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062298 CC Ws AgPk, CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, JUNE 22, 1998 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS IMMEDIATELY FOLLOWING REGULAR MEETING AT APPROXIMATELY 8:00 P.M. AGENDA 1. CONVENE WORK SESSION A. Roll Call B. Review Agenda 2. DISCUSSION OF ASSESSOR POSITION 3. REVIEW OF LIQUOR OPPERATION STATUS 4. ADJOURN tpo No official action is taken at Work Sessions. CITY OF SHOREWOOD BALANCE SHEET DATE '35131198 TIME 0a FUND 11 A RAY iiQUOR • ASSETS CURRENT ASSETS CASH & INVESTMENTS PETTY CASH NSF CHECKS ACCRUED.' INTEREST RECEIVABLE INY;LIQUOR INYIWINE iNV /BEER INV %Mi5C PREPAID INSURANCE TOTAL CURRENT ASSETS FIXED ASSETS FURNITURE $ FIXTURES ALLOW FOR DEW-FURN & FIXTURES TOTAL ASSETS LIABILITIES & FUND EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE SALES TAX PAYABLE ACCRUED SALARIES PAYABLE TOTAL CURRENT LIABILITIES LONG -TERM LIABILITIES TOTAL LONG-TERM LIABILITIES FUND EQUITY RETAINED EARNINGS NET INCOME YTO TOTAL FUND EQUITY TOTALLIABILITIESFUNO EQUITY PAGE 26 69.956.52 "J.'00 316.21 961.6. 32. %25.00 21.1 -09. -0J 3.165.-00 i 17Y 93 14/,010.32 211.00 3 39.004 15 -0. 28.210.99 x,008.99 185.10 33.465.08 0.00 108,531.82 8.552.42 111,084.24 150,549.32 " 1 TY AP ,`HOREWOOD Ovoid: L! DATE 05,31198 TTME 04,33 FUND A 72 SHOREWOOD PLAZA LI9UOR ASSETS CURRENT ASSETS CASH & INVESTMENTS 130,384.74 PETTY CASH 600.00 NSF CHECKS 249.67 ACCRUED INTEREST RECEIVABLE 1,512.74 INV /LI9UOR 71,312.00 1NYiWINE 55 761.00 !NY/BEER 30,207.00 INV1'MISC 5. PREPAID INSURANCE 2,263.35 TOTAL CURRENT ASSETS 29 �y y0 FIXED ASSETS 23,92B.82 FURNITURE & FIXTURES 22,335.36 ALLOW FOR DEPR -TURN & FIXTURES 17,887.00 TOTAL FIXED ASSETS 4,449.36 TOTAL ASSETS 302,248.26 LIABILITIES & FUND EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE 52,742.00 SALES TAX PAYABLE ACCRUED SALARIES PAYABLE 7,112.07 461.60 TOTAL CURRENT LIABILITIES 60,315.67 LONG-TERM LIABILITIES TOTAL LONG -TERM LIABILITIES 0.00 FUND EQUITY RETAINED EARNINGS 218,003.77 NET INCOME YTO 23,92B.82 TOTAL FUND EQUITY 241,932.59 TOTAL LIABILITIESiFUND EQUITY 302,248.26 i iY n; ;;OREN ny{ PAt E 28 OATE ni °8 iIm �IN{I � �� 1`L{ P�(�PFE! RD ui LIQLI yiP C:iRRENT ASSETS CASH AND INVESTMENTS 157,862.40 - PETTY CASH 600.00 NSF CHECKS 180.633 iNY/LIQUOR 43,448.00 INY Ni_ 38,532.00 INYBEER 25,652.00 IN'v;MISC 3,445.00 PwEPA10 1NSURANCE 2,138.35 TOTAL CURB "tHi ASSETS 43,366.42- • ? ASjF7S FURNITURE AND FIXTURES 76,402.56 ALLOW FOR DEPR -FrURN K F.x,vkt; tJ, ^63.00 TOTAL FIXED ASSETS 53,734.56 TOTAL ASSETS 10,373.14 LIABILITIES & FUND EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE 30,447.00 SALES TAX PAYABLE 5,124.64 ACCRUED SALARIES PAYABLE 1,878.44 TOTAL CURRENT LIABILTIES 37,500.63 LONG -TERM LIABILITIES TOTAL LONG -TERM LIABILITIES 0.00 FUND EQUITY RETAINED EARNINGS 3,356.07 - NET INCOME YTD 23,771,42 - TOTAL FUND EQUITY 27,127.49 - TOTAL LIABILITIES/FUND EQUITY 10,373.14 [l V DF 5'An;EhOnA ` lHCO E S7�7BiEM7 Al aT[ /98 TlM[ 5J��5 pBl0)-- AMOUNT PC 7. AMA, I ikT PCT. Ri io EoiHNC[ FUND 0 71 7UMKA BAY LIQUOR SALES LIQUOR SALES 8.754.96 27.73 6 .37O.44 29.33 0.00 61.3701.44' WINE SALES /.�B.�i l3.96 3�.6i7.0 16. �.00 8[EK 5AiB ' 29.079.99 51 .1B 100.486.41 48.02 O.00 i5O.486.41' MlSC �iB 4.O0 .6O 7.l6 iZ.��.32 k.l8 O.00 12. RnT7LE 0E�Bl7S lJ.29' .0' i@.69' .O/- 0.00 141.0 07AL ��LB ' �6.5��I� l��.�� 0.��Y.3� i�N,6N O.00 209.269.35' �� O[ GUO0S SOi0 u: poxxnoxFr ' ��E PUKCHASES 0.1 4.21 D.A4 7.42 48. 042.25 26.875.9O 22.96 12.84 O.00 48.042.25' 26.875.90' pURCwAS[S 21 36.99 80.221. 38.33 O.V� 8O.Z2l.66' N{5C PURCHASES 2.926.88 ii� lO.9i8.j2 �.22 O.00 lO,9i8.62' TOTAL OB7 OF GOODS SOLD 38,186.69 67.21 166,058.33 79.39 O.00 1 6 6 .08.33' -.-ROSS PROFIT 18.633.58 32.79 43 ,2l1 .0 2 20.65 O.O01 43.211.02' EXPENSES PERSONAL SERVICES SALARIES 2,595.24 4.97 1 3.0D.7. 5 6.25 0.00 13.02.75' SALARIES - 0/T 4 9.5 A .09 83.26 .04 83.26' PART TIME SALARIES 1.60.19 2.83 7.2B.1 3.46 0.08 7^233.17' FICA CITY SHARE 325.6 .57 1.55�.70 .74 0.00 1`551.70' CITY SHARE 184.71 .3I 849.95 .41 0.00 849.95' CITY SHARE 127.50 .72 570.95 .27 0.00 570.95' MEDICARE CITY SHARE O.00 .00 0.00 .00 0 0 0 0 TOTAL PERSONAL S[KYlC[S ' 4.887.82 8.60 23.371.78 11.17 0.00 23.371.78' SUPPLIES OFFICE [X9/POSTAGE 6.6; .Oi 1 3.24 .02 0.00 33.24' REPAIRS AND NAlNT 0.00 .00 100.52 .09 0.00 100.52' SUPPLIES-GENERAL 13 .2S 451.12 .22 0.80 45i.12' TOTAL SUPPLIES 145.64 .26 584.08 .28 0.00 584. OTHER CHARGES ` LECAL 0. CIO .00 0.130 .00 0.00 ' 0.00 AUDI PROF SVCS 0. DO .OD 00.00 .23 0.00 480.00- �OH7RAC0A 86.0 6 .16 41O.76 .2O 01 .00 410.76- M7GS SCHOOLS MILEAGE 0. CIO .0O .00 .0O O.�O 0.00 UllLlD[S . 447. .79 Z`O/J.36 .Y9 O.0O 2,0/3.36' THSURANC� E�PENS[ 32l.92 .67 i./82.�O .85 ��h0 7R? 6,)- • - TTY O SHOREWOOD PAGE iNCOaiE STATEMENT Ci01 h' v5i -K;;Qtl T. ^C GS:S] ..- •I,liR l.'CNI l'1hM 11 }U ...- - Y TO C'A;C -..- 1'IFI AM}jiiN PrT. aMC'UN`t PCT. 8UC'GET 8ALANCE CREDIT CARD CHARGES 245.14 .43 897.2E 43 0 DO 897.20 - SAO DEBT EXPS 0.00! .00 7.00 .00 0.00 1.UG RENT 3,3Go.11 5.82 5,118.35 2.41 0.00 5,178.35- LICjTAXES G.GG GO 0.00 .00 1 ).00 0.00 DUES w SUBS 0.00 .00 0.00 .00 0.00 0.00 ADVERTISING 6 SALES 16.35 '03 553. .26 0.00 553.89 - DEPRECIATIC'N E.P. 0.00 .00 0.00 .00 0.C'r. G. C'0 TOTAL OTHER CHARGES 4,423. 1.19 11,3$3.15 5.44 0.00 11,383.16 - TOTAL OPERATING EXPENSES 9,451.05 16.54 35,339.82 16.89 0.00 35,339.82 - NET OPERATING INCOME /LOSS 9,116.52 16.15 1,811.20 3.16 0.00 7,871.20 - OTHER INCOME /EXPENSES �EREST 1NCOME 167.47 .29 1.079.43 .52 0.00 1 ,0779.43 - MISC INCOME ii.'06 .02 94.12 .04 0.00 94.12 - CASH SHORT, 04 ER 256.r'o .45 468.61 .22 0.00 468.61 - INVES'sMGNT SERVICE CHARGES 5.96 Oi 23.72 .01 0.00 23.72 - TOTAL C'THER INCOMEJEXPENSES 83.43 .15 681.22 .33 0.010 681.22 - NET !NC /LOSS BEFORE TFRS 9,093.09 16.00 8,552.42 4.09 0.00 8,552.42 - INTERFUND TRANSFERS TRANSFERS FROM OTHER FUNDS no .00 0.00 .00 0.00 0.00 TRANSFER TO OTHER FUNDS 0.00 .00 0.00 .00 0.00 0.0'0 TOTAL INTERFUNG TRANSFERS 0.'00 .00 0.00 .00 0.00 0.100 NET INCOMELOSS 9,093.09 16.0 8, 552.42 4.09 0.00 8,552.42- ' ' CITY OF SHOREWOOD PAc£ 1 INCOME STATEMENT ,, ATE 05131/"8 TIIAE !73:35 - - - - CURRENT PERIOD - - - - - - - - YEAR TO DATE - - - - NET AMOUNT PCT. AMOUNT OCT. BUDGET BALANCE FUND 4 72 SHOREWOOD PLAZA LIQUOR SAL ES LIQUOR SALES 26,473.19 33.01 107,8332.66 34.39 0.00 107,832.66 - WINE SALES 14,494.11 18.08 70, 22.59 0.00 70,834.49 - BEER SALES 35,5119.64 44.30 123,486.38 39.38 0.00 123,486.38 - MISC SALES 3,670.73 4.58 11,719.99 33.74 0.00 11,719.99 - BOTTLE DEPOSITS 27.79 .03 316.59 .10- X0.00 316.59 TOTAL SALES 80,185.46 100.013 313,456.93 100.00 0.00 313,556.93 - COST OF 60ODS SOLD 0 O PURCHASES 12.897.42 1608 13 31 80,351.16 51,678 28 25.63 16.48 0.00 0.00 83,351 - 51.678 28- PURCHASES 10,671.49 BEER PURCHASES 22,528.13 28.10 94,535.31 30.15 0.00 94.535.31 - 41SC PURCHASES 1,925.09 2 2.40 8,693.65 2 2.777 0.00 8 - TOTAL COST OF GOODS SOLD 48, 59.89 235,258.40 15.0 0.00 235.258.40 - GROSS PROFIT 32,163.33 40.11 78,298.53 24.97 0.00 78,298.53 - EXPENSES PERSONAL SERVICES SALARIES 22,595.24 3.24 13.083.02 4.11 0.00 13,083.02 - OVERTIME 25.88 .03 210.03 .01 0.00 210.03 - PART TIME 2,460.69 3.01 13.093.72 4.18 0.00 13,093.72 - UC FUND 0.00 387.18 .00 0.00 2,009.77 .00 0.00 0.00 0.00 2.009.77 - CITY SHARE .48 .64 P£RA CITY SHARE 172.28 .21 913.78 .29 0.00 913.78 - INS. CITY SNARE 200.52 .25 1.002.60 .32 0.00 1,002.60 - MEDICARE CITY SNARE - 0.00 .00 0.00 .00 0.00 0.00 TOTAL PERSONAL SERVICES 5,841.79 7.29 30,312.92 9.67 0.00 30.312.92 - SUPPLIES OFFICE EXPIPOSTAGE 5.66 .01 33.28 .01 0.00 33.28 REPAIRS AND MAINT 0.00 .00 242.22 .08 0.00 242.22 - SUPPLIES- GENERAL 176.13 .22 836.57 .27 0.00 836.57 - TOTAL SUPPLIES 181.79 .23 1,112.07 .35 0.00 1,112.07 - OTHER CHARGES LEGAL 0.00 .00 0.00 .00 0.00 0.00 AUDIT PROF SVGS 0.00 DO 480.00 .15 0.100 480.00 - LEGAL 0. DO .00 0.00 .00 0.00 0.00 CONTRACTUAL 0.00 .00 206.50 .07 0.00 206.50 - MTGS SCHOOLS MILEAGE 0.00 .00 cl.043 .00 0.00 0'00 liY lii �. PAGE 73T;mFhiT DATE TMt US: SJ -- - -� CUR RENT - IJP 1 uEM ll 11 - - -- ^- �� - YEAR TO t - - -- DATE N t 1 F' A M OU NT PCT. AMOUNT PCT. E!T?i:ET BALANCE UTiLITIcS 8'19.50 1.101 2,735.78 .87 0.00 2,135.78 - INSURANCE EXPENSE 452.57 .56 2,203.35 .72 0.00 2,263.35 - CR£DIT CARD CHARGES 465.02 58 1,915.84 .61 0.00 1,915.84 - BAD DEBT ErP 0.00 .00 9.G8 .00 0.00 9.08 - RENT 3,626.12 4.52 15,916.04 5.08 0.00 15,916.04 - LIC/TAXES 0. DO 40 0.00 .00 0.00 0.00 DUES & SUBS 0.00 .00 4.00 .00 0.00 0.00 ADVERTISING & SALES PROMOTION 2C'.25 .03 918.36 29 0.00 918.36 - DEPRECIATION EXP 0.010 .00 0.00 .00 0.00 0.00 FURNITURE & FIXTURES 0.00 Oct . 9.00 .00 0.00 0.00 TOTAL OTHER CHARGES 5,443.56 6.79 24,444.95 7.80 0.00 24,444,9 - TOTAL OPERATING EXPENSES 11,467.14 I4 30 55,869.94 177.82 0.00 55,869,94 - 0 NET OPERATING 1NC0MEiLOSS 20,696.19 25.Bi 22,428.59 7.15 0.00 22,428,59' OTHER TN. - nMErF DENSE INTEREST INCOME 334.33 .42 2,314.26 74 0.00 2,314,26 - MISC INCOME 0.00 .00 27.75 'Oi 0.00 27.75 - CASH vriOTt „ OdER 323.31 .40 791.74 .25 0.00 791.74 - INVESTMENT SERVICE CHARGES il.91 Oi 50.04 .02 0.00 50.04 - TOTAL OTHER !NCC'ME P.XPENSES 0.89- .00 1,500.23 .48 0.00 1,500.23 - NET INC /LOSS BEFORE TFRS 20,695.30 25.81 23,928.82 7.63 0.04 23,928.82 - INTERFUND TRANSFERS TRANSFERS FROM OTHER FUNDS 4.00 .00 0.00 .00 0.00 0.00 46NSFER TO OTHER FUNDS 0.00 .00 0.00 .00 0.00 0.00 TO,.,L INTE,.TUNC ,RANSFE,. TOTAL ERF TR 0.00 .00 0.00 .00 n n 0.00 0. 00 NET INCOME /LOSS - 20,695.30 25.81 23,928.82 7.63 0.00 23,928.82- PAGE :ntuMt ��H.tMtn� DATE 115 ?31i'!8 TI;�F 03:3: - - - CURRENT PERIOD - - -- - -- - YEAR TO GATE - - -- NET HNUU0! P;, T. AM00UNT Pi- T cUncPT PH; Awr FUND 473 OLD MARKET ROAD LIQUOR SAL ES LIQUOR SALES 15.981.30 17.$3 6],407.54 28.71 0,00 67,$07.54 - WINE SALES 13,215.78 2 2.78 58,636.30 24.98 0.00 58,636.30 - BEER SALES 26.429.92 45.34 99.565.27 42.41 0.00 99,565.27 - MISC SALES 2,575.56 4.42 9,091.34 3.87 0.00 9,091.34 - BOTTLE DEPOSITS 20.4G 03 71.18 .03 4.00 71.i8- TOTAL SALES 58,188.9c 100.'?u 234,]71.63 100.00 A. 234,711.63 - COST OF GOOD'S SOLD UOR PURCHASES 15,81 - r.45 21.1$ 57.741.37 24.59 0.00 57,7$1.37 - E PURCHASES 40 , 1 "1.774.59 21.92 43,4995.88 19.3 CL OG $5.495.88' BEER PURCHASES 26.485.60 $5.$$ 75.!41.36 32.06 G.G0 7:.7$I.36- MISC PURCHASES 2,517.53 4.34 8.256.35 3.52 0.00 8,256.35 - TOTAL COST OF GOODS SOLD 51.605.17 98.83 187,234.96 79.75 0.00 187 , 77 4,96- GROSS PROFIT 683.79 1.17 47,536.61 20.25 0.00 47.536.67 - EXPENSES PERSONAL SERVICES SALARIES 2,595.24 4.45 13,080.75 5.57 0.00 13,080.75 - SALARIES - OJT 46.22 .08 80.27 .03 13.00 80.27 - .ART TIME 1,303.32 2.24 6,303.09 2.68 0.00 6,303.09 - MN UC FUND 0.00 .00 0.00 .00 0.00 0.00 CITY SHARE 290.00 .50 1,424.19 .61 0.00 1.424.19 - .A CITY SHARE 1711.11 .29 861.00 .37 0.00 861.00 - INS CITY SHARE 491.20' BS 2,486.0 1.06 0.00 2,48b.00- TOTAL PERSONAL SERVICES 4,903.09 8.41 24,235.30 10.32 0.00 24,235.30 - SUPPLIES OFFICE EXPJPGSTAGE 5.65 .Oi 33.23 .01 0.00 33.23 - REPAIRS AND MAINT 0.00 00 1,175.00 .50 0.00 1,175.00 - GENERAL SUPPLIES 109.77 .19 372.25 i6 0.00 372.25 - TOTAL SUPPLIES 115.42 .20 1,580.48 07 0.00 1,580.48 - OTHER CHARGES LEGAL 0.00 .00 0.00 .00 0.00 0.00 AUDIT SERVICES 0.00 .00 480.00. .20 0.00 480.00 - CONTRACTUAL 833.07 .14 166.14 .07 0.00 166.14 - MTGS SCHOOLS MILEAGE r.fi0' 00 0.00 .00 O.OQ 0.00 PRINTING AND PUBLISHING, 13.00 .00 0.00 00 0.00 0.00 UTILiiIES 498.75 .86 2,554.91 1.09 0.00 2,554.97- INSURANCE EXPENSE CREDIT CARD EXPENSES BAD DEBT EXPENSE RENT LICITAXES DUES AND SUBSCRIPTIONS ADVERTISING & SALES PROMO DEPRECIATION EXPENSE FURNITi AND FIXTURES TOTAL OTHER CHARGES TOTAL OPERATING EXPENSES HET OPERATING INCOME;LOSS O R iNCOMEjEXPENSES INTEREST INCOME MISC INCOME CASH OVERSHORT INVESTMENT SERVICE CHARGES TOTAL OTHER 1MCOME(EXPENSES NET TNCjLOSS BEFORE TFRS INTERFUND TRANSFERS TRANSFERS FROM OTHER FUNDS TRANSFERS TO OTHER FUNDS O TAL INTERFUND TRANSFERS HET INCOME,LOSS CITY OF SHOREWOOD .00 0.00 C'0 PAGE 2 INCOME STATEMENT 33.96 .06 339.63 .02 OAT; 05131 ?98 TIME o3:35 185.24 .32 462.12 - - -- CURRENT PERIOD - - -- -- -- YEAR TO DATE - - - NET 0.00 AMOUNT PCT. AMOUNT PCT. BUDGET BALANCE 4;7.75 .73 2,138.75 .91 4 .O 2,i38.i5- 320.92 .55 1.454.15 .62 Oct 0.O 1 ,454.75 - 0.00 .00 1.00 .00 0.00 I. CIO- 7,6- 13.13 37.505.85 15.98 0.00 37,505.85 0.00 .00 0.00 .00 0.00 0.00 0.00 .00 0.00 00 0,00 0.00 20,25 .03 768.36 .333 0.40 768.36 - 0.00 .40 0.00 .00 0.00 0,00 0.00 .00 0.00 .04 0.00 0.00 0 91 15.45 45,069.82 19.20 0.00 45,069.82 14,0233.42 24.06 70,885.60 30.19 0.00 70,885.60 1 ,'339.63 22.89 2 ;,348.93 - 9.95- 0.00 23,;48.93 0.00 .00 0.00 C'0 0.00 0.00 33.96 .06 339.63 .02 0.00 39.63- 185.24 .32 462.12 .20 0.00 462.12 - 0.00 .00 0.00 .00 0.00 0.00 151.38 .26- 422.49 .18- 0.00 422.49 13,491.01 23.15- 23,771.42- 10.13- 0.00 23,771.42 0.00 .00 0.00 .iD 0.00 .00 0.00 W 0.00 .00 0.00 .00 13,491.01- 23.15 23,711.42- 10.13- o.o0 0.00 0.00 0.00 0.30 0.00 0.00 23,771.42 Shorewood Plaza Liquor Store Projected Income Statements 1998 -2001 4/27/98 1998 1999 2000 2001 1996 1997 Budaet Pro'ec ed Proiecte Projected Sales 713,620 783,143 845,000 895,700 949,442 1,006,409 Less: COGS (574,150) (621,815) (663,325) (703,125) (745,312) (790,031) Gross Profit Expenses Personnel Supplies Services (1) Charges (2) Rent & CAM Depreciation O al Expenses 139,470 161,328 181,675 192,576 204,130 216,378 60,754 64,650 73,500 80,613 85,450 90,577 3,401 4,693 4,500 4,600 4,700 4,800 14,592 14,690 16,000 16,200 16,400 16,600 7,715 8,386 8,000 8,500 9,000 9,500 31,294 40,734 43,000 47,370 51,824 56,291 2,588 2,520 3,000 3,000 3,000 3,000 120,344 135,673 148,000 160,283 170,373 180,768 Operating Income /(Loss) 19,126 25,655 33,675 32,293 33,757 35,610 Nonoperating Revenue/ (Expense) 3,017 5,187 4,500 4,500 4,500 4,500 Net Income /(Loss) 22,143 30,842 38,175 36,793 38,257 40,110 1996 1997 Sales Escalator n/a 9.74 % Gross Profit % 19.54 % 20.60% Rent/sq ft (3990 sf) $7.75 $6.00 CAM @ 3% incr $ 0 $15,126 1998 1999 2000 2001 Budget Projected Project Projected 7.90% 6.00% 6.00% 6.00% 21.50% 21.50% 21.50% 21.50% $7.00 $8.00 $9.00 $10.00 $15,000 $15,450 $15,914 $16,391 1 0) includes audit services, insurance, utilities & other fees (2) includes advertising, licensing, credit card & other fees 1 Y 1 RETAIL LEASE AGREEMENT BY AND BETWEEN SHOREWOOD VILLAGE SHOPPING CENTER, INC AND CITY OF SHOREWOOD TABLE OF CONTENTS Page ARTICLE I LEASE SCHEDULE ........................................... ............................... 1 1.01 -1.13 LEASE SCHEDULE . .................................... ............................... 1 -2 ARTICLE N RENT, OPERATING EXPENSES, • SECURITY DEPOSIT, REAL ESTATE TAXES ...... 3 2.01 MINIMUM RENT. 3 ............................. ......................... 2.02 LEASE YEAR ............................................... ............................... 