within thirty (30) days prior to the expiration of any such
insurance, deliver other original or duplicate policies or certificates of
insurance evidencing the renewal of such insurance. If Tenant fails to maintain
such insurance, then Landlord shall be entitled to purchase such insurance on
behalf of the Tenant and the Tenant agrees to reimburse the Landlord for such
amounts so expended in the purchase of such insurance within ten (10) days after
written demand therefor.
16. INDEMNITY
16.1. Tenant shall pay and shall protect, indemnify, defend and hold
Landlord and Landlord's agents, officers, directors, shareholders, partners and
employees harmless from and against any and all liabilities, losses, damages,
costs, expenses (including without limitation, reasonable attorney's fees and
costs of litigation), causes of action, suits, claims, demands or judgments of
any nature arising, or alleged to arise, from or in connection with: (i) any
injury to or the death of any person, or any damage to property on or in the
Premises in any manner arising out of or connected with Tenant's use, occupancy,
maintenance or repair of the Premises or any portion thereof or in connection
with the actions or omissions of Tenant, its employees, agents, contractors,
subcontractors, business invitees or licensees on or about the Premises except
to the extent caused by Landlord's negligence or willful misconduct; and (ii)
any violation by Tenant of any law, rule, regulation, ordinance or restriction
now or hereafter in effect which is Tenant's obligation to comply with hereunder
and applicable to the Premises or to Tenant or its business property except to
the extent caused by Landlord's negligence or willful misconduct.
16.2. Landlord shall pay and shall protect, indemnify, defend and
hold Tenant, its agents, officers, directors, shareholders, partners and
employees harmless from and against any and all liabilities, losses, damages,
costs, expenses (including, without limitation, reasonable attorney's fees and
costs of litigation), causes of action, suits, claims, demands or judgments of
any nature arising, or alleged to arise, from or in connection with: (i) any
injury to or death of any person, or any damage to property on or in the
Premises in any manner arising out of, or connected with the actions or
omissions of Landlord, its employees, agents, contractors or subcontractors, on
or about the Premises except to the extent caused by Tenant's
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negligence or willful misconduct; or (ii) any violation by Landlord of any
provisions of this Lease or of any law, rule, regulation, ordinance or
restriction, now or hereafter in effect which is Landlord's obligation hereunder
to comply with hereunder.
17. RELEASE AND WAIVER OF SUBROGATION
Landlord and Tenant hereby waive and release each other from any and
all rights of recovery, claim, action or cause of action against each other,
their agents, officers, directors, partners and employees, for any loss or
damage that may occur to the Premises, or personal property including building
contents within the Premises, by reason of fire or the elements of nature
regardless of cause or origin, including negligence of Landlord or Tenant and
their agents, officers, directors, partners and employees. Because this
paragraph will preclude the assignment of any claim mentioned in it by way of
subrogation or otherwise to any insurance company or any other person, Landlord
and Tenant agree immediately to give to each of their respective insurance
companies which has issued to it policies of insurance, written notice of the
terms of mutual waivers contained in this paragraph, and to have the insurance
policies properly endorsed to prevent the invalidation of such insurance
coverage by reason of these waivers.
18. FIRE AND CASUALTY DAMAGE
18.1. If all or any part of the Premises is damaged or destroyed by
fire or other casualty, Tenant shall give immediate written notice thereof to
Landlord.
18.2. If the Premises should be damaged by fire or other casualty
such that rebuilding or repairs cannot be completed within two hundred ten (210)
days from the date of such damage, Tenant may, within thirty (30) days of the
determination of the number of days necessary to restore the Premises, terminate
this Lease on written notice to Landlord. Fixed Rent shall be abated as of the
date of the happening of the damage but other charges payable by Tenant to
Landlord hereunder shall not xxxxx unless such other charges are covered under
the loss of rental income insurance required to be carried hereunder.
18.3. (a) Except as otherwise expressly set forth herein, Tenant
shall proceed forthwith to rebuild or repair the Premises to substantially the
condition which existed prior to such damage except that Tenant may make changes
to the Premises in the course of such restoration that do not diminish the value
thereof.
(b) If the Premises should be damaged during the final two
(2) years of the initial Term Lease hereof or any extension of the initial Term
Lease as provided herein, there shall be no requirement to rebuild or repair
such damage
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and this Lease shall, at the option of Tenant, terminate and Rent and all
additional charges shall be abated as of the date of such damage, unless Tenant
shall exercise its option to extend the Term Lease, by giving written notice of
such extension to the Landlord within sixty (60) days after the date of such
damage, in which case Tenant shall proceed forthwith to rebuild or repair such
damage.
