Exibit 10.40
LEASE
LEASE, dated October 7, 1997, between CREEKSIDE BUILDING LLC, a Washington
limited liability company ("Landlord"), and PACIFIC AEROSPACE AND ELECTRONICS,
INC., a Washington corporation, ("Tenant").
1. Basic Lease Terms. This Section sets forth certain basic terms of this
Lease for reference purposes. This Section is to be read in conjunction
with the other provisions of this Lease.
Additional Rent Initial Estimated:
$6,203.10/month
($.29/rsf)
Leased Premises (See ss. 2)
Business Park Quadrant Xxxxx
Xxxxx Center
Parking (See ss. 24) Approx. 75
stalls
(3.5 stalls/
1,000 rsf)
Building Name Creekside Building
Address 00000 00xx Xxx XX Brokers (See ss. 36)
Xxxxxxx, XX 00000 For Tenant: Pacific Real Estate
Partners
For Landlord: Pacific Real Estate
Partners
Rentable Sq. Ft. Approx. 21,390 "rsf"
Rent; Prepaid Rent; Security Deposit Addresses for Notices (See ss. 29)
(See ss. 5 and 6)
Base Monthly Rent: Landlord:
Commencement Date- Creekside Building LLC
Rent Commencement Date: $0.00 x/x Xxxxxxxx/XXX Xxxx. Xxxxxxxx
Xxxxxxxx Xxxxx, Xxxxx 000
Rent Commencement Date - N.E. 0xx Xxxxxx at 112th Ave. NE
Month 36:$24,598.50($ 1.1 5/rsf) Xxxxxxxx, XX 00000
Month 37 - 60:$27,379.20($1.28/rsf) Tel: 000-000-0000
Month 61 - 72:$29,090.40($1.36/rsf) Fax: 000-000-0000
Attn: Xxxxx Xxxxxxxx
Prepaid Rent:
Tenant:
$0.00 for month N/A Pacific Aerospace & Electronics, Inc.
$0.00 for month N/A 000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Security Deposit: $30,801.60 Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxxxxx
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Term (See ss. 3)
Commencement Date: Estimated:
1 1 /1 5/97
Rent Commencement Date: Estimated
2/1 /98
Expiration Date: Estimated:
1 1/1 4/2003
Length of Term: 72 months
Permitted Use (See ss. 7)
General office, product development and
light manufacturing purposes
Operating Expenses (See ss. 8)
Tenant's Share 50% of Operating Expenses
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1A. Special Lease Terms. The following additional special lease terms shall
apply. To the extent of any inconsistency between the special lease terms
in this Section 1A and the other provisions of this Lease, this Section 1A
shall control.
1A.1 Operating Expenses. Tenant's payment of Tenant's Share of Operating
Expenses shall commence on the Commencement Date.
1A.2 Option to Extend Term.
1A.2.1 Tenant shall have one option to extend the Term of this
Lease for an additional five year period. Tenant's option may be
exercised by Tenant only by written notice of exercise to Landlord
no earlier than 12 months and no later than 9 months prior to the
expiration of the then-effective Term.
1A.2.2 Upon such exercise, the parties shall be obligated under all
the terms and conditions of this Lease through the extended Term,
except that Base Monthly Rent during the extension of the Term
shall be equal to the higher of (i) the Base Monthly Rent in the
final month of the then-effective Term or (ii) 100% of the fair
market rent for the Premises as of 30 days after Tenant's notice of
exercise.
1A.2.3 Within 20 days of Tenant's notice of exercise, Landlord
shall propose a Base Monthly Rent for the extended Term. The
parties shall negotiate in good faith, but if they are unable to
agree upon such Base Monthly Rent by 30 days after the delivery of
Landlord's proposal, then either party may elect to cause such Base
Monthly Rent to be determined by reference to the appraised fair
market rent. Such election shall be made by such party by notice to
the other party, including in such notice the designation of an
appraiser. The other party may accept such appraiser or designate
another appraiser within 10 days of such notice. If it does not
designate another appraiser in such period, it shall be deemed to
have accepted the first appraiser. If a second appraiser is
designated, the two appraisers shall promptly appoint a third
appraiser.
1A.2.4 Each appraiser shall determine the fair market rent for the
Premises for the extended Term by reference to all factors deemed
appropriate in his or her professional opinion, and notify the
parties within 30 days of the date of appointment of the last
appraiser of such fair market rent. The Base Monthly Rent for the
extended Term shall be calculated as provided in Section 1A.2.2 by
reference to the fair market monthly rent determined by the single
appraiser or, if there are
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three appraisers, the mean average of the two closest fair market
monthly rents.
1A.2.5 All appraisers under this appraisal provision shall be
independent certified professional appraisers with at least five
years' experience appraising office properties/business park
complexes in north King County and/or south Snohomish County. If
there are three appraisers, each party shall pay for the cost of
its designated appraiser and 50% of the cost of the third
appraiser, It there is only one appraiser, each party shall pay 50%
of the cost of such appraiser.
1A.2.6 Tenant may not exercise its option to renew the Term at any
time in which it is in Default under this Lease. If Tenant has
received notice of Default, under this Lease after exercise of its
option to extend the Term but before the commencement of the
extended Term, and any applicable cure period has expired without
cure having been accomplished, Landlord may, in addition to its
other remedies under this Lease, elect to terminate such extension
by notice in writing to Tenant, whereupon the Term shall expire
without any such extension.
1A.3 Sublease; Assignment. Landlord's consent to any proposed sublease
or assignment of all or any part of the Premises shall not be
unreasonably withheld, conditioned or delayed; provided, however,
that Landlord's rejection of any proposed subtenant or assignee
based upon Landlord's determination, in the exercise of its sole
discretion, that use of the Premises by such proposed subtenant or
assignee is not allowed in the Business Park shall not be deemed to
be an unreasonable withholding of Landlord's consent. To the extent
that any subtenant's rent exceeds the Rent payable by Tenant under
this Lease, Landlord and Tenant shall share equally in the amount
by which Rent is exceeded. Tenant shall propose such assignment or
sublease by written notice to Landlord, and such notice shall
specify an effective date which shall be the first day of a
calendar month and shall be not less than 30 days after the date of
such notice.
1A.3.1 Actions Not Deemed Assignment. An assignment or transfer by
operation of law or by contract of this Lease by Tenant to (i) any
corporation or partnership that controls, is controlled by, or is
under common control with Tenant; or (ii) any corporation resulting
from the merger or consolidation with the Tenant or to any entity
that acquires substantially all of the Tenant's assets as a
going-concern business, shall not constitute an assignment under
this Lease.
1A.3.2 Landlord's Consideration of Release Upon Assignment. If, in
accordance with and subject to Section 1A.3.1, Landlord gives its
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consent to Tenant's assignment of this Lease to the assignee
proposed by Tenant (the "Assignee"), Landlord shall, if requested
by Tenant, consider in good faith, but shall not be required to
issue, the express written release of Tenant from its obligations
under this Lease arising after the assignment to Assignee, provided
(i) Assignee assumes and is fully responsible for all obligations
of Tenant under this Lease arising after the date of such
assignment pursuant to written documentation acceptable to Landlord
and (ii) that Assignee is of commercial creditworthiness comparable
to or exceeding that of Tenant, as reasonably determined by
Landlord, considering such factors as the Assignee's balances of
cash or cash equivalents at the time of the proposed assignment,
Assignee's total stockholder's equity as measured by total assets
less total liabilities, and profitability as measured by net income
after taxes and other factors deemed material and relevant by
Landlord. If Tenant requests such release, Tenant shall provide
Landlord financial information relating to the commercial
creditworthiness of the Assignee as requested by Landlord and
certified by Assignee or its independent financial advisors to be
true, complete and correct.
