Standard Office Lease Agreement

EXHIBIT 10.12



STANDARD OFFICE LEASE

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LEASE AGREEMENT (Lease") made as of 12/31/93, between MINNESOTA CC PROPERTIES, INC. ("Landlord") and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Tenant").





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Each reference in this Lease to any of the terms set forth on the following Schedule ("Schedule") shall be construed to incorporate the following:



1. Premises: The Premises consisting of approximately 29,903 square feet of net rentable area as shown on Exhibit A, on the fourteenth (14th) and twelfth (12th) floor(s) of the building commonly known as 5500 Wayzata Boulevard, Golden Valley, Minnesota (the "Building").



2. Project: The land described in Exhibit B (the "Land"), together with the buildings, improvements and appurtenances now or hereafter located on or used in connection with the Land.



3. Term: The Term shall be seventy-two (72) months commencing on May 1, 1994 (the "Commencement Date"), and ending on April 30, 2000 (the "Termination Date"), subject to adjustment as provided in Section 3 of this Lease.



4. Base Rent: The annual Base Rent shall be $8.50 per rentable square foot in the Premises, payable in monthly installments of $21,181.29. See Exhibit E, Section 27.



5. Operating Cost Rent: Landlord's estimate of the annual Operating Cost Rent for 1993 is $9.95 per rentable square foot in the Premises, payable in monthly installments of $24,794.57. See Exhibit E, Section 27.



6. Security Deposit: None.



7. Advance Payment: $24,794.57, payable on or before March 1, 1994, to be applied to the first monthly installment of Operating Cost Rent due under the Lease. See Exhibit E, Section 27.



8. Tenant's Permitted Use: General office purposes only.



9. Landlord's Address: Minnesota CC Properties, Inc., c/o The Shelard Group, Inc., 5500 Wayzata Boulevard, Suite 315, Golden Valley, MN 55416.



10. Tenant's Capacity and Address: Tenant, a corporation under the laws of New Jersey, has the following address for notices before the Commencement Date: The Prudential Insurance Company of America, Central Group Office, 250 Gibraltar Road, Horsham, PA 19044-2323, Attn: Rich Jacobus, Building Operations, Services and Support Division, and the Premises for notices after the Commencement Date, or such other address as Tenant may from time to time designate by notice to Landlord.



11. Real Estate Brokers: The Shelard Group, Inc., representing Landlord; and Welsh Companies, Inc., representing Tenant.







FOR VALUABLE CONSIDERATION, the parties agree as follows:





1. LEASING AGREEMENT. Landlord leases to Tenant, and Tenant accepts from Landlord, the Premises as set forth on the Schedule. The Term shall begin on the Commencement Date and continue until the Termination Date as set forth on the Schedule, unless sooner terminated under the terms of this Lease.



Tenant and its agents, employees and invitees have the non-exclusive right with others designated by Landlord to use the common area in the Project for their intended and normal purposes. Common areas include elevators, sidewalks, unrestricted parking areas, driveways, hallways, stairways, public bathrooms, common entrances, lobbies and other areas designated by Landlord for common use. Landlord may change the common areas at any time, provided the changes do not materially and unreasonably interfere with Tenant's access to or use of the Premises. Tenant's use of the common areas shall be subject to the terms and conditions of this Lease and to the rules and regulations prescribed from time to time by Landlord as provided in Section 7.



2. RENT.



A. Kinds. Tenant agrees to pay to Landlord, without setoff, deduction or demand, at Landlord's Address as set forth on the Schedule, or to such other person or at such other place as Landlord designates by written notice to Tenant, in lawful money of the United States, the aggregate of the following, all of which are rent reserved under this Lease (collectively, "Rent"):



(1) Base Rent to be paid in monthly installments in advance on or before the first day of each month of the Term of this Lease in the amount set forth on the Schedule.



(2) Operating Cost Rent in an amount equal to Tenant's Proportionate Share of the Operating Costs for the applicable fiscal year of this Lease. Operating Cost Rent shall be paid monthly in advance in an estimated amount, as adjusted by Landlord from time to time as provided in Section 2B. Definitions of Operating Costs, Tenant's Proportionate Share and the method for billing and payment of Operating Cost Rent are set forth in Sections 2B and 2C.



(3) Additional Rent consisting of all of the sums, liabilities, obligations and other amounts (excepting Base Rent and Operating Cost Rent) which Tenant is required to pay or discharge pursuant to this Lease (including, without limitation, any amounts which this Lease provides shall be Tenant's cost or expense), together with any late charge or interest, all as hereafter provided.