(c) If the existing laws do not permit restoration of the
Premises to substantially the same condition as they were in immediately before
destruction (which shall mean that the Premises, as restored, would have
comparable amenities and ambiance, for example, ceiling height, access, colors,
lighting and windows), then Tenant, at its option, may (i) restore the Premises
so as to comply with the then existing laws or codes, or (ii) terminate this
Lease immediately by giving written notice to Landlord within thirty (30) days
after Tenant determines that the existing laws do not permit restoration as
described above, in which case this Lease shall cease as of the date of
destruction.
18.4. The determination of whether the Premises can be rebuilt or
repaired within two hundred ten (210) days from the date of any damage shall be
in the mutual judgment of both Landlord and Tenant. If Landlord and Tenant
cannot agree, the determination shall be made by an independent contractor
mutually acceptable to both Landlord and Tenant.
18.5. If so much of the Premises shall be damaged so that Tenant is
unable to conduct business from the Premises, in its sole reasonable judgment,
Tenant may discontinue the conduct of business from the Premises and all Fixed
Rent shall xxxxx and the Term Lease shall toll thereafter and the Lease Term
shall be extended by the number of days the Lease Term is tolled. The Fixed
Rent abatement and tolling of the Lease Term shall end on the earlier to occur
of the date on which the damage shall be repaired or replaced or the date on
which the conduct of business from the Premises shall be resumed. If Fixed Rent
abates in accordance with this Article, the other charges payable by Tenant to
Landlord shall not xxxxx unless covered by the loss of rental income insurance
required to be carried by Tenant hereunder.
18.6. The insurance proceeds with respect to any damage or
destruction of the Premises shall be applied solely to the cost of the repair or
replacement of the damage or destruction with any excess insurance belonging to
Tenant. In the event the casualty is not covered by the insurance required to be
carried by Tenant then Tenant shall not be obligated to rebuild the Premises to
the extent of such insufficiency, and either party may terminate the Lease;
provided, however, if either party elects to pay for the cost of restoration not
covered by Tenant's insurance policy (and which Tenant was not required to
provide pursuant to the terms of this Lease), then the other party shall not
have a termination right.
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19. CONDEMNATION
19.1. (a) In the event all of the Premises is taken or condemned
by any competent authority or sold under threat thereof, then this Lease shall
be automatically terminated on the date when the condemning authority takes
possession of the Premises.
(b) In the event any part of the Premises is taken or
condemned by any competent authority or sold under threat thereof and the part
not so taken is insufficient for the reasonable operation of Tenant's business,
Tenant shall have the right: (a) to terminate this Lease as of the earlier of
the date of title transfer or the date of the taking of possession by the
condemning authority in which event the terms hereof and Rent and all other
charges shall be abated and any unearned rent paid or credited will be refunded
by Landlord to Tenant; or (b) to continue this Lease in full force and effect
with a reduced Fixed Rent commensurate with the reduced area and/or reduced
utility of the Premises, in lieu of the amount of Fixed Rent hereinabove
provided, which reduced Fixed Rent will become effective upon the date the
condemning authority takes possession. Tenant shall elect among these rights and
give notice to Landlord of its election within sixty (60) days after the date
when possession of the portion of the Premises in question is required by the
condemning authority.
19 .2. If this Lease does not terminate as set forth herein, then the
award or payment for the taking shall be paid to Landlord and made available by
Landlord to Tenant to restore the Premises, and Tenant shall, except as
otherwise provided in this paragraph, commence, and with reasonable dispatch
continue, out of the proceeds of the award, to restore the portion of the
Premises remaining after the taking to substantially the same condition and
tenantability as existed immediately preceding the taking, except that Tenant
shall have the right to make changes to the Premises in the course of such
restoration that do not diminish the value thereof.
19.3. If Tenant does not commence within thirty (30) days of
notification by Landlord to Tenant of Landlord's receipt of the award, and with
reasonable dispatch continue, to restore the portion of the Premises, as
aforesaid (commencement meaning taking such steps as drawing plans or applying
for permits), Landlord shall have the right, upon giving notice to Tenant, to
restore the Premises itself and Landlord shall use the amount of such award
necessary to restore the Premises. If the amount of the award is insufficient to
cover the cost of restoration and neither Landlord nor Tenant is willing to pay
the difference, then either party may terminate this Lease unless the other
party nullifies such termination by agreeing to pay the difference.
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19.4. Termination of this Lease because of condemnation shall be
without prejudice to the rights of either Landlord or Tenant to recover from the
condemning authority compensation and damages for the injury and loss sustained
by them as a result of the taking, and Tenant shall have the right to make a
separate claim against the condemning authority for the reasonable value of
Tenant's trade fixtures and leasehold improvements, if any, furniture, personal
property, interruption or dislocation of business in the Premises, loss of good
will and for moving and remodeling expenses; provided, however, if the laws of
the jurisdiction where the Premises is located do not allow Tenant to make a
separate claim for the above described items, then the award for the same shall
come out of Landlord's award. Except as specifically provided herein, any and
all awards or proceeds payable shall belong solely to Landlord and Tenant hereby
disclaims any right or interest therein.