1A.4 Signage. Interior signage shall be provided by Landlord identifying
Tenant at the main entrance to the Premises; and building directory
signage shall be provided by Landlord identifying Tenant at the
main building lobby; provided, however, maintenance of such signage
shall constitute an Operating Expense. At Tenant's expense, Tenant
shall have the right to install an identifying signage on the
Building in accordance with and limited to the following criteria:
subject to the Development Standards for Quadrant Xxxxx Xxxxx
Center and applicable City of Bothell Codes.
2. Premises. Landlord agrees to lease to Tenant and Tenant agrees to lease
from Landlord the Premises described on Exhibit A-1 and consisting of
approximately the square feet designated in Section 1. The Premises are a
part of the Building, located on the real property described on Exhibit
A-2 ("Property"). The Premises, Building, and Property are part of a
business park described on Exhibit A-3 ("Business Park").
3. Term.
3.1 The term of this Lease ("Term") shall commence on the Commencement
Date set forth in Section 1, subject to Section 4.
3.2 The Term shall expire on the Expiration Date set forth in Section
1, unless sooner terminated or extended as provided in this Lease.
4. Tenant Improvements: Early Possession: Delayed Delivery of Possession.
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4.1 Any improvements to or construction on the Premises shall be
carried out in accordance with the Work Letter attached as Exhibit
6 and incorporated herein by this reference.
4.2 If Landlord permits Tenant to occupy the Premises prior to the
Commencement Date set forth in Section 1 , the Commencement Date
shall be such date of occupancy. Tenant's occupancy prior to the
originally scheduled Commencement Date shall be subject to all the
provisions of this Lease and shall not advance the Expiration Date.
4.3 If Landlord for any reason, other than Force Majeure or Tenant
Delay (as defined in the Work Letter), cannot deliver possession of
the Premises to Tenant at the estimated Commencement Date of
November 15, 1997, then (i) the Commencement Date shall be the date
on which possession of the Premises is delivered to Tenant, (ii)
this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting therefrom, (iii)
the Rent Commencement Date shall be delayed one day for each one
day delay in the estimated Commencement Date of November 15, 1997,
(iv) the Expiration Date shall be adjusted so that the length of
the Term remains as provided in Section 1 , and (v) Landlord and
Tenant shall execute an amendment to this Lease setting forth the
adjusted Commencement Date and Expiration Date.
5. Rent
5.1 Tenant shall pay to Landlord the Base Monthly Rent specified in
Section 1 and the Additional Rent as set forth in Section 8 and
elsewhere in this Lease (the Base Monthly Rent and the Additional
Rent are collectively referred to as "Rent"). Rent shall be paid in
advance, on or before the first day of each calendar month of the
Lease Term of each month of the Term of this Lease; provided,
however, that the first full calendar month's Rent, and any portion
of a partial month preceding such first calendar month shall be
paid by Tenant on the Commencement Date.
5.2 Except as otherwise expressly provided in this Lease rent shall be
paid without prior notice, demand, set off, counterclaim, deduction
or defense and, without abatement or suspension.
5.3 Payment of Rent shall begin on the Rent Commencement Date set forth
in Section 1, subject to Section 4. Rent for any period during the
Term that is for less than one month shall be prorated for the
actual number of days in such period.
5.4 All Rent shall be paid to Landlord at the address for notices set
forth in Section 1, in lawful money of the United States of
America, or to such other person or at such other place as Landlord
may from time to time designate in writing.
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6. Prepaid Rent and Security Deposit.
6.1 Upon execution of this Lease, Tenant shall pay to Landlord the
Prepaid Rent and Security Deposit set forth in Section 1 (the
Prepaid Rent and the Security Deposit collectively, "Deposit").
6.2 Landlord shall have the right to all or any part of the Deposit to
cure any Default by Tenant under this Lease or to compensate
Landlord for actual damages sustained by Landlord as a result of
such Default. In the event of any such application of the Deposit,
Tenant shall, on written demand, pay to Landlord the amount
necessary to replenish the Deposit to the amount set forth in
Section 1 within five (5) business days.
6.3 If Tenant is not in Default at the expiration or termination of
this Lease, Landlord shall return the remaining Security Deposit to
Tenant, less any amounts necessary to return the Premises to their
original condition, reasonable wear and tear excepted and damage by
insured casualty.
6.4 In the event this Lease is terminated before the end of the Term
for any reason, any Rent paid for any period after the date of such
termination shall be treated as an addition to the Security
Deposit.
6.5 Landlord's obligations with respect to the Security Deposit are
those of a debtor and not a trustee. Landlord may maintain the
security deposit separate from Landlord's general funds or may
commingle the Security Deposit with other funds of Landlord. No
interest shall accrue for Tenant on the Deposit.
7. Use of Premises
7.1 Tenant shall use the Premises only for the purpose set forth in
Section 1. Tenant acknowledges that it has determined to its
satisfaction that the Premises can be used for general office,
product development and light manufacturing purposes. Tenant waives
any right to terminate this Lease in the event the Premises cannot
be used for such purposes during the Term. The Premises may not be
used for any other purpose without Landlord's written consent.
7.2 Tenant shall not do or permit anything to be done in or about the
Premises or bring or keep anything therein which will in any way
increase the cost of or affect any fire or other insurance upon the
Building or any part thereof or any of its contents, or cause
cancellation of any insurance policy covering the Building or any
part thereof or any of its contents; provided, however that Tenant
may do or permit, an action that increases the cost of, or affects
insurance on the Buildings or any part thereof or any of its
contents if Tenant pays the increased cost directly to Landlord
upon receipt of a verified invoice showing such increased cost
directly attributable to such activity.
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Tenant's use of the Premises for the uses described in this Section
shall be permitted without additional cost to Tenant, regardless of
the impact on the cost of insurance.
7.3 Tenant shall not do or permit anything to be done in or about the
Premises that will obstruct or interfere with the rights of other
tenants or occupants of the Building or Business Park or injure
them or their property, or use or allow the Premises to be used for
any unlawful purpose or in any way constituting a nuisance;
provided, Tenant shall be entitled to conduct its operations,
including without limitation product development and light
manufacturing at the Premises, and provided further, that Landlord
shall give Tenant notice and an opportunity to both challenge and
cure any action that allegedly obstructs, interferes or creates a
nuisance at the Premises. The cure period shall be of reasonably
sufficient time to allow Tenant to make any required changes to its
operations without substantial interruption of its business.
8. Additional Rent for Operating Expenses.
8.1 Tenant shall pay, as Additional Rent, Tenant's Share, as set forth
in Section 1, of all Operating Expenses.
8.2 Tenant's Share shall be the percentage of all Operating Expenses
for the Building set forth in Section 1.
