United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act For the transition period from ______________ to
_________________
Commission file number 0-8482
ASTROCOM CORPORATION
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0946755
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3500 Holly Lane North, Suite 60, Plymouth, Minnesota 55447-1284
(Address of principal executive office) (Zip Code)
(612) 378-7800
(Issuer's telephone number)
2700 Summer Street N.E., Minneapolis, Minnesota 55413-2820
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes _X_ No ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 14,999,161
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASTROCOM CORPORATION
BALANCE SHEETS
31-Mar-99 31-Dec-98
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 403,728 $ 549,337
Accounts receivable, less allowance 278,105 239,199
Inventories 475,687 566,751
Prepaid expenses 22,054 39,919
Total Current Assets 1,179,574 1,395,206
Property and Equipment
Property and Equipment 2,125,148 2,122,466
Accumulated Depreciation (1,911,313) (1,879,913)
Net Property and Equipment 213,835 242,553
License agreements, net 80,989 65,625
Other Assets 7,572 7,572
Total Assets $1,481,970 $1,710,956
<PAGE>
31-Mar-99 31-Dec-98
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts Payable 103,133 100,425
Accrued Expenses 96,293 84,907
Current portion of Lease Settlement Costs 32,341 31,703
Total Current Liabilities 231,767 217,035
Lease settlement Costs 27,999 36,327
Shareholders' Equity
Preferred Stock 200,000 200,000
Common Stock 1,499,520 1,499,520
Additional Paid in Capital 8,079,387 8,079,387
Accumulated Deficit (8,556,702) (8,321,313)
Total Shareholders' Equity 1,222,204 1,457,594
Total Liabilities and Shareholders' Equity $1,481,970 $1,710,956
See accompanying notes to financial statements.
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<CAPTION>
ASTROCOM CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31,
1999 1998
<S> <C> <C>
Net Sales $ 529,302 $ 827,904
Cost of Products Sold 377,920 544,513
Gross Profit 151,382 283,391
Operating Expenses
Selling and administrative 245,071 270,210
Research and development 140,724 51,753
Total Operating Expenses 385,795 321,963
Operating Loss (234,413) (38,572)
Other Income (Expense)
Interest Income 5,025 218
Interest Expense (2,592) (67,401)
Other Expense (397) (714)
Total Other Income (Expense) 2,036 (67,897)
Net Loss Before Taxes (232,377) (106,469)
Income Taxes 13 1,000
Net Loss (232,390) (107,469)
Less Preferred Stock Dividends 3,000 3,000
Loss Applicable to Common Shares $ (235,390) $ (110,469)
Loss per Common Share - basic and diluted $ ( .02) $ ( .01)
Weighted average number of common shares 14,999,161 10,514,076
oustanding
See accompanying notes to financial statements.
<PAGE>
CAPTION
<PAGE>
ASTROCOM CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (232,389) $ (107,468)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 41,036 34,416
Amortization of debt discount - 43,408
Interest on debt converted to common stock - 1,274
Changes in operating assets and liabilities:
Accounts receivable (38,906) (20,243)
Inventories 91,064 (122,714)
Prepaid expenses 17,865 38,421
Accounts payable 2,708 28,587
Accrued expenses 8,386 6,645
Net cash used in operating activities (110,237) (97,674)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment (2,682) -
Purchase of license agreements (25,000) (50,000)
Net cash used in investing activities (27,682) (50,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from factoring agreement - 122,433
Payments on lease settlement obligations (7,690) (1,412)
Cash provided by financing activities (7,690) 121,021
Net decrease in cash (145,609) (26,652)
Cash at beginning of period 549,337 31,830
Cash at end of period $ 403,728 $ 5,178
SUPPLEMENTAL CASH FLOW INFORMATION
Conversion of notes payable to common stock - 25,000
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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Astrocom Corporation
Notes to Financial Statements
March 31, 1999
1. Basis of Presentation
The financial statements in this Form 10-QSB have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the financial statements reflect all
adjustments necessary for a fair presentation of financial position, results of
operations and cash flows. These financial statements should be read in
conjunction with the financial statements and notes included in the Company's
annual report on Form 10-KSB for the year ended December 31, 1998.
2. Inventories
Inventories are stated at the lower of cost or market, determined on an average
cost basis. Inventories at March 31, 1999 and December 31, 1998 consisted of
the following:
<TABLE>
March 31, 1999 December 31, 1998
<S> <C> <C>
Raw materials 244,842 169,666
Work in process 257,109 431,172
Finished goods 110,801 104,154
Less obsolescence reserve (137,065) (138,154)
475,687 566,751
</TABLE>
3. Loss Per Share
The Company follows Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share." Basic earnings per share exclude the dilutive effect of
options, warrants and convertible securities, while diluted earnings per share
include such effects. For all periods presented, the Company's basic and
diluted loss per share are the same because the effects of all options, warrants
and convertible securities were antidilutive.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report contains certain forward-looking statements that project or estimate
future events. When used in this Form 10-QSB, the words "believes," "expects,"
"anticipates," "intends," and similar expressions are intended to identify
forward-looking statements. These statements are subject to various risks and
uncertainties which could cause actual results to differ materially from
historical results or those currently projected. Readers are cautioned not to
place undue reliance on these forward-looking statements.
RESULTS OF OPERATIONS
The following table sets forth selected information derived from the Company's
interim statement of operations expressed as percentages of net sales:
<TABLE>
Three Months Ended % Increase
March 31, (Decrease)
1999 1998
<S> <C> <C> <C>
Net Sales 100.0% 100.0% (36.1)%
Cost of Sales 71.4 65.8 (30.6)
Gross Profit 28.6 34.2 (46.6)
Selling and Administrative 46.3 32.6 (9.3)
Research and Development 26.6 6.3 171.9
Operating Loss (44.3) (4.7) 507.7
Other Income (Expense) 0.4 (8.2) 103.0
Net Loss (43.9)% (13.0)% 116.2%
</TABLE>
Net Sales. Net sales for the quarter ended March 31, 1999 totaled
$529,302, a decrease of 36.1% from $827,904 for the same quarter of 1998. The
decline in sales was the result of reduced demand from a few significant
customers. To address this decline and general pricing pressures in the
market, the Company is focusing on new product development. Specifically,
management has recognized the need for lower-priced products and a broader
product line. The Company expects that shipment of new products in future
quarters will help to reverse this trend of declining sales.
Gross Profit. Gross profit margin decreased to 28.6% in the first quarter
from 34.2% for the same period last year. This decrease is primarily
attributable to the lower sales volume and the resulting increase in labor and
overhead as a percentage of sales. Gross margins will continue to be affected
by sales volume, product mix and the distribution channel used.
Operating Expenses. Selling and administrative expenses decreased 9.3% to
$245,071 from $270,210 in the same period last year. Administrative expenses
decreased because of staff attrition and reduced reliance on outside
professional services.
Research and development expenses increased 171.9% to $140,724 in 1999 from
$51,753 in the first quarter of 1998 due to a larger engineering staff and the
costs associated with new product development, including product testing and
prototype parts.
Other Income (Expense). Interest expense decreased 96.2% to $2,592 in 1999
from $67,401 in the first quarter of last year. The higher interest expense in
1998 was associated with bridge financing, which was repaid in June 1998 with
the proceeds of a private placement of equity.
Net Loss. The Company reported a net loss of $232,390 for the quarter
ended March 31, 1999, compared to a net loss of $107,469 in the first quarter
of 1998. The increased loss is attributable to reduced sales, lower gross
margins and increased expenditures on product development.
Liquidity and Capital Resources
During the first quarter of 1999, the Company's operations were funded by
existing working capital. Net working capital declined to $947,807 on March 31,
1999 from $1,178,171 on December 31, 1998. Cash decreased to $403,728 on March
31, 1999 from $549,337 on December 31, 1998. This decrease in cash is largely
due to the Company's net operating loss.
Management remains focused on achieving profitable operations that generate
adequate cash flow to meet current obligations on a timely basis. The Company
intends to secure an asset-based lending facility during the current fiscal year
and has received assurances of financing availability from a former lender. The
Company currently believes that its available sources of funds will be adequate
to finance current operations and anticipated investments for the current year.
Year 2000 Issues
The Company is aware of the Year 2000 problem resulting from the inability
of some computer software or hardware to recognize or properly process dates
ending in "00" because a computer program is written using two digits rather
than four to define the applicable year. The Company has examined its internal
information systems and has determined that all of its critical business
software and hardware are Year 2000 compliant. The Company also has determined
that all of its products are Year 2000 compliant. The Company has requested
assurances from its major suppliers that they are addressing this issue and
will achieveYear 2000 compliance. The Company is not aware of any suppliers
with a Year 2000 issue that would materially impact the Company.
Based on information presently available, the Company does not believe that
the costs and efforts to address the Year 2000 problem will be material to its
business, financial condition or results of operation. If some unforeseen
problem does arise, the worst case scenario may result in delays of shipments
and possible lost sales. The Company could also be subject to litigation for
computer systems product failure. In addition, disruptions in the economy
generally resulting from Year 2000 issues could also materially adversely affect
the Company. The amount of potential liability and lost revenue cannot be
reasonably estimated at this time. The Company plans to address any unforeseen
problems by utilizing manual workarounds and alternative suppliers.
<PAGE>
The Company intends to continue monitoring Year 2000 compliance
matters. However, there can be no assurance that unforeseen problems will not
arise in connection with this issue.