20. DEFAULT
20.1. (a) Tenant shall be in default under this Lease (a "TENANT
DEFAULT") if any of the following events shall occur:
(i) If Tenant shall fail to pay Fixed Rent, Additional Rent
or any other charge due hereunder when due and the failure shall continue for a
ten (10) day period after Landlord shall have given Tenant written notice of
Tenant's failure to pay, it being understood and agreed that if Tenant fails to
pay any Fixed Rent, Additional Rent or any other charge when due and such
failure occurs twice in any 12-month period, then thereafter Tenant shall pay to
Landlord, in addition to any other penalty hereunder, an administrative charge
for each subsequent late payment equal to One Hundred Dollars ($100).
(ii) If Tenant shall fail to perform any of its other
obligations under this Lease and the failure shall continue for a thirty (30)
day period after Landlord shall have given Tenant written notice of its failure
to perform.
(b) Notwithstanding the foregoing, if Tenant shall fail to
perform an obligation, other than an obligation to pay Fixed Rent or Additional
Rent, and the failure cannot be cured by Tenant within thirty (30) days after
Landlord shall have given written notice of the failure, Tenant shall not be in
default if Tenant commences to cure the failure within the thirty (30) day
period and diligently thereafter prosecutes the cure to completion.
20.2. If a Tenant Default shall occur under this Lease, and for so
long as such Tenant Default shall continue, Landlord may elect any one or more
of the following remedies:
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(a) Landlord may terminate this Lease and forthwith
repossess the Premises with due process of law. In such event, Landlord shall be
entitled to recover from Tenant: (i) the amount of any unpaid Rent, Additional
Rent and other charges that are owed by Tenant to Landlord at the time of such
termination, together with interest thereon at the rate specified in Paragraph
20.6(b) hereof; (ii) (x) all Rent, Additional Rent and other charges payable
by Tenant to Landlord for the unexpired Lease Term (as same may have been
extended), discounted to present value at the prime rate of interest published
in the Wall Street Journal on the date of termination (or, if such rate of
interest is no longer published on such date, then such comparable rate of
interest published by a financial periodical of recognized standing as may be
selected by Landlord in its good faith discretion), less (y) the fair market
value of the Premises for such unexpired term (as same may have been extended)
also discounted to present value at such interest rate; (iii) Landlord's
reasonable attorney's fees and costs of litigation incurred in enforcing its
remedies against Tenant; and (iv) any and all other sums owed by Tenant and
actual (not consequential) damages which Landlord could not have reasonably
prevented which arise as a result of Tenant's default which are attributable to
periods of time up to and including the date when Tenant vacates the Premises.
(b) Landlord may terminate Tenant's right of possession
without terminating the Lease and may repossess the Premises by forcible entry
or detainer suit or otherwise, without demand or notice of any kind to Tenant in
which event Landlord shall use reasonable efforts to relet the Premises or any
portion thereof for the account of Tenant for such rent and upon such terms as
shall be satisfactory to Landlord. If Landlord, after using reasonable efforts,
shall be unable to relet the Premises, or if the same are relet and a sufficient
sum shall not be realized from such reletting to satisfy the Rent, Additional
Rent and other sums provided for in this Lease to be paid by Tenant, then Tenant
shall pay to Landlord as damages a sum equal to the amount of the rental and
other sums reserved in this Lease for such period or periods or if the Premises
have been relet, Tenant shall satisfy and pay any such deficiency upon written
demand therefor from time to time. Landlord shall also be entitled to recover
forthwith as damages, Landlord's reasonable expenses of reentering,
repossessing, reletting (including market-rate leasing commissions attributable
to the unexpired term) and repairing the Premises, reasonable sums expended by
Landlord in good faith in order to remodel the Premises for subsequent
occupants, the rent from which will operate to reduce Tenant's liability
hereunder, Landlord's reasonable attorney's fees and cost of litigation, and any
and all other sums owed by Tenant or actual (not consequential) damages suffered
by Landlord which Landlord could not reasonably prevent, as a result of Tenant's
default. Tenant agrees that Landlord may file suit to recover any sums falling
due under the terms of this Paragraph 20.2(b) from time to time, and that no
delivery or recovery of any portion due Landlord hereunder shall be a defense to
any subsequent action brought for any amount not theretofore reduced to
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judgment in favor of Landlord, nor shall such reletting be construed as an
election on the part of Landlord to terminate this Lease unless a written notice
of such intention be given to Tenant by Landlord. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this Lease for such previous breach, in which event the provisions of
Paragraph 20.2(a) hereof shall apply.