3 2.03 PERCENTAGE RENT . ............................. ............................... 3 ........ a . AMOUNT . ....................................... 3 ........_...................... b. SALES REPORTS .......... ............................... ... .................. 4 C. DEFINITION OF GROSS SALES . .................... ............................... 4 d. RECORDS AND BOOKS ........ .... ............ ............................... 4 e. INSPECTION AND AUDIT . ......................... ............................... 4 f. CONFIDENTIAL INFORMATION . .................................................. 5 g. RADIUS ................ ............................... ........................ 5 h. PERCENTAGE RENT AFTER A DEFAULT . ........... ............................... 5 I. RELATIONSHIP OF THE PARTIES ................... ............................... 5 2.04 OPERATING EXPENSES . .................................... 5 ............................... 2.05 SECURITY DEPOSIT ......................................... ............................... 6 2.06 REAL ESTATE TAXES AND ASSESSMENTS ........... ........ ............................ 6 2.07 ADDITIONAL RENT............ 7 • 2.08 NO OFFSET . ........................................... ............................... .. 7 2.09 INTEREST /LATE FEE ............... 7 ARTICLE III DEFINITIONS ............................................................... 7 3.01 COMMON AREA ................... .......... ............................... 7 3.02 EXPIRATION DATE. .............. 7 3.03 FORCE MAJEURE ....................... ............................... 7 3.04 INSURANCE REQUIREMENTS ........................... ............................... 8 3.05 LANDLORD'S WORK .......... 8 3.06 MORTGAGE .... 8 3.07 MORTGAGEE 8 3.08 PARKING AREA ......... ............................... ............ 8 3.09 PERSON 8 3.10 PRO RATA SHARE .......... 8 3.11 REPAIR ............................................................. 8 3.12 TENANT'S AGENTS ....................... ... 8 3.13 TENANT'S WORK . ............................... ... 8 A r Page ARTICLE IV CONSTRUCTION OF THE DEMISED PREMISES; EFFECTIVE DATE ............................... 8 4.01 LANDLORD'S OBLIGATION TO CONSTRUCT . .................. ............................... 8 4.02 DELIVERY OF POSSESSION ................................... ............................... 9 4.03 TENANT'S WORK ............................................ ............................... 9 4.04 ACCEPTANCE OF POSSESSION ............................. ............................... 9 4.05 ARBITRATION . ............................................. ............................... 9 ARTICLE V EFFECTIVE DATE; MEMORANDUM OF LEASE .................. ............................... 9 5.01 EFFECTIVE DATE OF LEASE .................................. ............................... 9 5.02 SHORT FORM LEASE ........................................ ............................... 10 ARTICLE VI CONDITION OF PREMISES, ALTERATIONS, SIGNS ............. ............................... 10 6.01 NO REPRESENTATIONS, ETC . ............................... ............................... 10 6.02 ALTERATIONS . ............................................ ............................... 1 6.03 MECHANIC'S LIENS ......................................... ............................... 10 6.04 SIGNS . .................................................... ............................... 10 6.05 INSURANCE COVERING TENANT'S WORK . ................... ............................... 10 ARTICLE VII REPAIRS, COMPLIANCE, SURRENDER .................... ............................... 11 7.01 REPAIRS BY LANDLORD . ................................... ............................... 11 7.02 REPAIRS AND MAINTENANCE BY TENANT . .................. ............................... 11 7.03 APPROVAL BY LANDLORD OF REPAIRS . .................................................... 11 7.04 COMPLIANCE .............................................. ............................... 11 7.05 ELECTRICAL LINES .....................................:... ............................... 11 7.06 EMERGENCY REPAIRS ...................................... ............................... 11 7.07 SURRENDER OF PREMISES . ................................. ............................... 11 ARTICLE VIII SERVICES AND UTILITIES ................................. ............................... 12 8.01 UTILITIES . ................................................ ............................... lie 8.02 METERS ........... ...................................... ............................... 1 ARTICLE IX USE AND OPERATION ...................................... ............................... 12 9.01 USE . ...................................................... ............................... 12 9.02 CONTINUOUS OPERATION . ................................. ............................... 12 9.03 STORE OPERATIONS ........ ............................... ............................... 12 9.04 RESTRICTIONS ON TENANT'S ACTIVITIES AT SHOPPING CENTER .............................. 13 9.05 INSURANCE RATE .......................................... ............................... 14 9.06 RESTRICTIONS ON OTHER STORES ........................... ............................... 14 Page ARTICLE X TRANSFER OF INTEREST, PRIORITY OF LIEN ................... ............................... 14 10.01 ASSIGNMENT OR SUBLEASE BY TENANT . ................... ............................... 14 a . SUBLEASE ............................................ ............................... 14 b. ASSIGNMENT .......................................... ............................... 14 10.02 SUBORDINATION . ......................................... ............................... 15 10.03 ATTORNMENT .......... ............................... .. ............................... 16 10.04 TRANSFER OF LANDLORD'S INTEREST ....................... ............................... 16 10.05 MORTGAGEE'S RIGHTS ..................................... ............................... 16 ARTICLE XI COMMON AREA AND SHOPPING CENTER .................... ............................... 16 11.01 USE OF COMMON AREAS....... ...................... 16 11.02 LANDLORD'S RIGHTS ...................................... ............................... 16 • 11.03 LICENSE NUMBERS ........................................ ............................... 17 11.04 LANDLORD'S OBLIGATION WITH RESPECT TO PARKING AREA ............................... 17 11.05 PROMOTION; MERCHANT'S ASSOCIATION ................... ............................... 17 11.06 ADVERTISING .... ............................... ...... ..................... 17 ARTICLE XII DESTRUCTION AND FIRE INSURANCE .............. ....................... ......... 17 12.01 RENT ABATEMENT ........................................ ............................... 17 12.02 OPTION TO CANCEL ....................................... ............................... 18 12.03 OBLIGATION TO REBUILD . ................................ ............................... 18 12.04 WAIVER OF SUBROGATION . .... ............................... ..................... .. 18 12.05 RIGHTS OF MORTGAGEE .. ............................... ............................... 18 ARTICLE XIII CONDEMNATION ......................................... ............................... 18 13.01 DEFINITIONS ................... ......................... ............................... 18 a . AWARD .............. ...................... ............................... 18 b. TAKING ......................................... ............................... 18 C. TAKING DATE ...............................• 18 ... ............................... 13.02 TOTAL OR SUBSTANTIAL TAKING OF DEMISED PREMISES. 18 13.03 ABATEMENT AND RESTORATION . .......................... ............................... 18 13.04 TAKING FOR TEMPORARY USE .............................. ............................... 19 13.05 DISPOSITION OF AWARDS ................... ............................... ............ 19 ARTICLE XIV INDEMNITY AND LIABILITY . ...................... ............................... ... 19 14.01 INDEMNIFICATION ........................................ ............................... 19 14.02 RELEASE OF LANDLORD . ................ ............................... ............... 19 14.03 TENANT'S INSURANCE ........................... ............ ......................... 19 14.04 PLATE GLASS INSURANCE . .............. ................. ............................... 20 14.05 GENERAL PROVISIONS WITH RESPECT TO INSURANCE ....... ............................... 20 14.06 INABILITY TO PERFORM ....... ............................... ........................... 20 14.07 BROKERAGE .............................................. ............................... 20 ARTICLE XV COVENANT OF QUIET ENJOYMENT ......................... ............................... 20 J K Page ARTICLE XVI DEFAULTS; REMEDIES ................... ............................... .............. 21 16.01 DEFAULTS ..................._............................ ............................... 21 16.02 REMEDIES ............. ............................... .. ............................... 21 16.03 DEFAULT BY LANDLORD . ................................. ............................... 23 16.04 LANDLORD'S RIGHT TO PERFORM FOR ACCOUNT OF TENANT . .............................. 23 16.05 ADDITIONAL REMEDIES, WAIVERS, ETC . ................... ............................... 23 ARTICLE XVII TENANT INFORMATION .................................. ............................... 24 17.01 TENANT'S CERTIFICATE . .................................. ............................... 24 17.02 FINANCIAL INFORMATION ...... ......................... ............................... 24 17.03 CONFIDENTIAL INFORMATION ............................. ............................... 24 ARTICLE XVIII RIGHT OF ACCESS ....................................... ............................... 20 18.01 ENTRY . .................................................. ............................... 2 18.02 EASEMENT FOR PIPES . ..................................... ............................... 25 ARTICLE XIX INTERPRETATION; NOTICES; MISCELLANEOUS ............. ............................... 25 19.01 INTERPRETATION ......................................... ............................... 25 19.02 COMMUNICATIONS ........................................ ............................... 25 19.03 SUCCESSORS AND ASSIGNS ................................ ............................... 25 19.04 RESPONSIBILITY OF TENANT ............................... ............................... 25 19.05 LIABILITY OF LANDLORD .................................. ............................... 26 19.06 GOVERNING LAW ......................................... ............................... 26 19.07 GUARANTY ...... ............................... ....... ............................... 26 19.08 EXECUTION AND DELIVERY REQUIRED ...................... ............................... 26 SHOPPING CENTER LEASE THIS LEASE dated FebruM 4, 199j, is by and between Shorewood Village Shopping Center. Inc. ( "Landlord ") and City of Shorewood a Minnesota municipal corporation ( "Tenant "). In consideration of the mutual promises and covenants contained herein, Landlord and Tenant hereby agree with each other as follows: ARTICLE I LEASE SCHEDULE The following provisions and definitions shall be applicable to this Lease: . 1.01 DEMISED PREMISES. That portion of the Shopping Center (defined herein) situated as set forth on Exhibit A, containing approximately 3.990 square feet including any alterations, additions or repairs made thereto. 1.02 =TERM. The Term of this Lease shall begin on the Commencement Date, and shall end on the Expiration Date (herein the "Term "), unless terminated earlier as provided herein. 1.03 COMMENCEMENT DATE. The date upon which the Term of this Lease begins is referred to as the "Commencement Date and shall be retroactive to 7 nu=1. 19-97 1.04 EXPIRATION DATE. If the C-onmetteentent Bette is the fint day of et ealendar n-renth then the-� of the ettlendw month in whieh the Gentmeneentent Date . The termination date shall be December 3 K, 2002. (See Section 3.02) 1.05 RENT. a. MINIMUM RENT. Minimum Rent shall be payable at the annual rate of See Exhibit D Dollars ($ See Exhibit D ) in equal monthly installments of See Exhibit D Dollars ($ &C Exhibit D ) per month. (See Section 2.01) b. PERCENTAGE RENT. N/A %o (the "Percentage Rent Rate'D of gross sales in excess of $ N/A (the "Break Point ") per Lease Year, during the Term. (See Section 2.03) 1.06 SECURITY DEPOSIT. $ N/A (See Section 2.05) 1.07 TENANTS GUARANTOR(S). N /A . (See Section 19.07) r 1.08 USE. a. PERMITTED USES. Tenant shall use the Demises Premises solely .for the purpose of conducting and operating the business of retail municipal liquor store (See Section 9.01) b. TENANT'S BUSINESS NAME. Shorewood Li uor . (See Section 9,02) (See Section 9.06) 1.09 SHOPPING CENTER. Shorewood Village Shopping Center located at 23730 Highway 7 Shorewood 55331 State of Minues and consisting of the property legally described on Exhibit B. 1.10 BROKER. Towle Real Estate Company (See Section 14.07) 1.11 NOTICE ADDRESSES. a. LANDLORD'S NOTICE Shorewood Village Shopping_ Center Inc ADDRESS: c/o Towle Real state CompMy 330 Second Avenue South Suite 800 Minneapolis, MN 55401 b. TENANT'S NOTICE ADDRESS: Shorewood Liquor Shorewood Village Shopping Center 23730 Highway Shorewood, MN 55331 (See Section 19.02) 1.12 PRO RATA SHARE. A percentage as defined in Section 3.10. (See Section 3.10) 1.13 LIST OF EXHIBITS. The following Exhibits are attached to and made a part of this Lease: A - Site Plan B - Legal Description C - Landlord's Work D - Other Provisions • K ARTICLE II RENT, OPERATING EXPENSES, SECURITY DEPOSIT, REAL ESTATE TAXES 2.01 MINIMUM RENT. a. The annual rate of Minimum Rent shall be as set forth in subsection 1.05(a). Tenant hereby covenants and agrees to pay the Minimum Rent. Minimum Rent shall be paid in equal consecutive monthly installments of one - twelfth (1/12) of such annual rate. The first monthly installment shall be due on the Commencement Date, except that any payment made pursuant to Section 2.01(b) shall be applied to such first month's Minimum Rent. Each subsequent installment shall be due on the first day of each month during the Term of this Lease next ensuing after the Commencement Date. If the Commencement Date is not the first day of any month, Minimum Rent for the first month of the Term shall be one - thirtieth of a monthly rent installment for each day of the period from the Commencement Date to the last day of the month in which the Commencement Date occurs. If the Expiration Date shall not be the last day of a month, Minimum Rent for the month in which the Expiration Date occurs shall be one - thirtieth of a monthly rent installment for each day of the period from the first day of that month to the Expiration Date. Minimum Rent shall be paid without notice or demand, and shall be paid to Landlord without any deduction, offset, counterclaim or reduction whatsoever, at the office of Towle Real Estate Company, Special Deposit Services, Box 11 -0071, Minneapolis, Minnesota 55486 or at an address designated by Landlord from time to time. b. Upon the execution of this Lease Tenant shall pay Landlord an amount equal to one month's Minimum Rent. Such amount shall be held by Landlord, without interest, pending the completion of Landlord's Work and Tenant's Work, if any, and shall be applied on the Commencement Date to the first month's Minimum Rent due under this Lease. 