8.3 "Operating Expenses" means all expenses and charges paid or accrued
by Landlord during the relevant accounting period in the operation
of the Building, Property and Common Areas (as defined in Section
10), as a first-class facility, including without limitation the
items set forth in this Section 8.3, but excluding the items set
forth in Section 8.4: (i) all real property taxes, assessments and
other general or special charges levied during the Term by any
public, governmental or quasi-governmental authority against the
real or personal property included in the Building or the Property,
including without limitation Landlord's personal property used
exclusively in the maintenance, repair or operation of the Building
or the Property, or any other tax on the leasing of the Building or
on the rents from the Building (other than any federal, state or
local income, franchise, excise transfer, gift or estate tax); (ii)
any and all assessments Landlord must pay for the Building or
Property pursuant to an applicable Declaration of Covenants,
Conditions, Restrictions and Easements for the Business Park
("CC&R's"), transportation or any other improvement monitoring or
management plan, or any other covenant, condition or reciprocal
easement agreements; (iii) electricity, gas and similar energy
sources, refuse collection, water, sewer and other utility services
for the Building and the Property; provided, however, to the extent
that any such services are separately metered to Tenant, Tenant
shall pay the actual separately incurred charges; (iv) all
licenses, permits and inspection fees, property management fees
paid to independent or affiliated contractors or to Landlord, and
legal, accounting and other professional expenses directly
applicable to the maintenance of the Premises, provided the same is
at a competitive market rate; (v) janitorial cleaning with respect
to the Common Areas and
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window washing, provided the same is at a competitive market rate;
(vi) all reasonable costs of improvements or alterations to the
Building, Property and Common Areas required by Laws, to save
labor, or reduce Operating Expenses; (vii) all premiums and
deductibles (if such deductibles are paid by Landlord and further
provided that Operating Expenses shall not include deductibles on
Landlord's liability or casualty insurance policies in excess of
$10,000, whichever is greater) for liability, property damage,
casualty, automobile, garage keeper's, rental loss, compensation or
other insurance maintained by Landlord for the Building or
Property; (viii) the cost (amortized over the expected useful life
of such improvements in accordance with generally accepted
accounting principles without regard to the Term of this Lease) of
any capital improvements made to the Property, Building or Common
Areas by Landlord for the replacement of any Building equipment
needed to operate the Building or the Common Areas at the same
quality levels as prior to the replacement, (ix) air conditioning,
heating, ventilating, elevator maintenance, supplies, materials,
equipment, tools, including the repair and maintenance of the
plumbing, heating, ventilating, air conditioning and electrical
systems of the Building; (x) maintenance costs, including utilities
and payroll expenses, rental of personal property used in
maintenance and all other upkeep of parking and Common Areas,
including landscaping; (xi) costs and expenses of repairs,
resurfacing, monitoring, repairing, maintenance, painting,
lighting, cleaning, refuse removal, security and similar items,
including appropriate reserves, (xii) costs incurred in the
management of the Building and Property (including supplies, wages
and salaries of employees to the extent used in the management,
operation and maintenance thereof and payroll taxes and similar
governmental charges with respect thereto; (xiii) any other expense
or charge whether or not described above that in accordance with
generally accepted accounting and management practices is properly
an expense of maintaining, operating or repairing the Building,
Property or Common Areas. Operating Expenses shall not include
depreciation on the Building or equipment therein, Landlord's
executive salaries, real estate brokers' commissions, and costs or
expenses for which Landlord is reimbursed or indemnified, by an
insurer or condemnor, tenant (except insofar as such reimbursement
constitutes Operating Expenses hereunder) or otherwise. Landlord
shall not collect more than 100% of Operating Expenses and shall
not recover any item of cost more than once.
8.4 The following items shall not be included in Operating Expenses:
(i) Costs of any special services for any tenants of the Building
(including Tenant) for which a special charge is made; (ii) Costs
or expenses for which Landlord is reimbursed or indemnified, by an
insurer, condemnor, tenant or otherwise; (iii) Leasing expenses,
including leasing commissions, legal expenses, rent concessions,
and the cost of refurbishment or tenant improvements carried out
for other tenants, and advertising and promotional expenses
incurred in connection with leasing or sale of the Building; (iv)
Legal expenses arising out of any disputes with tenants or the
enforcement of the terms of any leases in the Building; (v)
Interest or principal payments on any mortgage financing for or
secured by the Building or the Business Park; (vi) Cost of the
original construction of the Building or the Business Park; (vii)
Landlord's general overhead expenses not related to the
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Building; (viii) Expenses for painting, redecorating or other work
which Landlord performs for any other tenant of the Building and/or
the Business Park; (ix) Expenses for repairs or other work
occasioned by fire, windstorm or other insured casualty; and (x)
Any other expense which, under generally accepted accounting
principles and real estate management practices, would not be
considered a reasonable maintenance, operating or repair expense;
(xi) costs incurred because Landlord or another tenant violated the
terms of this Lease or any other lease; (xii) costs incurred in
operating the parking facilities for the Building except to the
extent that the costs for operating the parking facilities exceed
the revenues generated from operating the parking facilities;
(xiii) costs incurred to remedy structural defects in original
construction Materials or installations of the structural portions
of the Building, or to remedy defects or violations in the Building
or Premises by reason of any Laws; (xiv) any costs, lines or
penalties incurred because Landlord violated any Law, government
rule or authority; (xv) interest or penalties incurred because of
Landlord's failure to timely pay any assessments, costs or charges
imposed on Landlord under the CC&R's: (xvi) penalties or interest
for late payment of any taxes, costs, expenses or disbursements,
payable by Landlord; (xvii) marketing expenses and the costs of
promotions for the Building or any other tenant therein. Landlord
shall not collect more than 100% of Operating Expenses and shall
not recover any item of cost more than once.
8.5 Prior to each January 1 of the Term, Landlord shall furnish Tenant
a written statement of the estimated monthly Tenant's Share of
Operating Expenses for the coming calendar year. The estimated
monthly Tenant's Share of Operating Expenses for the period before
the first January 1 after the Commencement Date is set forth in
Section 1. Landlord may, by written notice to Tenant, revise its
estimate of Tenant's Share of Operating Expenses from time to time.
8.6 Tenant shall pay, as Additional Rent, the monthly estimated
Operating Expenses then in effect, and such payment shall be made
in the same manner as Base Monthly Rent.
8.7 Within 90 days after each January 1 during the Term, or as soon
thereafter as practicable, but not later than 150 days after
January 1, Landlord shall deliver to Tenant a written statement
setting forth the actual Operating Expenses and Tenant's Share
thereof during the preceding calendar year (or portion of such
calendar year after the Commencement Date). To the extent Tenant's
Share of such actual Operating Expenses exceeded the estimated
Tenant's Share thereof paid by Tenant, Tenant shall pay Additional
Rent to Landlord within 30 days after receipt of such statement by
Tenant. To the extent Tenant's Share of such actual Operating
Expenses was less than the estimated Tenant's Share thereof paid by
Tenant, Tenant shall receive a credit against its next payable Rent
or such amount shall otherwise be promptly refunded to Tenant as
Landlord determines in its sole discretion.
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8.8 If this Lease shall expire or otherwise terminate other than on a
December 31, Landlord may in its discretion make a special
determination of Tenant's Share of actual Operating Expenses for
the partial calendar year ending on the date of such expiration or
other termination, or may defer such determination until its usual
reconciliation of Operating Expenses for the Building for the
entire calendar year. The excess actual Tenant's Share for such
partial calendar year shall be paid to Landlord, or the excess
estimated Tenant's Share already paid by Tenant, as the case may
be, shall be paid by Tenant to Landlord or Landlord to Tenant, as
the case may be, within 30 days of such determination.
8.9 Landlord shall have the same rights with respect to Tenant's
nonpayment of Tenant's Share of Operating Expenses as required
under this Lease as it has with respect to any other nonpayment of
Rent under this Lease.