<PAGE>
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION
1. The Company entered into five-year lease agreement with Plymouth Ponds
Development II, LLC on March 30, 1999 for 9,672 square feet of office and
manufacturing space at 3500 Holly Lane North, Suite 60, Plymouth, Minnesota.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
(10) Lease agreement between the Company and Plymouth Ponds Development
II, LLC, dated March 30, 1999.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 11, 1999
ASTROCOM CORPORATION
By:_/S/ Ronald B. Thomas__
Ronald B. Thomas
President and Chief Executive Officer
By:_/s/ Sarah B. Fjelstul_
Sarah B. Fjelstul
Vice President and Corporate Controller
(Principal Accounting Officer)
<PAGE>
Exhibit 10
OFFICE/WAREHOUSE LEASE
This Indenture of Lease, dated this 30th day of March, 1999 by and
between Plymouth Ponds Development II, LLC, , a Minnesota limited liability
company (hereinafter referred to as "Lessor"), and Astrocom Corporation, a
Minnesota Corporation, (hereinafter referred to as "Lessee").
DEFINITIONS:
"Premises"-That certain real property located in the City of Plymouth,
County of Hennepin and State of Minnesota and legally described on Exhibit "A"
attached hereto and made a part hereof, including all buildings and site
improvements located thereon.
"Building"-That certain office/warehouse building containing
approximately 9,672 square feet located upon the Premises and commonly
described as Plymouth Ponds Development II, LLC, 3600 Holly Lane North,
Plymouth, Minnesota 55441.
"Demised Premises"-That certain portion of the Building located at 3500
Holly Lane North, Plymouth, MN and designated as Suite 60, for a total of
approximately 9,672 square feet consisting of 9,624 square feet of office
space and approximately 48 square feet of mechanical space as measured from
the outside walls of the Demised Premises to the center of the partition wall.
The Demised Premises include a non-exclusive easement for access to common
areas, as hereinafter defined, and all licenses and easements appurtenant to
the Demised Premises.
"Common Areas"-The term "common area" means the entire areas to be used
for the non-exclusive use by Lessee and other lessees in the Building,
including, but not limited to, corridors, lavatories, driveways, truck docks,
parking lots and landscaped areas. Subject to reasonable rules and
regulations promulgated by Lessor, the common areas are hereby made available
to Lessee and its employees, agents, customers, and invitees for reasonable
use in common with other lessees, their employees, agents, customers and
invitees.
WITNESSETH:
TERM:
1. For and in consideration of the rents, additional rents, terms,
provisions and covenants herein contained, Lessor hereby lets, leases and
demises to Lessee the Demised Premises for the term of 60 months commencing on
the 1st day of April, 1999 (sometimes called "the Commencement Date") and
expiring the 31st day of March, 2004 (sometimes called "Expiration Date"),
unless sooner terminated as hereinafter provided.
BASE RENT:
2. Lessor reserves and Lessee shall pay Lessor, a total rental of
(See Addendum) payable in advance, in equal monthly installments of (See
Addendum) commencing on the Commencement Date and continuing on the first day
of each and every month thereafter for the next succeeding months during the
balance of the term (sometimes called "Base Rent"). In the event the
Commencement Date falls on a date other than the first of a month the rental
for that month shall be prorated and adjusted accordingly.
ADDITIONAL RENT:
3. Lessee shall pay to Lessor throughout the term of this Lease the
following:
a. Lessee shall pay a sum equal to 12.78% of the Real Estate taxes.
The term "Real Estate Taxes" shall mean all real estate taxes, all assessments
and any taxes in lieu thereof which may be levied upon or assessed against the
Premises of which the Demised Premises are a part. Lessee, in addition to all
other payments to Lessor by Lessee required hereunder shall pay to Lessor, in
each year during the term of this Lease and any extension or renewal thereof,
Lessee's proportionate share of such real estate taxes and assessments paid in
the first instance by Lessor.
Any tax year commencing during any lease year shall be deemed to
correspond to such lease year. In the event the taxing authorities include in
such real estate taxes and assessments the value of any improvements made by
Lessee, or of machinery, equipment, fixtures, inventory or other personal
property or assets of Lessee, then Lessee shall pay all the taxes attributable
to such items in addition to its proportionate share of said aforementioned
real estate taxes and assessments. A photostatic copy of the tax statement
submitted by Lessor to Lessee shall be sufficient evidence of the amount of
taxes and assessments assessed or levied against the Premises of which the
Demised Premises are a part.
b. A sum equal to 12.78% of the annual aggregate operating expenses
incurred by Lessor in the operation, maintenance and repair of the Premises.
The term "Operating Expenses" shall include but not be limited to maintenance,
repair, replacement and care of all common areas (including common area
utilities and lighting), mechanical rooms, common area plumbing and roofs,
parking and landscaped areas, signs, snow removal, non-structural repair and
maintenance of the exterior of the Building, Insurance premiums, management
fee not to exceed 5% of gross rents, wages and fringe benefits of personnel
employed for such work, costs of equipment purchased and used for such
purposes, and the cost or portion thereof properly allocable to the Premises
(amortized over such reasonable period as lessor shall determine together with
the interest at the rate of ten percent (10%) per annum on the unamortized
balance) of any capital improvements made to the Building by Lessor after the
Base Year which result in a reduction of Operating Expenses or made to the
Building by Lessor after the date of this Lease that are required under any
governmental law or regulation that was not applicable to the Building at the
time it was constructed.
c. In no event shall the total adjusted monthly rent be less than
Seven Thousand Four Hundred Fifteen and 20/100 Dollars ($7,415.20) per month
during the term of this Lease.
The payment of the sums set forth in this Article 3 shall be in addition
to the Base Rent payable pursuant to Article 2 of this Lease. All sums due
hereunder shall be due and payable within thirty (30) days of delivery of
written certification by Lessor setting forth the computation of the amount
due from Lessee. In the event the lease term shall begin or expire at any
time during the calendar year, Lessee shall be responsible for his pro-rata
share of Additional Rent under subdivisions a. and b. during the Lease and/or
occupancy time.
Prior to commencement of this Lease, and prior to the commencement of
each calendar year thereafter commencing during the term of this Lease or any
renewal or extension thereof, Lessor may estimate for each calendar year (i)
the total amount of Real Estate Taxes; (ii) the total amount of Operating
Expenses; (iii) Lessee's share of Real Estate Taxes for such calendar year;
(iv) Lessee's share of Operating Expenses for such calendar year; and (v) the
computation of the annual and monthly rental payable during such calendar year
as a result of increases or decreases in Lessee's share of Real Estate Taxes,
and Operating Expenses. Said estimates will be in writing and will be
delivered or mailed to Lessee.
The amount of Lessee's share of Real Estate Taxes, and Operating Expenses
for each calendar year, so estimated, shall be payable as Additional Rent, in
equal monthly installments, in advance, on the first day of each month during
such calendar year at the option of Lessor. In the event that such estimate
is delivered to Lessee before the first day of January of such calendar year,
said amount, so estimated, shall be payable as additional rent in equal
monthly installments, in advance, on the first day of each month during such
calendar year. In the event that such estimate is delivered to Lessee after
the first day of January of such calendar year, said amount, so estimated,
shall be payable as additional rent in equal monthly installments, in advance,
on the first day of each month over the balance of such calendar year, with
the number of installments being equal to the number of full calendar months
remaining in such calendar year.
Upon completion of each calendar year during the term of this Lease or
any renewal or extensions thereof, Lessor shall cause its accountants to
determine the actual amount of the Real Estate Taxes, and Operating Expenses
payable in such calendar year and Lessee's share thereof and deliver a written
certification of the amounts thereof to Lessee. If Lessee has underpaid its
share of Real Estate Taxes, or Operating Expenses for such calendar year,
Lessee shall pay the balance of its share of same within ten (10) days after
the receipt of such statement. If Lessee has overpaid its share of Real
Estate Taxes, or Operating Expenses for such calendar year, Lessor shall
either (i) refund such excess, or (ii) credit such excess against the most
current monthly installment or installments due Lessor for its estimate of
Lessee's share of Real Estate Taxes, and Operating Expenses for the next
following calendar year. A prorata adjustment shall be made for a fractional
calendar year occurring during the term of the Lease or any renewal or
extension thereof based upon the number of days of the term of the Lease
during said calendar year as compared to three hundred sixty-five (365) days
and all additional sums payable by Lessee or credits due Lessee as a result of
the provision of this Article 3 shall be adjusted accordingly. Lessor's books
and records relating to Operating Expenses for any particular year should be
available for inspection by Lessee during the 120 day period following
delivery of Lessor's written certification with respect to such year.
<PAGE>
COVENANT TO PAY RENT:
4. The covenants of Lessee to pay the Base Rent and the Additional
Rent are each independent of any other covenant, condition, provision or
agreement contained in this Lease. All rents are payable to Lessor at
Plymouth Ponds Development II, LLC, 3600 Holly Lane North, Suite 100,
Plymouth, MN 55441.
UTILITIES:
5. Lessor shall provide mains and conduits to supply water, gas,
electricity and sanitary sewage to the Premises. Lessee shall pay, when due,
all charges for sewer usage or rental, garbage disposal, refuse removal,
water, electricity, gas, fuel oil, L.P. gas, telephone and/or other utility
services or energy source furnished to the Demised Premises during the term of
this Lease, or any renewal or extension thereof. If Lessor elects to furnish
any of the foregoing utility services of other services furnished or caused to
be furnished to Lessee, then the rate charged by Lessor shall not exceed the
rate Lessee would be required to pay to a utility company or service company
furnishing any of the foregoing utilities or services. The charges thereof
shall be deemed additional rent in accordance with Article 3.