2.02 LEASE YEAR. The first Lease Year shall commence on the Commencement Date or, if the Commencement Date is not the first day of a month, then on the first day of the first month following the Commencement Date. Each Lease Year other than the first Lease Year shall commence on the date next following the expiration of the previous Lease Year and shall continue for a period of one (1) full year therefrom except the last Lease Year, which shall end on the Expiration Date. 2.03 PERCENTAGE RENT. 3 -� POWIFIR r 3 • _ Ri/ll�f_ i F175EP PR R!:ri _il!lf�E�!!�!!!t9.7.F • _ • _ • •� YY •. • • Y _ _ _ !_ P 11. WIN _ _ • _ • _ • _ WMAWN M.W.A.A. Y a • • _ _ _ _ _ _ FR _ _ _ _WW", 2.04 OPERATING EXPENSES. a. Each month during the Term of this Lease and any extension or renewal hereof, Tenant shall pay in advance, together with payment of Minimum Rent, one - twelfth (1/12) of Tenant's Pro Rata Share of all annual "Operating Expenses ", as defined herein. Within ninety (90) days of the end of each calendar year (or as soon thereafter as reasonably possible) during the term of this Lease or any extensions or renewals hereof, Landlord shall furnish to Tenant a certificate of the actual above enumerated costs incurred by Landlord during the preceding calendar year, at which time an appropriate adjustment will be made between Landlord and Tenant if such certified figures differ from the estimated payment made by Tenant throughout the preceding calendar year. b. The term "Operating Expenses" is defined to mean and include all costs and expenses necessary, reasonable or appropriate, as determined by Landlord, incurred by Landlord or its managing agent in operating, owning, managing, equipping, policing, protecting, lighting, repairing, replacing and maintaining the Shopping Center, the building and structures, the roof, structural components and Common Areas. Such costs and expenses shall include, but not be limited to: maintaining the mall area (if any) and other Common Areas; cleaning; fire protection; snow, ice and trash removal; striping and restriping and sealing; resurfacing or replacing of the Parking Areas; costs and expenses of planting, cutting, trimming, replanting and replacing lawns, flowers and landscaping; all signs including traffic control and identification signs; water and sewage charges; 5 _ _ __ \_ • !_ P 11. WIN _ _ • _ • _ • _ WMAWN • _ _ _ •(:,1�•• _ _ _ _ _ _ _ _ _ _ \�l•�i•I •R�I��Y':l.l Ri /�� \ 1��.\ �1�• 7\ Z�/ �:l\ 4�> r' �I\ Ri• �! Y• ia�/\ �. \i� \.r }�In�f:1� \!!'�I••Y� /��J ��J�)v�r: R' M.W.A.A. Y a • • _ _ _ _ _ _ FR _ _ _ _WW", 2.04 OPERATING EXPENSES. a. Each month during the Term of this Lease and any extension or renewal hereof, Tenant shall pay in advance, together with payment of Minimum Rent, one - twelfth (1/12) of Tenant's Pro Rata Share of all annual "Operating Expenses ", as defined herein. Within ninety (90) days of the end of each calendar year (or as soon thereafter as reasonably possible) during the term of this Lease or any extensions or renewals hereof, Landlord shall furnish to Tenant a certificate of the actual above enumerated costs incurred by Landlord during the preceding calendar year, at which time an appropriate adjustment will be made between Landlord and Tenant if such certified figures differ from the estimated payment made by Tenant throughout the preceding calendar year. b. The term "Operating Expenses" is defined to mean and include all costs and expenses necessary, reasonable or appropriate, as determined by Landlord, incurred by Landlord or its managing agent in operating, owning, managing, equipping, policing, protecting, lighting, repairing, replacing and maintaining the Shopping Center, the building and structures, the roof, structural components and Common Areas. Such costs and expenses shall include, but not be limited to: maintaining the mall area (if any) and other Common Areas; cleaning; fire protection; snow, ice and trash removal; striping and restriping and sealing; resurfacing or replacing of the Parking Areas; costs and expenses of planting, cutting, trimming, replanting and replacing lawns, flowers and landscaping; all signs including traffic control and identification signs; water and sewage charges; 5 _ _ __ \_ • !_ _ _ • _ • _ • _ M.W.A.A. Y a • • _ _ _ _ _ _ FR _ _ _ _WW", 2.04 OPERATING EXPENSES. a. Each month during the Term of this Lease and any extension or renewal hereof, Tenant shall pay in advance, together with payment of Minimum Rent, one - twelfth (1/12) of Tenant's Pro Rata Share of all annual "Operating Expenses ", as defined herein. Within ninety (90) days of the end of each calendar year (or as soon thereafter as reasonably possible) during the term of this Lease or any extensions or renewals hereof, Landlord shall furnish to Tenant a certificate of the actual above enumerated costs incurred by Landlord during the preceding calendar year, at which time an appropriate adjustment will be made between Landlord and Tenant if such certified figures differ from the estimated payment made by Tenant throughout the preceding calendar year. b. The term "Operating Expenses" is defined to mean and include all costs and expenses necessary, reasonable or appropriate, as determined by Landlord, incurred by Landlord or its managing agent in operating, owning, managing, equipping, policing, protecting, lighting, repairing, replacing and maintaining the Shopping Center, the building and structures, the roof, structural components and Common Areas. Such costs and expenses shall include, but not be limited to: maintaining the mall area (if any) and other Common Areas; cleaning; fire protection; snow, ice and trash removal; striping and restriping and sealing; resurfacing or replacing of the Parking Areas; costs and expenses of planting, cutting, trimming, replanting and replacing lawns, flowers and landscaping; all signs including traffic control and identification signs; water and sewage charges; 5 costs of heating and air conditioning, electricity and other utilities; premiums for liability, property damage, loss of rents, fire and workmen's compensation insurance; wages; unemployment taxes; social security taxes; personal property taxes; all supplies; management fees; attorney's and accountant's fees incurred for services relating to the operation or management of the Shopping Center, or the Common Areas; engineer's fees; fees for required licenses and permits; supplies; operation of loud speakers, public address systems and other equipment supplying music or sound to the Common Areas; and all other costs of operation of the Shopping Center including any portion of capital expenditures or improvements made to the Shopping Center that shall be amortized in any given year. Provided, however, Operating Expenses shall not include payments of principal and interest on any mortgages or other encumbrances on the Shopping Center. C. If the first month of the Term of this Lease consists of less than a full calendar month, then the installment of Operating Expenses shall be apportioned for the number of days that occur during the Term. 2.05 SECURITY DEPOSIT. 2.06 REAL ESTATE TAXES AND ASSESSMENTS. Tenant shall, each year during the Term of this Lease or any extensions or renewals thereof, pay its Pro Rata Share of the amount, if any, of the general real estate taxes and installments of special assessments due and payable with respect to the Shopping Center in such year. Such payment by Tenant shall be paid in equal monthly installments representing 1/12 of the taxes and installments of special assessments due and payable in any such year, provided that upon Landlord's receipt of the tax statement for any tax year, Landlord shall send to Tenant a statement for, and Tenant shall promptly pay, any amount due for any monthly periods occurring within such tax year prior to the date Landlord receives such tax statement if such amount exceeds the payments made by Tenant for such monthly periods. All payments made by Tenant under this Section shall be treated as payments of Additional Rent and shall be made together with monthly payments of Minimum Rent. If the Commencement Date occurs other than the first day of a calendar year, then Tenant shall pay a fraction of Tenant's Pro Rata Share of the real estate taxes and installments of special assessments due and payable in the year in which the commencement date occurs, the numerator of such fraction being the number of days from the Commencement Date through the last day of the calendar year, and the denominator of which fraction will be three hundred and sixty -five (365). Similarly, if the Expiration Date should occur on a date other than the last day of a calendar year, Tenant agrees to pay a fraction of Tenant's Pro Rata Share of the real estate taxes and installments of special assessments due and payable in the year in which the Expiration Date occurs, the numerator of said fraction being the number of days elapsed from January 1 of such year to and including the Expiration Date, and the denominator of which fraction will be three hundred and sixty -five (365). Tenant understands that there may be more than one (1) tax statement covering said Shopping Center and that Tenant's Pro Rata Share of the real estate taxes and installments of special assessments will be determined by multiplying the total real estate taxes and installments due by Tenant's Pro Rata Share. 2.07 ADDITIONAL RENT. Wherever it is provided in this Lease that Tenant is required to make payment to Landlord, such payment shall be deemed to be Additional Rent and all remedies applicable to the nonpayment of rent shall be applicable thereto. 2.08 NO OFFSET. Minimum Rent, Percentage Rent and Additional Rent shall be paid without set off or deduction whatsoever. Any claims not released hereunder which Tenant may have against Landlord may be pursued only in an .independent action against Landlord, subject to Section 19.05. 2.09 INTEREST/LATE FEE. All payments required to be paid by Tenant under the provisions of this Lease shall bear interest at a rate of either: (a) eighteen percent (18 %) per annum if Tenant is a corporation, or (b) the highest rate allowed by Minn. Stat. § 334.011, if Tenant is other than a corporation. Interest shall begin to accrue five (5) days after the due date of each payment and continue until the date actually paid by Tenant. Tenant hereby agrees to pay such interest to Landlord. Tenant agrees that in addition to interest and all other amounts due to Landlord hereunder, Tenant will pay Landlord a "late fee" equal to five percent (5 %) of any payment which has not been paid within five (5) days after its due date, without notice or demand. ARTICLE III DEFINITIONS As used in this Lease, the following words and phrases have the following meanings: 3.01 COMMON AREA shall consist of all parts of the Shopping Center and surrounding areas not under lease exclusively to Tenant or to other tenants, and include, but are not limited to, parking areas, access roads and facilities, driveways, sidewalks and other walkways, stairways, lounge areas, hallways, elevators, loading and/or delivery areas, malls (if any), landscaped *areas, and such other areas and improvements provided for common use and benefit. 3.02 EXPIRATION DATE. That date stated in Section 1.04 above, or if the term of this Lease is extended or if this Lease is renewed, the Expiration Date shall be the last day of the term as so extended or renewed. If this Lease is canceled or terminated prior to the originally fixed Expiration Date, then the Expiration Date shall be the date on which this Lease is so canceled or terminated. But if this Lease is canceled or terminated prior to the originally fixed Expiration Date by reason of Tenant's Default, Tenant's liability under the provisions of this Lease shall continue until the date the Term of this Lease would have expired had the cancellation or termination not occurred. 3.03 FORCE MAJEURE means any period of delay which arises from or through: Acts of God; strikes; contractor delays; shortages or unavailability of labor or materials; lockouts, or labor difficulty; explosion; sabotage; pending arbitration proceedings under Section 4.05; accident; riot or civil commotion; act of war;; fire or other casualty; legal requirements; delays caused by Tenant; and, other causes beyond the reasonable control of Landlord. 7 3.04 INSURANCE REQUIREMENTS means the applicable provisions of the insurance policy carried by Landlord covering the Demised Premises, the Shopping Center or any part of either; all requirements of the issuer of any such policy; and the applicable regulations and other requirements of the National Board of Fire Underwriters, any applicable local board of fire underwriters, and any other body exercising a similar function. 3.05 LANDLORD'S WORK means the construction and other work designated as Landlord's Work, if any, in Exhibit C, 3.06 MORTGAGE means any mortgage, deed to secure debt, trust indenture, or deed of trust which may now or later encumber or be alien upon the Demised Premises, the Shopping Center, the real property of which the Shopping Center forms a part, or Landlord's interest in any of them; and any renewals, modifications, consolidations, replacements and extensions of any instrument referred to in this Section. 