B. Payment of Operating Cost Rent.



(1) Payment of Estimated Operating Cost Rent. Landlord shall reasonably estimate the Operating Costs of the Project from time to time each year. Such estimates may be revised by Landlord whenever(but not more than twice per fiscal year) it obtains information relevant to making such estimates more accurate. With thirty (30) days after notice from Landlord setting forth an estimate of Operating Costs for a particular fiscal year. Tenant shall pay Landlord an amount equal to one-twelfth (1/12th) of Tenant's Proportionate Share of such estimate multiplied by the number of months during the Term that have elapsed in such fiscal year to the date of such payment, minus payments of estimated Operating Cost Rent previously paid for said period. Thereafter on the first day of each month, Tenant shall pay monthly until a new estimate is applicable, one-twelfth (1/12th) of Tenant's Proportionate Share of the estimated Operating Costs.



(2) Correction of Operating Cost Rent. As soon as reasonably possible after the end of each fiscal year, Landlord shall deliver to Tenant a notice (the "Operating Cost Report") setting forth (a) the actual Operating Costs for the preceding fiscal year, (b) the amount of Operating Cost Rent due to Landlord for such fiscal year, and (c) the amount of Operating Cost Rent paid by the Tenant for such fiscal year. Within thirty (30) days





after such report, Tenant shall pay to Landlord the amount of any additional Operating Cost Rent due for the preceding fiscal year (or a prorated portion thereof if this Lease was not in effect for the entire fiscal year). If Tenant's payments of Operating Costs Rent exceed the amount due Landlord for the fiscal year in question, Landlord shall promptly either refund any such amount to Tenant or apply any such amount as a credit against Tenant's other obligations under this Lease. Unless Tenant takes written exception to any item within sixty (60) days after the furnishing of the Operating Cost Report, such report shall be considered as final and accepted by Tenant.



C. Definitions.



(1) Operating Costs. "Operating Costs" shall mean the sum of the Taxes and Expenses for the Project, determined in accordance with sound accounting and management practices as follows:



(a) Taxes. "Taxes" shall mean all taxes, assessments and other

governmental charges, general and special, ordinary and

extraordinary, of any kind and nature whatsoever, including,

without limitation, assessments for public improvements or

benefits, imposed by any lawful authority upon the Project or

payable by Landlord in connection with the ownership, leasing,

renting, management, control or operation of the Project.

Taxes shall include, without limitation, real estate taxes,

personal property taxes (to the extent imposed on any

equipment, fixtures or personal property constituting a part

of or used in connection with the Project), sewer rents,

assessments (special or otherwise), transit taxes, ad valorem

taxes, and any new or increased taxes, assessments or charges

which are in place of or arise out of any changes in current

Taxes. Taxes shall also include all reasonable fees and

expenses incurred to contest, determine or reduce any Taxes;

and if a refund is obtained, Landlord shall promptly either

pay to Tenant or apply as a credit against Tenant's other

obligations under this Lease portion of the refund based on

the percentage of the original Taxes paid by Tenant from which

the refund was derived. If at any time during the Term, a

federal, state or local tax, excise or surcharge on rents or

income or other tax however described (herein called "Rent

Tax") is levied or assessed on account of the rents hereunder

or the interest of Landlord under this Lease, such Rent Tax

shall be included in Taxes. Taxes shall not include any net

income capital stock, succession, transfer, franchise, gift,

estate or inheritance taxes, unless the same shall be imposed

in place of all or any portion of Taxes.



The Taxes for any given fiscal year shall be the amount of

Taxes payable during such fiscal year, even though levied or assessed

for a different fiscal year; provided, that in the case of special

assessments which may be paid installments, only the installment, plus

any interest, payable during the fiscal year shall be included in

Taxes. Tenant shall be solely responsible for any taxes on its personal

property and trade fixtures used in connection with the Premises.



(b) Expenses. "Expenses" shall mean all expenses, costs and

disbursements (other than Taxes) of every kind and nature, paid or

incurred by or on behalf of Landlord in connection with the ownership,

management, maintenance, operation and repair of all or any part of the

Project. Expenses shall not include (1) costs of alterations of tenant

premises: (2) costs of capital improvements, except for a reasonable

amortization plus interest expense for any capital improvements which

are made to reduce Expenses or which are required to comply with all

governmental laws, ordinances, regulations or orders applicable from

time to time to the Project; (3) depreciation, except as permitted in

the preceding Subsection; (4) interest and principal payments on

mortgages, any rental payments on any ground or other underlying leases

and other debt costs, if any; (5) real estate brokers' leasing

commissions; and (6) any cost or expenditure for which Landlord is

reimbursed, whether by tenants, insurance proceeds or otherwise

(excluding Operating Cost Rent).



