HomeMy WebLinkAbout4H - Dance Studio Lease
AGENDA #:
PREPARED BY:
SUBJECT:
DATE:
BACKGROUND:
DISCUSSION:
~~ BOYLES, CITY MANAGE~ J( \
CONSIDER APPROVAL OF DANC STUDIO LEASE
AGREEMENT WITH PRIORDALE L
AUGUST 21, 1995
At the lune 19, 1995 meeting the City Council authorized the staff to
negotiate a lease for the Priordale Mall Dance Studio. After hearing
comments from concerned individuals the Council directed that the staff
enter into negotiations for a new one year lease with a the six month out-
clause with Priordale, Ltd., and specifically directed the staff to insist
that maintenance issues with regard to the leaky roof, outside lighting,
and water fountain be corrected before signing the lease. This agenda
item addresses this issue.
Bret Woodson and I met on two occasions with Neil Boderman
representing Blue Star Associates, a general partnership which owns the
Priordale Mall. The purpose of the meeting was to revise the lease in a
fashion that would make it acceptable to all parties and be responsive to
the Council's direction. In addition, City Attorney Kessel provided a
multi-page letter suggesting amendments to the lease agreement which
would be beneficial to the City (copy attached).
The principal changes in the new lease include:
1. Article 1, Section 2 - The term of the new lease is 3 rather than 4
years, commencing on September I, 1995 and running through
August 31, 1998.
2. Article 2, Section 3 - Payments by the City which are later than 30
days are charged at a 6% rather than a 10% per annum interest rate.
3. Article 3, Section 7 - Provides a maximum of 60 days rather than
an unlimited period of time for the landlord to notify the City
whether additional costs are due under the terms of the agreement.
4. Article 6, Section 6 - If the landlord does not fulfill his obligations
under the lease then the City may do so and set off such costs
against its lease payment. If an air conditioner or heating unit must
be replaced within the leased period, then the landlord must replace
the equipment and prorate its cost over the useful life, rather than
attempting to recover all costs from the City during the lease period.
DANLEAS.DOC
16200 Eagle Creek Ave., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORnJNTlY EMPLOYER
ISSUES:
AL TERNA TIVES:
DANLEAS.DOC
5. Article 10, Section 2 Either the City or the landlord may
terminate the lease in the event of major damage to the space.
Previously, only the landlord could do so.
6. Article 7, Section 1 - The City may assign the lease, should it
desire, as long as the assignee's usage meets the criteria for the
shopping center use and the zoning ordinance.
7. Article 14, Section 6 - The lease may be terminated by the tenant if
the landlord is in default under the conditions of the lease and has
been given 30 days written notice to cure his default and fails to do
so within an additional 30 days.
8. The per square footage rent including estimated taxes, insurance and
the common area costs increase from $8.17 per square foot in the
existing contract to $8.42 in the new contract. The square foot rate
increases to $8.75 in the second year of the lease, and to $9.00 in the
last year of the lease. Taken together, the lease increase is 10.2
percent over its 3 year period.
Residents raised concerns about leaky roofs at the Priordale Mall. The
landlord contends that the problem has to do with condensation in the air
conditioning units which did not drain but dropped to the floor because
the filters were not adequately changed and the units not regularly
cleaned which is a City responsibility. Our maintenance crews see it
differently. In an effort to assure that such maintenance takes place on
an ongoing basis, we have agreed that the City will contract with the
same vendor the landlord uses to maintain and inspect this equipment
every 60 days.
A second intended improvement is to replace the ceiling tiles which are
stained by water as a result of the foregoing problem.
As a third step in improving the facility we will be installing a vinyl
covered wooden floor which will provide a better surface. The floor is
removable in order that it can be relocated to a new site, should we
decide to do so in the future.
Because we are renting the same size facility there is not a reasonable
opportunity to improve the waiting area. This is unfortunate, but I
believe our prime focus must be to provide a reasonable dance studio.
We agreed with Mr. Boderman to work to identify where additional
exterior lighting might be appropriate. He indicated a willingness to
install wall style lighting if it did not constitute a "major expense." We
also will be working on an ongoing basis to improve regular cleaning of
the facility, which is the City's responsibility, as is the water fountain.
1. Approve the lease as presented.
2. Direct additional changes in the lease. Direct the staff to pursue
such changes with the property owner.
RECOMMENDATIONS: Alternative Number 1. I believe that the revisions which have been
incorporated in the new lease are responsive to some of the major
concerns which both the landlord and city have. The initiation of
regularized heating and air conditioning inspection and cleaning will
allow the park maintenance department to focus on their primary duties
and minimize future potential for water leakage and loss of heating and
air conditioning capabilities. The improvements to the structure should
entail minimum costs and improve the look and utility of the building.
Over the next three years we will have a better opportunity to evaluate
whether this program should continue to be offered here, moved, or
discontinued.
FISCAL IMPACT: The lease costs as contained in the agreement are incorporated into the
1996 Recreation Fund budget.
ACTION REQUIRED: Motion and second as part of the consent agenda to approve the
proposed lease agreement and authorize the Mayor and City Manager to
execute the document.
DANLEAS.OOC
LOMMEN
----;-. -r . ,'- --'<\ -
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Lommen. Nelson. Cole & StagebelX. P. A.
Grandview Professional Building, Suite 210
400 South Second Street
Hudson, Wisconsin 540 t 6
1800 IDS Center
80 South Eighth Street
Minneapolis. Minnesota 55402
LAW FIRM
(612) 339-8131
Minnesota W A TS (800) 752-4297
FAX (612) 339-8064
Glenn R. Kessel
Attorney at Law
(715) ]86-8217
Twin City Line (612) 436-8085
FAX (715) 386-8219
Minneapolis Office
Internet Address: GLENN@EMAIL.LOMMEN.COM
(612) 336-9338
\
June 29, 1995
Mr. Frank Boyles, City Manager
City of Prior Lake
16200 Eagle Creek Avenue S. E.
Prior Lake, MN 55372
Re: Dance Studio
Dear Frank:
I have reviewed the existing lease between the City of Prior Lake and Priordale Mall
Investors Limited Partnership dated August 5, 1991. I have the following recommendations
and comments concerning a renegotiated lease:
1. Section 3 of Article II provides for an interest payment of 10% per annum or
the highest rate permitted by law, whichever is less, in the event the City is late in its rental
payments by more than 30 days. I would assume that the City has been prompt in its
payment of rent. Therefore, I would recommend that that interest rate be reduced to
something more reasonable such as 6%.
2. I would .assume that parking near the dance studio is important. Therefore, I
would recommend a change in Section 1 of Article ill which currently allows the Landlord to
have the unrestricted right to change the parking area, driveways, etc.
3. Tenant's share of certain common area expenses as spelled out in Section 4,
Article III is calculated to be 3.46% wh~reas in Section 5, the Tenant's proportionate share is
calculated to be 3.84 % . Those two numbers should be consistent as they. are both based on
the net rentable area of the leased premises to the total net rentable area of the entire
shopping center. While the management fees are capped at 5 % of the gross rents excluding
the common area, real estate taxes and insurance expense, it might be a good idea to have a
covenant within the lease that the Landlord will use all reasonable efforts to keep costs
associated with its management fee to a minimum.
Lommen, Nelson, Cole & Stageberg, P.A.
Mr. Frank Boyles, City Manager
June 29, 1995
Page 2
4. I am always concerned with a provision as found in Section 6 of Article III
which permits the Landlord to include in the operating expense amortized capital
improvement costs. Although those capital improvement costs can only be included in the
operating expenses if they improve the operating efficiency of the shopping center or reduce
the operating expenses, it would be difficult to dispute those Landlord decisions. It would be
better if we could get that section deleted.
5. I would recommend that we specify a time period at the end of each lease year
in which the Landlord should give the written notice of the actual operating costs as set forth
in Section 7, Article III rather than within "a reasonable period of time". A 60 day time
period would seem appropriate. It also might be appropriate to require the Landlord to
refund excessive operating costs collected with interest at a certain rate in the event the
Landlord has consistently overestimated operating costs during the previous term of the lease.