3.07 3.08 from time to time. MORTGAGEE means the holder of any Mortgage. PARKING AREA means the portions of the Shopping Center which are designated as such by Landlord 3.09 PERSON means an individual, fiduciary, estate, trust, partnership, firm, association, corporation or other organization, or authority. . , 3.10 PRO RATA. SHARE means a fraction, expressed as a percentage, the numerator of which fraction is the total square footage of the main floor of the Demised Premises, and the denominator of which fraction is the gross leasable area of the main floor of the Shopping Center, exclusive of common areas, as such gross leasable area may exist or change from time to time. Square footage for all purposes under this Lease shall be computed on the measurement of the outside face of exterior walls and the centerline of interior demising walls. If for any reason the foregoing calculation of Pro Rata Share does not fairly and equitably require Tenant to pay its proportionate share of Operating Expenses, real estate taxes, special assessments or other costs, then Landlord may, at Landlord's option, calculate Tenant's fair and equitable share of such amounts and Tenant agrees to pay the same in the manner . provided in Sections 2.04, 2.06, and 2.07. 3.11 REPAIR includes the words "replacement and restoration," "replacement or restoration," "replace and restore," or "replace or restore," as the case may be. 3.12 TENANTS AGENTS includes Tenant's employees, servants, licensees, tenants, subtenants, assignees, contractors, heirs, successors, legatees, and devisees and Tenant's Guarantor. 3.13 TENANTS WORK means any construction, installations and other work performed at the Demised Premises by Tenant, at its sole cost, pursuant to plans and specifications approved by Landlord, necessary for Tenant's use and occupancy of the Demised Premises (other than Landlord's Work). ARTICLE IV CONSTRUCTION OF THE DENUSED PREARSES; EFFECTIVE DATE 4.01 LANDLORD'S OBLIGATION TO CONSTRUCT. a. Attached to this Lease as Exhibit C is a description of Landlord's Work, if any, which includes all the improvements to the Demised Premises which the Landlord has agreed to perform at its expense, subject to the conditions hereof and to delays or impossibility of performance caused by Force Majeure. All of Landlord's Work shall be performed in accordance with Exhibi C in a good and workmanlike manner, utilizing new and first -grade materials; shall be in conformity with all applicable federal, state and local laws, ordinance, regulations, building codes, and fire regulations; and shall comply with any applicable insurance requirements. b. Landlord's Work may vary from the requirements of Exhibit C if the variance is required by the circumstances or good construction practices, the building permit or applicable legal requirements; or if the variance is nonsubstantial. Any disagreement between Landlord and Tenant as to whether such changes are nonsubstantial shall be resolved in accordance with the provisions of Section 4.05. As to changes which require Tenant's approval, such approval shall not be withheld unreasonably, and any disagreement between Landlord and Tenant as to whether or not such approval is being withheld unreasonably shall be resolved in accordance with the provisions of Section 4.05. 4.02 DELIVERY OF POSSESSION. Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord, the Demised Premises. Delivery of possession shall be deemed to have occurred on the date that Landlord's Work, if any, shall have been substantially completed to the extent necessary to allow Tenant to commence Tenant's Work, as determined by Landlord. 4.03 TENANT'S WORK. All of Tenant's Work, if any, shall be performed in accordance with good construction practices, all applicable legal and insurance requirements and any Tenant Design Construction Manual for the Shopping Center. Tenant shall indemnify Landlord from and hold Landlord harmless against any and all liabilities, damages, losses, liens, mechanic's liens, foreclosures, injury, suits, actions, claims of any nature whatsoever, including all attorneys fees, arising out of Tenant's Work. 4.04 ACCEPTANCE OF POSSESSION. Within ten (10) days after Delivery of Possession, Tenant shall give Landlord written notice of any alleged defects in Landlord's Work and of any alleged variances of Landlord's Work from the requirements of this Lease. Any defect or variance not so set forth shall be deemed waived by Tenant. If Tenant shall fail to give such notice, it shall waive all rights with respect to such defects or variances. Upon the expiration of the ten (10) day period, the Demised Premises shall be conclusively deemed to have been accepted by Tenant, subject to the defects or variances set forth in the notice, which defects or variances Landlord will promptly rectify to the extent the same are not in compliance with the terms of this Lease. At any time after the expiration of the ten (10) day period, upon request of Landlord, Tenant shall execute a certificate certifying that the Demised Premises were accepted in accordance with the foregoing. 4.05 ARBITRATION. Any matter which is specifically set forth in this Lease to be resolved in accordance with the provisions of this Section shall be determined by binding arbitration as follows: On ten (10) days' written notice by either party to the other, each shall designate an arbitrator, and a third arbitrator shall be selected by the two so designated. All arbitrators selected under this paragraph shall have at least five (5) years' experience in leasing commercial space. If either party fails to designate an arbitrator within ten (10) days following notice, or upon the inability or failure of the two arbitrators to agree upon a third within ten (10) days following their designation, said selection shall be made by the judge then sitting at special term in the District Court of Hennepin County, Minnesota upon notice to all parties. Each party shall be entitled to be represented by counsel in the arbitration proceedings. The difference or dispute shall be settled in accordance with the Uniform Arbitration Act, and the Rules of the American Arbitration Association shall govern. The decision of a majority of the arbitrators, signed and acknowledged, shall be final and binding upon Lessor and Tenant. To the extent feasible, such decision shall be made within thirty (30) days of the appointment of the third arbitrator. The costs and expenses of the arbitrators, the fees of the arbitrators, and all attorneys' fees and costs incurred, shall be paid .by the losing party in the arbitration proceeding, and the defmition of "losing party" shall be a proper subject of the arbitration proceeding. ARTICLE V EFFECTIVE DATE; MEMORANDUM OF LEASE 5.01 EFFECTIVE DATE OF LEASE. This Lease shall be binding upon the parties effective as of the date of execution indicated above. At the earlier of the entry into the Demised Premises by Tenant to make any measurements or inspect the same, or the Delivery of Possession, as provided in Section 4.02, all of the terms and conditions of this Lease shall be in full force and effect and all of Tenant's obligations under this Lease shall be applicable, except for Tenant's obligations to pay Minimum Rent or any other charges Tenant is required to pay Landlord under this Lease (which obligations to pay shall commence on the Commencement Date). 9 5.02 SHORT FORM LEASE. Upon request of Landlord or Landlord's mortgagee, Landlord and Tenant shall execute a short form lease or memorandum of lease in proper form for recording, setting forth the Commencement Date and any provision of this Lease other than Article H or Sections 1.05 and 1.12. Tenant shall not have the right to record this Lease in any public records. ARTICLE VI .CONDITION OF PREMISES, ALTERATIONS, SIGNS 6.01 NO REPRESENTATIONS, ETC. Landlord has made no representations, covenants or warranties with respect of the Demised Premises except as expressly set forth in this Lease. 6.02 ALTERATIONS. Tenant may not make any alterations to the Demised Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld. If Landlord grants consent, the alterations shall be performed in a good and workmanlike manner in accordance with all applicable legal requirements, Insurance Requirements, pursuant to plans and specifications approved by Landlord and other conditions which Landlord shall impose on such work. 6.03 MECHANIC'S LIENS. If any mechanic's or materiahnan's lien is filed against the Demised Premises or the Shopping Center as a result of any work or act of Tenant, Tenant shall discharge the lien within twenty (20) days after the filing of the lien. If Tenant shall fail to discharge the lien, Landlord may, but shall not be obligated to, bond or pay the lien or claim for the account of Tenant without inquiring into the validity thereof. In such event, the Tenant shall,promptly reimburse Landlord the amoun so advanced or the costs and expenses of such bond. Upon completion of any repair, alteration or other work performed by Tenant or its agents and contractors to the Demised Premises, Tenant shall provide Landlord with copies of lien waivers from each contractor or agent who performed work or supplied materials relative to such work. 6.04 SIGNS. a. Tenant shall, at its expense, promptly install and maintain a sign affixed to the exterior of the Demised Premises. Tenant's sign shall be subject to (I) the written approval of Landlord as to dimensions, material, content, location and design; (ii) applicable legal requirements; (iii) Insurance Requirements; and (iv) the sign criteria for the Shopping Center attached hereto as Exhibit "E " . Tenant shall obtain and pay for all permits and licenses required in connection with a sign. Copies of all permits and licenses shall be delivered to Landlord within a reasonable time after they are issued. b. If Landlord shall deem it necessary to remove any sign in order to paint or to make repairs, alterations or improvements to the Demised Premises, Landlord shall have the right to do so. Tenant shall not have the right to maintain or install any other signs at the Shopping Center or the Demised Premises. In the event that the exterior of the Shopping Center is substantially renovated Tenant shall install such new sign to conform to new sign criteria. • 6.05 INSURANCE COVERING TENANT'S WORK. Tenant shall not make any alterations, repairs or installations, or perform any other work to the Demised Premises (including Tenant's Work) unless prior to the commencement of the work Tenant shall obtain (and dirring the performance of the work keep in force) public liability and worker's compensation insurance to cover every contractor to be employed, and naming Landlord and any mortgagee as an additional insured. The policies shall be noncancellable without ten days' notice to Landlord. Coverage limits shall be reasonably satisfactory to Landlord. Prior to the commencement of the work, Tenant shall deliver duplicate originals or certificates of the insurance policies to Landlord. 10 ARTICLE VII REPAIRS, COMPLIANCE, SURRENDER 7.01 REPAIRS BY LANDLORD. Upon reasonable notice from Tenant, Landlord shall make necessary repairs to the structural components of the roof, foundation, exterior walls and any load - bearing interior walls of the Demised Premises. However, Landlord shall not be required to make any repairs to windows, plate glass, doors and any fixtures and appurtenances composed of glass. Landlord shall not be required to repair any damage caused by any act, omission or negligence of Tenant, Tenant's Agents or Tenant's customers. All expenses incurred by Landlord in making such repairs shall be deemed to be Operating Expenses hereunder, and will be subject to reimbursement pursuant to Section 2.04. 7.02 REPAIRS AND MAINTENANCE BY TENANT. Except for the repairs Landlord is specifically obligated to make under Section 7.01, Tenant shall make all other repairs to the Demised Premises which are necessary or desirable to keep the Demised Premises in good order and repair and in an attractive, safe, dry and tenantable condition. Without limiting the generality of the foregoing, Tenant is specifically required to make repairs a) to the portion of any pipes, lines, ducts, wires or conduits contained within the Demised Premises; b) to windows, plate glass, doors and any fixtures or appurtenances composed of glass, floor coverings, ceilings and wall coverings; c) to Tenant's sign; d) to any heating or air conditioning equipment servicing the Demised Premises; and e) to the Demised Premises or the Shopping Center when repairs to the same are necessitated by any act or omission of Tenant, Tenant's Agents or Tenant's customers or the failure of Tenant to perform its obligations under this Lease. Tenant shall keep the Demised Premises in a clean and sanitary condition and free from vermin and escaping offensive odors. With respect to the heating, ventilation, d air conditioning equipment and systems, Tenant at4u- expense, shall maintain 4on#aet, and furnish evidence thereof (and renewals) to Landlord upon Landlord's request. 7.03 APPROVAL BY LANDLORD OF REPAIRS. With respect to any repair required or permitted to be performed by Tenant under any provision of this Lease, Tenant shall give notice to Landlord before any work is performed. Except in the event of an emergency, all plans and specifications with respect to repairs shall be subject to the prior written approval of Landlord. No repair shall be commenced until plans and specifications therefor shall have been submitted to and approved by Landlord, which approval shall not be unreasonably withheld. After approval of the plans and specifications, the work shall then be commenced promptly, performed in accordance with the approved plans and specifications, and prosecuted diligently to completion. 7.04 COMPLIANCE. Tenant shall observe and comply promptly with all present and future legal requirements and Insurance Requirements relating to or affecting the Demised Premises, or any sign of Tenant, or the use and occupancy of the Demised Premises, including, but not limited to, laws, regulations, codes, and rules relating to the use, storage or release of any hazardous or toxic wastes or substances, asbestos, petroleum products or any other harmful productions ( "Hazardous Wastes "). 7.05 ELECTRICAL LINES. If Tenant installs any electrical equipment that overloads the lines in the Demised Premises or the Shopping Center, Landlord may require Tenant to make whatever changes to the lines as may be necessary to render the same in good order and repair, and in compliance with all Insurance Requirements and applicable legal requirements. 7.06 EMERGENCY REPAIRS. If in an emergency it shall become necessary to make promptly the repairs or replacements required to be made by Tenant, Landlord may reenter the Demised Premises and proceed forthwith to have the repairs or replacements made and pay the cost thereof. Within thirty (30) days after Landlord renders a bill therefor, Tenant shall reimburse Landlord for the cost of making the repairs. 