9. Maintenance and Repair Responsibility
9.1 Tenant shall, at its expense, clean, maintain, and keep in good
repair throughout the Term the entire Premises (from exterior or
demising wall to exterior or demising wall, and subfloor to
ceiling) and all appurtenances thereto, including without
limitation signs, windows, doors, electrical, computer cabling,
lighting and plumbing, patios, decks, service areas and similar
areas for Tenant's exclusive use whether inside or outside the
Premises, and Tenant's fixtures, unless this Lease specifically
provides otherwise.
9.2 Landlord shall at its expense maintain and repair any separate
heating, ventilating, and air conditioning system that is exclusive
to the Premises ("HVAC System"), unless Landlord approved, in its
reasonable discretion, the maintenance of such HVAC System by
Tenant; provided, however, in all cases that the cost of such
maintenance services shall be paid by Tenant and shall not
constitute an Operating Expense.
9.3 Tenant shall surrender the Premises to Landlord upon the expiration
or sooner termination of this Lease, in the same condition as when
received, excluding ordinary wear and tear and damage by casualty.
9.4 Except as specifically provided elsewhere in this Lease, Landlord
shall have no obligation whatsoever to alter, remodel, improve,
repair, decorate, or paint the Premises or any part thereof. Tenant
affirms that Landlord has made no representations to Tenant about
the condition of the Premises or the Building, except as
specifically herein set forth.
9.5 Notwithstanding Sections 9.1 through 9.4, but subject to Section
15, Landlord shall, at its expense (and without reimbursement as
Operating Expenses or other pass through to Tenant), repair and
maintain the structural portions of the Building which shall
constitute the foundation, bearing and exterior walls, subflooring,
and roof structure.
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Landlord shall give reasonable advance notice to Tenant of such
repairs to the extent practical and feasible.
9.6 Tenant waives the right to make repairs at Landlord's expense under
any law, statute, or ordinance now or hereafter in effect. However,
Tenant shall have the repair rights in Section 18.4.
10. Common Areas.
10.1 Landlord shall maintain the Common Areas in good condition at all
times, the cost of which shall (consistent with Section 8)
constitute an Operating Expense. Landlord shall have the right to
establish and enforce reasonable rules and regulations applicable
to all tenants concerning the maintenance, management, use, and
operation of the Common Areas to the extent such rules and
regulations are not inconsistent with the terms of this Lease or
contrary to Laws, do not unreasonably interfere with or impair
Tenant's operations, or are not unreasonably discriminatory among
tenants or owners at the Building. Landlord may make changes to the
Common Areas, including without limitation changes in the location
of lobbies, driveways, entrances, exits, vehicular parking spaces,
parking areas, pedestrian and bicycle trail areas, or the direction
of the flow of traffic, to the extent such changes to the Common
Areas are not inconsistent with the terms of this Lease or contrary
to Laws, do not unreasonably interfere with or impair Tenant's
operations, or are not discriminatory among tenants or owners at
the Building.
10.2 In this Lease, "Common Areas," means all parts of the Building and
related land areas and facilities outside the Premises and the
premises leased or available for lease to other tenants, but
constituting a part of Business Park. Common Areas include without
limitation:
10.2.1 the structural portions of the Building which shall
constitute the foundation, bearing and exterior walls, subflooring,
and roof structure;
10.2.2 the Building's common entrances, lobbies, restrooms,
elevators, stairway and accessways, loading docks, ramps, drives
and platforms and any passageways and serviceways thereto, and the
common plumbing, sewage, electrical and telecommunications and data
communications systems, pipes conduits, wires and appurtenant
equipment of the Building serving the Premises;
10.2.3 the open areas, landscaped areas, sidewalks, pedestrian
walkways and patios, roadways, pedestrian and bicycle trails,
driveways, parking areas, utility systems and facilities, service
areas, refuse areas and all other areas in the Business Park and
available for use in common with all tenants, guests and invitees
of the Business Park (to the extent such areas are governed by the
CC&R's and the costs of maintaining such areas is assessed to
Landlord under
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the CC&R's), located outside the Premises and the premises leased
or available for lease to other tenants in the Business Park.
11. Utilities and Services
11.1 Provided that Tenant is not in Default under this Lease, Landlord
shall cause to be furnished to the Premises the following utilities
and services, during generally recognized business hours:
electricity for normal lighting and office machines and heat and
air conditioning required in Landlord's judgment for the
comfortable use and occupation of the Premises. Janitorial services
to the Premises will be provided by Tenant, at Tenant's sole
expense; provided the janitorial service contractor is acceptable
to Landlord.
11.2 The provision and use of such utilities and services shall be in
accordance with any applicable rules and regulations under this
Lease. If Tenant requires or utilizes more water or electrical
power than is considered reasonable or normal by Landlord, Landlord
may at its option require Tenant to pay, as Additional Rent, the
cost, as fairly determined by Landlord, incurred in such
extraordinary usage.
11.3 At Tenant's request, Landlord shall furnish, at Tenant's expense,
heat and air conditioning outside of generally recognized business
hours, at rates to be established from time to time by Landlord,
and to be paid by Tenant as billed by Landlord.
11.4 To the extent that the Premises are separately metered or
sub-metered for Tenant's use of any utilities or services, Tenant
shall pay for such use in the same manner as Rent, or shall pay the
cost thereof directly to the service provider, and in either event
such charges shall constitute Additional Rent hereunder.
11.5 In the event of any failure or interruption of such utilities and
service, Landlord shall diligently and continuously take
appropriate action to attempt to resume service promptly, including
reasonable interim solutions, at Landlord's expense, pending a
permanent restoration. Tenant shall not be entitled to any
abatement or reduction of Rent by reason of any failure or
interruption of utilities or services, no eviction of Tenant shall
result from any such failure or interruption, and Tenant shall not
be relieved from the performance of any obligation in this Lease
because of such failure or interruption.
12. Limits on Landlord's Liability. Landlord's liability in respect of its
obligations under Sections 9, 10 and 11 to repair and maintain portions of
the Premises, Building and Common Areas and to provide utilities and
services (collectively, "Repair and Service Obligations") is subject to
the following limitations:
12.1 Landlord shall not be liable for any failure of Repair and Service
Obligations when such failure is caused by (i) strikes, lockouts or
other labor disturbance or labor dispute of any character, (ii)
governmental regulation moratorium or other government
13
action, (iii) inability despite the exercise of reasonable
diligence to obtain electricity, water, fuel from the providers
thereof, (iv) acts of God, or (v) any other cause beyond Landlord's
reasonable control.
12.2 Subject to Section 12.1, Landlord shall not be liable for any
failure of Repair and Service Obligations, unless such failure
shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance or of the interruption of
services is given to Landlord by Tenant.
12.3 To the extent that maintenance and repairs to the Premises,
Building or Common Areas are caused in part or in whole by the act,
neglect, fault, or omission of any duty by Tenant, its agents,
servants, employees, or invitees, Tenant shall pay to Landlord the
costs of such maintenance and repairs.
12.4 Except as specifically provided in Sections 15 and 16, there shall
be no abatement of Rent in any circumstance under this Lease.
12.5 Landlord shall not be liable for any injury to or interference with
Tenant's business arising from the making of any repairs,
alterations, or improvements in or to any portion of the Building,
the Premises, the Property, or the Common Areas, or to fixtures,
appurtenances, and equipment therein, or the failure of Repair arid
Service Obligations.