6. There is a typographical error in Section 2 of Article IV. The" delivery of
pickup" should be changed to "delivery or pickup". Also, since the City intends to use the
leased space for dance lessons, etc., the provision prohibiting the Tenant from permitting any
blinking or flashing light to emit from Tenant's leased premises might need to be deleted.
7. In Article V, Section 3, the Landlord is required to furnish heat, ventilation
and cooling equipment in good mechanical condition and operating order at the beginning of
the lease: However, Article VI, Section 3 requires the Tenant to repair, replace or improve
any equipment in the leased premises including air conditioning equipment. It is my
understanding that the air conditioning equipment is located within the leased premises. I
would recommend that these provisions be changed to require that the Landlord make any
changes, repairs, improvements as required by the 1990 Amendments to the Clean Air Act
which bans CFC's which become effective on December 31, 1995. Any repair or
replacement of a cooling system after that date is going to be very expensive.
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8. The words "or by reason of anyone illegally entering upon the premises" at the
end of Section 1,. Article VI should be deleted.
9. It is my understanding, that the City has been experiencing problems with the
leased premises and certain common areas of the property as a result of a leaking roof which
has not been repaired by the Landlord. I would recommend that a clause be added that in
the event the Landlord does not repair or maintain its obligations as specified in Section 1
and 2 of Article VI, that the Tenant would have the right to do so and then be able to set off
against lease payment obligations for such maintenance or repairs. Also, in Article VI, I
Lommen, Nelson, Cole & Stageberg, P.A.
Mr. Frank Boyles, City Manager
June 29, 1995
Page 3
would recommend that a provision be included that if expensive equipment such as air
conditioning units within the leased premises fail towards the end of the lease and the City
would have no intention to renew, that the replacement of such expensive equipment be pro-
rated over the useful life of the new equipment.
10. Tenant's obligation to replace broken glass as set forth in Articie VI, SectIon 4
should not cover glass broken as a result of Landlord or Landlord's agent's negligence.
11. The third sentence of Section 1, Article VII should be deleted since this is a
lease renewal, that provision is not applicable. Also, the last portion of the last sentence of
that Section should be deleted. The Landlord shouldn't have to require that workmen be
union workmen.
12. If Tenant will have the right to make repairs or maintain the property required
to be maintained or repaired by the Landlord, then the first sentence of Section 4, Article VII
should be changed. Also, that Section should add the language after Landlord's written
consent, "which consent shall not be unreasonably withheld. " In addition, Tenant should be
allowed to make reasonable emergency repairs to the leased premises without the written
consent of Landlord. You might also want the right to make alterations to the premises
without the Landlord's consent where those alterations would not have a material adverse
effect on any structure or building system or future use of the leased premises by another
Tenant.
13. In Article X, Section 2, we may want to have a provision that will allow the
Tenant to terminate the lease if the premises is reasonably anticipated to be untenantable for
a significant period of time. This is merely a reciprocal right to Landlord's right to
terminate.
14. In Article XII, Section 1, we should have the right to assignment of the lease
to another credit-worthy entity and then have no future obligations under the lease.
15. Since the Landlord hasn't been making repairs to the roof during the initial
term of the lease, perhaps Section 6 of Article XIV should have a time certain period
specified in which the Landlord would be required to cure its maintenance defaults. Absence
such a cure, we should have the right to fix and set-off against future rents, or terminate the
lease.
16. If at all possible, I would recommend that Section 7 of Article XIV be deleted.
Lommen, Nelson, Cole & Stageberg, P.A.
Mr. Frank Boyles, City Manager
June 29, 1995
Page 4
.,
, ;
17. Your attention is directed to Section 2 of Article XV. If a new lease is not
signed effective September 1, 1995 and the City remains in possession, then you would be
obligated for 125 % of the minimum rent. It might be advisable to not have that provision
apply during the period of time that both parties are negotiating to renew the lease in good
faith. Again, the 10% interest rate in Section 3 of Article XV seems high. The Article XVI
subordination clause should. make it clear that any subordination should recognize the
Tenant's right of non-disturbance as well as require that any successors to Landlord by
assignment, sale or foreclosure contain a reciprocal right of Tenant to continue to enforce the
lease against those successors.
18. I don't know if the Article XX "Merchants' Association" membership
requirement should apply to the City. Perhaps this Article should be deleted altogether.
19.
deleted.
I would recommend that the last sentence of Section 5 of Article XXI be
20. I would recommend that intentional or willful acts be excluded from the
personal liability exception as found in Section 13 on page 19.
21. Finally, we might want to make some changes to Section 4, Article XXIV. I
would recommend that Landlord warrant that the common areas in the leased premises
comply with .all, legal requirements, including the Americans With Disabilities Act and the
obligations of the Clean Air Act Amendments of 1990 with respect to the CFC's and air
conditioning equipment as well as warranties with respect to ~V AC, plumbing, electrical and
life safety systems in the common area.
Please give me a call should you have any questions regarding these comments or
recommendations .
Very truly yours,
"
I
\~,EN, NE~ON, COLE & STAGEBERG, P.A.
m~ .\~
Glenn R. Kessel
GRK:dh
LEASE
TInS LEASE, entered into as of the .1!Jt day of August.. 1995, by and between Priordale
Mall Investors Limited Partnership, a Minnesota limited partnership, by Blue Star Associates, a
Minnesota general partnership, General Partner, 7301 Ohms Lane, Edina, Minnesota 55435,
hereinafter called corporation, "Landlord", and the City of Prior Lake, a Minnesota municipal
corporation, 16200 Eagle Creek Avenue, S.E., Prior Lake, Minnesota 55372, hereinafter called
"Tenant" .
ARTICLE I
PREMISES AND TERM
Section 1. landlord hereby leases to tenant, and tenant hereby leases from landlord, the
dance studio shown outlined in red on Exhibit A attached hereto and made a part hereof. (The
premises outlined in red are hereafter called the "leased premises" and contain approximately
2,694 square feet.) Said dance studio is situated at Priordale Mall Shopping Center. 16760
Toronto Avenue. City of Prior Lake, County of Scott, State of Minnesota, which shopping center
is located on land legally descnoed in Exhibit B attached hereto and made apart hereof. The
shopping center name is subject to change by Landlord.
Section 2. To have and to hold the leased premises unto Tenant for a term of three years
commencing on the 1st day of September, 1995, and ending on the 31st day of August, 1998,
unless sooner terminated as hereinafter provided.
ARTICLE II
MINIMUM RENT
Section 1. The fixed annual minimum rent shall be payable by Tenant in equal monthly
installments, on or before the first day of each month in advance, at the office of Landlord or at
such other place designated by Landlord without prior demand therefore. Said fixed annual
minimum rent during the term of this Lease shall be as set forth on Exhibit C attached hereto and
made a part hereof: The first full month's rent shall be paid at the time of execution of this Lease.
Minimum rent for any partial month at the beginning of the Lease term shall be equitably prorated,
and is payable on the commencement date of the Lease term.
Section 2. Tenant shall have the right of setoff against any present or future rent payment
obligations in the event of a material breach of Landlord' s covenants contained in this agreement.
Section 3. All rental and other sums payable hereunder by Tenant which are not paid
within 30 days after the due date shall bear interest from the date due to the date paid at the rate
of 6% per annum or the highest rate permitted by law, whichever is less.
LEASE9'.DOC
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ARTICLE ill
COMMON AREAS
Section 1. The term "common areas" shall mean all that portion of shopping center
improvements excepting only that area which is constructed for lease to tenants or hereafter
leased to tenants. Landlord has made no representation as to identity, type, size or number of
other stores or tenancies in the shopping center, and Landlord reserves the unrestricted right to
change the building perimeters, driveways, parking areas, store sizes and identity and type of
other stores or tenancies and add buildings and other structures, provided only that the size of the
leased premises, reasonable access to the leased premises and minimum parking facilities as
required by governmental authorities having jurisdiction shall not be substantially or materially
impaired subject to the provisions of Article XI hereof.