7.07 SURRENDER OF PREMISES. On the Expiration Date, Tenant shall quit and surrender the Demised Premises broom clean and in good condition and repair. At Landlord's option, all alterations, fixtures, trade fixtures, installations, additions and improvements which may have been made in or attached on or to the Demised Premises shall either remain in the Demised Premises and shall become the property of Landlord or shall be removed by Tenant, at its sole cost and expense, and Tenant shall repair any damage to the Demised Premises caused thereby. 11 ARTICLE VIII SERVICES AND UTILITIES 8.01 UTILITIES. Tenant shall pay when due all charges for electricity, heat, air conditioning, water, gas, fuel, sewage usage, garbage disposal, refuse removal, telephone and any other utility service furnished to the Demised Premises from and after the Delivery of Possession until the Expiration Date, or earlier termination of this Lease. If one or more of the foregoing utilities are not separately metered to the Demised Premises, then Tenant agrees to pay its Pro Rata Share of such utilities, or such other equitable proportion if required by the circumstances. 8.02 METERS. Tenant shall keep any gas, water and electric meter(s) installed for the Demised Premises or any other meter(s) measuring the gas or water volume and electric current consumed at the Demised Premises in good order and repair. ARTICLE IX USE AND OPERATION 9.01 USE. Tenant shall use the Demised Premises solely for the uses designated as Permitted Uses in subsection 1.08(a). Tenant shall not use, permit or suffer the use of the Demised Premises for any other purposes whatsoever, or for any illegal purpose. All uses not specifically granted herein are reserved to Lessor and other tenants in the shopping center, but Tenant's use shall be non - exclusive. 9.02 CONTINUOUS OPERATION. a. Tenant shall conduct its business in the Demised Premises continuously on all days and at all hours during which the Shopping Center is open. b. Tenant shall operate its store as a typical operation as presently conducted in the vicinity in which the Demised Premises are located or in the locality closest to the Shopping Center in which such operation is conducted. C. Tenant shall use its best efforts to achieve a maximum sales volume in the Demised Premises. 1.08(b). d. Tenant shall conduct its business under the name designated as Tenant's Business Name in subsection 9.03 STORE OPERATIONS. a. Tenant shall use for office, clerical or other nonselling purposes only such space in the Demised Premises as is reasonably required for Tenant's business therein, and shall not perform any office, storage or clerical function in the Demised Premises for any other store. re o f€ise slerieal a�ether nenselli$g�ses. b. Tenant shall pay before delinquency any and all taxes, assessments and public charges levied, assessed or imposed upon Tenant's business or upon Tenant's fixtures, furnishings or equipment in the Demised Premises. C. Tenant shall pay when and as due all license fees, permit fees and charges of a similar nature for the conduct by Tenant of any business or undertaking authorized hereunder to be conducted in the Demised Premises. d. Tenant shall keep and maintain in good order, condition and repair any loading platform, truck door and/or truck maneuvering space therefor which is used by Tenant or to which Tenant has the right of use notwithstanding the fact that the same may be deemed to be a portion of the Common Area. 12 e. Tenant agrees (i) not to permit the accumulation (unless concealed in metal containers) or burning of any rubbish or garbage in, on or about any part of the Shopping Center, and (ii) if Landlord shall so request, not to permit any garbage or rubbish to be collected or disposed of from the Demised Premises except by Landlord or its designee, and, (iii) if Landlord shall so request, to remove all trash to a designated trash room or area. f. Tenant shall observe all reasonable rules and regulations established by Landlord from time to time for the Shopping Center, provided Tenant shall be given at least five (5) days' notice thereof. 9.04 RESTRICTIONS ON TENANT'S ACTIVITIES AT SHOPPING CENTER. a. Tenant shall not use the sidewalk adjacent to or any other space outside the Demised Premises for display, sale or any other similar undertaking. b. Tenant shall not use any advertising medium which may be heard outside the Demised Premises. C. Tenant shall not use the plumbing facilities of the Demised Premises for any purpose other than that for which they were constructed. Tenant shall not dispose of any substances in such facilities which may clog, erode or damage the plumbing pipes, lines or conduits of the Shopping Center whether through the utilization of "garbage disposal" units or otherwise. If Tenant uses the Demised Premises for the sale, preparation or service of food for on- premises consumption, Tenant shall install any grease traps that may be necessary or desirable to prevent the accumulation of grease or other wastes in the plumbing facilities servicing the Demised Premises. But notwithstanding anything to the contrary, the foregoing shall not be deemed to permit Tenant to use the Demised Premises as provided in the preceding sentence unless such use is specified in subsection 1.08(a). d. Tenant shall not place a load on any floor exceeding the floor load per square foot which such floor was designed to carry. e. Tenant shall not use the roof of the Demised Premises for any purpose. Tenant shall not use exterior walls of the Demised Premises except that Tenant may maintain a sign in accordance with Section 6.04. No coin or token operated vending-machine or similar device for the sale of any merchandise or services (including pay lockers, pay toilets, scales, amusement devices and machines for the sale of beverages, foods, candy, cigarettes or other commodities) may be operated in the Demised Premises. g. Tenant shall not use any forklift truck, tow truck or any other machine for handling freight except as may • be approved in writing by the Landlord. h. No auction, fire or bankruptcy sales may be conducted within the Demised Premises without the previous written consent of Landlord. i. Tenant shall not use the malls, sidewalks adjacent to the Demised Premises or other Common Areas on the Shopping Center site for business purposes without the prior written consent of Landlord. j. Tenant shall keep the doors and displays windows of the Demised Premises clean and shall keep the same electrically lighted during such periods of time as windows throughout a major portion of the Shopping Center development are kept lighted, and for this purpose shall install and maintain a mechanical time- clock. show2 Tenant shall not paste any signs to any portion of the Demised Premises, or display any signs attached to d , or within three (3) feet of the lease line of the Demised Premises without obtaining Landlord's prior, written approval. Landlord shall have the right, at Landlord's sole discretion, to require Tenant to remove any sign visible from any portion of the common area of the Shopping Center that is not in keeping with the standards of the Shopping Center. The signs desired by Tenant shall be indicated in plans and specifications to be submitted to Landlord for approval. 13 1. Tenant shall not perform any act or carry on any practice which may injure the Demised Premises or any other part of the Shopping Center, or cause any offensive odors or loud noise (including the use of loudspeakers), or constitute a nuisance or menace to any other occupant or other persons in the Shopping Center, and in no event shall any noises or odors be emitted from the Demised Premises. m. Tenant shall at all times fully and adequately heat and/or air condition (as the circumstances require) the Demised Premises and shall not draw any heat or air conditioning from the enclosed mall if any. 9.05 INSURANCE RATE. Tenant shall comply with all Insurance Requirements relating to or affecting the Demised Premises. If the insurance premiums that would have been applicable for the Permitted Uses as a result of any failure by Tenant to comply with Insurance Requirements, or as a result of or in connection with the use to which the Demised Premises are put by Tenant, Tenant shall reimburse Landlord for the excess. The reimbursement shall be made within ten (10) days after Landlord renders a bill therefor. For the purpose of this section, any finding or schedule of a fire insurance rating organization having jurisdiction over the Demised Premises or the Shopping Center shall be deemed to be conclusive. 9.06 RESTRICTIONS ON OTHER STORES. As used in this section the term "Radius" means the area from the Demised Premises located within the distance noted in Section 1.08(c). Distance shall be computed on a straight line radial from the center of the Demised Premises. Tenant agrees (insofar as and to the extent it lawfully may so agree) that during the Term neither Tenant, Tenant's Agents, any Tenant's Guarantor nor any affiliated parent or subsidiary companies or entities, directly or indirectly, will own, lease or operate another store, department within a store, or any structure or site for retail business within the Radius similar* to the use specified in section 1.08(a). ARTICLE X TRANSFER OF INTEREST, PRIORITY OF LIEN 10.01 ASSIGNMENT OR SUBLEASE BY TENANT. a. SUBLEASE. Since Landlord wishes the party in possession of the Demised Premises to be bound to Landlord by direct privity of contract, Tenant may not sublease the whole or any part of the Demised Premises without the prior written approval of Landlord, which approval may be withheld in Landlord's sole and absolute discretion. b. ASSIGNMENT. Tenant may not, voluntarily or by operation of law, assign, mortgage, pledge or otherwise transfer this Lease without the prior written consent of Landlord. If Tenant is a corporation, then any transfer of this Lease by merger, consolidation or liquidation, or any change in ownership of the shares of voting stock shall constitute an assignment of this Lease, and, as such, shall require the prior written consent of Landlord. If Tenant is a partnership, any transfer, assignment or sale of a partnership interest, or any change in the partners comprising Tenant, shall constitute an assignment of this Lease, and, as such, shall require the prior written consent of Landlord. . The prior written consent of Landlord to any such proposed assignment or transfer shall not be withheld unreasonably, if all of the following conditions are met: (1) The proposed assignee has a net worth at least equal to Tenant and Tenant's Guarantor(s) (if any) as of the date of signing this Lease, or the date of the proposed assignment, whichever is greater; (2) The proposed assignee is creditworthy considering the obligations to be assumed under the Lease; (3) The proposed assignee has experience and expertise in operating a retail business similar to that being conducted in the Demised Premises; 14 (4) The use of the Demised Premises will comply with Section 1.08(a), and, in addition, the proposed assignee's use will not conflict with Landlord's current or projected tenant mix of the Center or with exclusive uses granted or to be granted to any other tenant(s) of the Shopping Center; (5) Tenant and Tenant's Guarantor(s) (if any) acknowledge in writing that they will remain liable for the performance of all obligations pursuant to the Lease; (6) Tenant, Tenant's Guarantor(s) (if any) and the proposed assignee agree in a written Amendment to the Lease, in form and substance acceptable to Landlord, that the Minimum Rent, as of the effective date of such assignment shall become the greatest of the following: (i) The Minimum Rent then applicable; (ii) The average of the sum of the annual Minimum Rent and annual Percentage Rent (if any), payable for the last two (2) Lease Years (or shorter period, if so required) immediately prior to the Lease Year of the proposed assigning; or (iii) The prevailing market rate determined by Landlord for Minimum Rent for similar space in the Center at the time of the Assignment. . (7) No Default by Tenant shall be in existence at the time of the request for consent. If Tenant desires to assign the Lease, it shall so notify Landlord in writing at least thirty (30) days prior to the proposed effective date of the assignment. Tenant shall provide Landlord with: a copy of the proposed assignment, financial information, bank references and financial statements of the proposed assignee; a copy of the agreements referenced in subsections (b)(5) and (b)(6) above; and, such further information as Landlord might request concerning the proposed assignee. Within fifteen (15) days after Landlord's receipt of all required information concerning the proposed assignee, and the satisfaction of all of the conditions specified in subsections (b)(1) through (b)(7) above, Landlord shall have the following options: (1) To cancel this Lease and upon such cancellation, all parties shall be released from liability hereunder and Tenant will immediately vacate the Demised Premises; (2) To consent to the proposed assignment; or (3) To refuse to consent if reasonable grounds exist therefore; PROVIDED THAT IF THE CONDITIONS SPECIFIED IN SUBSECTIONS (b)(1) THROUGH (b)(7) ARE NOT SATISFIED, LANDLORD'S CONSENT TO THE PROPOSED ASSIGNMENT MAY BE WITHHOLD OR GRANTED IN ITS SOLE AND ABSOLUTE DISCRETION. 10.02 SUBORDINATION. • a. At Landlord's election, this Lease shall be subordinate to the lien of any present or future Mortgage, irrespective of the time of execution or the time of recording of the Mortgage. From time to time, Landlord may, without notice to Tenant, elect that this Lease be subordinate to the lien of any Mortgage. The exercise of any of the elections provided in this section shall not exhaust Landlord's right to elect differently thereafter from time to time. However, at any time when the Demised Premises are encumbered by a Mortgage, Landlord may not exercise either election without the consent of the Mortgagee b. Upon Landlord's request, from time to time, Tenant shall (I) confirm in writing and in recordable form that this Lease is so subordinate to the lien of any Mortgage and/or (ii) execute an instrument making this Lease subordinate to the lien of any Mortgage, in a form as may be required by any applicable Mortgagee. 15 10.03 ATTORNMENT. If the Demised Premises or the Shopping Center is encumbered by a Mortgage and the Mortgage is foreclosed, or if the Demised Premises or Shopping Center is sold pursuant to foreclosure or by reason of a default under a Mortgage, the following shall apply notwithstanding the foreclosure, the sale or the default: (I) Tenant shall not disaffirm this Lease or any of its obligations under this Lease; and, (ii) at the request of the applicable Mortgagee or purchaser at the foreclosure or sale, Tenant shall attorn to the Mortgagee or purchaser. 