12.6 Without limiting the generality of this Section 12, in no event
shall Landlord have any liability for consequential damages
resulting from any act or omission of Landlord in respect of its
Repair and Service Obligations, even if Landlord has been advised
of the possibility of such consequential damages.
13. Alterations and Additions by Tenant. With the prior written consent of
Landlord, Tenant may make at its expense additional improvements or
alterations to the Premises; provided that no consent shall be required
for minor, non-structural alterations, repairs or new construction at an
estimated cost of less than $2,500 per individual alteration, repair or
new construction and $25,000 in the aggregate for the Term. Landlord shall
have notice of all alterations, repairs or new construction, and all
repairs or new construction by Tenant shall be done in conformity with
plans and specifications approved by Landlord, by contractors approved by
Landlord, and subject to Landlord's reasonable rules and regulations
regarding such construction. All work performed shall be done lien-free in
a workmanlike manner and shall become the property of Landlord. For work
requiring Landlord's consent, Landlord may require that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount
equal to 150% of the estimated cost of any improvements, additions, or
alterations in the Premises. Landlord shall not unreasonably withhold,
condition or delay its consent to Tenant's proposed alterations or
improvements if the conditions of this Section 13 are satisfied. By
providing Tenant with written notice of such requirement at the time
Landlord gives its consent, Landlord
14
may require Tenant to remove any improvements or alterations at the
expiration or termination of the Term, such removal to occur at Tenant's
expense; and Tenant shall repair all damage to the Premises or Building
occurring as a result of such removal. In the event Tenant fails to remove
any improvements or alterations as required by Landlord or repair any
damage occurring during such removal, Landlord shall be entitled to remove
any improvements or alterations or make such repairs, at Tenant's expense,
and shall further be entitled to draw upon the Deposit.
14. Insurance: Indemnity
14.1 Landlord shall not be liable to Tenant, and Tenant hereby waives
all claims against Landlord, for injury or damage to any person or
property in or about the Premises, Building, Property or Common
Areas by or from any cause whatsoever, including without limitation
any acts or omissions of any other tenants, licensees or invitees
of the Building.
14.2 Tenant shall indemnify and defend (using legal counsel acceptable
to Landlord) Landlord and hold Landlord harmless, from and against
any and all loss, cost, damage, liability and expense (including
reasonable attorneys' fees) whatsoever that may arise out of or in
connection with Tenant's occupation, use or improvement of the
Premises, or that of its employees, agents or contractors, or
Tenant's breach of its obligations under this Lease. To the extent
necessary to fully indemnify Landlord from claims made by Tenant or
its employees, this indemnity constitutes a waiver of Tenant's
immunity under the Washington Industrial Insurance Act, RCW Title
51. This indemnity shall survive the expiration or termination of
the Term.
14.3 The exculpation, release and indemnity provisions of Sections 14.1
and 14.2 shall not apply to the extent the subject claims
thereunder were caused by Landlord's gross negligence or willful
misconduct. However, in no event shall Landlord be liable to Tenant
for consequential damages.
14.4 Landlord and Tenant shall each procure and maintain throughout the
Term at their respective expense, the following insurance:
14.4.1 Comprehensive general liability insurance, insuring them
against liability arising out of the Lease and the use, occupancy,
or maintenance of the Premises and all areas appurtenant thereto.
Such insurance shall be in the amount of not less than $5,000,000
combined single limit per occurrence and in the aggregate for
injury to or death of one or more persons in an occurrence, and for
damage to tangible property (including loss of use but excluding
items covered by the other party's insurance). Such policy shall
insure the operations of independent contractors and contractual
liability (covering the indemnity in Section 14.2) and shall: (i)
name the other party as an additional insured, (ii) provide a
waiver of subrogation endorsement with respect to Landlord, and
(iii) provide that it is
15
primary and noncontributing with any insurance in force or on
behalf of the other party.
14.4.2 Property insurance insuring against the perils of fire,
vandalism, malicious mischief, special perils and sprinkler leakage
("All-Risk") or special form equivalent. This insurance policy
shall be upon all persona property for which the party purchasing
it is legally liable or that was installed at such party's expense,
and that is located in the building or Premises, including without
limitation all such party's furnishings, fixtures, furniture,
fittings, and equipment and all improvements to the Premises
installed by such party in an amount not less than 90% of the full
replacement cost thereof. Such policy shall also include business
interruption coverage, covering direct and indirect loss of
Tenant's earnings attributable to Tenant's inability to use fully
or obtain access to the Premises or Building, in an amount as will
properly reimburse Tenant and covering direct, indirect, and loss
of Landlord's earnings attributable to abatement of rent or
termination of this Lease. Such policies shall name Tenant,
Landlord and any mortgagees of Landlord as insured parties, as
their respective interests may appear.
14.4.3 Xxxxxxx'x Compensation and Employer's Liability Insurance
(as required by state law).
14.4.4 Any other form or forms of insurance as Tenant or Landlord
or any mortgagees of Landlord may reasonably require from time to
time in form, in amounts and for insurance risks against which a
prudent tenant or landlord would protect itself.
14.5 All policies of insurance to be obtained hereunder shall be in a
form satisfactory to both parties and shall be issued by insurance
companies holding a General Policyholder Rating of "A" and a
Financial Rating of "X" or better in the most current issue of
Best's Insurance Guide. Both parties shall provide each other with
certificates of such insurance. No such policy shall be cancelable
or reducible in coverage except after 30 days' prior written notice
to the other party. Each party shall, within ten days prior to the
expiration of such policies, furnish the other with renewals or
"binders" thereof.
14.6 The proceeds of any insurance policies shall be payable first to
the person paying the premium for such insurance, subject to the
obligations to rebuild and restore the Premises with such proceeds
as otherwise provided in this Lease.
14.7 Landlord shall maintain liability and casualty insurance for the
Building and Property adequate in Landlord's judgment to cover
(with deductibles deemed appropriate
16
by Landlord) the risks customarily insured against by owners of
properties similar to the Building.
14.8 Anything in this Lease to the contrary notwithstanding, Tenant and
Landlord each waives its entire right of recovery, claims, actions,
or causes of action against the other for loss or damage to the
Premises, Building, or Property or any personal property of such
party therein that is caused by or incident to the perils insured
against under the terms of the insurance policies carried by the
waiving party and in force at the time of damage or loss. Tenant
and Landlord each waives any right of subrogation it may have
against the other party to the extent of recovery under any such
insurance, and shall cause each insurance policy obtained by it to
provide that the insurance company waives all right to recovery by
way of subrogation against the other party in connection with any
such loss or damage. If either Landlord or Tenant is unable to
obtain its insurer's permission to waive any claim against the
other party, such party shall promptly notify the other party of
such inability. Nothing in this Section shall be interpreted to
have the effect of relieving or modifying any obligation of any
insurance company, and shall be void to the extent it would have
such effect.
14.9 Each of Landlord and Tenant shall endeavor to promptly notify the
other of any casualty or accident occurring in or about the
Premises.
15. Destruction.
15.1 If the Premises or the Building is damaged or destroyed by fire,
earthquake, or other casualty to the extent that they are
untenantable in whole or in part by Tenant for the continued
operation of its business, then Landlord shall have the right but
not the obligation to proceed with reasonable diligence to rebuild
and restore the Premises or the Building or such part thereof.