Section 2. Landlord grants to Tenant, its employees, customers and invitees, the
nonexclusive right during the tenn of this Lease to use the common areas from time to time
constructed, such use to be common with Landlord and all tenants of Landlord, its and their
employees, customers and invitees. Tenant shall not at any time interfere with the rights of
Landlord and other tenants, its and their employees, customers and invitees, to use any part of the
common areas. It is understood and agreed that Landlord may contract for mutual easement
rights with adjoining landowners who shall thereafter, along with their employees, customers and
invitees, use the common areas in common with Landlord, Tenant and all tenants of Landlord, and
their employees, customers and invitees, to the extent of the adjoining landowners contract rights.
Section 3. Landlord agrees to manage, operate and maintain all common areas and
common facilities within the common areas of the shopping center. The manner in which such
areas and facilities shall be maintained and the expenditures therefore shall be at the sole
discretion of Landlord, who shall have the right to adopt and promulgate reasonable
nondiscriminatory rules and regulations, from time to time, including the right to designate
parking areas for the use of employees of tenants of the shopping center and to restrict such
employees from parking areas designated exclusively for customers. Upon reasonable request by
Landlord, Tenant shall furnish a complete list of the names of Tenant's employees at the leased
premises who have automobiles and of the license numbers of their automobiles and the license
number of all motor vehicles operated by Tenant. Landlord shall have the right to use portions of
the common areas for the purpose of displays, promotions, programs, games or other uses which
may be of interest to all or part of the general public. Landlord shall have the right to close
portions of the common areas from time to time for repairs, to prevent accruing of public rights
therein and for any other legitimate purpose.
Section 4. Tenant agrees to pay as additional rent Tenant's proportionate share ofall
common area expenditures calculated by Landlord including, but not limited to, the cost of
managing the property at a management fee at competitive rates (not to exceed 5% of gross rents
excluding common area, real estate taxes and insurance expense), repairing, insuring (both the
common areas and common area maintenance employees), operating, securing, traffic regulating,
lighting, cleaning, snow removal, line painting and maintenance, including such replacement of
paving, curbs, sidewalks, landscaping, drainage and lighting of the shoppipg center constituting
LEASE9'.DOC
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exterior common areas, in monthly payments with the monthly rent payments. Tenant's
proportionate share of such costs shall at all times be computed as the percentage which the net
rentable area of the leased premises bears to the net rentable area of the entire premises. Tenant's
proportionate share of total operating costs is 3.46%. The net rentable area of the leased premises
is 2,694 square feet, and the net rentable area of the entire leased premises is 77,797 square feet.
The rentable area of the leased space and the shopping center shall be calculated in accordance
with the standard methods of floor measurement adopted by the Building Owners and Managers
Association. There shall be excluded from operating costs: interest and principal payment on
mortgages, depreciation on real property and other costs required to be capitalized for federal
income tax purposes.
Section S. Tenant agrees to pay as additional rent Tenant's proportionate share of the
cost of heating, air conditioning, lighting, insuring and maintaining the shopping center enclosed
mall and/or walkway areas (both the common areas and common area maintenance employees), in
monthly payments with the monthly rent payments. Tenant's proportionate share of such costs
shall be 3.84% (which costs are again determined based on the net rentable area of the leased
premises to the net rentable area of the entire premises in the shopping center).
Section 6. For the purpose of this Lease, the costs set forth in Sections 4 and 5 above
shall be deemed to include costs of capital improvements made to the shopping center subsequent
to the commencement date of this Lease, providing that the costs to the City are not increased,
which will improve the operating efficiency of the shopping center, or reduce its operating
expenses, which costs will be amortized to the extent that operating costs are thereby reduced.
" ~
Section 7. The monthly payments described in Sections 4 and 5 above may be based on
Landlord's reasonable estimate of the costs subject hereto made at the beginning of each Lease
year. At the end of each Lease year, Landlord shall, within 60 days, give written notice to
Tenant, which notice shall contain or be accompanied by a statement of the actual operating costs
of Landlord's operation of the premises during such calendar year, compared to estimated
operating costs, certified to be correct by an officer or partner of Landlord. If the aggregate of
monthly installments of operating costs actually paid by Tenant to Landlord during such Lease
- year differs from the amount of operating costs payable for such Lease year, Tenant shall payor
Landlord shall refund the difference, as the case may be, with interest, within 30 days after the
date of delivery of the statement. Tenant, upon Tenant's written request, shall be allowed to
examine the books and records of Landlord used by it to determine the annual operating costs of
the shopping center and Tenant's proportionate share of such costs. If Landlord and Tenant
disagree on the accuracy of such costs as set forth in the statement, Tenant shall nevertheless
make payment in accordance with any notice given by Landlord, but the disagreement shall
immediately be referred by Landlord for prompt decision by a mutually acceptable public
accountant, architect, insurance broker or other professional consultant who shall be deemed to
be acting as expert(s) and not arbitrator(s), and a determination signed by the selected expert(s)
shall be final and binding on both Landlord and Tenant. Any adjustment required to any previous
payment made by Tenant or Landlord by reason of any such decision shall be made within 14 days
thereot: and the party required to make payment under such adjustment shall bear all costs of the
"'
LEASE9'.DOC
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expert( s) making such operating costs that were the subject of the disagreement, in which case
Tenant shall bear all such costs.
ARTICLE IV
USE
Section 1. The Leased premises may be used only for a dance studio (subject always to the
provisions of Section 2 of this article) and for no other purpose without the written consent of
Landlord. Tenant agrees to conduct its business at all times good faith and in a reputable manner.
Section 2. Tenant shall not, without Landlord's prior written consent, conduct any
auction, fire, closing-out or bankruptcy sales in or about the leased premises nor obstruct the
common areas or use the same for business or display purposes, nor abuse walls, ceilings,
partitions, floors, wood, stone, iron work; nor use plumbing for any purpose other than that for
which constructed; nor make or permit any noise or odor objectionable to the public, to other
occupants of the building or the Landlord to emit from the leased premises; nor create, maintain
or permit a nuisance thereon; nor do nay act tending to injure the reputation of the shopping
center; nor use or permit to be used other entrances for delivery or pickup of merchandise or
supplies to or from the leased premises, or permit trucks or other delivery vehicles while being
used for nay such purpose to be parked at any place within the shopping center except such
facilities as are specifically provided for such purpose.
Tenant shall keep the leased premises and loading platform areas allowed for the use of
Tenant clean and free fro rubbish and dirt at all times, and shall store all trash and garbage within
the leased premises and will make the same available for the regular pickup which Tenant will
arrange at the Tenant's expense ifnot supplied by the center. Tenant shall not bum any trash or
garbage at any time in or about the shopping center.
Section 3. Tenant shall conduct its business in the leased premises during the regular
customary days and hours for such type of business in the city or trade area in which the shopping
center is located.
Section 4. Landlord reserves the right, without liability to Tenant, to refuse admission to
the shopping center and the leased premises outside ordinary business hours to any person not
known to any watchman in charge, or properly identified, to eject any person from the shopping
center whose conduct may tend to be harmful to the safety and interest of shopping center tenants
or to close any part of the shopping center during any riot or other commotion where persons or
property may be imperiled.
Section 5. Tenant shall use the shopping center name as its advertised address when
referring to its business in the leased premises in newspaper and other advertising. The right to
use such name for such purpose for the tenn of this Lease is hereby licensed by Landlord to
Tenant. Landlord retains all property rights in such name and Tenant shall not acquire or have
nay rights in or to such name other than as are expressly granted by Landlord in this section or
otherwise in writing.
LEASE9S.DOC
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ARTICLE V
UTILITIES
-'
Section 1. The leased premises are constructed to utilize individual heating and air
conditioning systems. Tenant agrees to keep the air conditioning and heating systems operating
during business hours at levels sufficient to satisfy the requirements of the leased premises.
Tenant shall pay for all heating, air conditioning, electricity, gas, water and sewer charges used in
the leased premises. If Landlord elects to supply said utilities to the leased premises, Tenant shall
use only utilities supplied by Landlord in the leased premises and shall pay for all utilities so
supplied by Landlord at rates no greater than if supplied by the public utilities which would
otherwise serve the leased premises. Tenant shal1 pay for utility charges by paying its share of
such charges as determined by Landlord unless Tenant's premises are separately metered.