If the Project is not fully occupied at any time during any

fiscal year, Landlord may reasonably adjust the Expenses which vary

with occupancy in the Project for such fiscal year, employing sound





accounting and management principles, to the amount of Expenses that

would have been incurred had the Project been fully occupied for the

entire fiscal year. If during any fiscal year's tenant performs any

service (the cost of which would constitute an Expense) in lieu of

Landlord furnishing the service, Landlord may reasonably adjust the

Expenses for such fiscal year to the amount which would have been

incurred if Landlord had furnished such service.



(2) Fiscal Year. "Fiscal year" shall mean any twelve 912) month period (including, without limitation, the calendar year) which Landlord may from time to time select as the fiscal year of the Project; provided, that in case Landlord changes such fiscal year, the fiscal years before and after the change may contain less than twelve (12) months. See Exhibit E, Section 32.



(3) Tenant's Proportionate Share. "Tenant's Proportionate Share" shall mean the percentage obtained by dividing the net rentable area of the Premises by the net rentable area of the Project, each as reasonably determined by Landlord.



D. Rules of Interpretation and Computation of Base Rent and Rent Adjustments.



(1) If the Term commences or terminates on other than the first or last day of a month, the Base Rent and Operating Cost Rent for such month shall be prorated based upon the number of days of the Term falling within such month and shall be paid in advance. If the Term of this Lease commences on any day other than the first day of the designated fiscal year, or if the Term of this Lease ends on any day other than the last day of the designated fiscal year, any Operating Cost Rent due to Landlord with respect to such fiscal year shall be prorated based on the number of days in the Term falling within such fiscal year.



(2) If Tenant fails to pay any Base Rent, Operating Cost Rent or Additional Rent within ten (10) days from the date due, Tenant shall pay to Landlord on demand a late charge in the amount of five percent (5%) of such sum to help defray Landlord's additional administrative costs. In addition, any sum due from Tenant to Landlord not paid within ten (10) days from the date due shall bear interest from the date due until the date paid at an annual rate equal to the lesser of: (a) the highest lawful rate, or (b) eighteen percent (18%) per annum. The payment of such late charge or interest shall not excuse or cure any default of Tenant under this Lease, or limit any right or remedy of Landlord. See Exhibit E, Section 33.



(3) If changes are made to the number of square feet of net rentable area in the Premises or in the Project, Tenant's Proportionate Share shall be appropriately adjusted and the computations of rent shall be appropriately adjusted upon written notice to Tenant so as to take into account the different Tenant's Proportionate Share figures applicable during each portion of the applicable fiscal year.



(4) Landlord shall, in its reasonable discretion and consistent with the provisions of this Lease, determine from time to time the method of computing Operating Costs, the allocation of Operating Costs among the various parts and types of space within the Project and the allocation of Operating Costs relating to more than one fiscal year.



(5) Landlord's and Tenant's obligations under this Section 2 shall survive the expiration or termination of this Lease.



3. CONDITION POSSESSION AND SURRENDER OF PREMISES.



A. Landlord shall make the improvements to the Premises, if any, as provided in Exhibit C and shall maintain the Project as provided in Section 5. Except as otherwise provided in this Lease, Landlord is leasing the Premises to Tenant "as is," without any representations or warranties of any kind (including, without limitation, any express or implied warranties of fitness or habitability) and without any obligation on the part of the Landlord to alter, remodel, improve, repaid, decorate or clean the Premises, the Project or any part thereof.





B. If Landlord is unable to deliver possession of the Premises by the Commencement Date set forth on the Schedule because construction has not been substantially completed, or due to a holding over by a prior tenant, or for any other reason beyond Landlord's control (except Tenant's default hereunder or Tenant Delay as provided in Exhibit C), then: the Commencement Date and Tenant's obligation for payment of Rent shall be postponed until the date on which Landlord delivers possession of the Premises: Landlord shall not be liable for any loss, damage or expense arising in any manner from any such delay; this Lease shall remain in effect during the period of any delay; and the Term shall be automatically extended to include the same number of months set forth on the Schedule, plus, if the Commencement Date is not the first day of a calendar month, the partial month in which the commencement Date occurs, and the Termination Date shall be appropriately adjusted.