10.04 TRANSFER OF LANDLORD'S INTEREST. The term "Landlord" as used in this Lease means only the owner for the time being or the Mortgagee in possession for the time being of the Demised Premises. Each time the Demised Premises are sold, the selling Landlord shall be released of all obligations and liability under this Lease. 10.05 MORTGAGEE'S RIGHTS. If Landlord shall notify Tenant that the Demised Premises or the Shopping Center is encumbered by a Mortgage, and shall notify Tenant of the name and address of the mortgagee, the following shall apply, notwithstanding anything to the contrary: If any Mortgagee shall perform any obligation that Landlord is required to perform under this Lease, the performance by the Mortgagee shall be deemed to be performance on behalf of the Landlord insofar as Tenant is concerned, and the performance shall be accepted by Tenant as if performed by the Landlord. ARTICLE XI COMMON AREA AND SHOPPING CENTER 11.01 USE OF COMMON AREAS. Landlord hereby grants to Tenant the following privileges to use portions of the Common Area during the Term of this Lease. These privileges may be exercised in common with Landlord and other tenants • of the Shopping Center, and any designee of Landlord, and subject to Landlord's rules and regulations: a. Tenant is hereby granted the nonexclusive license to permit its customers to use the sidewalks and customer Parking Areas designated by Landlord from time to time. Tenant is hereby granted the nonexclusive license to permit its employees to use the sidewalks and employee Parking Areas designated by Landlord from time to time. The rights to the use of the Parking Areas by Tenant's customers and employees shall be limited to the right to pass by foot and to parking passage and maneuvering of vehicles. The rights to the use of the sidewalks shall be limited to the right to pass by foot. b. Tenant is hereby granted the nonexclusive privilege to permit its employees and customers to use the entrance and exit ways designated by Landlord from time to time for access to the Demised Premises through appropriate entrances and exits designated by Landlord. 11.02 LANDLORD'S RIGHTS. Notwithstanding anything to the contrary, Landlord shall have the following rights with respect to the Common Area: a. Landlord may close all or any portion of the Common Area temporarily to discourage noncustomer use. • b. Landlord may prohibit parking or passage of motor vehicles in areas previously designated for parking or passage. C. Landlord may erect additional buildings on the Common Area or above the Demised Premises, or change the location of buildings or other structures to any location in the Shopping Center including the Common Area. Upon erection or change of location, the portion of the Shopping Center upon which buildings or structures have been erected shall no longer be deemed to be a part of the Common Area. d. The Landlord reserves the right at any time, and from time to time, to construct and lease kiosks on any part of the Shopping Center (including but not limited to, the interior common areas, the sidewalks and the parking lot). If the Landlord chooses to build a kiosk on a common area of the Shopping Center, upon the commencement of construction, the space devoted to the kiosk will no longer be considered a common area of the Shopping Center. 16 11.03 LICENSE NUMBERS. Landlord shall have the right, from time to time, to prohibit and/or restrict the use of Parking Areas by Tenant, Tenant's Agents and Tenant's employees to specific parking places or areas. In order to implement the foregoing, Tenant shall famish Landlord with the license numbers of any vehicle owned or operated by Tenant and Tenant's employees promptly after each request therefor by Landlord. If any vehicles are parked in violation of Landlord's designated restrictions, Landlord shall have the right to have any such vehicle towed at Tenant's sole expense. 11.04 LANDLORD'S OBLIGATION WITH RESPECT TO PARKING AREA. Landlord shall keep the Parking Area properly paved and in good order and repair throughout the Term. Landlord shall keep the Parking Area properly drained and shall provide painted stripes to designate parking space. Within a reasonable time after a snowfall ends, Landlord shall commence to remove accumulated snow and ice from the Parking Area; and Landlord shall diligently prosecute the removal so that, to the extent practicable, the Parking Area shall be reasonably free of snow and ice. Landlord may deposit accumulated ice and snow on portions of the Common Area as may be necessary under the circumstances. If any ice cannot be removed with reasonable effort on the part of Landlord, it will be sufficient for Landlord to spread sand or other abrasive substances over the ice. 5 PROMOTION; MERCHANT'S ASSOCIATION. Tenant shall fully cooperate with the other occupants of the Shopping Center in promoting the use of such trade names and slogans as may be adopted for said development and in all promotional and advertising campaigns; and in this connection, at the request of Landlord, join and maintain membership in the Merchants' Association and pay the Tenant's just and proportionate share of the cost of the activities conducted by the Merchant's Association. In any event, Tenant specifically agrees with Landlord that Tenant shall contribute to the cost of the activities of the erchants' Association (or those conducted by Landlord in lieu thereof as set forth below) not less than the annual sum of $ , payable to the Merchants' (or to whom Landlord shall otherwise direct) in monthly installments of one- twelfth (1/12) thereof, in advance. Landlord's rights and remedies with regard to the foregoing covenant shall be the same as though Tenant were obligated to make said payments directly to Landlord. Landlord, at its option, may elect to not create or may elect to disband the Merchants' Association and substitute for the promotion of the Shopping Center a _ "Promotional Fund" or "Marketing Fund," and Tenant agrees in such event to pay to Landlord for application to such Fund an amount equal to the amount payable by the Tenant to the Merchants' Association during the last full year of the operation of the Merchants' Association (or the amount set forth above, if a Merchants' Association was not created), subject to adjustment each year by a percentage equal to the percentage of increase or decrease from the "base period" (as defined in the following sentence) of the Consumer Price Index (U.S. City Average) of the United States Bureau of Labor Statistics (or in the event such index shall not be published, then such other index published by the United States as may be selected by Landlord). The "base period" shall be deemed to be the February of the year following disbandment of the Merchants' Association (or, if none was created, the first February during the Term) and the amount payable shall be adjusted every year thereafter. 11.06 ADVERTISING. All Tenant's advertising in the metropolitan St. Paul - Minneapolis area shall set forth the name and address of the Shopping Center. Tenant shall not use the name of the Shopping Center in any confusing, derogatory or misleading manner, and upon the termination of this Lease, Tenant shall not use the name of or any trademark or service mark, if any, associated with the Shopping Center. ARTICLE XH DESTRUCTION AND FIRE INSURANCE 12.01 RENT ABATEMENT. If all or any portion of the Demised Premises is damaged by fire or casualty covered by extended coverage insurance not caused by the fault or neglect of Tenant or Tenant's Agents, and this Lease is not terminated pursuant to any provisions of this Lease, the following shall apply: Rent shall abate from the date of the occurrence in the proportion that the area of the portion of the Demised Premises rendered unusable for the Permitted Uses bears to the entire area of the Demised Premises. The abatement shall continue until the Demised Premises, or the portion thereof which shall have been damaged, shall be rebuilt or repaired. If the fire or other casualty is caused by the fault or neglect of Tenant or Tenant's Agents, rent shall not abate. 17 12.02 OPTION TO CANCEL. This Lease shall not be canceled as a result of fire or casualty except as follows: Landlord shall have the option to cancel this Lease if all or a substantial portion of the Shopping Center or the Demised Premises shall be damaged by fire or casualty. This option may be exercised upon giving notice of cancellation to Tenant within ninety (90) days following the occurrence. Tenant hereby waives all rights to cancel this Lease by reason of damage to the Demised Premises as a result of fire or other casualty pursuant to any presently existing or hereafter enacted statute or other law. 12.03 OBLIGATION TO REBUILD. If all or any portion of the Demised Premises is damaged by fire or other casualty insurable under a standard fire insurance policy with standard extended coverage endorsement, and this Lease is not terminated, Landlord shall repair or rebuild the Demised Premises or such portion to its or their condition immediately prior to the occurrence but only to include the tenant improvements originally included in Landlord's Work. Tenant will, at its sole expense, complete all items of Tenant's Work. The repair or rebuilding shall be commenced within a reasonable time after the occurrence, subject to Force Majeure. Landlord shall not be obligated to expend any sums for repair or rebuilding which are greater than the proceeds of any insurance policy actually received by Landlord and made available to Landlord by any mortgagee. 12.04 WAIVER OF SUBROGATION. Landlord and Tenant hereby release each other and each other's officers, directors, employees and agents from liability or responsibility for any loss or damage to property covered by valid and collectible fire insurance with standard extended coverage endorsement. This release shall apply not only to liability and responsibility of the parties to each other, but shall also extend to liability and responsibility for anyone claiming through or under the parties by way of subrogation or otherwise. This release shall apply even if the fire or other casualty shall have been caused by the fault or negligence of a party or anyone for whom a party may be responsible. However, this release shall apply only with respect to loss or damage actually recovered from an insurance company. This release shall not apply to loss or damage of property of a party unless the loss or damage occurs . during the times the fire or extended coverage insurance policies of a party contain a clause or endorsement to the effect that any release shall not adversely affect or impair the policies or prejudice the right of the party to recover thereunder. Landlord and Tenant each agree that any fire and extended coverage insurance policies covering the Demised Premises or their contents shall include this clause or endorsement. 12.05 RIGHTS OF MORTGAGEE. Tenant acknowledges that the rights of the Landlord with respect to the use of any insurance proceeds paid as a result of any casualty is subject to the rights of any Mortgagee. ARTICLE XIII CONDEMNATION 13.01 DEFINITIONS. As used in this Lease, the following words have the following meanings: a. AWARD means the award for or proceeds of any Taking less all expenses in connection therewith including attorneys' reasonable fees. • b. TAKING means the taking of, or damage to, the Demised Premises or the Shopping Center or any portion thereof, as the case may be, as the result of the exercise of any power of eminent domain, condemnation or purchase under threat thereof or in lieu C. TAKING DATE means the date on which the condemning authority shall take physical possession of the Demised Premises or the Shopping Center or any portion thereof as the case may be. 13.02 TOTAL OR SUBSTANTIAL TAKING OF DEMISED PREMISES. If all of the Demised Premises shall be taken, except for a Taking for temporary use, this Lease shall be canceled automatically as of the Taking Date. If a part of the Shopping Center or the Demised Premises shall be taken, Landlord shall have the option to cancel this Lease. The option to cancel may be exercised within six (6) months of the Taking Date by giving Tenant notice that the option has been exercised. 13.03 ABATEMENT AND RESTORATION. If all or a portion of the Demised Premises shall be taken, except for a Taking for temporary use, and this Lease shall not be canceled under section 13.02, the following shall apply: Minimum Rent 18 shall be reduced in the proportion that the area so taken bears to the entire area of the Demised Premises. Landlord shall restore the remaining portion of the Demised Premises to the extent practical, to render it reasonably suitable for the Permitted Uses. Landlord shall not be obligated to expend an amount greater than the Award for the restoration actually received by Landlord and made available to Landlord by any mortgagee. 13.04 TAKING FOR TEMPORARY USE. If there is a Taking of the Demised Premises for temporary use, this Lease shall continue in full force and effect, and Tenant shall continue to comply with Tenant's obligations under this Lease, except to the extent compliance shall be rendered impossible or impracticable by reason of the Taking. 13.05 DISPOSITION OF AWARDS. All Awards arising from a total or partial Taking of the Demised Premises or of Tenant's leasehold interest awarded to Landlord or Tenant shall belong to and be the property of Landlord without any participation by Tenant. Tenant hereby waives any rights it may have with respect to the loss of its leasehold interest in this Lease and the Demised Premises as a result of a Taking. Tenant shall have the right to make its separate claim for its unamortized costs of leasehold improvements to the extent paid for by Tenant, its fixtures and moving expenses, all to the extent such claims are allowable and do not diminish any Award made or to be made to Landlord. ARTICLE XIV INDENINITY AND LIABILITY . 