CARE AND REPAIR OF DEMISED PREMISES:
6. Lessee shall, at all times throughout the term of this Lease,
including renewals and extension, and at its sole expense, keep and maintain
the Demised Premises in a clean, safe, sanitary and first class condition
ordinary wear and tear excepted, and in compliance with all applicable laws,
codes, ordinances, rules and regulations. Lessee's obligations hereunder
shall include but not be limited to the maintenance, repair and replacement,
if necessary, of heating, air conditioning fixtures, equipment, and systems,
all lighting and plumbing fixtures and equipment, fixtures, motors and
machinery, all interior walls, partitions, doors and windows, including the
regular painting thereof, all exterior entrances, windows, doors and docks and
the replacement of all broken glass. When used in this provision, the term
"repairs" shall include replacements or renewals when necessary, and all such
repairs made by Lessee shall be equal in quality and class to the original
work. The Lessee shall keep and maintain all portions of the Demised Premises
and the sidewalk and areas adjoining the same in a clean and orderly
condition, free of accumulation of dirt, rubbish, snow and ice.
Notwithstanding anything to the contrary herein contained, Lessee shall not be
responsible for alterations, repairs or improvements mandated by the Americans
with Disabilities Act ("ADA").
If Lessee fails, refuses or neglects to maintain or repair the Demised
Premises as required in this Lease after notice shall have been given Lessee,
in accordance with Article 33 of this Lease, Lessor may make such repairs
without liability to Lessee for any loss or damage that may accrue to Lessee's
merchandise, fixtures or other property or to Lessee's business by reason
thereof, and upon completion thereof, Lessee shall pay to Lessor all costs
plus 15% of overhead incurred by Lessor in making such repairs upon
presentation to Lessee of bill therefor.
Lessor shall repair, at its expense, the structural portions of the
Building, provided however where structural repairs are required to be made by
reason of the acts of Lessee, the costs thereof shall be borne by Lessee and
payable by Lessee to Lessor upon demand.
The Lessor shall be responsible for all outside maintenance of the
Demised Premises, including grounds and parking areas. All such maintenance
which is the responsibility of Lessor shall be provided as reasonably
necessary to the comfortable use and occupancy of Demised Premises during
business hours, except Saturdays, Sundays and holidays, upon the condition
that Lessor shall not be liable for damages for failure to do so due to causes
beyond its control.
SIGNS:
7. Any sign, lettering, picture, notice or advertisement installed on
or in any part of the Premises and visible from the exterior of the Building,
or visible from the exterior of the Demised Premises, shall be approved by
Lessor and installed at Lessee's expense. In the event of a violation of the
foregoing by Lessee, Lessor may remove the same without any liability and may
charge the expense incurred by such removal to Lessee.
ALTERATIONS, INSTALLATION, FIXTURES:
8. Except as hereinafter provided, Lessee shall not make any
alteration, additions, or improvements in or to the Demised Premises or add,
disturb or in any way change any plumbing or wiring therein without the prior
written consent of Lessor, consent not to be unreasonably withheld. In the
event alterations are required by any governmental agency by reason of the use
and occupancy of the Demised Premises by Lessee, Lessee shall make such
alterations at its own cost and expense after first obtaining Lessor's
approval of plans and specifications therefor and furnishing such
indemnification as Lessor may reasonably require against liens, costs, damages
and expenses arising out of such alterations. Alterations or additions by
Lessee must be built in compliance with all laws, ordinances and governmental
regulations affecting the Premises and Lessee shall warrant to Lessor that all
such alterations, additions, or improvements shall be in strict compliance
with all relevant laws, ordinances, governmental regulations, and insurance
requirements. Construction of such alterations or additions shall commence
only upon Lessee obtaining and exhibiting to Lessor the requisite approvals,
licenses and permits and indemnification against liens. All alterations,
installations, physical additions or improvements to the Demised Premises made
by Lessee shall at the option of Lessor become the property of Lessor and
shall be either removed by Lessee at Lessee's sole cost or surrendered to
Lessor upon the termination of this Lease; provided, however, this clause
shall not apply to movable equipment or furniture owned by Lessee which may be
removed by Lessee at the end of the term if this Lease of Lessee is not then
in default.
POSSESSION:
9. Except as hereinafter provided Lessor shall deliver possession of
the Demised Premises to Lessee in the condition required by this Lease on or
before the Commencement Date, but delivery of possession prior to or later
than such Commencement Date shall not affect the expiration date of this
Lease. The rentals herein reserved shall commence on the date when possession
of the Demised Premises is delivered by Lessor to Lessee. Any occupancy by
Lessee prior to the beginning of the term shall in all respects be the same as
that of Lessee under this Lease. Lessor shall have no responsibility or
liability for loss or damage to fixtures, facilities or equipment installed or
left on the Demised Premises. If Demised Premises are not ready for occupancy
by Commencement Date and possession is later than Commencement Date, rent
shall begin on date of possession.
SECURITY AND DAMAGE DEPOSIT:
10. Lessee contemporaneously with the execution of this Lease, has
deposited with Lessor the sum of Ten Thousand and 00/100 Dollars ($10,000.00),
receipt of which is acknowledged hereby by Lessor, which deposit is to be held
by Lessor, without liability for interest, as a security and damage deposit
for the faithful performance by Lessee during the term hereof or any extension
hereof. Prior to the time when Lessee shall be entitled to the return of this
security deposit, Lessor may commingle such deposit with Lessor's own funds
and to use such security deposit for such purpose as Lessor may determine. In
the event of the failure of Lessee to keep and perform any of the terms,
covenants and conditions of this Lease to be kept and performed by Lessee
during the term hereof or any extension hereof, then Lessor, either with or
without terminating this Lease may (but shall not be required to) apply such
portion of said deposit as may be necessary to compensate or repay Lessor for
all losses or damages sustained or to be sustained by Lessor due to such
breach on the part of Lessee, including, but not limited to overdue and unpaid
rent, any other sum payable by Lessee to Lessor pursuant to the provisions of
this Lease, damages or deficiencies in the reletting of Demised Premises, and
reasonable attorney's fees incurred by Lessor. Should the entire deposit or
any portion thereof, be appropriated and applied by Lessor, in accordance with
the provisions of this paragraph, Lessee upon written demand by Lessor, shall
remit forthwith to Lessor a sufficient amount of cash to restore said security
deposit to the original sum deposited, and Lessee's failure to do so within
five (5) days after receipt of such demand shall constitute a breach of this
Lease. Said security deposit shall be returned to Lessee, less any depletion
thereof as the result of the provisions of this paragraph, at the end of the
term of this Lease or any renewal thereof, or upon the earlier termination of
this Lease. Lessee shall have no right to anticipate return of said deposit
by withholding any amount required to be paid pursuant to the provision of
this Lease or otherwise.
In the event Lessor shall sell the Premises, or shall otherwise convey or
dispose of its interest in this Lease, Lessor may assign aid security deposit
or any balance thereof to Lessor's assignee, whereupon Lessor shall be
released from all liability for the return or repayment of such security
deposit and Lessee shall look solely to the said assignee for the return and
repayment of said security deposit. Said security deposit shall not be
assigned or encumbered by Lessee without such consent of Lessor, and any
assignment or encumbrance without such consent shall not bind Lessor. In the
event of any rightful and permitted assignment of this Lease by Lessee, said
security deposit shall be deemed to be held by Lessor as a deposit made by the
assignee, and Lessor shall have no further liability with respect to the
return of said security deposit to Lessee.
Upon Lessor's reasonable request, Lessee shall provide to Lessor the most
current available financial statements of Lessee and any guarantors of this
Lease, for the preceding full fiscal year, all signed and certified as true,
correct and complete by the Lessee and any guarantees.
USE:
11. The Demised Premises shall be used and occupied by Lessee solely
for the purposes of office/warehouse space so long as such use is in
compliance with all applicable laws, ordinances and governmental regulations
affecting the Building and Premises. The Demised Premises shall not be used
in such manner that, in accordance with any requirement of law or of any
public authority, Lessor shall be obligated on account of the purpose or
manner of said use to make any addition or alteration to or in the Building.
The Demised Premises shall not be used in any manner which will increase the
rates required to be paid for pubic liability or for fire and extended
coverage insurance covering the Premises. Lessee shall occupy the Demised
Premises conduct its business and control its agents, employees, invitees and
visitors in such a way as is lawful, and reputable and will not permit or
create any nuisance, noise, odor, or otherwise interfere with, annoy or
disturb any other Lessee in the Building in its normal business operations or
Lessor in its management of the Building. Lessee's use of the Demised
Premises shall conform to all Lessor's reasonable rules and regulations
relating to the use of the Premises (as attached Exhibit "C"). Outside
storage on the Premises of any type of equipment, property or materials owned
or used on the Premise by Lessee or its customers and suppliers shall not be
permitted.
ACCESS TO DEMISED PREMISES:
12. The Lessee agrees after reasonable notice to Lessee to permit
Lessor and the authorized representatives of Lessor to enter the Demised
Premises at all times during usual business hours for the purpose of
inspecting the same and making any necessary repairs to the Demised Premises
and performing any work therein that may be necessary to comply with any laws,
ordinances, rules, regulations or requirements of any public authority or of
the Board of Fire Underwriters or any similar body or that Lessor may deem
necessary to prevent waste or deterioration in connection with the Demised
Premises. Nothing herein shall imply any duty upon the part of Lessor to do
any such work which, under any provision of this Lease, Lessee may be required
to perform and the performance thereof by Lessor shall not constitute a waiver
of Lessee's default in failing to perform the same. The Lessor may, during
the progress of any work in the Demised Premises, keep and store upon the
Demised Premises all necessary materials, tools and equipment. The Lessor
shall not in any event be liable for inconvenience, annoyance, disturbance,
loss of business, or other damage of Lessee by reason of making repairs or the
performance or any work in the Demised Premises, or on account of bringing
materials, supplies and equipment into or through the Demised Premises during
the course thereof and the obligations of Lessee under this Lease shall not
thereby be affected in any manner whatsoever.