Tenant's such share shall be payable with its monthly minimum rent payment based on actual
billings and Tenant's said share thereot:
Section 2. Landlord shall not be liable in damages or otherwise if the furnishings by
Landlord or by any other supplier of any utility or other setvice to the leased premises shall be
interrupted or impaired by fire, repairs, accident, or by any causes beyond Landlord's reasonable
control.
Section 3. Landlord shall, at the beginning of this Lease furnish heat, ventilation and
cooling equipment, in good mechanical condition and operating order, as required for the
comfortable use and occupancy of the premises during nonnal operating hours; janitor setvices
for the common area as reasonably required to keep the common area in a clean wholesome
condition; electric power for nonnallighting and operating of office equipment and other
equipment needed for the dance studio operation, replacement of building standard fluorescent
tubes, light bulbs and ballast's as required in the common area from time t time as a result of
normal usage; and maintenance, repair and replacements as set forth in Article VI.
ARTICLE VI
REPAIRS
Section 1. Landlord shall keep the foundations, exterior walls (except plate glass or other
special breakable materials used in structural portions) an roof in good repair, and if necessary or
required by proper governmental authority, make modifications or replacements thereof; except
that Landlord shall not be required to make any such repairs, modifications or replacements which
become necessary or desirable by reason of the negligence of Ten ant, it s agents, servants or
employees.
Section 2. Landlord shall operate, maintain, repair and replace the systems, facilities and
equipment necessary for the proper operation of the shopping center and for provision of
Landlord's services required in this Lease. If all or part of such systems, facilities and equipment
are destroyed, damaged or impaired, Landlord shall have a reasonable time in which to complete
LEASE9'.DOC
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the necessary repair or replacement, and during that time shall be required only to maintain such
services as are reasonably possible in the circumstances.
Section 3. Tenant shall be obligated for the repair, replacement or improvement of any
kind within its leased space of any equipment, facilities or fixtures contained therein, including
maintenance and replacement of air conditioning or heating equipment or other equipment serving
the leased premises located within the leased premises, as specified in Section 6 below, and shall
keep the leased premises in a clean, sanitary and safe condition and in accordance with all
applicable laws, ordinances and regulations of any governmental authority having jurisdiction.
Tenant shall permit no waste, damage or injury to the leased premises.
Section 4. Tenant shaIl forthwith at its own cost and expense, replace with glass of the
same quality any cracked or broken glass, including plate glass or glass or other special breakable
materials used in stnlctura1 portions, and any interior and exterior windows and doors in the
leased premises. This does not include glass broken as a result of Landlord or Landlord's agent's
negligence. If specifically required by Landlord, Tenant shall maintain a policy or policies of
insurance in acceptable Bureau companies insuring Landlord and Tenant, as their interests may
appear, against breakage of all such glass in the leased premises and shall deposit copies of such
policy or policies of insurance or certificates evidencing their existence, together with evidence of
the payment of the premiums thereot: with Landlord at the commencement of the term of this
Lease and at least 30 days prior to the expiration of each such policy.
Section S. It is hereby agreed that the Landlord shall have the right to periodically inspect
the heating and air conditioning equipment which services the leased premises to ensure that
Tenant is maintaining the equipment as required in Section 3 of this article. Ifit is the Landlord's
determination after these inspections that the Tenant has been negligent in servicing and
maintaining said equipment, then Landlord shall notify Tenant of its findings, and Tenant shall
have ten days to administer corrective action. If corrective measures are required and any costs
incurred by Landlord in so doing shall be reimbursed to Landlord by Tenant upon demand.
Section 6. In the event the landlord does not repair or maintain its obligations as specified
in Section 1 and 2 of this Article, the tenant shall have the right to do so and then be able to set
off against lease payment obligations for such maintenance or repairs. In addition, if expensive
equipment such as air conditions or heating units within the leased premises fail, the initial upfront
costs to purchase and install equipment shall be paid for by Landlord and recovered through pro-
rated payments by Tenant over the expected useful life of the equipment.
ARTICLE VII
INSTALLATIONS, ALTERATIONS AND SIGNS
Section 1. As soon as reasonably possible, Tenant shall have the privilege, minimum rent
free, of entering the leased premises for the purpose of performing Tenant's leasehold
improvements, setting Tenant's fixtures and storing Tenant's merchandise, all to be done without
interference with the work of Landlord. Such entry of the leased premises by Tenant for this
purpose shall not be construed as acceptance of the leased premises or ~ a waiver of any of the
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provisions hereof: When, prior to the commencement of the term, Tenant shall enter the leased
premises, it is agreed that such entry shall be at the Tenant's sole risk. Without limiting the
foregoing, Tenant hereby agrees, and it is made the strictest requirement of any such entry, that
before entering the leased premises, Tenant will cause Landlord to be insured with liability
insurance according to coverage elsewhere provided in this Lease, to be maintained by Tenant
during the tenD; and in addition will deliver to Landlord satisfactory proof that all workmen of
Tenant or any of Tenant's contractors or subcontractors entering upon the leased premises are
properly covered by workmen's compensation insurance.
Section 2. Tenant, at its own expense, shall maintain its store fixtures, floor covering,
interior painting and decorating as required by it.
Section 3. Tenant shall not erect or install any signs, advertising media or make changes to
the leased premises which may be seen from outside the leased premises without landlord's prior
written consent. Use of the roof is reserved for Landlord. Tenant shall keep all exterior signs,
exterior improvements made by Tenant with Landlord's consent, and its store front in good
condition and repair.
Section 4. Tenant shall be able to make any reasonable repairs, alterations or additions to
the leased premises or make any contract therefor without first procuring Landlord's written
consent. Tenant shall furnish such indemnification against liens and other claims as Landlord may
require. Landlord may condition its consent on such indemnification being furnished by Tenant.
All alterations, additions, improvements and fixtures, other than trade fixtures, which may be
made or installed by either of the parties hereto upon the leased premises and which in any manner
are attached to the floors, walls or ceilings, at the termination of this Lease, shall become the
property of Landlord, and shall remain upon and be surrendered with the leased premises as a part
thereof; without damage or injury; any floor covering affixed to the floor shall likewise become
the property of Landlord, all without compensation or credit to Tenant. All fixtures installed by
Tenant shall be new or completely reconditioned.
Section 5. Tenant shall promptly pay all contractors and material men so as to minimize
the possibility of a lien attaching to the leased premises, and should any lien be made or filed,
Tenant shall bond against or discharge the same within ten days after written request by Landlord.
Nothing in this Lease contained shall be construed as a consent on the part of the Landlord to
subject the Landlord's estate in the leased premises to any lien or liability under the Lien Laws of
the state in which the leased premises are located. Tenant shall install and maintain a sign(s), all in
accordance with Landlord's Sign Approval, a copy of which is attached hereto as Exhibit D and
made a part hereof:
ARTICLE vm
INDEMNITY
Section 1. Tenant agrees to indemnify and save Landlord Harmless against any and all
claims, demands, damages, costs and expenses, including reasonable attorneys' fees for the
defense thereof; arising from the conduct or management of the business ponducted by Tenant in
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the leased premises or from any breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease,
or from any act or negligence ofT enant, its agents, contracts, servants, employees, subleases,
concessionaires or licensees, in or about the leased premises.
Section 2. Landlord agrees to indemnify and save Tenant harmless against any and all
claims, demands, damages, costs and expenses, including reasonable attorneys' fees for the
defense thereot: arising from any breach or default on the part of Landlord in the performance of
any covenant or agreement on the part of Landlord to be performed pursuant to the terms of this
Lease, or from any act or negligence of Landlord or its employees, in or about the shopping
center.
Section 3. The provisions of this article are subject to the waiver of any right of
subrogation against Tenant in Landlord's insurance under Article IX and to the waiver of any
right of subrogation against Landlord in Tenant's insurance under Article IX.
ARTICLE IX
INSURANCE
Section 1. Tenant shall not carry any stock of goods or do anything in or about said leased
premises which shall in any way tend to increase insurance rates on said leased premises or the
building in which the same are located. If Landlord shall consent to such use, Tenant agrees to
pay as additional rental any increase in premiums for insurance against loss by fire or extended
coverage risks resulting from the business carried on in the leased premises by Tenant. If Tenant
installs any electrical equipment that overloads the power lines to the building, Tenant shall, at its
own expense, make whatever changes are necessary to comply with the requirements of insurance
underwriters and insurance rating bureaus and governmental authorities having jurisdiction.