14.01 INDEMNIFICATION. Tenant shall indemnify and save harmless Landlord against all liabilities, damages, claims, fines, penalties, costs and other expenses, including, all attomeys' fees, which may be imposed upon, incurred by, or asserted against Landlord by reason of all of the following: a) any use or condition of the Demised Premises or any part thereof; b) any personal injury or property damage occurring on the Demised Premises; c) any negligence on the part of Tenant, its agents, contractors, licensees or invitees; d) any failure to comply with any requirement of any governmental authority; e) any prosecution or defense of any suit or other proceeding in discharging the Demised Premises or any part thereof from any liens, judgments or encumbrances created upon or against the same or against Tenant's leasehold estate; f) any proceedings in obtaining possession of the Demised Premises after the termination of this Lease by forfeiture or otherwise; g) any litigation commenced by or against Tenant to which Landlord is made a party without any fault on the part of Landlord; h) any response costs, other damages, and expenses (including attorney's fees) which may be imposed upon, incurred by or asserted against Landlord by reason of the use, release, threatened release or disposal of Hazardous Wastes (as defined in Section 7.04) at the Demised Premises; and i) any failure on the part of Tenant to perform or comply with any covenant or agreement required to be performed or complied with by Tenant hereunder. 14.02 RELEASE OF LANDLORD. All property of any kind that may be on or at the Demised Premises shall be at the sole risk of Tenant or those claiming through or under Tenant. Unless directly caused by the tortiously intentional conduct or willful and wanton negligence of Landlord, Landlord shall not be liable to Tenant or to any other person or entity and Tenant hereby releases and waives all claims due to any of the following: a) damage, loss or injury,, either to person or persons; b) loss of property sustained by Tenant, or by any other person, persons or entities in or upon the Demised Premises or the Shopping Center; c) equipment, fixtures, appliances or machinery in or upon the Demised Premises being or becoming out of repair or defective; d) the happening of any accident, however occurring; e) any act or neglect of Tenant, or any other tenant or occupant of the Shopping Center or of any other person, persons or entities; f) water, snow, rain, backing up of water mains or sewers, frost, steam, sewage, illuminating gas, sewer gas, odors, electricity or electric current, bursting, stoppage or leaking of pipes, radiators, plumbing, sinks and fixtures in or about the Demised Premises or the Shopping Center; g) the use or misuse of any instrumentality or agency in or connected with the Demised Premises or the Shopping Center, or h) any nuisance made or suffered in, on or at the Demised Premises. 14.03 TENANTS INSURANCE. a. Tenant shall provide and maintain a comprehensive policy of liability hmn with respect to the Demised Premises. Landlord, Shorewood Village Shopping Center, Inc, its management f rm, Towle Real Estate Company, and any other designee of Landlord shall be named as additional insured. The liability insurance policy shall name Landlord, its management faun, Tenant, any Mortgagee and any other designee of Landlord as insured against any liability which arises from any occurrence on or about the Demised Premises or any appurtenance of the Demised Premises, or which arises from 19 any of the Claims indicated in Section 14.01 against which Tenant is required to indemnify the Landlord. The policy is to be written by a good and solvent insurance company satisfactory to Landlord. The coverage limits of the policy shall be at least $1,000,000 with respect to any one person, at least $1,500,000 with respect to any one accident, and at least $1,000,000 with respect to property damage. b. Tenant shall provide and maintain a fire insurance policy with standard extended coverage endorsement insuring its improvements, betterments, fixtures, equipment and personal property at replacement cost. 14.04 PLATE GLASS INSURANCE. Tenant shall keep all plate glass of the Demised Premises insured against all risks for the benefit of Landlord and Tenant in amounts and with a company satisfactory to Landlord. 14.05 GENERAL PROVISIONS WITH RESPECT TO INSURANCE. a. On or before Tenant enters the Demised Premises for any reason, and before any insurance policy shall expire, Tenant shall deliver to Landlord the policy or a renewal thereof, as the case may be, together with evidence of payment of applicable premiums. Any insurance required to be carried under this Lease may be carried under a blanket policy covering the Demised Premises and other locations of Tenant. If Tenant includes the Demised Premises in blanket coverage, Tenant may deliver to Landlord a duplicate original of the blanket insurance policy or a certificate evidencing such insurance instead of the original of the policy. b. All insurance policies required to be carried under this Lease by or on behalf of Tenant shall provide (and . any certificate evidencing the existence of any insurance policies shall certify) that: unless Landlord shall be given ten (10) days' written notice of any cancellation or failure to renew or material change to the policies, as the case may be (I) the insurance shall not be canceled and shall continue in full force and effect, (ii) the insurance carrier shall not fail to renew the insurance policies for any reason, and (iii) no material change may be made in an insurance policy. As used in this Lease, the term "insurance policy" shall include any extensions or renewals of an insurance policy. 14.06 INABILITY TO PERFORM. a. If Landlord fails to perform any of its obligations under this Lease as a result of Force Majeure, Landlord shall not be liable for loss or damage for the failure and Tenant shall not be released from any of its obligations under this Lease. b. If Landlord is delayed or prevented from performing any of its obligations as a result of Force Majeure, the period of delay or prevention shall be added to the time herein provided for the performance of any such obligation. 14.07 BROKERAGE. Tenant represents that there was no broker (other than the person designated as Broker in � Section 1.09) instrumental in consummating this Lease, and that no conversations or prior negotiations were had with any broker (other than the Broker) concerning the renting of the Demised Premises. Tenant shall hold Landlord harmless against any claims for brokerage commission or compensation arising out of any conversations or negotiations had by Tenant with any broker (other than the Broker). ARTICLE XV COVENANT OF QUIET ENJOYMENT 15.01 Landlord covenants that if Tenant pays the Minimum Rent, Additional Rent and all other charges provided for in this Lease, performs all of its obligations provided for under this Lease, and observes all of the other provisions of this Lease, Tenant shall peaceably and quietly enjoy the Demised Premises in accordance with the terms of this Lease without any interruption or disturbance from Landlord. Landlord shall not be responsible or liable for the actions of third parties, including other tenants in the Center. 20 ARTICLE XVI DEFAULTS; REMEDIES 16.01 DEFAULTS. Each of the following events shall constitute a Default: a. If an event of insolvency should occur. Each of the following events shall be regarded as events of insolvency: (i) If Tenant or any Tenant's Guarantor shall make an assignment for the benefit of creditors. (ii) If Tenant or any Tenant's Guarantor shall file or acquiesce to a petition in any court (whether or not pursuant to any statute of the United States or of any state) in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceedings. (iii) If Tenant or any Tenant's Guarantor shall make an application in any such proceedings for, or acquiesce to, the appointment of a trustee or receiver for it or all or any portion of its property. (iv) If any petition shall be filed against Tenant or any Tenant's Guarantor to which neither of them acquiesce in any court (whether or not pursuant to any statute of the United States or any state) in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceedings and the proceedings shall not be dismissed, discontinued or vacated within sixty (60) days. (v) If Tenant or any Tenant's Guarantor shall be adjudicated a bankrupt or if any petition referred to in clause (iv) shall be approved by any court. (vi) If, in any proceeding pursuant to the application of any person other than Tenant or Tenant's Guarantor to which neither of them acquiesce, a receiver or trustee shall be appointed for Tenant or Tenant's Guarantor, or for all or any portion of the property of either, and the receivership or trusteeship shall not be set aside within sixty (60) days after such appointment. b. If Tenant shall vacate the Demised Premises. C. If Tenant shall refuse to take possession of the Demised Premises on the Commencement Date or shall permit the Demised Premises to remain unoccupied and unattended. d. If Tenant shall cease to conduct its business in the Demised Premises at the times and in the manner required hereunder. e. If Tenant shall fail to pay any installment of Minimum Rent, Additional Rent, Percentage Rent (if any) or any other charge required to be paid by Tenant under this Lease within five (5) days after the same shall become due and payable. f. If Tenant shall fail to perform or observe any of its other obligations under this Lease for a period of ten (10) days after written notice to Tenant. 16.02 REMEDIES. a. Upon the occurrence of a Default as defined above Landlord may elect either (i) to cancel and terminate this Lease, and this Lease shall not be treated as an asset of Tenant's bankruptcy estate, and such termination will not release Tenant from liability for all amounts as provided in subsection c) hereof; or, (ii) to terminate Tenant's right to possession only without canceling, terminating or releasing Tenant's continued liability as set forth in subsection b). Notwithstanding the fact 21 that initially Landlord elects under clause (ii) to terminate Tenant's right to possession only, Landlord shall have the continuing right to cancel and terminate this Lease by giving three (3) days written notice to Tenant of such further election, and shall have the right to pursue any remedy at law or in equity that may be available to Landlord. b. In the event of election under clause (a) (ii) to terminate Tenant's right to possession only, Landlord may, at Landlord's option, enter into the Demised Premises and take and hold possession thereof, without such entry into possession terminating this Lease constituting an acceptance of surrender, or releasing Tenant in whole or in part from Tenant's obligation to pay all amounts hereunder for the full stated Term, or any then effective Renewal Term. Upon such reentry, Landlord may remove all persons and property from the Demised Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant, without becoming liable for any loss or damage which may be occasioned thereby, Such reentry may be conducted in any lawful manner. Upon and after entry into possession without termination of the Lease, Landlord may, but is not obligated to, relet the Demised Premises, or any part thereof, to anyone other than the Tenant, for such time and upon such terms as Landlord, in Landlord's sole discretion, shall determine. Landlord may make alterations and repairs, and redecorate the Demised Premises to the extent deemed by Landlord necessary or desirable. Whether or not Landlord re- enters the Demised Premises, upon the election by Landlord to terminate Tenant's right to possession, Tenant shall be liable to Landlord as follows: (1) For all attorneys' fees incurred by Landlord by reason of Tenant's Default or in connection with exercising any remedy hereunder; (2) For the unpaid installments of Minimum Rent, Additional Rent, Percentage Rent and other unpaid sums which were due prior to such termination of right to possession, including interest and late payment fees, which sums shall be payable immediately; (3) For the installments of Minimum Rent, Additional Rent, Percentage Rent and other sums falling due pursuant to the provisions of this Lease for the periods after termination of Tenant's right to possession during which the Demised Premises remain vacant, including interest, which sums shall be payable as they become due hereunder; (4) For all expenses incurred in redecorating, remodeling and releasing the Demised Premises, including leasing commissions, attorneys' fees, costs of alterations, repairs and redecorating, which shall be payable by Tenant as they are incurred by Landlord; and (5) While the Demised Premises are subject to any new lease or leases made pursuant to this subsection (b) for the amount by which the monthly installments payable under such new lease or leases is less than the monthly installment for all charges payable pursuant to this Lease, which deficiencies shall be payable monthly, C. Notwithstanding Landlord's initial election to terminate Tenant's right to possession only, and notwithstanding any reletting without termination, Landlord, at any time thereafter, may elect to terminate this Lease, and to recover from Tenant (and Tenant agrees to pay), in lieu of the amounts which would thereafter be payable pursuant to the foregoing subsection (b); but not in lieu of any amounts accruing prior thereto, as damages for loss of the bargain and not as a penalty, the following amounts: (1) The amount by which the rental value of the portion of the Term (or then effective Renewal Term, if applicable) unexpired at the time of such election is less than an amount equal to the unpaid Minimum Rent, Additional Rent and all additional charges due in the Lease Year in which such election occurs multiplied by the Lease Years remaining in the original Term (or such Renewal Term). (2) All expenses incurred by Landlord as a result of Tenant's Default including, without limitation, leasing commissions, attorneys' fees, all expenses of alteration, repairs and redecorating. (3) Interest on all of the foregoing, as provided herein. 22 (4) All other incidental and consequential damages incurred or suffered by Landlord directly or indirectly as a result of Tenant's Default. Such amounts shall be due to Landlord as of the time Landlord makes said election, notwithstanding that the Term had not expired. If Landlord, after such reentry, leases said Demised Premises, then the rent payable under such new lease shall be conclusive evidence of the rental value of said unexpired portion of said Term. If this Lease shall be terminated by reason of the bankruptcy or insolvency of Tenant, Lessor shall be entitled to recover from Tenant or Tenant's bankruptcy estate, as damages for loss of the bargain and not as a penalty, the amount determined by this subsection (c). d. Mention in this Lease of any particular remedy shall not preclude Landlord from any other remedy, in law or in equity. e. Tenant hereby expressly waives any and all rights of redemption granted by or under the 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 Demised Premises, by reason of violation by Tenant of any of the covenants and conditions of this Lease or otherwise. 