Lessor reserves the right to enter upon the Demised Premises at any time
in the event of an emergency and at reasonable hours to exhibit the Demised
Premises to prospective purchasers or others; and to exhibit the Demised
Premises to prospective Lessees and to display "For Lease" or similar signs on
windows or doors in the Demised Premises during the last one hundred eighty
(180) days of the term of this Lease, all without hindrance or molestation by
Lessee.
EMINENT DOMAIN:
13. In the event of any eminent domain or condemnation proceeding or
private sale in lieu thereof in respect to the Premises during the term
thereof, the following provisions shall apply:
a. If the whole of the Premises shall be acquired or condemned by
eminent domain or any public or quasi-public use or purpose, then the term of
this Lease shall cease and terminate as of the date possession shall be taken
in such proceeding and all rentals shall be paid up to that date.
b. If any part constituting less than the whole of the Premises shall
be acquired or condemned as aforesaid, and in the event that such partial
taking or condemnation shall materially affect the Demised Premises so as to
render the Demised Premises unsuitable for the business of Lessee, in the
reasonable opinion of Lessor, then the term of this Lease shall cease and
terminate as of the date possession shall be taken by the condemning authority
and rent shall be paid to the date of such termination.
In the event of a partial taking or condemnation of the Premises which
shall not materially affect the Demised premises so as to render the Demised
Premise unsuitable for the business of Lessee, in the reasonable opinion of
Lessor, this Lease shall continue in full force and effect but with a
proportionate abatement of the Base Rent and Additional Rent based on the
portion, if any, of the Demised Premise taken. Lessor reserves the right, at
its option, to restore the Building and the Demised Premises to substantially
the same condition as they were prior to such condemnation. In such event,
Lessor shall give written notice to Lessee, within thirty (30) days following
the date possession shall be taken by the condemning authority, of Lessor's
intention to restore. Upon Lessor's notice of election to restore, Lessor
shall commence restoration and shall restore the Building and the Demised
Premises with reasonable promptness, subject to delays beyond Lessor's control
and delays in the making of condemnation or sale proceeds adjustment by
Lessor; and Lessee shall have no right to terminate this Lease except as
herein provided. Upon completion of such restoration, the rent shall be
adjusted based upon the portion, if any, of the Demised Premises restored.
c. In the event of any condemnation or taking as aforesaid, whether
whole or partial, Lessee shall not be entitled to any part of the award paid
for such condemnation and Lessor is to receive the full amount of such award,
Lessee hereby expressly waiving any right to claim to any part thereof.
d. Although all damages in the event of any condemnation shall belong
to Lessor whether such damages are awarded as compensation for diminution in
value of the leasehold or to the fee of the Demised Premises, Lessee shall
have the right to claim and recover from the condemnating authority, but not
from Lessor, such compensation as may be separately awarded or recoverable by
Lessee in Lessee's own right on account of any and all damage to Lessee's
business by reason of the condemnation and for or on account of any cost or
loss to which Lessee might be put in removing Lessee's merchandise, furniture,
fixtures, leasehold improvements and equipment. However, Lessee shall have no
claim against Lessor or make any claim with the condemning authority of the
loss of its leasehold estate, any unexpired term of loss of any possible
renewal or extension of said lease or loss of any possible value of said
lease, any unexpired term, renewal or extension of said Lease.
DAMAGE OR DESTRUCTION:
14. In the event of any damage or destruction to the Premises by fire
or other cause during the term hereof, the following provisions shall apply:
a. If the Building is damaged by fire or any other cause to such
extent that the cost of restoration, as reasonably estimated by Lessor, will
equal or exceed thirty percent (30%) of the replacement value of the Building
(exclusive of foundations) just prior to the occurrence of the damage, then
Lessor may, no later than the sixtieth (60th) day following the damage, give
Lessee written notice of Lessor's election to terminate this Lease.
b. If the cost of restoration as estimated by Lessor will equal or
exceed fifty percent (50%) of said replacement value of the Building and if
the Demised Premises are not suitable as a result of said damage for the
purposes for which they are demised hereunder, in the reasonable opinion of
Lessee, then Lessee may, no later than the sixtieth (60th) day following the
damage, give Lessor a written notice of election to terminate this Lease.
c. If the cost of restoration as estimated by Lessor shall amount to
less than thirty percent (30%) of said replacement value of the Building, or
if, despite the cost, Lessor does not elect to terminate this Lease, Lessor
shall restore the Building and the Demised Premises with reasonable
promptness, subject to delays beyond Lessor's control and delays in the making
of insurance adjustments by Lessor; and Lessee shall have no right to
terminate this Lease except as herein provided. Lessor shall not be
responsible for restoring or repairing leasehold improvements of Lessee.
d. In the event of either of the elections to terminate, this Lease
shall be deemed to terminate on the date of the receipt of the notice of
election and all rentals shall be paid up to that date. Lessee shall have no
claim against Lessor for the value of any unexpired term of this Lease.
e. In any case where damage to the Building shall materially affect
the Demised Premises so as to render them unsuitable in whole or in part for
the purposes for which they are demised hereunder, then, unless such
destruction was wholly or partially caused by the negligence or breach of the
terms of this Lease by Lessee, its employees, contractors or licensees, a
portion of the rent based upon the amount of the extent to which the Demised
Premises are rendered unsuitable shall be abated until repaired or restored.
If the destruction or damage was wholly or partially caused by negligence or
breach of the terms of this Lease by Lessee as aforesaid and if Lessor shall
elect to rebuild, the rent shall not abate and Lessee shall remain liable for
the same.
CASUALTY INSURANCE:
15. a. Lessor shall at all times during the term of this Lease,
at its expense, maintain a policy or policies of insurance with premiums paid
in advance issued by an insurance company licensed to do business in the State
of Minnesota insuring the Building against loss or damage by fire, explosion
or other insurable hazards and contingencies for the full replacement value,
provided that Lessor shall not be obligated to insure any furniture,
equipment, machinery, goods or supplies not covered by this Lease which Lessee
may bring upon the Demised Premises or any additional improvements which
Lessee may construct or install on the Demised Premise.
b. Lessee shall not carry any stock of goods or do anything in or
about the Demised Premises which will in any way impair or invalidate the
obligation of the insurer under any policy of insurance required by this
Lease.
c. Lessor hereby waives and releases all claims, liabilities and
causes of action against Lessee and its agents, servants and employees for
loss or damage to, or destruction of, the Premises or any portion thereof,
including the buildings and other improvements situated thereon, resulting
from fire, explosion and other perils included in standard extended coverage
insurance, whether caused by the negligence of any of said persons or
otherwise. Likewise, Lessee hereby waives and releases all claims,
liabilities and causes of action against Lessor and its agents, servants and
employees for loss or damage to, or destruction of, any of the improvements,
fixtures, equipment, supplies, merchandise and other property, whether that of
Lessee or of others, upon or about the Premises resulting from fire, explosion
or the other perils included in standard extended coverage insurance, whether
caused by the negligence of any of said persons or otherwise. The waiver
shall remain in force whether or not Lessee's insurer shall consent thereto.
d. In the event that the use of the Demised Premises by Lessee
increases the premium rate for insurance carried by Lessor on the improvements
of which the Demised Premises are a part, Lessee shall pay Lessor, upon
demand, the amount of such premium increase. If Lessee installs any
electrical equipment that overloads the power lines to the building or its
wiring, Lessee shall, at its own expense, make whatever changes are necessary
to comply with the requirements of the insurance underwriter, insurance rating
bureau and governmental authorities having jurisdiction.
PUBLIC LIABILITY INSURANCE:
16. Lessee shall during the term hereof keep in full force and effect
at its expense a policy or policies of public liability insurance with respect
to the Demised Premises and the business of Lessee, on terms with companies
approved in writing by Lessor, in which both Lessee and Lessor shall be
covered by being named as insured parties under reasonable limits of liability
not less than: $500,000 for injury/death to any one person; $1,000,000 for
injury/death to more than one person, and $500,000 with respect to damage to
property. Such policy or policies shall provide that ten (10) days written
notice must be given to Lessor prior to cancellation thereof. Lessee shall
furnish evidence satisfactory to Lessor at the time this Lease is executed
that such coverage is in full force and effect.