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Section 2. Tenant agrees to procure and maintain a policy or policies of liability insurance
at its own cost and expense insuring Landlord and Tenant from all claims, demands or actions for
injwy or death sustained by one or more persons as a result of anyone occurrence in the amount
of 4300,000 and for damage to property in an amount of not less than $100,000, made by or on
behalf of nay person or persons, firm or corporation arising from, related to or connected with,
the conduct and operation of Tenant's business in the leased premises. Tenant shall carry like
coverage against loss or damage by boiler or internal explosion by boilers, if there is a boiler in the
leased premises. Said insurance shall not be subject to cancellation except after at least ten days
prior written notice to Landlord, and the policy or policies, or duly executed certificate or
certificates for the same, together with satisfactory evidence of the payment of premium thereon,
shall be deposited with Landlord at the commencement of the term and upon any renewal of said
insurance not less than 30 days prior to the expiration of the term of such coverage. If Tenant
fails to comply with such requirement, Landlord may obtain such insurance and keep the same in
effect, and Tenant shall pay Landlord the premium cost thereof upon demand.
Section 3. Landlord shall procure, at its initial expense, fire and extended coverage
(including coverage for rental loss in connection with damage and destruction covered by the said
~
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fire and extended coverage insurance) and other reasonably necessary insurance on the shopping
center Tenant shall reimburse Landlord monthly with its rental payments for its share of the actual
net cost and expense to Landlord of such insurance. Tenant's share of such costs shall be that
fractional part of the total of such costs as the total area of the leased premises bear to the total
rentable area of all buildings and structures constituting part of this shopping center. One-twelfth
of the amount due shall be payable on the first day of each month and added to the monthly rental.
This amount may be based on an estimate until the actual premiums are available and, when
available, an adjustment shall be made and any difference shall be payable based on Tenant's
actual share as determined.
Section 4. Tenant shall maintain, at its own cost and expense, fire and extended coverage,
vandalism, malicious mischief and special extended coverage insurance in an amount adequate to
cover the cost of replacement of all alterations, changes, decorations, additions, fixtures and
improvements in the leased premises in the event of a loss, in companies and in form acceptable to
Landlord. The insurance which the Tenant agrees to carry in this section shall insure the full
insurable value of the improvements and betterment's installed by the Tenant in the leased
premises, whether the same have been paid for entirely or partially by Tenant. Tenant will further
deposit the policy or policies of such insurance or certificate thereof with Landlord.
Section 5. Landlord and Tenant each hereby waive any and all rights of recovery against
the other, or against the officers, employees, agents and representatives of the other, for loss of or
damage to such waiving party or its property or the property of others under its control to the
extent that such loss or damage is insured against under any insurance policy in force at the time
of such loss or damages. The insuring party shall, upon obtaining the policies of insurance
required thereunder, give notice to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
ARTICLE X
FIRE OR OTHER CASUAL TV
.;
-.;
Section 1. In case the shopping center shall be partial1y or totally destroyed by fire or
other casualty insurable under standard tire and extended coverage insurance so as to become
partially or totally untenantable, the same shall be repaired as speedily as possible at the expense
of Landlord, unless Landlord shall elect not to rebuild, as hereinafter provided, and an equitable
part of the rent shall be abated until so repaired based upon the time and to the extent the leased
premises are untenantable.
Section 2. In case the shopping center buildings, including common areas, shall be
destroyed or so damaged by fire or other casualty as to render more than 50% thereof
untenantable, or in the event of any substantial uninsured loss or if the unexpired term of this
Lease is two years or less on the date of nay 'substantial destruction or damage, then Landlord
may, if it so elects, rebuild or restore said buildings pursuant to Section 1 above. The Landlord,
and also the tenant, maY7 at its election by notice in writing within 60 days after such destruction
or damage, terminate this Lease. The above shall apply whether or not any part of the leased
premises is damaged or destroyed. Landlord's obligation to repair or_ rebuild pursuant to this
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article shall be limited to a basic building and the replacement of any interior work which may
have originally been installed at Landlord's cost. In no event in the repair or replace Tenant's
stock in trade, leasehold improvements, fixtures, furniture, furnishings or Boor coverings and
equipment. Tenant covenants to make such repairs and replacements and to furnish Landlord, on
demand, evidence of insurance assuring its ability to do so.
ARTICLE XI
EMINENT DOMAIN
Section 1. If the whole of the leased premises shall be taken under the power of eminent
domain, then the term of this Lease shall case as of the day possession hall be taken and the rent
shall be paid up to that date.
Section 2. n the event more than 10% of the land area in the shopping center be so taken,
the Landlord shall have the right to tenninate this Lease at the time and with the rent adjustment
as provided in Section 1 by giving Tenant written notice of tennination within 60 days after the
taking of possession by such public authority.
Section 3. f any of the floor area of the leased premises or 40% or more of the parking
area shall be so taken, then Tenant shall have the right either to terminate this Lease or, subject to
Landlord's right of termination as set forth in Section 2 of this article, to continue in possession of
the remainder of Th. leased premises upon notice in writing to Landlord of Tenant's intention
within 30 days after such taking of possession. In the event Tenant elects to remain in possession,
and Landlord does not so terminate, all of the terms herein provided shall continue in effect
except that the rent shall be equitably abated as to any portion of the leased premises so taken and
Landlord shall make . all necessary repairs or alterations to the extent provided in Article X,
Section 2, of this Lease.
Section 4. All damages awarded for such taking under the power of eminent domain,
whether for the whole or a part of the leased premises, shall be the property of Landlord, whether
such damages shall be awarded as compensation for diminution in value of the leasehold or to the
fee of the leased premises; provided, however, that Landlord shall not be entitled to any separate
award made to tenant for loss of business, depreciation to and cost of removal of stock and
fixtures or to other separate awards payable to Tenant.
~;
ARTICLE XII
ASSIGNMENT AND SUBLETTING
Section 1. Tenant shall be able to assign, transfer this Lease, sublet said leased premises
or any part or parts thereot: permit occupancy by anyone as long as it meets the criteria for the
shopping center use and zoning ordinance. Consent by Landlord to one or more assignments of
this Lease or to one or more sublettings of the leased premises shall not operate as a waiver of
Landlord's rights under this article. No assignment shall release Tenant of any of its obligations
under this Lease or be construed or taken as a waiver of any of Landlord's rights thereunder. For
purposes hereof: if Tenant is a corporation or partnership or other eptity, any change in the
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control of Ten ant shall be deemed to be an assignment which shall required Landlord's consent as
above set forth. the acceptance of rent from someone as above set forth. The acceptance of rent
from someone other than Tenant shall not be deemed to be a waiver of any of the provisions of
this Lease or consent to any assignment or subletting of the leased premises.
Section 2. Tenant agrees not to change the advertised name of the place of business
operated in the leased premises, which name shall be Prior Lake Dance Program without the prior
written consent of Landlord.
Section 3. Neither this Lease nor any interest therein shall pass to any trustees or receiver
in banlauptcy, or any assignee for the benefit of creditors or by operation of law.
ARTICLE XIII
ACCESS TO PREMISES
Landlord shall have the reasonable right to enter upon the leased premises during all
business hours for the purpose of inspecting the same or of making repairs, additions or
alterations thereto or to the building in which the same are located, or for the purpose of
exhibiting the same to prospective tenants, purchasers or others.
ARTICLE XIV
REMEDIES
Section 1. Landlord may terminate this Lease and the term demised or Tenant's right to
possession hereunder upon the failure of Tenant to pay any installment of rent when due or to
perform any other of its material covenants under this Leas and the same are not remedied within
30 days after written notice to Tenant or within ten days after written notice to Tenant in regard
to the payment of rent or other monetary obligations of Tenant hereunder.