(c) Landlord may enter upon the Premises and/or do whatever
Tenant is obligated to do under the terms of this Lease and Tenant agrees to
reimburse Landlord upon demand for any reasonable expenses Landlord may incur in
effecting compliance with Tenant's obligation under this Lease.
(d) Landlord may bring a suit against Tenant in a court of
competent jurisdiction in order to collect all sums owed by Tenant as a result
of Tenant's default. If Landlord does not elect to terminate this Lease on
account of a Tenant Default, Landlord may, from time to time, without
terminating this Lease, recover all Fixed Rent, Additional Rent and other
charges payable by Tenant hereunder as they become due under this Lease in one
or more successive suits.
(e) Landlord may exercise any and all other remedies
available to Landlord at law or in equity; provided, however, that Landlord
shall never be entitled to any acceleration of rents which are not (i)
discounted to present value, and (ii) reduced by the fair market value of the
Premises, as provided in Paragraph 20.2(a) hereof.
Tenant covenants and agrees that the receipt by Landlord of Fixed
Rent, Additional Rent or other charges with or without knowledge of the breach
of any provision of this Lease, shall not be deemed a waiver of such breach,
shall not reinstate this Lease or Tenant's right to possession if either or both
have been terminated, and shall not otherwise affect any notice, action or
election by Landlord. Further, in the event that this Lease or Tenant's right to
possession of the Premises have been terminated, Tenant agrees to surrender
possession of the Premises. The remedies of Landlord under this Section 20.2
shall be cumulative and not exclusive, and may be exercised by Landlord
concurrently and whenever and as often as may be necessary.
20.3. In the event this Lease is assigned or sublet by Tenant and
should any default occur requiring notice as provided in this paragraph,
Landlord agrees that it will furnish Tenant with a copy of the notice at the
same time it is sent to the assignee or sublessee. In the event that the default
is not corrected by the assignee or sublessee during the specified time periods,
Tenant shall have an additional period of ten (10) days to correct the default,
and, upon correction of the default, Tenant shall have the right and option to
resume actual possession of the Premises as Tenant for the unexpired term of
this Lease.
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20.4. Except for cure periods expressly set forth in this Lease
which shall govern and control, should there be any default or breach of this
Lease on the part of Landlord, Tenant shall give Landlord notice thereof (except
in case of an emergency), and should Landlord fail to commence to correct the
breach or default within thirty (30) days after the notice (or such longer time
as necessary so long as Landlord has commenced the cure and is diligently
prosecuting the cure to completion), Tenant may give Landlord a second notice
which notice shall set forth the steps Tenant intends to take to effectuate the
cure and the approximate anticipated costs of the cure. If Landlord fails to
correct the breach or default within five (5) days of such second notice and
diligently pursue same to completion, then Tenant may, or in the case of an
emergency Tenant may without notice, as its sole remedies, either (i) cure the
breach or default and deduct the reasonable cost, including interest at the rate
described in 20.6(b) below, from Rent due or to become due Landlord or (ii)
Tenant may xxx Landlord for its damages. If Tenant has not been reimbursed for
its reasonable cost in remedying Landlord's breach or default at the expiration
of the Lease Term, or if Landlord is indebted to Tenant because of a breach or
default of this Lease at the expiration of the Lease Term, Tenant may, at its
option, extend this Lease on the same terms and conditions then in effect until
the costs and indebtedness are fully paid by application of all Rent thereto.
20.5. (a) Neither the Landlord nor Tenant shall have any right
arising from a failure to perform or remedy against the other unless a default
shall have occurred.
(b) Except for defaults arising from a failure to pay Fixed
Rent or Additional Rent, no default shall be deemed to have occurred if and so
long as Tenant or Landlord, as the case may be, shall be delayed in, or
prevented from, curing the underlying failure to perform by Force Majeure (as
such term is defined in Article 36).
20.6. (a) If a dispute shall arise between the parties as to the
performance of any obligation, a party contending that an obligation is the
other party's duty may perform the obligation under protest. The performance of
an obligation under protest shall not be regarded as voluntary performance. A
party which shall have performed an obligation under protest shall have the
right to bring suit for the recovery of the cost and expense of performance. If
it shall be determined that the other party was required to perform the
obligation, the other party shall reimburse the party that shall have performed
the obligation under protest for the cost and expense of performance.
(b) Any payment due from either Landlord or Tenant to the
other which is past due for over ten (10) days shall bear interest at the lesser
of: (i) the maximum lawful rate; or (ii) twelve percent (12%) per annum except
in the case of Tenant's failure to timely pay Fixed Rent or Additional Rent,
such interest shall
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be due only if Tenant fails to pay same within ten (10) days after written
notice that same is past due, such interest to be calculated from the first day
such installment of Fixed Rent or Additional Rent was due.