15.2 Landlord shall within 30 days after such damage or destruction
notify Tenant whether Landlord intends to rebuild. If Landlord
fails to notify Tenant within such period, then this Lease shall
terminate at 12:01 AM on the 31st day following the damage or
destruction. If Landlord notifies Tenant that it intends to
rebuild, then Landlord shall commence immediately and continue with
diligence until such repair and restoration is complete.
15.3 During the period from destruction or damage until restoration (or
termination of this Lease), Rent shall be abated in the same ratio
as that portion of the Premises which Landlord and Tenant determine
is unfit for occupancy shall bear to the whole Premises. If damage
is due to the fault or neglect of Tenant or its agents, employees,
invitees, or licensees, there shall be no abatement of Rent.
15.4 Unless due to the fault or neglect of Landlord, Landlord shall not
be require to repair any injury or damage by fire or other cause,
or to make any repairs or
17
replacements of any panels, decoration, office fixtures, paintings,
floor covering, or any other improvements to the Premises installed
by Tenant. Instead, if Landlord repairs or rebuilds the Premises
under this Section 15, Tenant shall repair or rebuild such
Tenant-installed improvements and other items of property
15.5 Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the
Premises, the property of Tenant, or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction, or restoration.
16. Condemnation.
16.1 If all or part of the Premises are taken under power of eminent
domain, or sold under the threat of the exercise of said power,
this Lease shall terminate as to the part so taken as of the date
the condemning authority takes possession.
16.2 If more than 25% of the floor area of Premises is taken by
consideration, Landlord or Tenant may, by written notice to the
other within ten days after notice of Such taking, terminate this
Lease as to the remainder of the Premises as of the date the
condemning authority takes possession.
16.3 If Landlord or Tenant does not so terminate, this Lease shall
remain in effect as to such remainder, except that the Rent shall
be reduced in the proportion that the rentable floor area taken
bears to the original rentable total floor area. However, if
circumstances make abatement based on floor area unreasonable, the
Rent shall xxxxx by a reasonable amount to be determined by Tenant
and Landlord. In the event that neither Landlord nor Tenant elects
to terminate this Lease, Landlord's responsibility to restore the
remainder of the Premises shall be limited to the amount of any
condemnation award allocable to the Premises, as determined by
Landlord.
16.4 Any award for the taking of all or part of the Premises under the
power of eminent domain, including payment made under threat of the
exercise of such power, shall be the property of Landlord, whether
made as compensation for diminution in value of the leasehold or
for the taking of the fee or as severance damages. Tenant shall
only be entitled to such compensation as may be separately awarded
or recoverable by Tenant in Tenant's own right for the loss of or
damage to improvements to the Premises installed by Tenant,
Tenant's trade fixtures and removable personal property. Landlord
shall not be liable to Tenant for the loss of the use of all or any
part of the Premises taken by condemnation.
16.5 Landlord shall have the exclusive authority to grant possession and
use to the condemning authority and to negotiate and settle all
issues of just compensation or, in the alternative, to conduct
litigation concerning such issues; provided, however, that Landlord
shall not enter into any settlement of any separate award that may
be made to
18
Tenant as described in Section 16.4 without Tenant's prior approval
of such settlement, which approval shall not be unreasonably
withheld.
17. Assignment and Subletting.
17.1 Except as provided in Section 1A.3, Tenant shall not assign this
Lease, or sublet the Premises or any part thereof, either by
operation of law or otherwise, or permit any other party to occupy
all or any part of the Premises, without first obtaining the
written consent of Landlord. Tenant shall propose such assignment
or sublease by written notice to Landlord, and such notice shall
specify an effective date which shall be the first day of a
calendar month and shall be not less than 60 days after the date of
such notice. This Lease shall not be assignable by operation of
law. Tenant shall further provide to Landlord other information and
creditworthiness materials concerning any proposed assignee or
sublessee as is requested by Landlord.
17.2 Except as provided in Section 1A.3, if Tenant is a corporation, any
transfer of this Lease from Tenant by merger, consolidation, or
liquidation, or any change in the ownership of or power to vote 50%
or more of the outstanding voting stock of Tenant shall constitute
an assignment under this Lease; provided, however that the
foregoing provision shall not apply if the stock of Tenant is
publicly traded. If Tenant is a partnership or limited liability
company, any change in the identity or majority ownership of
partners or members in Tenant serving as general partner or manager
or owning 50% or more of the outstanding economic interests in such
entity shall constitute an assignment under this Lease.
17.3 If this Lease is assigned pursuant to the provisions of the Revised
Bankruptcy Act, 11 U.S.C. Section 101 et seq., any and all
consideration paid or payable in connection with such assignment
shall be Landlord's exclusive property and paid or delivered to
Landlord, and shall not constitute the property of tenant or
tenant's estate in bankruptcy. Any person or entity to whom the
Lease is assigned pursuant to the Revised Bankruptcy Act shall be
deemed automatically to have assumed all of Tenant's obligations
under this Lease.
17.4 In the event of any sale of the Building or Property, or any
assignment of this Lease by Landlord, Landlord shall be relieved of
all liability under this Lease arising out of any act, occurrence,
or omission occurring after sale or assignment; and the purchaser
or assignee at such sale or assignment or any subsequent sale or
assignment of this Lease, the Property, or Building, shall be
deemed without any further agreement to have assumed all of the
obligations of the Landlord under this Lease accruing after the
date of such sale or assignment.
17.4 Subject to the provisions of this Section 17, this Lease shall be
binding upon and inure to the benefit of the parties, their heirs,
successors and assigns.
19
18. Default.
18.1 The occurrence of any one or more of the following events shall
constitute a material default and breach of the Lease by Tenant
("Default"):
18.1.1 vacation or abandonment of all of the Premises for a period
exceeding, 90 days;
18.1.2 failure by Tenant to make any payment required as and when
due, where such failure shall continue after five days' written
notice from Landlord;
18.1.3 failure by Tenant to observe or perform any of the
covenants, conditions, or provisions of this Lease, other than the
making of any payment, where such failure shall continue after 30
days' written notice from Landlord; provided, however, that if the
Default is one that is capable of cure with the passage of time,
the time required to cure such failure shall reasonably require
greater than 30 days, then no Default shall occur so long as Tenant
is continuously and diligently pursuing such a cure, and completes
such cure within a 1 20 day period; or
18.1.4 the making by Tenant of any general assignment or general
arrangement for the benefit of creditors; (ii) the filing by or
against Tenant of a petition in bankruptcy, including
reorganization or arrangement, unless, in the case of a petition
filed against Tenant, the same is dismissed within 30 days; (iii)
the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease; (iv) the seizure by any department
of any government or any officer thereof of the business or
property of Tenant; and (v) adjudication that Tenant is bankrupt.
18.2 Tenant shall notify Landlord promptly of any Default by Tenant that
by its nature is not necessarily known to Landlord.
18.3 Landlord shall be in default if it fails to observe or perform any
of the covenants, conditions, or provisions of this Lease, where
such failure shall continue after 30 days' written notice from
Tenant; provided, however, that if the nature of Landlord's
obligation is such that more than 30 days are required for
performance, Landlord shall not be in default if Landlord commences
performance within 30 days after Tenant's notice and thereafter
completes such performance diligently and within a reasonable time.
Tenant shall copy Landlord's lender with any such notice of
default, if Tenant has been provided with the name and address of
any such lender.