Section 2. If; at any time during the term of this Lease (1) the Tenant who then is the
holder of this Lease shall file in any court a petition in banlauptcy or insolvency or for
reorganization within the meaning of Chapter X of the Banlauptcy Act of 1898, or for
arrangement within the meaning of Chapter XI of said Banlauptcy Act (or for reorganization or
arrangement under any future Banlauptcy Act for the same or similar refiet), or for the
appointment of a receiver or trustee of all or a portion of the Tenant's property, or (b) an
involuntary petition of any kind referred to in Subdivision (a) of this section shall be tiled against
the Tenant, and such petition shall not be vacated or withdrawn within 30 days after the date of
filing thereot: or (c) if the Tenant shall make an assignment for the benefit of creditors, or (d) if
the Tenant shall be adjudicated a banlaupt, or ( e) a receiver shal1 be appointed for the property of
the Tenant by order of a court of competent jurisdiction (except where such receiver shall be
appointed in an involuntary proceeding, if he shall not be withdrawn within 30 days from the date
of appointment), this Lease shall tenninate ipso facto upon the happening of anyone of such
events, and the Tenant shall then quit and surrender the leased premises to the Landlord, but the
Tenant shall remain liable as hereinafter provided.
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Section 3. Upon the termination of the estate as aforesaid, the Landlord may reenter the
leased premises by any lawful means, and remove all person and chattels therefrom and Landlord
shall not be liable for damages or otherwise by reason of reentry or termination. Notwithstanding
such termination, the liability of Tenant for the rent provided for hereinabove shall not be
extinguished for the balance of the term remaining after said termination.
Should Landlord elect to reenter, as herein provided, or should it take possession 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 tenninating this Lease, make such alterations and
repairs as may be necessary in order to relate the premises, and relate said premises or any part
thereof for 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 landlord in its sole
discretion may deem advisable; upon each such reletting all rentals received by the Landlord from
such reletting shall be applied first, to the payment of any indebtedness other than rent due
hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such
reletting, including brokerage fees and reasonable attorneys' fees and of costs of such alterations
and repairs; this, to the payment of rent due and unpaid hereunder, and the residue, if any, shall be
held by Landlord and applied in payment of futUre rent as the same may become due and payable
hereunder.
If such rental received from such reletting during any month be less than that to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such reentry or taking possession of said
premises by Landlord shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination thereofbe decreed by
a court of competent jurisdiction.
Landlord shall use its best efforts to relet the premises lipon taking possession of the
premises pursuant to legal proceedings or pursuant to any notice provided for by law.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease on such previous breach. Should Landlord at any time
terminate this Lease for any breach, in addition to any other remedies it may have, it may recover
from tenant all damages it may incur by reason of such breach, including the cost of recovering
the leased premises, reasonable attorneys' 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 I
this Lease for the remainder of the stated term, 'all of which amounts shall be immediately due and
payable from Tenant to Landlord. in detennining the rent which would be payable by Tenant
hereunder, subsequent to default, the annual rent for each year of the unexpired term shall be
equal to the average annual minimum and percentage rent paid by Tenant from the
commencement of the term to the ~e of default, or during the preceding three full calendar
years, whichever period is shorter.
Section 4. In the event of any material breach hereunder by Tenant, Landlord may
immediately or at any time thereafter, without notice, cure such breach ~or the account and at the
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expense of Tenant. If Landlord at any time by reason of such breach is compelled to pay, or
elects to pay, any sum of money or do any act which will require the payment of any sum of
money, or is compelled to incur any expense, including reasonable attorneys' fees, the sum or
sums so paid by Landlord, with interest thereon at the rate of 10% per annum or the highest rate
permitted by law, whichever is less, from the date of payment thereot: shall be deemed to be due
from Tenant to Landlord on the first day of the month following the payment of such respective
sums or expenses.
Section 5. In the event of any material breach hereunder by Landlord, Tenant may
immediately or at any time thereafter, without notice, cure such breach for the account and at the
expense of Landlord. If Tenant at any time by reason of such breach is compelled to pay, or
elects to pay, any sum of money or do any act which will require the payment of any sum of
money, or is compelled to incur any expense, including reasonable attorneys' fees, the sum or
sums so paid by tenant, with interest thereon at the rate of 10% per annum or the highest rate
permitted by law, whichever is less, from the date of payment thereot: shall be deemed to be due
from Landlord to Tenant on the first day of the month following the payment of such respective
sums or expenses, and Tenant shall have the' right to offset any present or future rents due
Landlord for such payments.
Section 6. The lease may be terminated by Tenant if the Landlord is in default under the
tenns of this Lease, and has been given 30 days written notice to cure the default and fails to do
so within 30 days following expiration of the initial 30 day notice.
Section 7. Tenant hereby expressly waives, to the full extent available, any and all rights
or redemption granted by or under any present or future laws in the event of Tenant being evicted
or dispossessed for any cause, or in the event of Landlord obtaining possession of the leased
premises, by reason of the violation by Tenant of any of the material covenants or material
conditions of this Lease, or otherwise.
ARTICLE XV
SURRENDER OF POSSESSION
',j
Section 1. At the expiration of the Lease term, whether by lapse of time or otherwise,
Tenant shall surrender the leased premises broom clean and in good condition and repair,
reasonable wear and tear and loss by tire or ~voidable casualty excepted. If the leased premises
be not surrendered at the end of the term or the sooner tennination thereot: Tenant shall
indemnify Landlord against loss or liability resulting from delay by Tenant in so surrendering the
premises. Tenant shall promptly surrender all keys for the leased premises to Landlord at the
place then fixed for payment of rent.
Section 2. In the event Tenant remains in possession of the leased premises after the
expiration of the tenancy created hereunder with the consent of Landlord and without execution
of a new Lease, it shall be deemed to be occupying the leased premises as a tenant from month to
month, at 125% the minimum rent, subject to al the other conditions, provisions and obligations
of this Lease insofar as the same are applicable to a month-to-month tenapcy.
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Section 3. Upon the expiration of the tenancy hereby created, if Landlord so requires in
writing, Tenant shall promptly remove any additions, fixtures and installations placed in the leased
premises by Tenant and designated in said request, and repair any damage occasioned by such
removals at Tenant's expense, and in default thereot: Landlord may effect such removals and
repairs and Tenant shaI1 pay Landlord the cost thereot: with interest at the rate of 6% per annum,
or the highest rate permitted by law, whichever is less, from the date of payment by Landlord.
ARTICLE XVI
SUBORDINATION
Tenant agrees that this Lease shall be subordinate to any mortgages or trust deeds that
may hereafter be placed upon said leased premises and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof
provided that the mortgagee or trustee thereunder shall agree to recognize Tenant's rights
hereunder as long as Tenant is not in default hereunder, and Tenant shall attorney to such
mortgagee or trustee. Tenant further agrees that upon notification by Landlord to Tenant, this
Lease shall be or become prior to any mortgages or trust deeds that may heretofore or hereafter
be placed 0 the said leased premises. Tenant shall execute and deliver whatever instruments may
be required for the above purposes, and failing to do so within ten days after required demand in
writing, does hereby make, constitute and irrevocably appoint Landlord as its attorney-in-fact and
in its name, place and stead so to do. Tenant shall in the event of the sale or assignment of
Landlord's interest in the building of which the leased premises form a part, or in the even of any
proceedings brought for the foreclosure ot: or in the event of exercise of the power of sale
premises, attorney to the purchaser and recognize such purchaser as Landlord under this Lease.
ARTICLE XVII
NOTICES
Whenever under this Lease provision is made for notice of any kind, such notice shall be in
writing and shaI1 be deemed sufficient notice and service thereof if such notice is to Tenant if
actually delivered to Tenant or sent by registered or certified mail, return receipt requested,
postage prepaid, to the last post office address of Tenant furnished to Landlord for such purpose,
or to the leased premises; and if to Landlord if actually delivered to Landlord or sent by registered
or certified mail, return receipt requested, postage prepaid, to the Landlord at the address
furnished for such purpose, or to the place then fixed for the payment of rent. If the holder of the
record of any mortgage or ground lessors interest covering the leased premises shall have given
prior written notice to Tenant that it is the holder of said mortgage or lessor's interest and such
notice includes the address at which notices to such mortgagee or ground lessor are to be sent,
then Tenant agrees to give to such party or parties notice simultaneously with any notice given to
Landlord to correct any default of Landlord as hereinabove provided and agrees that such party or
parties shall have the right, within 30 days after receipt of said notice, to correct or remedy such
default before Tenant may take any action under this Lease by reason of such default.