DEFAULT OF LESSEE:
17. a. In the event of any failure of Lessee to pay any rental
due hereunder within ten (10) days after the same shall be due, or any failure
to perform any other of the terms, conditions or covenants of this Lease to be
observed or performed by Lessee for more than thirty (30) days after written
notice of such failure shall have been given to Lessee, or if Lessee or an
agent of Lessee shall falsify any report required to be furnished to Lessor
pursuant to the terms of this Lease, or if Lessee or any guarantor of this
Lease shall become bankrupt or insolvent, or file any debtor proceedings or
any person shall take or have against Lessee or any guarantor of this Lease in
any court pursuant to any statue either of the United States or of any state a
petition of bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Lessee's or any
such guarantor's property, or if Lessee or any such guarantor makes an
assignment for the benefit or creditors, or petitions for or enters into an
arrangement, or if Lessee shall abandon the Demised Premises or suffer this
Lease to be taken under any writ of execution, then in any such event Lessee
shall be in default hereunder, and Lessor, in addition to other rights of
remedies it may have, shall have the immediate right or re-entry and may
remove all persons and property from the Demised Premises and such property
may be removed and stored in a public warehouse or elsewhere at the cost of,
and for the account of Lessee, all without service of notice or resort to
legal process and without being guilty of trespass, or becoming liable for any
loss or damage which may be occasioned thereby.
b. Should Lessor elect to re-enter the Demised Premises, as herein
provided, or should it take possession of the Demised Premises pursuant to
legal proceedings or pursuant to any notice provided for by law, it may either
terminate this Lease or it may from time to time, without terminating this
Lease, make such alterations and repairs as may be necessary in order to relet
the Demised Premises, and relet the Demised Premises or any part thereof upon
such term or terms (which may be for a term extending beyond the term of this
Lease) and at such rental or rentals and upon such other terms and conditions
as Lessor in its sole discretion may deem advisable. Upon each such
subletting all rentals received by Lessor from such reletting shall be applied
first to the payment of any indebtedness other than rent due hereunder from
Lessee to Lessor; second, to the payment of any costs and expenses of such
reletting, including brokerage fees and attorney's fees and costs of such
alterations and repairs; third, to the payment of the rent due and unpaid
payment of future rent as the same may become due and payable hereunder. If
such rentals received from such reletting during any month be less than that
to be paid during that month by Lessee hereunder, Lessee, upon demand, shall
pay any such deficiency to Lessor. No such re-entry or taking possession of
the Demised Premises by Lessor shall be construed as an election on its part
to terminate this Lease unless a written notice of such intention be given to
Lessee or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Lessor
may at any time after such re-entry and reletting elect to terminate this
Lease for any such breach, in addition to any other remedies it may have, it
may recover from Lessee all damages it may incur by reason of such breach,
including the cost of recovering the Demised Premises, reasonable attorney's
fees, and including the worth at the time of such termination of the excess,
if any, of the amount of rent and charges equivalent to rent reserved in this
Lease for the remainder of the stated term over the then reasonable rental
value of the Demised Premises for the remainder of the slated term, all of
which amounts shall be immediately due and payable from Lessee to Lessor.
c. Lessor may, at its option, instead of exercising any other rights
or remedies available to it in this Lease or otherwise by law, statue or
equity, spend such money as is reasonably necessary to cure any default of
Lessee herein and the amount so spent, and costs incurred, including
attorney's fees in curing such default, shall be paid by Lessee, and
additional rent, upon demand.
d. In the event suit shall be brought for recovery of possession of
the Demised Premises, for the recovery of rent of any other amount due under
the provisions of this Lease, or because of the breach of any other covenant
herein contained on the part of Lessee to be kept or performed, and a breach
shall be established, Lessee shall pay to Lessor all expenses incurred
therefor, including a reasonable attorney's fee, together with interest on all
such expenses at the rate of ten percent (10%) per annum from the date of such
breach of the covenants of this Lease.
e. Lessee hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Lessee being
evicted or dispossessed for any cause, or in the event of Lessor obtaining
possession of the Demised Preemies, by reason of the violation by Lessee of
any of the covenants or conditions of this Lease, or otherwise. Lessee also
waives any demand for possession of the Demised Premises, and any demand for
payment of rent and any notice of intent to re-enter the Demised Premises, or
of intent to terminate this Lease, other than the notices above provided in
this Article, and waives any and every other notice or demand prescribed by
any applicable statues or laws.
f. No remedy herein or elsewhere in this Lease or otherwise by law,
statue or equity, conferred upon or reserved to Lessor or Lessee shall be
exclusive of any other remedy, but shall be cumulative, and may be exercised
from time to time and as often as the occasion may arise.
COVENANTS TO HOLD HARMLESS:
18. Unless the liability for damage or loss is caused by the gross
negligence of Lessor, its agents or employees, Lessee shall hold harmless
Lessor from any liability for damages to any person or property in or upon the
Demised Premises and the Premises, including the person and the property of
Lessee and its employees and all persons in the Building at its or their
invitation or sufferance, and from all damages resulting from Lessee's failure
to perform the covenants of this Lease. All property kept, maintained or
stored on the Demised Premises shall be so kept, maintained or stored at the
sole risk of Lessee. Lessee agrees to pay all sums of money in respect of any
labor, service, materials, supplies or equipment furnished or alleged to have
been furnished to Lessee in or about the Premises, and not furnished on order
of Lessor, which may be secured by and Mechanic's Materialmen's or other lien
to be discharged at the time performance of any obligation secured thereby
matures, provided that Lessee may contest such lien, but if such lien is
reduced to final judgment and if such judgment or process thereon is not
stayed, or if stayed and said stay expires, then and in each such event,
Lessee shall forthwith pay and discharge said judgment. Lessor shall have the
right to post and maintain on the Demised Premises, notices of
non-responsibility under the laws of the State of Minnesota.
NON-LIABILITY:
19. Subject the terms and conditions of Article 14 hereof, Lessor
shall not be liable for damage to any property of Lessee or of others located
on the Premises, not for the loss of or damage to any property of Lessee or of
others by theft or otherwise. Lessor shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling plaster,
steam, gas, electricity, water, rain or snow or leaks from any part of the
Premises or from the pipes, appliances, or plumbing works or from the roof,
street or subsurface or from any other place or by dampness or by any other
cause of whatsoever nature. Lessor shall not be liable for any such damage
caused by other Lessees or persons in the Premises, occupants of adjacent
property, of the buildings, or the public or caused by operations in
construction of any private, public or quasi-public work. Lessor shall not be
liable for any latent defect in the Demised Premises. All property of Lessee
kept or stored on the Demised Premises shall be so kept or stored at the risk
of Lessee only and Lessee shall hold Lessor harmless from any claims arising
out of damage to the same, including subrogation claims by Lessee's insurance
carrier.
SUBORDINATION:
20. This Lease shall be subordinated to any mortgages that may now
exist or that may hereafter be placed upon the Demised Premises and to any and
all advances made thereunder, and to the interest upon the indebtedness
evidenced by such mortgages, and to all renewals, replacements and extensions
thereof. In the event of execution by Lessor after the date of this Lease of
any such mortgage renewal, replacement or extension, Lessee agrees to execute
a subordination agreement with the holder thereof which agreement shall
provide that:
a. Such holder shall not disturb the possession and other rights of
Lessee under this Lease so long as Lessee is not in default hereunder,
b. In the event of acquisition of title to the Demised Premises by
such holder, such holder shall accept Lessee as Lessee of the Demised Premises
under the terms and conditions of this Lease and shall perform all the
obligations of Lessor hereunder, and
c. Lessee shall recognize such holder as Lessor hereunder.
Lessee shall, upon receipt of a request from Lessor therefore, within ten
(10) days after receipt of such request, execute and deliver to Lessor or to
any proposed holder of a mortgage or trust deed or to any proposed purchaser
of the Premises, a certificate in recordable form, certifying that this Lease
is in full force and effect, and that there are no offsets against rent nor
defenses to Lessee's performance under this Lease, or setting further any such
offsets or defenses claimed by Lessee, as the case may be.
ASSIGNMENT OR SUBLETTING:
21. Lessee agrees to use and occupy the Demised Premises throughout
the entire term hereof for the purpose or purposes herein specified and for no
other purposes, in the manner and to substantially the extent now intended,
and not to transfer or assign this Lease or sublet said Demised Premises, or
any part thereof, whether by voluntary act, operation of law, or otherwise,
without obtaining the prior written consent of Lessor in each instance.
Lessee shall seek such consent of Lessor by a written request therefor,
setting forth such information as Lessor may deem necessary. Lessor agrees not
to withhold consent unreasonably. Consent by Lessor to any assignment of this
Lease or to any subletting of the Demised Premises shall not be a waiver of
Lessor's rights under this Article as to any subsequent assignment or
subletting. Lessor's rights to assign this Lease are and shall remain
unqualified. No such assignment or subleasing shall relieve Lessee from any
of Lessee's obligations in this Lease contained, nor shall any assignment or
sublease or other transfer of this Lease be effective unless the assignees,
sublessee or transferee shall at the time of such assignment, sublease or
transfer, assume in writing for the benefit of Lessor, its successors or
assigns, all of the terms, covenants and conditions of this Lease thereafter
to be performed by Lessee and shall agree in writing to be bound thereby.
Should Lessee sublease in accordance with the terms of this Lease, fifty
percent (50%) of any increase in rental received by Lessee over the per square
foot rental rate which is being paid by Lessee shall be forwarded to and
retained by Lessor, which increase shall be in addition to the Base Rent and
Additional Rent due Lessor under this Lease. Lessee shall have the right to
transfer its interest in the Lease with notice but without consent to an
entity controlled by, controlling or under common control with Lessee.
ATTORNMENT:
22. In the event of a sale or assignment of Lessor's interest, in the
Premises, or the Building in which the Demised Premises are located, or this
Lease, or if the Premises come into custody or possession of a mortgagee or
any other party whether because of a mortgage foreclosure, or otherwise,
Lessee shall attorn to such assignee or other party and recognize such party
as Lessor hereunder; provided, however Lessee's peaceable possession will not
be disturbed so long as Lessee faithfully performs its obligations under this
Lease. Lessee shall execute, on demand, any attornment agreement required by
any such party to be executed, containing such provisions and such other
provisions as such party may require.