C. Except as otherwise provided in this Lease, Tenant's taking possession of the Premises or any portion thereof shall be conclusive evidence that the Premises or such portion were then in good order, repair and satisfactory condition. See Exhibit E, Section 34. If Landlord permits Tenant to take possession of all or any part of the Premises prior to the Commencement Date, all of the terms of this Lease, except where clearly inappropriate, shall apply to and shall control such pre-term occupancy. See Exhibit E, Section 28.



D. During the Term of this Lease, Tenant shall maintain the Premises in as good condition as when Tenant took possession (or as completed after possession, if applicable), except for ordinary wear, casualty and as otherwise provided in this Lease. At the expiration or termination of this Lease, Tenant shall, subject to Sections 3E and 3F below, return the Premises to Landlord broom clean and in good condition as described in the immediately preceding sentence.



E. Unless otherwise agreed in a writing signed by Landlord, all Work (as defined in Section 5A, including, without limitation, partitions, hardware, floor coverings, ceilings, wiring, light fixtures and other fixtures, but excluding trade fixtures, movable partitions and personal property belonging to Tenant) in or upon the Premises, whether placed there by Landlord or Tenant, shall be surrendered with the Premises at the expiration or termination of this Lease and shall become Landlord's property without compensation to Tenant; provided, that if prior to any such expiration or termination of this Lease, or within ten (10) days thereafter, Landlord so directs by written notice, Tenant shall promptly remove any Work placed in or upon the Premises by Tenant and designated in such notice, and repair any damage to the Premises caused by such removal.



F. Tenant shall also remove its trade fixtures and personal property from the Premises at the end of the Term, or within ten (10) days following the early termination of this Lease or Tenant's right of possession; and if Tenant does not remove such property, at Landlord's election: (1) Tenant shall be conclusively deemed to have conveyed the same to Landlord as by a bill of sale without further payment or credit by Landlord to Tenant, or (2) Tenant shall be conclusively deemed to have forever abandoned such property, and without accepting title thereto, Landlord may, at Tenant's expense, remove and store such property.



G. Tenant's obligations under this Section 3 shall survive the expiration or termination of this Lease.



4. PROJECT SERVICES.



A. Services. So long as Tenant is not in default hereunder, Landlord shall furnish the following services to the Tenant without charge except for Operating Cost Rent and as otherwise specifically provided herein:



(1) Heat and air conditioning to provide a temperature required, in Landlord's reasonable judgment, for comfortable occupancy of the Premises under normal business operations from 7:00 a.m. to 6:00 p.m. Monday through Friday and from 8:00 a.m. to 1:00 p.m. Saturdays, holidays. See Exhibit E, Section 35.



(2) Non-exclusive passenger elevator service at all times (provided Landlord may limit the elevators in operation during non-business hours), and non-exclusive freight elevator service as scheduled by Landlord.





(3) Electrical facilities to provide sufficient power for normal lighting and small business office equipment (but not equipment using amounts of power disproportionate to that used by other tenants int he Project). If the installation of any equipment requires additional electrical or air conditioning capacity above the building standard system, then the additional installation, metering and operating costs shall be paid by Tenant to Landlord as Additional Rent. Landlord shall replace building standard lamps, bulbs, ballasts or starters in the Premises as required by normal usage.



(4) Hot and cold municipal water at those points of supply provided for the general use of tenants in the Project.



(5) Janitorial and customary cleaning services nightly in the Premises, except Saturdays, Sundays and holidays; and window washing for exterior windows at intervals reasonably determined by Landlord.



B. Additional Services. Except as specifically provided in this Lease, Landlord shall not be obligated to furnish any additional services or to furnish services at other times. If Landlord provides additional services at Tenant's request, Tenant shall pay for such additional services at Landlord's then prevailing rates as Additional Rent. If Landlord from time to time reasonably determines that the use of any utility or service in the Premises is disproportionate to the use of other tenants, Landlord may separately charge Tenant for the excess costs attributable to such disproportionate use and may install metering devices at Tenant's expense, which amounts shall be due from Tenant as Additional Rent.