18.4 Subject to Sections 15 and 16 of this Lease, in no event shall a
default by Landlord under this Lease give rise to any right of
Tenant to terminate this Lease or withhold or offset the payment of
Base Monthly Rent or Additional Rent. Notwithstanding the
foregoing, if Landlord has failed to cure the claimed default by
Tenant as set forth in
20
Section 18.3 with respect to Landlord's Repair and Service
Obligations, or if Landlord has failed to dispute the claimed
default and mediation pursuant to Section 37 has not occurred, or
if Landlord has disputed the claimed default and mediation pursuant
to Section 37 has been resolved in favor of Tenant, then Tenant
may, but is not required to, make such maintenance and repairs or
perform such obligations and pay the cost thereof and thereafter
seek to collect such costs from Landlord. The obligations of Tenant
to pay Base Monthly Rent and Additional Rent shall continue
unaffected in all events unless suspended or terminated pursuant to
an express provision of this Lease or an unless judgment has been
entered against Landlord on account of a default by Landlord under
this Lease, in which event Tenant may offset the amount of such
judgment against Rent.
18.5 If Tenant was not obligated to pay Base Monthly Rent or Additional
Rent for any period of time after the Commencement Date ("Rental
Concession"), any such Rental Concession shall be canceled if
Landlord terminates this Lease due to Tenant's Default at any time
during the Term. In the event of such cancellation, Tenant shall be
obligated to pay Base Monthly Rent and/or Additional Rent, as the
case may be, as though there were no Rental Concession in the
Lease, and Tenant shall promptly on demand refund to Landlord the
amount of any Rental Concession already taken, without regard to
whether this Lease is terminated by Landlord as a result of
Tenant's Default.
19. Remedies in Default.
19.1 In the event of any Default by Tenant, Landlord may, at any time
without waiving or limiting any other right or remedy, do any one
or more of the following: (i) re-enter and take possession of the
Premises, (ii) pursue any remedy allowed by law or equity, and/or
(iii) terminate this Lease.
19.2 Whether Landlord has elected to terminate this Lease or not, Tenant
agrees to pay Landlord the reasonable cost of recovering possession
of the Premises, the reasonable expenses of reletting, and any
other reasonable costs or damages arising out of Tenant's Default,
including without limitation the reasonable costs of removing
persons and property from the Premises, the reasonable costs of
preparing or altering the Premises for reletting, broker's
commissions, and attorneys' fees; provided that Landlord diligently
pursues reletting the Premises.
19.3 No re-entry or taking possession of the Premises by Landlord
pursuant to this Section 19, or acceptance of Tenant's keys to or
surrender of the Premises shall be construed as an election to
terminate this Lease unless a written notice of such intention is
given to Tenant.
19.4 Notwithstanding any reentry or termination, the liability of Tenant
for the Rent shall continue for the balance of the Term, and Tenant
shall make good to Landlord any deficiency arising from reletting
the Premises at a lesser rent than the Rent provided for
21
in this Lease. Tenant shall pay such deficiency each month as the
amount thereof is ascertained by Landlord.
19.5 Notwithstanding anything to the contrary herein, both Landlord and
Tenant shall have the obligation to take reasonable steps to
mitigate their damages caused by any default under this Lease.
20. Access. Tenant shall permit Landlord to enter the Premises at all
reasonable times and upon 24 hours prior notice from Landlord (except in
the event of emergency, when Landlord's access to the Premises shall be
immediate, without notice) for the purpose of inspecting, altering, and
repairing the Premises and the Building and ascertaining compliance with
the provisions of this Lease by Tenant. The existence or exercise of such
right of access shall not be construed as imposing any obligation on
Landlord to inspect, discover or correct or repair any condition in the
Premises or the Building. After notice to Tenant, Landlord may also show
the Premises to prospective purchasers or tenants 150 days prior to Lease
termination at reasonable times, provided that Landlord shall not
materially interfere with Tenant's business operation.
21. Hold-Over Tenancy. If without execution of a new Lease or written
extension Tenant shall hold over after the expiration or termination of
the Term, with Landlord's written consent, Tenant shall be deemed to be
occupying the Premises as a Tenant from month to month, which tenancy may
be terminated as provided by law, unless the parties agree otherwise at
the time of Landlord's consent. If Tenant shall hold over after expiration
or termination of the Term without Landlord's written consent, the Base
Monthly Rent payable shall be 125% of the Base Monthly Rent payable in the
last month prior to expiration or termination of the Term, and Tenant
shall continue to pay Additional Rent. During any such tenancy, Tenant
shall continue to be bound by all of the terms, covenants, and conditions
of this Lease, insofar as applicable.
22. Compliance with Law. Tenant shall not use the Premises or permit anything
to be done in or about the Premises which will in any way conflict with
any applicable law, statute, ordinance, or governmental rule or regulation
and the CC&R's and any other restrictive covenants and obligations created
by private contracts which affect the use and operation of the Premises,
Building, Common Areas or Business Park, now or hereafter in force
("Laws"). Tenant shall at its sole cost and expense promptly comply with
all Laws, and with the requirements of any board of fire insurance
underwriters or other similar bodies now or hereafter constituted,
relating to, or affecting the use or occupancy of the Premises. The
judgment of any court of competent jurisdiction, or the admission of
Tenant in any action, whether Landlord be a party thereto or not, that
Tenant has violated any Laws, shall be conclusive of the fact as between
Landlord and Tenant. Tenant shall be obligated to pay for compliance with
the requirements of the Americans with Disabilities Act of 1990 after the
Commencement Date as they relate to the Tenant Improvements within the
Building. Otherwise, Landlord shall be obligated for compliance of the
Premises with such law, including without limitation any liability that
arises due to design of the Premises that is violation of such law.
22
23. Rules and Regulations. Tenant shall faithfully observe and comply with the
rules and regulations that Landlord shall from time to time promulgate; to
the extent such rules and regulations are not inconsistent with the terms
of this Lease or contrary to Laws, do not unreasonably interfere with or
impair Tenant's operations, are not discriminatory among tenants or owners
at the Building. Landlord reserves the right from time to time to make all
reasonable modifications to such rules and regulations consistent with
this Section. Additions and modifications to rules and regulations shall
be binding on Tenant upon delivery of a copy of them to Tenant. Landlord
shall not be responsible to Tenant for the nonperformance of any rules or
regulations by any other tenants or occupants of the Building.
24. Parking. Tenant shall have the right to use, on an unassigned, self-park
basis, in common with other tenants and occupants of the Building and
Business Park, no fewer than the number of parking stalls specified in
Section 1, located within the Building or the Business Park and which
shall be available for use by all tenants of the Business Park, their
guests and invitees, but which may, at Landlord's election, be designated
by Landlord, (which designated parking facilities Landlord may change at
any time and from time to time in its sole discretion), subject to the
rules and regulations that may be established or altered for such parking
facilities from time to time. Tenant shall comply with any and all private
and governmentally imposed parking restrictions applicable to the Business
Park, including without limitation, the requirements of all designations
placed on parking stalls within the Business Park, such as car pool,
visitor and designation for any tenant of the Business Park.