NOVATION IN THE EVENT OF SALE:
23. In the event of the sale of the Demised Premises, Lessor shall be
and hereby is relieved of all of the covenants and obligations created hereby
accruing from and after the date of sale, and such sale shall result
automatically in the purchaser assuming and agreeing to carry out all the
covenants and obligations of Lessor herein. Notwithstanding the foregoing
provisions of this Article, Lessor, in the event of a sale of the Demised
Premises, shall cause to be included in this agreement of sale and purchase a
covenant whereby the purchaser of the Demised Premises assumes and agree to
carry out all of the covenants and obligations of Lessor herein.
The Lessee agrees at any time and from time to time upon not less than
ten (10) days prior written request by Lessor to execute, acknowledge and
deliver to Lessor a statement in writing certifying that this Lease is
unmodified and in full force and effect as modified and stating the
modifications, and the dates to which the basic rent and other charges have
been paid in advance, if any, it being intended that any such statement
delivered pursuant to this paragraph may be relied upon by any prospective
purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of
the Demised Premises.
<PAGE>
SUCCESSORS AND ASSIGNS:
24. The terms, covenants and conditions hereof shall be binding upon
and inure to the successors and assigns of the parties hereto.
REMOVAL OF FIXTURES:
25. Notwithstanding anything contained in Article 8, 29 or elsewhere
in this Lease, if Lessor requests then Lessee will promptly remove at the sole
cost and expense of Lessee all fixtures, equipment and alterations made by
Lessee simultaneously with vacating the Demised Premises and Lessee will
promptly restore said Demised Premises to the condition that existed
immediately prior to said fixtures, equipment and alterations having been made
all at the sole cost and expense of Lessee.
QUIET ENJOYMENT:
26. Lessor warrants that it has full right to execute and to perform
this Lease and to grant the estate demised, and that Lessee, upon payment of
the rents and other amounts due and the performance of all the terms,
conditions, covenants and agreements on Lessee's part to be observed and
performed under this Lease, may peaceably and quietly enjoy the Demised
Premises for the business uses permitted hereunder, subject, nevertheless, to
the terms and conditions of this Lease.
RECORDING:
27. Lessee shall not record this Lease without the written consent of
Lessor. However, upon the request of either party hereto, the other party
shall join in the execution of the Memorandum lease for the purposes of
recordation. Said Memorandum lease shall describe the parties, the Demised
Premises and the term of the Lease and shall incorporate this Lease by
reference. This Article 27 shall not be construed to limit Lessor's right to
file this Lease under Article 22 of this Lease.
OVERDUE PAYMENTS:
28. All monies due under this Lease from Lessee to Lessor shall be
due on demand, unless otherwise specified and if not paid when due, shall
result in the imposition of a service charge for such late payment in the
amount of five percent (5%) of the amount due.
SURRENDER:
29. On the Expiration Date or upon the termination hereof upon a day
other than the Expiration Date, Lessee shall peaceably surrender the Demised
Premises broom-clean in good order, condition and repair, reasonable wear and
tear only excepted. On or before the Expiration Date or upon termination of
this Lease on a day other than the Expiration Date, Lessee shall, at its
expense, remove all trade fixtures, personal property and equipment and signs
from the Demised Premises and any property not removed shall be deemed to have
been abandoned. Any damage caused in the removal of such items shall be
repaired by Lessee and at its expense. All alterations, additions,
improvements and fixtures (other than trade fixtures) which shall have been
made or installed by Lessor or Lessee upon the Demised Premises and all floor
covering so installed shall at the option of Lessor remain upon and be
surrendered with the Demised Premises as a part thereof, without disturbance,
molestation or injury, and without charge, at the expiration or termination of
this Lease. If the Demised Premises are not surrendered on the Expiration
Date or the date of termination, Lessee shall indemnify Lessor against loss or
liability, claims, without limitation, made by any succeeding Lessee founded
on such delay. Lessee shall promptly surrender all keys for the Demised
Premises to Lessor at the place then fixed for payment of rent and shall
inform Lessor of combinations of any locks and safes on the Demised Premises.
HOLDING OVER:
30. In the event of a holding over by Lessee after expiration or
termination of this Lease without the consent in writing of Lessor, Lessee
shall be deemed a lessee at sufferance and shall pay rent for such occupancy
at the rate of twice the lease-current aggregate Base and Additional Rent,
prorated for the entire holdover period, plus all attorney's fees and expenses
incurred by Lessor in enforcing its rights hereunder, plus any other damages
occasioned by such holding over. Except as otherwise agreed, any holding over
with the written consent of Lessor shall constitute Lessee a month-to-month
lessee.
ABANDONMENT:
31. In the event Lessee shall remove its fixtures, equipment or
machinery or shall vacate the Demised Premises or any part thereof prior to
the Expiration Date of this Lease, or shall discontinue or suspend the
operation of its business conducted on the Demised Premises for a period of
more than thirty (30) consecutive days (except during any time when the
Demised Premises may be rendered untenantable by reason of fire or other
casualty), then in any such event Lessee shall be deemed to have abandoned the
Demised Premises and Lessee shall be in default under the terms of this Lease.
CONSENTS BY LESSOR:
32. Whenever provision is made under this Lease for Lessee securing
the consent or approval by Lessor, such consent or approval shall only be in
writing and shall not be unreasonably withheld or delayed.
NOTICES:
33. Any notice required or permitted under this Lease shall be deemed
sufficiently given or secured if sent by registered or certified return
receipt mail to Lessee at 3600 Holly Lane North, Plymouth, Minnesota 55441 and
to Lessor at the address then fixed for the payment of rent as provided in
Article 4 of this Lease, and either party may by like written notice at any
time designate a different address to which notices shall subsequently be sent
or rent to be paid.
<PAGE>
RULES AND REGULATIONS:
34. Lessee shall observe and comply with the rules and regulations as
Lessor may prescribe, on written notice to Lessee for the safety, care and
cleanliness of the Building.
INTENT OF PARTIES:
35. Except as otherwise provided herein, Lessee covenants and agrees
that if it shall any time fail to pay any such cost or expenses, or fail to
take out, pay for, maintain or deliver any of the insurance policies above
required, or fail to make any other payment or perform any other act on its
part to be made or performed as in this Lease provided, then Lessor may, but
shall not be obligated so to do, and without notice to or demand upon Lessee
and without waiving or releasing Lessee from any obligations of Lessee in this
Lease contained, pay any such cost or expense, effect any such insurance
coverage and pay premiums therefor, and may make any other payment or perform
any other act on the part of Lessee to be made and performed as in this Lease
provided, in such manner and to such extent as Lessor may deem desirable, and
in exercising any such right, to also pay all necessary and incidental costs
and expenses, employ counsel and incur and pay reasonable attorneys' fees.
All sums so paid by Lessor and all necessary and incidental costs and expenses
in connection with the performance of any such act by Lessor, together with
interest thereon at the rate of twelve percent (12%) per annum from the date
of making of such expenditure, by Lessor, shall be deemed additional rent
hereunder, and shall be payable to Lessor on demand. Lessee covenants to pay
any such sum or sums with interest as aforesaid and Lessor shall have the same
rights and remedies in the event of the non-payment thereof by Lessee as in
the case of default by Lessee in the payment of the Base Rent payable under
this Lease.
GENERAL:
36. The Lease does not create the relationship of principal and agent
or of partnership or of joint venture or of any association between Lessor and
Lessee, the sole relationship between the parties hereto being that of Lessor
ad Lessee.
No waiver of any default of Lessee hereunder shall be implied from any
omission by Lessor to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and that only
for the time and to the extent therein stated. One or more waivers by Lessor
shall not then be construed as a waiver of a subsequent breach of the same
covenant, term or condition. The consent to or approval by Lessor of any act
by Lessee requiring Lessor's consent or approval shall not waive or render
necessary Lessor's consent to or approval of any subsequent similar act by
Lessee shall be construed to be both a covenant and a condition. No action
required or permitted to be taken by or on behalf of Lessor under the terms or
provisions of this Lease shall be deemed to constitute an eviction or
disturbance of Lessee's possession of the Demised Premises. All preliminary
negotiations are merged into and incorporated in this Lease. The laws of the
State of Minnesota shall govern the validity, performance and enforcement of
this Lease.
a. This Lease and the exhibits, if any, attached hereto and forming a
part hereof, constitute the entire agreement between Lessor and Lessee
affecting the Demised Premises and there are no other agreements, either oral
or written, between them other than are herein set forth. No subsequent
alteration, amendment, change or addition to this Lease shall be binding upon
Lessor or Lessee unless reduced to writing and executed in the same form and
manner in which this Lease is executed.
b. If any agreement, covenant or condition of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such agreement, covenant or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each agreement, covenant or condition of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
HAZARDOUS MATERIAL:
37. a. The Demised Premises hereby leased shall be used by and/or
at the sufferance of Lessee only for the purpose set forth in Article 11 above
and for no other purposes. Lessee shall not use or permit the use of the
Demised Premises in any manner that will tend to create waste or a nuisance,
or will tend to unreasonably disturb other Lessees in the Building or the
Premises. Lessee, its employees and all persons visiting or doing business
with Lessee in the Demised Premises shall be bound by and shall observe the
reasonable rules and regulations made by Lessor relating to the Demised
Premises, the Building or the Premises of which notice in writing shall be
given to Lessee, and all such rules and regulations shall be deemed to be
incorporated into and form a part of this Lease.