21. BANKRUPTCY OR INSOLVENCY
21.1. If at any time during the term hereof proceedings in
bankruptcy shall be instituted by or against Tenant that result in an
adjudication of bankruptcy, or if Tenant shall file, or any creditor of Tenant
shall file any petition under any provision of the United States Bankruptcy
Code, as the same is now in force or may hereafter be amended and Tenant be
adjudicated bankrupt, or if a receiver of the business or assets of Tenant be
appointed and this appointment not be vacated within sixty (60) days after
notice to Tenant, or Tenant makes an assignment for the benefit of creditors, or
any sheriff, marshal, constable, or keeper takes possession of substantially all
of the assets of Tenant by virtue of any attachment or execution proceedings and
offers same for sale publicly, then Tenant shall be in default hereunder and
Landlord may, in addition to any other remedies available to Landlord, at its
option, in either or any of these events, immediately take possession of the
Premises and terminate this Lease. Upon this termination, all installments of
Rent earned to the date of termination and unpaid shall at once become due and
payable, and in addition thereto Landlord shall have all rights provided by the
bankruptcy laws relative to the proof of claims on an anticipatory breach of an
executory contract.
21.2. Notwithstanding any provision in this Lease to the contrary,
neither bankruptcy, insolvency, nor the appointment of a receiver or trustee
shall affect this Lease so long as the obligations of Tenant are being performed
by the Tenant or its successors in interest.
22. OPTION TO PURCHASE
22.1 At any time on or after the first (1st) day of the eleventh
(11th) Lease Year (including during any extension of the Lease Term), Tenant
shall have the right to purchase the Premises for a purchase price equal to the
greater of (i) the Fair Market Value (as hereinafter defined) of the Premises,
reduced by that portion thereof attributable to improvements to the Premises
paid for by Tenant, or (ii) the total amount of Project Costs paid or reimbursed
to Tenant by Landlord. Tenant shall exercise the purchase option set forth
herein by giving written notice of such election to Landlord. If the Fair
Market Value is not agreed upon by the parties hereto in writing within thirty
(30) days after exercise of the purchase option, then either party may submit
the determination of Fair Market Value to a binding appraisal in accordance with
the provisions of Paragraph 22.2 below. Fair Market Value means the price at
which a seller would be willing to sell the Premises and a buyer would be
willing to purchase the Premises, assuming that each is ready,
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willing and able to enter into a purchase agreement at such price but under no
compulsion to do so; provided, however, that notwithstanding anything to the
contrary contained herein, that portion of the Fair Market Value attributable to
the Land shall not exceed the lesser of (i) the Fair Market Value of the Land,
or (ii)$125,000.00.
22.2 Either party may request by written notice to the other party
("Appraisal Request") that the Fair Market Value be determined by an appraisal
board consisting of three appraisers who are members of the Appraisers Institute
(or a successor or similar organization, if such organization no longer exists)
and have at least five (5) years' experience appraising commercial real estate
in the City of Fargo, North Dakota. One appraiser will be appointed by each
party, and each such appraiser will have no material financial or other business
interest in common with the party selecting such appraiser. If a party fails to
appoint an appraiser and notify the other party of such appointment within 30
days after the Appraisal Request is made, then the appraiser that was appointed
by such other party within such 30 day period will be the sole appraiser. If
two appraisers are properly appointed and such first two appraisers are unable
to agree on a third appraiser within thirty (30) days after the appointment of
the second appraiser, then such third appraiser will be appointed by the
presiding judge of the District Court of Cass County, North Dakota, or by any
person to whom such presiding judge formally delegates the matter, or, if such
methods of appointment fail, by the American Arbitration Association.
If the appraisal is conducted by a sole appraiser, such sole appraiser
will render to Landlord and Tenant his or her determination of the Fair Market
Value by the 60th day after the Appraisal Request was made. If the appraisal is
conducted by three appraisers, each appraiser will submit his or her
determination(s) of the Fair Market Value in a sealed envelope by the 30th day
following appointment of the last appraiser, and any determinations not
submitted by such time shall be disregarded. In such cases, the parties will
meet on such 30th day (or if it is not a business day, on the first business day
thereafter) at 11:00 a.m. at the office of Tenant, or such other place as the
parties may agree, and simultaneously deliver the determinations. If the
determinations of at least two of the appraisers are identical in amount, such
amount will be deemed the decision of the appraisers. If the determinations of
the three appraisers are different in amount, the decision as to the Fair Market
Value will be independently determined as follows:
(a) If neither the highest nor lowest determination differs from
the middle determination by more than 15% of such middle determination,
then the decision will be deemed to be the average of the three
determinations; and
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(b) If clause (a) does not apply, then the decision will be deemed
to be the average of the middle determination and the determination closest
in amount to such middle determination.