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ARTICLE xvm
CONSENTS
The parties agree that whenever under this Lease provision is made for securing the
written consent, permission or approval of either that such written consent, permission or
approval shall not be unreasonably withheld or delayed.
ARTICLE XIX
TAXES
Landlord shall pay all real property taxes and installments of special assessments payable
therewith on the shopping center land and improvements payable during the Lease term and rental
taxes on rentals levied during the term hereof upon the rentals from the leased premises. Tenant
shall reimburse Landlord for Tenant's share of such payments of real property taxes and
installments of special assessments. Tenant's share of such costs shall be based on the ratio the
net rentable area of the leased premises bears to the net rentable area in the shopping center
except buildings separately taxed or assessed for which such taxes and assessments are directly
allocated to their tenants. Tenant shall also reimburse Landlord for rental taxes and gross receipts
taxes, if any, paid by Landlord on rentals from leased premises. One-twelfth of a full year taxes,
installments of which are next payable, shall be payable on the first day of each month and added
to the monthly rental. This amount may be based on Landlord's reasonable estimate until the
actual tax amounts are available and, when available, an adjustment shall be made and any
difference shall be payable based on Tenant's actual share as detennined. Tenant's share of such
taxes payable in the first and last calendar year of the Lease tenn shall be equitably prorated based
on the portion of the year included in the Lease tenn. Tenant shall pay all personal property and
similar taxes on its property in the leased premises.
ARTICLE XX
MERCHANTS' ASSOCIATION
Section 1. Tenant shall, throughout the term or any extension or renewal of the term of
this Lease, become a member at: participate fully in and remain in good standing in the
Merchants' Association (" Association") formed or to be fonned by the Landlord, at its sole
discretion, and comply with the bylaws, roles and regulations of such Association. The objectives
of such Association shall be to assist the business of the shopping center tenants by sales
promotions and advertising for the shopping center as a whole.
Section 2. Tenant agrees to pay promptly when due its share of such dues and
assessments as may be fixed from time to time by the Association for the purposes of creating a
fund for the general promotion and welfare of the shopping center as a whole. The Board of
Directors can, by majority vote, increase the assessment in any year an amount hat is not greater
than the increase in the consumer price index. The increase, in addition to the bas assessment,
will then become the base assessment for future year adjustments. Adjustments will be made to
coincide wit the beginning of the Merchants' Association's fiscal year. Such sums shall be paid
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monthly in advance, the first such payment being paid to the Association on or before the date of
the commencement of the term hereof:
ARTICLE XXI
GENERAL
Section 1. Nothing contained herein shall be deemed or construed by anyone as creating
the relationship of principal and agent or of partnership or of joint venture between the parties
hereto.
Section 2. The various rights and remedies contained in this Lease shall not be considered
as exclusive of any other right or remedy, but shall be construed as cumulative and shall be in
addition to every other remedy now or hereafter existing at law, in equity or by statute. No delay
or omission of the right to exercise any power by either party sha1l impair any such right or
power, or sha1l be construed as a waiver of any default or as acquiescence therein. One or more
waivers of any covenant, term or condition of this Lease by either party shall not be construed by
the other party as a waiver of a subsequent approval by either party to or of any act by the other
party of a nature requiring consent or approval shall not be deemed to waive or render
unnecessary consent to approval of any subsequent similar act.
Section 3. The headings of the several articles contained herein are for convenience only
and do not define, limit or construe the contents of such articles. All negotiations, considerations,
representations and understandings between the parties are incorporated herein, and may be
modified or altered only by agreement in writing between the parties.
Section 4. The covenants, agreements and obligations herein contained shall extend to,
bind and inure to the benefit not only of the parties hereto but the respective personal
representatives, heir, successors and assigns.
Section 5. Whenever a period of time is herein provided for either party to do or perform
any act or thing, that party shall not be liable or responsible for any delays and applicable periods
for performance shall be extended accordingly, due to strikes, lockouts, riots, acts of God,
shortages of labor or materials, national emergency, acts of a public enemy, governmental
restrictions, laws or regulations, or any other cause or causes, whether similar or dissimilar to
those enumerated, beyond its reasonable control. The provisions of this Section 5 shall not
operate to excuse Tenant from prompt payment of rent, percentage rent, additional rent or other
monetary payments required by the terms of the lease.
Section 6. No payment by Tenant or receipt by Landlord of a lesser amount than the
amount then due under this Lease shall be deemed to be other than on account of the earliest
portion thereof due, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover the balance due or
pursue any other remedy in this Lease provided.
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Section 7. Each of the parties represents and warrants that there are no claims for
brokerage commissions or finder's fees in connection with the execution of this Lease, except as
listed below, and each of the parties agrees to indemnify the other against, hold it harmless &om,
all abilities arising from any such claim for which such party is responsible (including, without
limitation, the cost of counsel fees in connection therewith), except as follows:
None
Section 8. Unenforceability of any provision contained in this Lease shall not affect or
impair the validity of any other provision of this Lease.
Section 9. The laws of the State of Minnesota shall govern the validity, perfonnance and
enforcement of this Lease. .
Section 10. Additional provisions, if any, are set forth in Exhibit E attached hereto and
made a part hereof:
Section 11. The following exhibits are part of this Lease Agreement: Exhibit A, shopping
Center Site Plan; Exhibit B, shopping Center Legal Description; Exhibit C, Fixed Annual
Minimum Rent; Exhibit D, Sign Approval; Exhibit E, Additional Provisions; and Exhibit F, Plans
and Specifications. All said exhibits are hereby incorporated herein by reference and are
construed as a part of this Lease.
Section 12. In the event that two or more individuals, corporations, partnerships or other
entities (or any combination of two or more thereof) shall sign this Lease as tenant, the liability of
each such individual, corporation, partnership or other entity to perfonn all obligations hereunder
shall be deemed to be joint and several. In like manner, in the event that the Tenant named I this
Lease shall be a partnership or other business association, the members of which are~ by virtue of
statute, or general law, subject to personal liability, then and in that event, the liability of each
such member shall be deemed to be joint and several.
Section 13. Anything to the contrary herein notwithstanding, if Landlord, its successors
and assigns, is a mortgagee, an individual, a joint venture, a tenancy in common, a firm or
partnership, general or limited, it is specifically understood and agreed that there shall be
absolutely no personal liability on the part of such Landlord or the members of such Landlord
with respect to any of the terms, covenants, conditions and provisions of this Lease to be
perfonned by Landlord, such exculpation of personal liability does not include intentional or
wi11fu1 acts.
Section 14. Landlord shall have the right to install, maintain, use, repair and replace pipes,.
ducts, conduits and wires leading through the leased premises and serving other parts of the
building in locations which will not materially interfere with Tenant's use thereof:
Section IS. In the event that the Landlord and/or the Merchants' Association deems it
necessary to employ security guards and/or security patrols on either a ~11 time or part time basis
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.. . ...._"._---_..._-~_...__.......................__....."
to maintain security for persons and property within the shopping center, including common
areas, then Tenant agrees to pay as additional rent a sum equal to Tenant's proportionate share of
the cost of all expenditures made for security of the shopping center, including common areas, in
monthly payments with the monthly rent payments. The monthly payments shall be based on
Landlord's reasonable estimate of the costs subject hereto made at the beginning of such Lease
year. At the end of each Lease year, Landlord shall furnish a statement of all costs subject hereto
and Tenant's share thereof certified to by Landlord. U; at the end of any Lease year, the amount
paid by Tenant is less than its share as shown on said statement, the balance as shown on said
statement shall be paid with the next monthly rental payment due pursuant to the term of this
Lease. U; at the end of any such Lease year, the amount paid by Tenant is greater than its share
as shown on said statement, the excess as shown on said statement shall be credited against the
next payments (whether of rent or otherwise). due hereunder. Tenant's proportionate share of
such costs shall be based on the proportions set forth in Section 4 of Article m.
Section 16. Tenant shall be required to pay all rental obligations and be open for business
on September 1. 1995. Provided, however, if Tenant actually opens for business prior to this
date, all rental obligations and tenns of this Lease will be in full force and effect upon such date.