b. Lessee covenants throughout the Lease Term, at Lessee's sole cost
and expense, promptly to comply with all laws and ordinances and the orders,
rules and regulations and requirements of all federal, state and municipal
governments and appropriate departments, commissions, boards, and officers
thereof, and the orders, rules and regulations of the Board of Fire
Underwriters where the Demised Premises are situated, or any other body now or
hereafter as well as extraordinary, and whether or not the same require
structural repairs or alterations, which may be applicable to the Demised
Premises, or the use or manner of use of the Demised Premises. Lessee will
likewise observe and comply with the requirements of all policies of public
liability, fire and all other policies of insurance at any time in force with
respect to the buildings and improvements on the Demised Premises and the
equipment thereof.
c. In the event any Hazardous Material (hereinafter defined) is
brought or caused to be brought into or onto the Demised Premises, the
Building or the Premises by Lessee, Lessee shall handle any such material in
compliance with all applicable federal, state and/or local regulations. For
purposes of this Article, "Hazardous Material" means and includes any
hazardous, toxic or dangerous waste, substance or material defined as such in
(or for purposes of) the Comprehensive Environmental Response, Compensation,
and Liability Act, and so-called "Superfund" or "Superlien" law, or any
federal, state or local statue, law, ordinance, code, rule, regulation, order
decree regulation, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereafter in effect. Lessee shall submit to Lessor on an
annual basis copies of its approved hazardous materials communication plan,
OSHA monitoring plan, and permits required by the Resource Recovery and
Conservation Act of 1976, if Lessee is required to prepare, file or obtain any
such plans or permits. Lessee will indemnify and hold harmless Lessor from
any losses, liabilities, damages, costs or expenses (including reasonable
attorneys' fees) which Lessor may suffer or incur as a result of Lessee's
introduction into or onto the Demised Premises, Building or Premises of any
Hazardous Material. This Article shall survive the expiration or sooner
termination of this Lease.
CAPTIONS:
38. The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent or any provision thereof.
ATTACHMENTS:
39. See also rider attached hereto and made a part hereof containing
articles 42 through Article 44 inclusive as well as Exhibits A through Exhibit
D, inclusive, which Exhibits are attached hereto and made a part hereof.
Exhibit Description
Exhibit A Legal Description
Exhibit B Demised Premises
Exhibit C Building Rules and
Regulations
Exhibit D Improvements
SUBMISSION:
40. Submission of this instrument to Lessee or proposed Lessee or his
agents or attorneys for examination, review, consideration or signature does
not constitute or imply an offer to lease, reservation of space, or option to
lease, and this instrument shall have no binding legal effect until execution
hereof by both Lessor/Owner and Lessee or its agents.
REPRESENTATION:
41. It is agreed and understood that Mr. Jonathan R. Yanta and Mr. Jason J.
Meyer, agent or broker with United Properties Brokerage Company, are Plymouth
Ponds Development II, LLC , Lessor in this transaction. Lessor holds Lessee
harmless from all commissions due United properties Brokerage Company as a
result of this Lease.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have caused these presents to be
executed in form and manner sufficient to bind them at law, as of the day and
year first above written.
Lessee Lessor:
PLYMOUTH PONDS DEVELOPMENT, LLC
a Minnesota limited liability company
By: /s/ Ronald B. Thomas By: /s/ Bradley L. Moen
Its: President Its: Governor
STATE OF MINNESOTA
COUNTY OF HENNEPIN ss:
on this 30TH day of March, 1999, personally came before me, a Notary Public
within and for said County, Ronald B. Thomas, to me well known to be the same
persons described in and who executed the foregoing instrument, and
acknowledged that they executed the same as their free act and deed.
/s/ Mark Shulstad
Notary Public
My commission expires:January 31, 2000
STATE OF MINNESOTA
COUNTY OF HENNEPIN ss:
on this 30TH day of March, 1999, personally came before me, a Notary Public
within and for said County, Bradley L. Moen, to me well known to be the same
persons described in and who executed the foregoing instrument, and
acknowledged that they executed the same as their free act and deed.
/s/ Mark Shulstad
Notary Public
My commission expires:January 31, 2000
<PAGE>
LEASE ADDENDUM
This Indenture of Lease, dated this 30th day of March, 1999, by and between
Plymouth Ponds Development II, LLC, a Minnesota limited liability company,
hereinafter referred to as "Lessor", and Astrocom Corporation, hereinafter
referred to as "Lessee".
The purpose of this addendum is to add or make changes to the existing lease
for the following agreements:
BASE RENT:
42. Term Rates psf N.N.N. Annual Net Rents Monthly Net Rents
Years 1 - 5 $ 9.20 $88,982.40 $7,415.20
WAREHOUSE ACCESS:
43. Landlord shall provide and permit Lessee access to the warehouse
area adjacent to the Demised Premises during normal business hours to allow
storage of garbage and recycling dumpsters in designated area of said
warehouse area, permit Lessee use of and access to the loading docks in said
warehouse area, and permit Lessee access to the phone room in said warehouse
area.
IMPROVEMENTS:
44. Landlord shall provide up to but not to exceed $22,990.00 in Tenant
Improvements.
By signing below, both parties agree to the above referenced terms and
conditions.
LESSEE LESSOR
ASTROCOM CORPORATION PLYMOUTH PONDS DEVELOPMENT II, LLC
A Minnesota Corporation a Minnesota limited liability company
By: /S/ Ronald B. Thomas By: /s/ Bradley L. Moen
Its: President Its: Governor
Date: March 30, 1999 Date: March 30, 1999
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
Lot 1, Block 2
Plymouth Ponds Business Park
<PAGE>
EXHIBIT B
DEMISED PREMISES
3500 Holly Lane North, Suite #60
Hennepin County, Plymouth, MN
See Original for details
<PAGE>
EXHIBIT C
BUILDING RULES AND REGULATIONS
1. Any sign, lettering, picture, notice or advertisement installed on or in
any part of the premises and visible from any exterior or interior common area
of the Complex or from the exterior of the Premises, shall be installed at
Lessee's sole cost and expense, and in such manner, character and style as
Lessor may approve in writing. Anything herein to the contrary
notwithstanding, approval as to signs shall be subject to Lessor's approval
which may be withheld in Lessor's sole discretion. In the event of a
violation of the foregoing by Lessee, Lessor may remove the same without any
liability and may charge the expense incurred by such removal to Lessee.
2 The Real Estate Tax payable is allocated according to the square footage
leased as compared to the total building square footage.
3 Lessee, its employees, customers, invitees and guests shall not obstruct
sidewalks, entrances, passages, corridors, vestibules, halls, or stairways in
and about the Complex which are used in common with other tenants and their
employees, customers, guests and invitees, and which are not a part of the
Premises of Lessee. Lessee shall not place objects against glass partitions
or doors or windows which would be unsightly from the Complex corridors or
from the exterior of the Complex and will promptly remove any such objects
upon notice from Lessor.
4 Lessee shall not make excessive noises, cause disturbances or
vibrations, use or operate any electrical or mechanical devices that emit
excessive sound or other waves, disturbances or create obnoxious odors, nor
operate any device/equipment for radio/television broadcasting or reception
from or within the Complex or elsewhere and shall not place or install any
projections, antennas, aerials or similar devices inside or outside the
Premises or on the Complex.
5 Lessee shall not waste electricity, water or air conditioning furnished
by Lessor, if any, and shall cooperate fully with Lessor to ensure the most
effective operation of the Complex's heating and air conditioning systems.
6 Lessee assumes full responsibility for protecting its space from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed and secured after normal business hours.
7 In no event shall Lessee bring into the Complex flammables, such as
gasoline, kerosene, naphtha, benzene, explosives or any other article of
intrinsically dangerous nature. If, by reason of the failure of Lessee to
comply with the provisions of this subparagraph, any insurance premium for all
or any part of the Complex shall at any time be increased, Lessee shall make
immediate payment of the whole of the increased insurance premium, without
waiver of any of Lessor's other rights at law or in equity for Lessee's breach
of this lease.
8 Lessee shall comply with all applicable federal, state and municipal
laws, ordinances and regulations, and building rules and shall not directly or
indirectly make any use of the Premises which may be prohibited by any of the
foregoing or which may be dangerous to persons or property or may increase the
cost of insurance or require additional insurance coverage.
9 Lessor shall have the right to prohibit any advertising by Lessee which
in Lessor's reasonable opinion tends to impair the reputation of the Complex
or its desirability as a building complex for office/warehouse use, and upon
written notice from Lessor, Lessee shall refrain from or discontinue such
advertising.
10 The Premises shall not be used for cooking (as opposed to heating of
food), lodging, sleeping or for any immoral or illegal purpose.
11 Unless expressly permitted by Lessor, no additional locks or similar
devices shall be attached to any door or window and no keys other than those
provided by Lessor shall be made for any door. If more than two keys for one
lock are desired by Lessee, Lessor may provide the same upon payment by
Lessee. Upon termination of this Lease or of Lessee's possession, Lessee
shall surrender all keys of the Premises and shall explain to Lessor all
combination locks on safes, cabinets and vaults.
12 Any carpeting cemented down shall be installed with a releasable
adhesive. In the event of a violation of the foregoing by Lessee, Lessor
may charge the expense incurred by removal to Lessee.
13 The restrooms, drinking fountains and other plumbing fixtures shall not
be used for any purpose other than those for which they are constructed, and
no sweepings, rubbish, rags, coffee grounds or other substances shall be
thrown therein. All damages resulting from any misuse of the fixtures shall
be borne by Lessee who, or whose employees, agents, visitors or licensees have
caused same. No person shall waste water by interfering or tampering with the
faucets or otherwise.