The decision of the appraisers, determined as above set forth, will be final and
non-appealable. The fees and expenses of the appraiser or appraisers will be
shared equally by Landlord and Tenant.
22.3 If Tenant exercises the purchase option set forth herein, the
purchase price shall be paid in cash and the closing of the purchase shall take
place on such date as Tenant may designate, but not later than the date six (6)
months after Tenant gives written notice of the exercise of such purchase
option; provided, however, that if Tenant determines that there are any matters
affecting title to the Premises which are unacceptable to Tenant, Tenant shall
not be obligated to close such purchase until such matters are resolved to its
satisfaction. At closing Landlord shall execute and/or deliver to Tenant a
general warranty deed conveying title to the Premises to Tenant and such other
documents and instruments as are customary in transactions of such type.
23. RIGHT OF FIRST REFUSAL
23.1 If, at any time during the Lease Term, or any extension
thereof, Landlord shall receive a bona fide written offer (the "Offer") from any
third party to purchase the Premises or any part thereof, Landlord shall give
notice to Tenant of its intent to enter into a purchase and sale agreement with
such third party (which notice shall include a copy of the Offer), and Tenant
shall have a right of first refusal ("First Refusal Right").
23.2 Tenant may, within sixty (60) days after the receipt of the
Offer, give notice to Landlord agreeing to purchase the Premises or part thereof
subject to the Offer in accordance with the terms set forth in the Offer. If
Tenant shall give such notice, then Landlord and Tenant shall close the sale and
purchase contemplated by the Offer in accordance with the terms specified in the
Offer.
23.3 Should Tenant fail to give notice under Paragraph 23.2 above
within the time provided, then Landlord shall be free to sell the Premises or
part thereof subject to the Offer to such third party in accordance with the
terms of the Offer; provided, however, if the Landlord shall propose to sell the
Premises or part thereof subject to the Offer on terms more favorable to such
third party than disclosed to Tenant in the Offer, then Landlord shall give an
additional notice to Tenant of the revised terms and Tenant shall have the right
to purchase the Premises or part thereof in question in accordance with the
terms of the revised notice if Tenant shall give notice exercising such right
with thirty (30) days after receipt of such second notice. If Tenant shall give
such notice, then Landlord and
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Tenant shall close the sale and purchase in accordance with the terms specified
in the revised notice and otherwise consistent with the terms hereof. Any sale
to any such third party shall be subject to this Lease, including without
limitation the provisions of Articles 22 and 23 hereof.
24. WAIVER
The failure of Landlord or Tenant to insist upon prompt and strict
performance of any of the terms, conditions or undertakings of this Lease, or to
exercise any right herein conferred, in any one or more instances, shall not be
construed as a waiver of the same or any other term, condition, undertaking,
right or option.
25. NOTICES TO TENANT
Any notice required to be given to Tenant under the terms of this
Lease shall be effective upon receipt by Tenant or refusal to accept delivery,
provided such notice is in writing and mailed via registered or certified mail
return, receipt requested or by overnight courier providing proof of delivery to
the appropriate address as Tenant may furnish to Landlord in writing.
26. NOTICES TO LANDLORD
Any notice required to be given to Landlord under the terms of this
Lease shall be effective upon receipt by the Landlord or refusal to accept
delivery, provided such notice is in writing and mailed via registered or
certified mail, return receipt requested or sent by overnight courier providing
proof of delivery to Landlord at the address given on page one of this Lease, or
to such other address as Landlord may furnish to Tenant in writing. Rental
payments shall be forwarded to Landlord at the referenced address via first
class mail. If at any time or from time to time, there shall be more than one
Landlord, the Landlords shall designate a party to receive all notices and rent
payments, and service upon or payment to the designated party shall constitute
service upon or payment to all. Tenant shall not be required to issue multiple
checks for any single payment or rent or other charges hereunder.
27. RECORDATION, SHORT FORM
Landlord agrees, upon Tenant's request, to execute a short form of
this Lease, entitled Memorandum of Lease in the form of EXHIBIT C. Tenant may
record the Memorandum of Lease at its expense following the execution hereof.
The provisions of this Lease shall control, however, with regard to any
omissions from the Memorandum of Lease, or with respect to any provisions hereof
which may be
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in conflict with the Memorandum of Lease. Except for such Memorandum, Tenant
agrees not to record this Lease.
28. PARTIES BOUND
The terms, covenants, agreements, conditions and undertakings
contained herein shall be binding upon and shall inure to the benefit of the
heirs, successors in interest and assigns of the parties hereto. Where more than
one party shall be the Landlord in this Lease, the word "Landlord", whenever
used in this Lease, shall include all Landlords jointly and severally.