16.03 DEFAULT BY LANDLORD. If Landlord shall default in the performance of any of the terms or provisions of this Lease, Tenant shall promptly so notify Landlord in writing. If Landlord shall -fail to cure such default within thirty (30) days to receipt of such notice, or if the default is of such character as to require more than thirty (30) days to cure, and Landlord shall fail to commence to do so within thirty (30) days after receipt of such notice and thereafter diligently proceed to cure such default, then in either event, Tenant may cure such default and any reasonable and actual expenses paid by Tenant shall be paid by Landlord to Tenant within ten (10) days after a statement therefor is rendered. Tenant shall have no right to set off or deduct any such amounts from any Minimum Rent, Additional Rent or other amount due hereunder. 16.04 LANDLORD'S RIGHT TO PERFORM FOR ACCOUNT OF TENANT. If Tenant shall be in Default under this Lease, Landlord may cure the Default at any time for the account and at the expense of Tenant. If Landlord cures a Default on the part of Tenant, Tenant shall reimburse Landlord for any amount expended by Landlord in connection with the cure upon demand. 16.05 ADDITIONAL REMEDIES, WAIVERS, ETC. a. In addition to all other remedies granted to Landlord hereunder, upon the occurrence of a default specified in Section 16.01(d), Landlord may obtain equitable relief by way of specific performance and/or temporary and permanent injunctions requiring Tenant to continue to conduct its business in the Demised Premises at the times and in the manner required hereunder. b. The rights and remedies of Landlord set forth herein shall be in addition to any other right and remedy now and hereafter provided by law. All rights and remedies shall be cumulative and not exclusive of each other. Landlord may exercise its rights and remedies at any times, in any order, to any extent, and as often as Landlord deems advisable without regard to whether the exercise of one right or remedy precedes, concurs with or succeeds the exercise of another. C. A single or partial exercise of a right or remedy shall not preclude a further exercise thereof, or the exercise of another right or remedy from time to time. d. No delay or omission by Landlord in exercising a right or remedy shall exhaust or impair the same or constitute a waiver of, or acquiescence to, a Default. e. No waiver of a Default shall extend to or affect any other Default or impair any right or remedy with respect thereto. No action or inaction by Landlord shall constitute a waiver of a Default. The acceptance by Landlord of any Minimum Rent, Additional Rent, Percentage Rent or other amounts, whether partial or full payment shall not constitute a waiver of any other Defaults. The acceptance of any M inimui n Rent, Additional Rent or Percentage Rent from any third party 23 shall not constitute a waiver of any of the restrictions of Section 10.01 hereof. No waiver of a Default shall be effective against Landlord unless the same is in writing and is duly executed by an authorized representative of Landlord. ARTICLE XVII TENANT INFORMATION 17.01 TENANT'S CERTIFICATE. Within ten (10) days after each request by Landlord, Tenant shall deliver a certificate to Landlord. The certificate shall be in writing, shall be acknowledged, and shall be in proper form for recording. The certificate shall be executed by Tenant if Tenant is an individual proprietorship, by a general partner of Tenant if Tenant is a partnership, or by the president or a vice president if Tenant is a corporation. Each certificate shall be certified to Landlord, any Mortgagee, any assignee of any Mortgagee, any purchaser, or any other person specified by Landlord. Each certificate shall contain the following information certified by the person executing it on behalf of Tenant: (I) Whether or not Tenant is in possession of the Demised Premises; (ii) Whether or not this Lease is unmodified and in full force and effect. (If there has been a modification of this Lease, the certificate shall state whether this Lease is in full force and effect as modified) and whether Landlord is in default under this Lease in any respect; (iv) Whether or not there are then any claims defenses against the enforcement of any right or remedy of Landlord, or any duty or obligation of Tenant (and if so, specify the same); (v) the dates, if any, to which any rent or charges have been paid in advance; and (vi) any other information reasonably requested by Landlord. FINANCIAL INFORMATION. Tenant shall provide to Landlord within ten (10) days after the end of each calendar month of the Term of this Lease, a statement of gross sales made in or from the Demised Premises for that particular calendar month, signed and certified as accurate by an officer or principal of Tenant. In addition within thirty (30) days after the end of each lease year of the term of this lease, Tenant shall provide to Landlord a statement of gross sales for that particular lease year signed by an appropriate officer or principal of tenant and certified as accurate by an independent certified public accountant. Within ten (10) days after request therefor by Landlord or any prospective purchaser or Mortgagee or other lender, Tenant hereby agrees to deliver to the requesting party Tenant's most recent financial statements and most recent annual report, if any, all prepared in accordance with generally accepted accounting principles consistently applied. Such statements shall be prepared by the accountants then regularly employed by Tenant or, if Tenant does not then regularly employ accountants for the preparation of such financial statements, the financial statement shall be prepared by Tenant and signed by its President, if a corporation or a general partner, if a partnership, who shall certify that the statement fairly presents the financial condition of Tenant as of the date stated. 17.03 CONFIDENTIAL INFORMATION. Landlord shall hold any financial information obtained from Tenant's records in strict confidence except as may be necessary (a) for the enforcement of Landlord's rights under this Lease, (b) in connection with prospective financing or prospective sales of the Shopping Center or a lease of the Demised Premises, © with respect to tax proceedings, and (d) pursuant to any legal requirements. ARTICLE XVIII • RIGHT OF ACCESS 18.01 ENTRY. During any reasonable time before and after the Commencement Date, Landlord may enter upon the Demised Premises, any portion thereof and any appurtenance thereto (with men and materials, if required) for any of the following purposes without constituting a construction eviction: a) inspecting the Demised Premises; b) making any repairs, replacements or alterations which Landlord may be required to perform under this Lease, or which Landlord may deem desirable for the Demised Premises and c) showing the Demised Premises to prospective purchasers or lessees. 24 18.02 EASEMENT FOR PIPES. Tenant shall permit Landlord to erect, use, maintain and repair pipes, cables, conduits, plumbing, vents and wires in, to and through the Demised Premises as often and to the extent that Landlord may now or hereafter deem to be necessary or appropriate for the proper operation and maintenance of the Shopping Center. ARTICLE = INTERPRETATION; NOTICES; MISCELLANEOUS 19.01 INTERPRETATION. a. Exhibits A. B. C. D and E are attached to this Lease. They shall be considered a part of this Lease. b. Any references in this Lease to "subtenants" or "licensees" shall not be deemed to imply that any subtenants or licensees are permitted under this Lease. Any references in this lease to any extensions or renewals of the Term of this Lease or to any period during which Tenant may be in possession after the Expiration Date shall not be deemed to imply that any extension or renewal of the Term of this Lease is contemplated or that Tenant shall be permitted to remain in possession after the expiration of the Term of this Lease. C. If any provision of this Lease or the application of any provision of this Lease to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Lease, or the application of such provision to persons or circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby; and each provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. d. The captions and headings used throughout this Lease are for convenience of reference only and shall not affect the interpretation of this Lease. This Lease has been executed in several counterparts; but the counterparts shall constitute but one and the same instrument. 19.02 COMMUNICATIONS. No notice, request, consent, approval, waiver or other communication under this Lease shall be effective unless the same is in writing and is mailed by registered or certified mail, or overnight courier, postage prepaid, addressed as follows: a. If intended for Landlord, a communication shall be effective three (3) days after it is sent if mailed to the address designated as Landlord's Notice Address in Section 1.10, with appropriate copy, or to such other address as Landlord designates by giving notice to Tenant, and i b. If intended for Tenant, a communication shall be effective three (3) days after it is sent if mailed to the address designated as Tenant's Notice Address in Section 1.10 or such other address as Tenant shall designate by giving notice thereof to Landlord. 19.03 SUCCESSORS AND ASSIGNS. Except as otherwise provided, this Lease shall bind and inure to the benefit of the parties and their respective successors, representatives, heirs and assigns subject to Section 10.01. 19.04 RESPONSIBILITY OF TENANT. Any restriction on or requirement imposed upon Tenant under this Lease shall be deemed to extend to Tenant's Guarantor, Tenant's concessionaires and licensees; and it shall be Tenant's obligation to cause the foregoing persons to comply with the restrictions and requirements. 25 19.05 LIABILITY OF LANDLORD. Landlord and its officers or partners shall have absolutely no personal liability with respect to any provision of this Lease or any obligation or liability arising from this Lease. Tenant shall look solely and exclusively to Landlord's interest in the Shopping Center for the satisfaction of any judgment or remedies of Tenant. 19.06 GOVERNING LAW. This Lease shall be governed by and construed according to the laws of the State of Minnesota. 19.07 GUARANTY. All of Tenant's obligations under this Lease Agreement are secured by the Guaranty executed by Tenant's Guarantor(s) as specified in Section 1.07 hereof. 19.08 EXECUTION AND DELIVERY REQUIRED. This document shall have no binding effect on the parties unless executed by the landlord and the tenant and a fully executed copy if delivered to the tenant. To evidence their agreement to the foregoing the parties have duly executed this Lease the date first indicated above. LANDLORD: Shorewood Village Shopping Center, Inc. By Its TENANT: City of Shorewood By Its By Its swooduiquor.lse • M 4 F a SHOREWOOD VILLAGE CENTER 0 23600 - 23750 HIGHWAY 7 W w SHOREWOOD, MINNESOTA 55331 WELL 0 oN to t0 N C� N ac 123640 .400 SF LOCK 80x PUMP ROOM 123620 10,660 SF 123600 24,600 SF Richard W. Ducharme, CPM VICE PRESIDENT /GENERAL MANAGER TOWLE REAL ESTATE COMPANY EDINA OFFICE CENTER 7600 FRANCE AVENUE SOUTH EDINA, MN 55435 OFFICE: 612 832 0723 FAX: 612 832 0733 Ea k N oL. vi r- 0 fn 04 C4 �M . Me to /23750 °'L^ 19,110 SF N 4m o N a; rn o N O N M N rn o .O N� N C wa phi / 4 F a SHOREWOOD VILLAGE CENTER 0 23600 - 23750 HIGHWAY 7 W w SHOREWOOD, MINNESOTA 55331 WELL 0 oN to t0 N C� N ac 123640 .400 SF LOCK 80x PUMP ROOM 123620 10,660 SF 123600 24,600 SF Richard W. Ducharme, CPM VICE PRESIDENT /GENERAL MANAGER TOWLE REAL ESTATE COMPANY EDINA OFFICE CENTER 7600 FRANCE AVENUE SOUTH EDINA, MN 55435 OFFICE: 612 832 0723 FAX: 612 832 0733 Ea EXHIBIT B LEGAL DESCRIPTION All of Lot 172 and that part of Lots 170 and 171 lying south of the Westerly extension of the North line of Lot 172, and that part of Lot 173, Auditor's Subdivision No. 135, Hennepin County, Minnesota, lying Northerly of the Northerly right of way line of State Highway No. 7 EXCEPT the East 50 feet of said Lot 173 as measured at right angles from the East line of said Lot 173_ Also that part of the East 30 feet of vacated Woodruff Avenue lying North of State Highway No. 7 and South of a line drawn from the Southwest corner of Lot 171, Auditor's Subdivision No. 135, to the most Southerly point of Lot 11, Linden Park, subject to easement for public records, but including any portion of said East ' / 2 of Woodruff Avenue to be vacated at a future date, according to the plat thereof on file and of record in the office of the Register of Deeds, in and for Hennepin County, Minnesota. • r7 7 EXHIBIT C LANDLORD'S WORK Tenant accepts premises in "as -is" condition. • • EXHIBIT D OTHER PROVISIONS Base Rent Tenant shall pay Landlord on or before the 1st day of each month, base rent according to the following schedule: Rent Monthly Annual p•s_f. Rent Rent January 1, 1997 - December 31, 1997 $ 6.00 $1,995.00 $23,940.00 January 1, 1998 - December 31, 1998 $ 7.00 $2,327.50 $27,930.00 January 1, 1999 - December 31, 1999 $ 8.00 $2,660.00 $31,920.00 January 1, 2000 - December 31, 2000 $ 9.00 $2,992.50 $35,910.00 January 1, 2001 - December 31, 2001 $10.00 $3,325.50 $39,900.00 Tenant shall pay it's prorata share of all operating expenses. Early Termination Should the City of Shorewood decide to discontinue operation of all its municipal liquor stores during the term of this Lease, Tenant shall have the option to terminate this Lease provided Tenant gives Landlord at least six (6) months advance written notice of its intention to do so. Potential Shopping Center Renovation In the event that Landlord elects to renovate the shopping center, Tenant agrees to pay an additional rent, an amount equal to its pro rata share of the costs associated with the renovation including but not limited to masonry work, carpentry, new signage, site work, new HVAC, electrical, rebuilding the mansard roof, new entrances and new roof. Said cost shall be amortized over the remaining term of the lease with an interest charge at 2 points over the prime rate published at that time by First Bank, Minneapolis. Termination Right In the event that Tenant's share of the cost of renovation exceeds $665.00 per month, Tenant may give Landlord. one year's written notice of Tenant's intent to terminate this Lease. Landlord shall have thirty (30) days from the receipt of said written notice from Tenant to either allow Tenant to terminate the Lease or Landlord may reduce Tenant's obligation to pay additional rent based on said renovation, so that Tenant's Rent will not increase by more than $665.00 per month. LANDLORD Shorewood Village Shopping Center, Inc. Lo Its Dated TENANT • City of Shorewood By Its B Its Dated