14 Lessee shall not overload any utilities serving the Premises.
15 No dog or other animal shall be allowed in the Complex.
16 All loading/unloading, receiving/delivery of goods/supplies or disposal
of garbage/refuse shall be made only through entryways provided for such
purposes. Lessee shall be responsible for any damage to the Complex or the
property of its employees or others and injuries sustained by any person
whomsoever resulting from the use or moving of such articles in or out of the
Premises, and shall make all repairs and improvements required by Lessor or
governmental authorities in connection with the use or moving of such
articles.
17 All safes, equipment or other heavy articles shall only be used by
Lessee in a manner which will not interfere with or cause damage to the
Premises or the Complex in which they are located, or to the other tenants or
occupants of said Complex. Lessee shall be responsible for any damage to the
building or the property of its employees or others and injuries sustained by
any person whomsoever resulting from the use or moving of such articles in or
out of the Premises, and shall make all repairs and improvements required by
Lessor or governmental authorities in connection with the use or moving of
such articles.
18 Canvassing, soliciting, and peddling in or about the Complex is
prohibited and each Lessee shall cooperate to prevent the same.
19 Wherever in these Building Rules and Regulations the word "Lessee"
occurs, it is understood and agreed that it shall mean Lessee's associates,
employees, agents, clerks, invitees, and visitors. Wherever the word "Lessor"
occurs, it is understood and agreed that it shall mean Lessor's assigns,
agents, clerks, and visitors.
20 Lessor shall have the right to enter upon the Premises at all
reasonable hours for the purpose of inspecting the same.
21 Lessor shall have the right to enter the Premises at hours convenient
to Lessee for the purpose of exhibiting the same to prospective tenants.
22 Lessee, its employees, customers, invitees and guests shall, when using
the parking facilities in and around the Complex, observe and obey all signs
regarding fire lanes and no parking zones, and when parking always park
between the designated lines. Lessor reserves the right to tow away, at the
expense of the owner, any vehicle which is improperly parked or parked in a no
parking zone. All vehicles shall be parked at the sole risk of the owner, and
Lessor assumes no responsibility for any damage to or loss of vehicles. No
vehicles shall be parked overnight.
23 In case of invasion, mob, riot, public excitement, or other commotion,
Lessor reserves the right to prevent access to the Complex during the
continuance of the same by closing the doors or otherwise, for the safety of
the tenants or the protection of the Complex and the property therein. Lessor
shall in no case be liable for damages resulting from any error or action
taken with regard to the admission to or exclusion from the Complex of any
person.
24 All entrance doors to the Premises shall be locked when the Premises
are not in use. All common corridor doors, if any, shall also be closed
during times when the air conditioning equipment in the Complex is operating
so as not to dissipate the effectiveness of the system or place an overload
thereon.
25 Lessee shall be responsible for all repair, maintenance and replacement
of mechanical systems and devices directly associated with Lessee's demised
premises, including, but not limited to, heating and air conditioning
equipment, water heaters, exhaust fans, plumbing and electrical. Lessor must
be advised of any such repair, etc. and must approve of any such repair.
26 Alterations of any nature to the demised premises by Lessee shall
require written approval of Lessor. Such approval shall be at the sole
discretion of Lessor. In the event of a violation of the foregoing by Lessee,
Lessor may remove the same without any liability and may charge the expense
incurred by such removal to Lessee.
27 No awning or other projection shall be attached to the outside walls of
the Complex. No curtains, blinds, shades or screens visible from the exterior
or interior common area of the Complex or visible from the exterior of the
Premises, shall be attached to, hung in, or used in connection with any window
or door of the Premises without the prior written consent of Lessor. Such
curtains, blinds, shades, screens or other fixtures must be of a quality,
type, design and color, and attached in manner approved by Lessor.
28 Lessee and Lessee's employees, agents, visitors and licensees shall
observe faithfully and comply strictly with the foregoing rules and
regulations and such other and further appropriate rules and regulations as
Lessor or Lessor's agent may from time to time adopt. Reasonable notice of
any additional rules and regulations shall be given in such manner as Lessor
may reasonably elect.
29 Lessor reserves the right at any time to rescind, alter or waive, in
whole or in part, any of these Rules and Regulations when deemed necessary,
desirable, or proper, in Lessor's judgment, for its best interest or for the
best interest of the tenants of the Complex. Lessee reserves the right to
refuse compliance with any subsequent additional rules and regulations added
to those agreed to at the time of signing the lease.
<PAGE>
EXHIBIT D
PLYMOUTH PONDS BUILDING
I. BUILDING STANDARD TENANT LEASE FINISH
A. DEMISING PARTITION OFFICE, WAREHOUSE SEPARATION WALL, AND TOILET WALL
PARTITION:
Shall be 5/8" fire rated gypsum wallboard on 3-5/8" metal studs to underside
of deck. Gypsum wallboard interior face to office and toilet rooms shall be
taped, bedded and sanded to accept scheduled wall finish. Gypsum wallboard
interior to warehouse shall not be taped.
B. INTERIOR PARTITIONS:
Shall be 5/8" fire rated gypsum wallboard on 3-5/8" metal studs to the
underside of suspended ceiling grid at 9' 6" above finished floor. Gypsum
wallboard is taped, bedded and sanded to accept scheduled wall finish. Gypsum
wallboard applications to the inside face of the exterior wall, in office
areas only, shall extend to 9' 6" above finish floor, applied to metal furring
strips and be taped, bedded and sanded to accept scheduled wall finish.
C. FLOOR COVERING:
Shall be selected from either 30-32 oz. cut pile nylon or 22-26 oz. level loop
nylon in building standard colors in office areas. Carpet shall be directly
glued down on concrete floor slab. Carpet base shall be 4" carpet base in
building standard color. Warehouse area concrete floor slabs have been sealed
at the time of installation with curing sealer.
D. CEILING HEIGHTS / CEILING SUSPENSION SYSTEM AND ACOUSTICAL CEILING
TILE:
Shall be 24" x 48" second-look revealed edge lay-in panel ceiling tile in
15/16" exposed white suspended steel grid at 9' 6" clear height in office
area. The warehouse ceiling is exposed structure, unpainted, at 24' average
clear height to bottom of bar joists.
E. WALL FINISHES:
Two coats of scrubbable flat latex wall paint on office walls in building
standard paint manufacturers' colors, including 20% wall covering.
F. INTERIOR DOORS:
Shall be 3' 0" x 8' 0" x 1-3/8" steel frame doors. Sidelights are optional at
additional cost.
G. RESTROOMS:
Shall consist of two toilet room facilities including all plumbing fixtures to
code, exhaust fan and hot water heater. Walls will be painted gypsum board
with ceramic tile to 4' 0" above finish floor on fixture wall only and ceramic
base throughout. Ceramic tile floor and base shall be provided in toilet
rooms and shared corridor space. Toilet room ceiling will be 2' x 4'
acoustical ceiling tile. Toilet accessories will include a toilet paper
holder and metal toilet partitions (when necessary). All toilet rooms will be
handicap accessible.
H. MECHANICAL:
Gas-fired roof top heating/air conditioning units for office area, metered to
each tenant with controls in tenant space. Sized for 1 ton air conditioning
load for 450 square feet of office area. Warehouse space heating shall be
sized for the average of 40 BTU per square foot, (assuming the presence of 1
rolling overhead exterior door in warehouse space).
I. PLUMBING:
Toilet room fixtures shall consist of a white porcelain handicap accessible
floormount toilet, a white porcelain lavatory and electric hot water heater
sized to service restroom requirements. A white porcelain handicap accessible
drinking fountain will be provided. A commodity wall hung janitor sink will
be provided, recessed behind doors when necessary.
J. FIRE PROTECTION:
Wet pipe sprinkler system and fire protection controls are installed in
building shell as per regulatory codes. One semirecessed head per 225 square
feet in the office area and one head per 130 square feet in the warehouse area
will be provided. Head relocation, if required by tenant plan, is done under
tenant lease finish cost.
K. ELECTRICAL SERVICE:
Shall consist of 2500 amp 277/480 volt, 3-phase service, amp service complete
with distribution panel and circuit breakers for only equipment provided.
L. ELECTRICAL RECEPTACLES:
Shall be duplex receptacles providing one receptacle per 150 square feet of
office space and one duplex receptacle in warehouse located at panel. One
light switch will be provided per 200 square feet of office. Two switches
allowed per warehouse space. All receptacle and switchplate covers shall be
ivory color.
M. TELEPHONE:
One 4' x 4' plywood telephone board for mounting equipment by others will be
provided. Empty conduit through walls to empty box, one telephone outlet will
be provided per 200 square feet of office area, located to accommodate
tenant's own telephone installation. NO phone cable or equipment will be
provided or installed by Landlord. Any communication or computer cable must
be fire rated for installation in the air plenum ceiling.
N. LIGHT FIXTURES:
Shall be 2' x 4' recessed fluorescent parabolic light fixtures. One fixture
shall be provided per eighty (80) square feet of rentable office area.
Twenty-five (25) 30-foot candles of light provided in warehouse. The lighting
will be 8' fluorescent strip fixtures.
II. IMPROVEMENTS PROVIDED AT LESSEE'S EXPENSE
All improvements constructed to the Premises that are in addition to the
tenant improvements listed in this Exhibit shall be approved by Lessor and the
cost thereof shall be paid by Lessee.
III. DESIGN OF TENANT IMPROVEMENTS
Lessee shall retain the services of Lessor's architect for the purposes of
office and warehouse layouts to prepare the necessary drawings including
without limitation, Basic Plans and Final Plans (Lessee's Plans) for
construction of Lessee improvements. All Lessee's Plans shall be subject to
approval of Lessor.