29. ENTIRE AGREEMENT; MODIFICATION; SEVERABILITY; CONSTRUCTION
This Lease, including the Construction Addendum and Exhibits A through
D attached hereto, contains the entire agreement between the parties hereto with
respect to the subject matter hereof, and no representations, inducements,
promises or agreements, oral or otherwise, entered into prior to the execution
of this Lease, will alter the covenants, agreements and undertakings herein set
forth. This Lease shall not be modified in any manner, except by an instrument
in writing executed by the parties. If any term or provision of this Lease or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law. The terms and provisions of this Lease shall not be construed
against or in favor of a party hereto merely because such party or its counsel
is the draftsman of this Lease.
30. NUMBER AND GENDER
All of the terms and words used in this Lease, regardless of the
number and gender in which they were used, shall be deemed and construed to
include any other number (singular and plural), and any other gender (masculine,
feminine or neuter), as the context or sense of this Lease or any paragraph or
clause hereof may require, the same as if the words had been fully and properly
written in the number and gender.
31. EXHIBITS
All exhibits, attachments and addenda referred to herein shall be
considered a part hereof for all purposes with the same force and effect as if
copied at full length herein. The Exhibits attached hereto are listed as
follows:
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Exhibit A - LEGAL DESCRIPTION
Exhibit B - NOTICE OF LEASE
Exhibit C - MEMORANDUM OF LEASE
Exhibit D - LANDLORD'S PRELIMINARY TITLE REPORT
32. LIENS
If, because of any act or omission of Tenant, a mechanic's or other
lien or order for the payment of money shall be filed against the Premises,
Tenant shall, at Tenant's own cost and expense, within thirty (30) business days
after notice of the filing thereof, cause the same to be cancelled and
discharged of record, or furnish Landlord with a surety bond in form and issued
by a surety company reasonably acceptable to Landlord or with other security
reasonably acceptable to Landlord, protecting Landlord and the Premises from any
loss because of nonpayment of such lien claim. In the event Tenant does post
bond or provide the security, Tenant shall be entitled to contest any such lien
claims by appropriate judicial proceedings, so long as Tenant complies with all
applicable laws regarding such contest and shall never permit the Premises or
any part thereof to be subjected to forfeiture as a result of any such item.
33. LAST EXECUTION AND EFFECTIVE DATE
This Lease shall be effective on the date set forth in the first
paragraph hereof. Any reference contained in this Lease to the "date of last
execution" or "date hereof" shall mean the last date on which any party required
to execute or initial this Lease does so, and such date shall be set forth in
the first paragraph of this Lease where indicated.
34. NO PARTNERSHIP FORMED
Landlord does not become a partner of Tenant in the conduct of its
business or otherwise, or a joint venturer or a member of a joint enterprise
with Tenant by virtue of this Lease and nothing contained herein shall ever
cause either party to become liable for the debts or obligations of the other.
35. AUTHORITY TO EXECUTE LEASE
Tenant and Landlord each warrant and represent that the party signing
this Lease on behalf of each has authority to enter into this Lease and to bind
Tenant and Landlord respectively to the terms, covenants and conditions
contained herein. Each shall deliver to the other, upon request, all documents
reasonably requested by the other evidencing such authority including, without
limitation, a copy of all corporate resolutions, consents or minutes reflecting
the authority of persons or parties to enter into agreements on behalf of Tenant
or Landlord.
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36. FORCE MAJEURE
Landlord and Tenant shall be excused for the period of any delay in
performance of any obligations hereunder when prevented from doing so by an
Event of Force Majeure or by cause or causes beyond either party's control which
shall include, without limitation, all labor disputes, civil disturbance, war,
war-like operations, invasions, rebellion, hostilities, military or usurped
power, sabotage, governmental regulations or controls, fires or other casualty,
inclement weather, inability to obtain any permits, material, service or
equipment, or acts of God. Nothing contained in this paragraph shall excuse
either party from paying the other party any sums due hereunder and Landlord's
inability to obtain financing shall not constitute Force Majeure or otherwise
extend any time periods set forth herein for the performance of Landlord's
obligations.
37. BROKERS
Tenant and Landlord represent and warrant to each other that such
party has not had any dealings with any realtor, broker or agent in connection
with this Lease or the negotiation thereof and each party agrees to defend,
indemnify, and hold the other party harmless from any claim, cost, expense or
liability, including without limitation, reasonable attorney's fees, for any
breach of this representation by the other.