ARTICLE XXII
OFFSET STATEMENT
Within ten days after request therefore by Landlord, Tenant shall provide an offset
statement in recordable form to any proposed mortgagee or purchaser, or to Landlord, certifying
(if such be the case) that this Lease is in full force and effect and there are no defenses or offsets
thereto, or stating those claimed by Tenant and certifying to such other matters as such party shall
reasonably require. In the event claimed by Tenant and certifying to such other matters as such
party shall reasonably require. In the event Tenant should refuse to execute and deliver said
statement and/or certificate, Landlord shall have the right, as attorney-in-fact for such purpose.
Landlord's mortgage lenders and/or purchasers shall be entitled to rely upon any statement so
executed pursuant to this article.
ARTICLE XXIII
TITLE
Landlord covenants that it has full right and authority to enter into this Lease for the full
term hereof Landlord further covenants that Tenant, performing the covenants and agreements
of this Lease to be performed by said Tenant, will have, hold and enjoy quiet possession of the
leased premises.
ARTICLE XXIV
PREPARATION OF LEASED PREMISES
Section 1. Any plans which shaI1 require Tenant's approval shall be submitted to Tenant.
In the event Tenant has not indicated its disapproval of any such plans _and specifications within
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five days after submission of the same to it, such approval shall be deemed to have been given and
Landlord may proceed with the work contemplated by such plans and specifications. To the
extent the plans and specifications conform to Exhibit F hereof: no approval by Tenant shall be
required.
Section 2. The proposed location of the leased premises in the building of which the
leased premises form a part is designated on the site plan attached as Exhibit A The location of
the leased premises in the building, the location of the building in the shopping center, shaD be
subject to such changes as Landlord's architect finds to be desirable in the work to be done by the
Landlord. Upon request by either party, both parties agree to modify the site plan as shown on
Exhibit A to the extent that the Landlord's architect certifies to be desirable, and no changes in
the "Landlord' s Work" so certified to be desirable shall invalidate or affect this Lease. No such
changes in the plans that may be appropriate during the preparation of the leased premises for the
Tenant, or during constructio~ shall affect, change or invalidate this Lease. However, any such
changes shall not alter the general appearance, relative location or aggregate amount of floor
space of the leased premises.
Section 3. Landlord contemplates completion of the leased premises on or before Nt A -
Tenant to do own buildup. In the event the Landlord is unable to complete construction and
deliver possession of the leased premises to the Tenant on the contemplated commencement date,
for nay reason whatsoever, the Landlord shall not be liable to the tenant for any damages
whatsoever and this Lease shall remain in full force and effect and the Landlord shall continue to
use its best efforts to complete construction of the same as soon as reasonably possible.
Section 4. Tenant accepts the premises in "as is" condition and Landlord shall have no
constructio~ reconstruction or modification obligations whatsoever. "As is" condition is
interpreted to mean in working or operating condition. Thus the lights, front and rear doors,
locks, utilities, HV AC, plumbing, water heater, exhaust fans and roll gates are in operating
condition. This is without warranty. Also, the ceiling tile, walls, floors and window glass are
complete. landlord makes absolutely no warranties and/or representations about or concerning
the condition of the premises. Tenant shall submit its plans to Landlord for written approval prior
to any remodeling, renovating, construction or installation of trade fixtures. Tenant shall, as
expeditiously as possible, prepare the premises, at its own cost and/or expense, for opening for
business.
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IN WITNESS WHEREOF, Landlord and Tenant have signed this lease as of the day and
year first above written.
PRIORDALE MALL INVESTORS
LIMITED PARTNERSHIP
By
Its
And
Its
CITY OF PRIOR LAKE
By
Its Mayor
And
Its City Manager
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,
'.
EXHIBIT A
SHOPPING CENTER SITE PlAN
To b-e Attached to and ~wr.,e ~ part of that tcrtaln lC'n,(" agrrE"mcnt C"n'\"~nng ftpftc:~ in the
_ . _ ____. ?r\o"f""clo-\:c- tJ\t-~' .__ Shoppln~ Center.
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EXHIBIT B
SHOPPING CENTER LEGAL DESCRIPTION
To be attached to and become a part of that certain lease agreement covering space in the
Priordale Mall shopping center.
That part of Lot 1, Block 1, plat ofBROOKSvnLE CENTER 1ST ADDmON, Scott
county, :Minnesota, together with that part of the East one-half of the Southwest Quarter and that
part of the West one-half of the Southeast Quarter of Section 2, Township 114, Range 22, Scott
County, :Minnesota, described as follows:
Commencing at the most Northerly Westerly corner of said Lot 1, said corner being on the
Southerly right of way line of Trunk Highway No. 13; thence North 65 degrees 43 feet 28 inches
East along the Northerly line of said Lot 1, a distance of 198.32 feet to the actual point of
beginning of the land to be described; thence South 28 degrees 40 feet 18 inches East a distance
of 104.76 feet; thence North 61 degrees 16 feet 31 inches East a distance of 136.67 feet to its
intersection with the Easterly line of said Lot 1; thence south 12 degrees 45 feet 55 inches East a
distance of 460.00 feet along the Northerly line of said Lot 1, to a point distant 850.00 feet West
(as measured at right angels) of the East line of said West one-half of the Southeast Quarter;
thence North 00 degrees 14 feet 5 inches East parallel with said East line a distance of 430.00
feet; thence South 89 degrees 45 feet 55 inches East a distance of 150.00 feet; thence North 00
degrees 14 feet 5 inches East a distance of 497.9 feet, more or less, to its intersection with the
Southeasterly right of way line of State Trunk Highway No. 13; thence Southwesterly along said
Southeasterly right of way line to the point of beginning.
Together ~th an easement for roadway purposes over and across a strip of land 25 feet in
width, the Easterly line of said strip is described as follows: Commencing at the most Northerly,
Westerly corner of said Lot 1, Block 1; thence North 65 degrees 43 feet 28 inches East along the
northerly line of said Lot 1, a distance of 198.32 feet to the actual point of beginning of the line to
be described; thence south 28 degrees 40 feet 18 inches East a distance of 104.76 feet and there
terminating.
AND
Beginning at the southeast comer of Lot 1, Block 1, BROOKSvnLE CENTER 2ND
ADDmON, Scott County :Minnesota; thence north 12 degrees 08 minutes 08 seconds West '
along the easterly line of said Lot 1, a distance of 419.74 feet to the northeast comer of said Lot
1; thence North 61 degrees 16 minutes 31 seconds East a distance of 25.00 feet; thence south 24
degrees 23 minutes 40 second East a distance of 463.22 feet to the northeast comer of Lot 2,
Block 1, of said plat; thence westerly along the north line of said Lot 2, a distance of 125.00 feet
to the point of beginning.
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EXHIBIT C
FIXED ANNUAL MINIMUM RENT
Estimated
Net Per TaUs, IDs. Total
Sq.Ft. Common Area Yearly
Rent Ooentions Total ttn
9/1/95 - 8/31/96 $6.42 52.00 58.42 522,683
9/1/96 - 8/31/97 $6.75 $2.00 $8.75 $23,572
9/1/97 - 8/31/98 $7.00 52.00 59.00 524,246
'0'
!; 1
,
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EXHIBIT 0
SIGN APPROVAL
To be attached to and become a part of that certain lease agreement covering space in the .!rim
dale Mall Shopping Center.
InstaDation of signs must able done by a licensed sign company. We have arranged with Valley
Sign Co. for discounted pricing and installation of letters. They are ~iliar with our style and
color.
The following procedures must be followed in order to place a sign on the mall sign band.
1.
Color is restricted to dark blue. Size of letters can be 14" or 10" high and 1/8"
in thickness. Valley Sign Co. will have these letters in stock.
2.
Each tenant space is assigned a location on the sign band, approximately 12.5 ft.
in len~ 31 "/high. All signs must fit within this space.
3.
A scale drawing showing the size and distribution of letters within the assigned
space must be submitted to the mall manager for approval.
4.
A sign permit must be purchased from the City of Prior Lake.
s.
New signs must be installed by a licensed sign contractor.
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