C. Interruption of Service. Landlord does not warrant that any service will be free from interruption caused by labor controversies, accidents, inability to obtain utilities, fuel, steam, water or supplies, governmental regulations or other causes beyond the reasonable diligence to remedy any interruption of its services after notice from Tenant, but no such interruption of service shall be deemed an eviction or disturbance of Tenant's use and possession of the Premises or any part thereof, or render Landlord liable to Tenant for damages, by statement of Rent or otherwise, or relive Tenant from performance of Tenant's obligations under this Lease. See Exhibit E, Section 36.



D. Keys and Locks. Landlord shall furnish Tenant with two (2) keys for each corridor door entering the Premises, and additional keys ordered by Tenant will be furnished by Landlord at Tenant's expense. All such keys shall remain the property of Landlord; provided, that Tenant shall be solely responsible for monitoring distribution and use of keys furnished to Tenant. No additional locks shall be allowed on any door of the Premises without Landlord's written consent. Upon termination of hits Lease, Tenant shall surrender to Landlord all keys to any locks on doors entering or within the Premises, and shall give to Landlord the combination for all locks for safes and vaults, if any, left in the Premises.



5. ALTERATIONS AND REPAIRS.



A. Tenant shall not make or permit any interior or exterior alterations, additions, improvements or changes, structural or otherwise, to the Premises or the Project, nor make any installations which may require any change to the heating, ventilating, air conditioning, electrical or plumbing systems of the Project (collectively, "Work") without obtaining the prior written consent of Landlord in each instance which will not be unreasonably withheld. As a condition to granting its consent, Landlord may impose reasonable requirements, including, without limitation, requirements as to the manner and time for the performance of any Work, the type and amount of insurance, bonds and security for payment Tenant must provide, the plans and specifications relating to the Work, the contractors performing the Work, the contracts and building permits relating to the Work, the activities being undertaken within the Project relating to the Work, and the removal of the Work at the expiration or termination of this Lease. Landlord shall be reimbursed by Tenant for all reasonable costs incurred in connection with its review and supervision of the Work. In no event will such supervision or right to supervise by Landlord, nor any approvals given by Landlord under this Lease, constitute any warranty by Landlord to Tenant of the adequacy of the design, workmanship or quality of any Work or materials for Tenant's intended use or otherwise, or impose any liability





upon Landlord in connection with the performance of such Work. All Work shall be performed in a good and workmanlike manner and in full compliance with applicable laws, ordinances and regulations, and all insurance requirements.



B. Tenant shall promptly pay all contractors and materialmen for the Work and furnish Landlord with sworn construction statements and lien waivers upon request of Landlord. Any mechanic's lien filed against the Premises or the Project for Work or materials furnished or claimed to have been furnished in connection with the Work or to Tenant shall be released and discharged by Tenant, by bond or otherwise, within ten (10) days after the filing of such lien at Tenant's sole expense. Tenant agrees to indemnify, hold harmless and defend Landlord, its agents and employees, the Premises, the Building and the Project from any loss, damage or expense, including reasonable attorney's fees, arising out of any lien claim or other claim relating to any Work. Nothing contained in this Lease shall be construed as a consent by Landlord so as to subject the Landlord's interest in the Premises to any lien or liability under applicable mechanic's lien laws.



C. Landlord shall maintain and repair the foundations, exterior walls, structural portions, roof and common areas of the Project, and the heating, air conditioning, ventilating, electrical, elevator and plumbing systems serving the Project (except improvements or fixtures in or primarily serving the Premises) in good condition, ordinary wear except; provided that: (1) Landlord's obligations shall be subject to the provisions of this Lease concerning casualty loss and condemnation, and the cost of such repairs shall be included in Operating Costs subject to the terms and conditions of Section 2; (2) Tenant shall promptly at its expense repair all damage to the Premises or the Project caused by Tenant or any of its employees, agents or invitees, by Tenant's failure to comply with or perform any of Tenant's obligations under this Lease, or by the installation, operation or removal of Tenant's improvements or fixtures; and (3) Landlord shall use reasonable diligence in carrying out its obligations under this Section, but shall not be liable under any circumstances for any consequential damage to any person or property for any failure to do so, nor shall the same constitute an eviction of Tenant or relieve Tenant from performance of Tenant's obligations under this Lease except as expressly provided in Section 36 or otherwise in this Lease.



D. Except for ordinary wear and as otherwise provided in this Lease, Tenant shall at its expense maintain and repair the Premises, all improvements and fixtures in or primarily serving the Premises, and all of Tenant's trade fixtures and personal property at the Premises in good condition. If due to Tenant's use of the Premises, alterations or improvements to the Premises or the Project are nece ...