38. HAZARDOUS WASTE
38.1. "HAZARDOUS SUBSTANCE" shall mean the following without
limitation:
38.1.1. Those substances included within the definitions of
"hazardous substances," "hazardous materials," "toxic
substances," or "solid waste" in CERCLA, RCRA, and the
Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801 ET SEQ., and in the regulations promulgated pursuant to
said laws;
38.1.2. Those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and any amendments
thereto) or by the Environmental Protection Agency (or any
successor agency) as hazardous substances (40 CFR Part 302
and any amendments thereto);
38.1.3. Such other substances, materials and wastes which are or
become regulated under applicable local, state or federal
law or the United States government, or which are classified
as
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hazardous or toxic under federal, state or local laws or
regulations; and
38.1.4. Any materials, waste or substance which is (A) asbestos, (B)
polychlorinated biphenyls, (C) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act,
33 U.S.C. Sections 1251 ET SEQ. (33 U.S.C. Section 1321) or
listed pursuant to Section 107 of the Clean Water Act (33
U.S.C. Section 1371); (D) an explosive; (E) radioactive; or
(F) gasoline, diesel fuel, kerosene or other petroleum
products not contained in an underground or above ground
storage tank upon the Premises.
38.2. "ENVIRONMENTAL LAWS" shall mean any federal, state or local
law, statute, ordinance, or regulation pertaining to health, industrial hygiene,
or the environmental conditions on, under or about the Premises, including
without limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, 42 U.S.C. Sections 9601 ET SEQ.,
and the Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, 42
U.S.C. Sections 6901 ET SEQ.
38.3. Tenant represents and warrants to Landlord that it will not
use, store, sell, release, generate or dispose of or otherwise introduce any
Hazardous Substance in or from the Premises in violation of any Environmental
Laws. Tenant agrees to indemnify, defend and hold harmless Landlord from and
against any claims, suits and/or causes of action, costs and fees, including
attorney's fees, arising from a violation of such representation and warranty
except to the extent the same may be caused by Landlord or any of Landlord's
agents, employees, contractors or invitees. This provision shall survive
termination of this Lease.
39. SURRENDER OF PREMISES
Tenant shall, upon the expiration of the Lease Term, or any earlier
termination of this Lease, surrender to Landlord the Premises, and all
alterations, improvements and other additions which may be made or installed by
either party to, in, upon or about the Premises, other than trade fixtures,
signs, equipment and other personal property which remain the property of
Tenant, shall be surrendered to Landlord by Tenant without any damage, injury or
disturbance thereto or payment therefor, reasonable wear and tear and damage by
fire or other casualty excepted.
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40. ATTORNEY'S FEES
In the event that at any time either Landlord or Tenant shall
institute any action or proceeding against the other relating to the provisions
of this Lease, or any default hereunder, the unsuccessful party in such action
or proceeding agrees to reimburse the successful party for the reasonable
expenses, attorney's fees and disbursements incurred therein by the successful
party.
41. ESTOPPEL
At any time and from time to time either party, upon request of the
other party, will execute, acknowledge and deliver an instrument stating, if the
same be true, that this Lease is a true and exact copy of the Lease between the
parties hereto, that there are no amendments hereof (or stating what amendments
there may be), that the same is then in full force and effect and that, to the
best of its knowledge, there are no offsets, defenses or counterclaims with
respect to the payment of Rent reserved hereunder or in the performance of the
other terms, covenants and conditions hereof on the part of Tenant or Landlord,
as the case may be, to be performed, and that as of such date no default has
been declared hereunder by either party and such other matters as may be
reasonably requested. Such instrument will be executed by the other party and
delivered to the requesting party within ten (10) business days of receipt of a
request therefor.
42. MISCELLANEOUS
42.1. THIS LEASE SHALL BE DEEMED TO BE MADE IN AND CONSTRUED UNDER
AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH DAKOTA. EACH PARTY AND
THEIR RESPECTIVE COUNSEL HAVE PARTICIPATED IN THE PREPARATION AND NEGOTIATION OF
THIS LEASE AND, ACCORDINGLY, THE NORMAL RULE OF CONSTRUCTION THAT AMBIGUITIES
ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED IN THE
INTERPRETATION HEREOF.
42.2. Time is of the essence of this Lease.
42.3. The captions in this Lease are inserted only as a matter of
convenience and for reference and they in no way define, limit or describe the
scope of this Lease or the intent of any provision hereof.
42.4. This Lease may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed as of the dates set forth below.
LANDLORD:
IRET PROPERTIES, a North Dakota Limited
Partnership, by IRET, INC., its General
Partner
ATTEST: /s/ Xxxxxx X. Xxxxx Name: /s/ Xxxxx X. Xxxxx
---------------------------- ----------------------------------
Date: 10-23-97 Title: President
------------------------------ ----------------------------------
TENANT:
GREAT PLAINS SOFTWARE, INC.
ATTEST: /s/ Xxxxxx Xxxxx Name: /s/ Xxxxx Xxxxxxxxx
---------------------------- -----------------------------------
Date: 10-22-97 Title: Chief Financial Officer
------------------------------ ----------------------------------
[notarial stamp]