25. Estoppel Certificates. Tenant shall execute, within ten business days
following Landlord's request, a certificate in such reasonable form as may
be required by Landlord or a prospective purchaser, mortgagee or trust
deed beneficiary, or Landlord's successor after a sale or foreclosure,
certifying: (i) the Commencement Date of this Lease, (ii) that the Lease
is unmodified and Tenant believes the Lease to be in full force and
effect, (or if there have been modifications hereto, that Tenant believes
the Lease is in full force and effect, and stating the date and nature of
such modifications); (iii) that there are no current defaults under this
Lease by either Landlord or Tenant except as specified in Tenant's
statement, (iv) the dates to which the Base Monthly Rent, Additional Rent
and other charges have been paid, and (v) any other information reasonably
acceptable to Tenant and requested by the requesting party. Such
certificate may be relied upon by Landlord and/or such other requesting
party. Tenant's failure to deliver such statement within such time shall
be conclusive upon Tenant that this Lease is in full force and effect,
without modification except to the extent represented by Landlord, that
there are no uncured defaults in Landlord's performance under this Lease,
and that not more than one month's Rent has been paid in advance. Tenant's
failure to deliver said statement within ten business days of request,
shall constitute Tenant's Default.
26. Subordination. Tenant agrees that this Lease shall be subordinate to the
lien of any mortgage, deeds of trust, or ground leases now or hereafter
placed against the Property or Building, and to all renewals and
modifications, supplements, consolidations, and extensions thereof.
Notwithstanding the foregoing, landlord reserves the right, however, to
subordinate or cause to be subordinated any such mortgage, deed of trust
or ground lease to this Lease. Upon
23
a foreclosure or conveyance in lieu of foreclosure under such mortgage or
deed of trust, or a termination of such ground lease, and a demand by
Landlord's successor, Tenant shall attorn to and recognize such successor
as Landlord under this Lease. Tenant shall execute and deliver on request
and in a form reasonably agreed to by Landlord and Tenant, any instruments
reasonably necessary or appropriate to evidence, effect or confirm such
subordination on the condition that the holder of any such mortgage or
deed of trust or the lessor under any ground lease agrees in a form
reasonably satisfactory to Tenant to the nondisturbance of Tenant or the
Lease. Should Tenant fail to sign and return any such documents within ten
business days of request, Tenant shall be in Default.
27. Removal of Property. On expiration or other termination of this Lease,
Tenant shall remove (i) all personal property of Tenant on the Premises,
including without limitation all Tenant's furnishings, fixtures,
furniture, fittings, and equipment; (ii) all improvements to the Premises
installed by or at the expense of Tenant to which Landlord's consent was
conditioned on such removal. Tenant shall repair or reimburse Landlord for
the cost of repairing any damage to the Premises resulting from the
installation or removal of such property of Tenant. All property of Tenant
remaining on the Premises following 30 days after reentry or termination
of this Lease shall conclusively be deemed abandoned and may be removed by
Landlord. Landlord may store such property of Tenant in any place selected
by Landlord, including but not limited to a public warehouse, at the
expense and risk of the owner thereof, with the right to sell such stored
property of Tenant without notice to Tenant. The proceeds of such sale
shall be applied first to the cost of such sale, second to the payment of
the cost of removal and storage, if any, and third to the payment of any
other amounts that may then be due from Tenant to Landlord under this
Lease, and any balance shall be paid to Tenant.
28. Personal Property Taxes. Tenant shall pay prior to delinquency all
personal property taxes payable with respect to all property of Tenant
located on the Premises or the Building and promptly upon request of
Landlord shall provide satisfactory evidence of such payment. "Personal
property taxes" under this Section 28 shall include all property taxes
assessed against the property of Tenant, whether assessed as real or
personal property.
29. Notices. All notices under this Lease shall be in writing. Notices shall
be effective (i) when mailed by certified mail, return receipt requested
(ii) when personally delivered, or (iii) when sent by fax, in each case to
the address or fax number of the receiving party set forth in Section 1 .
Either party may change its address and fax number for notices by notice
to the other from time to time.
30. Condition of Premises. Except with respect to those warranties given by
Landlord under the Work Letter, by taking possession of the Premises on
the Commencement Date, Tenant accepts the Premises as being in good,
sanitary order, condition and repair, and further accepts all aspects of
the Premises, Building, and Property in their present condition, AS IS,
including latent defects, without any representations or warranties,
express or implied, from Landlord.
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31. Hazardous Substances.
31.1 Tenant shall not, without first obtaining Landlord's prior written
approval, generate, release, store, deposit, transport, or dispose
of (collectively "Release") any hazardous substances, sewage,
petroleum products, hazardous materials, toxic substances or any
pollutants or substances, defined as hazardous or toxic in
applicable federal, state and local laws and regulations
("Hazardous Substances") in, on or about the Premises, other than
non-regulated Hazardous Substances used in the ord nary course of
Tenant's business, safely, and in accordance with all applicable
laws. In the event, and only in the event, Landlord approves such
Release of Hazardous Substances on the Premises, such Release shall
occur safely and in compliance with all applicable federal, state,
and local laws and regulations.
31.2 Tenant shall indemnify and defend (with counsel reasonably
acceptable to Landlord) Landlord, and hold Landlord harmless, from
and against any and all claims, liabilities, losses, damages,
cleanup costs, and expenses (including reasonable attorneys' fees)
arising out of or in any way relating to the Release by Tenant or
any of its agents, representatives, employees or invitees, or the
presence of any Hazardous Substances in, on or about the Premises
occurring as a result of or in connection with Tenant's use or
occupancy of the Premises at any time after the Commencement Date.
31.3 Landlord shall have the right from time to time at reasonable times
and upon one business days' prior notice from Landlord to Tenant
(except in the event of emergency, when Landlord's access to the
Premises shall be immediate, without notice) to enter the Premises,
Building and Property and inspect the same for the presence of
Hazardous Substances and compliance with the provisions of this
Section 31 and inspect the Premises, Building and Property. If
there is reasonable evidence for cause, Landlord may at Landlord's
sole cost and expense, cause tests to be performed for Hazardous
Substances on the Premises from time to time. Tenant shall
reimburse Landlord for the cost of such test that indicates the
presence of Hazardous Substances in the Premises in violation of
Tenant's obligations under this Lease.
31.4 The provisions of this Section 31 shall survive the expiration or
termination of this Lease with respect to any occurrences during
the Term.
32. Signs. Tenant shall not place upon or install in windows or other openings
or exterior sides of doors or walls of the Premises observable from the
outside of the Building or from the Common Areas any symbols, drapes, or
other materials without the written consent of Landlord, which shall not
be unreasonably withheld, conditioned or delayed. Tenant shall observe and
comply with the requirements of all Laws applicable to signage.
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33. General Provisions.
33.1 Attorneys' Fees. In the event Landlord or Tenant reasonably
requires the services of any attorney in connection with any
Default or violation by the other of the terms of this Lease or the
exercise by Landlord or Tenant of its remedies for any Default by
Landlord or Tenant under this lease, or a request by Landlord or
Tenant for the other's waiver of any terms of this Lease or
extension of time to perform or pay any obligation of Landlord or
Tenant under this Lease, Landlord or Tenant shall promptly on
demand reimburse the other for its reasonable attorneys' fees
incurred in such instance. In the event of any litigation,
arbitration or other proceeding (including proceedings in
bankruptcy and probate and on appeal) brought to enforce or
interpret or other wise arising under this Lease, the substantially
prevailing party therein shall be entitled to the award of its
reasonable attorneys' fees, witness fees, and court costs incurred
therein and in preparation therefor.
33.2 Governing Law: Venue. This Lease shall be governed by and construed
in accordance with the laws of the State of Washington. Venue for
any action to interpret or enforce this Lease shall lie in the
Superior Court of King County, Washington.
33.3 Cumulative Remedies. No remedy or election under this Lease shall
be deemed exclusive but shall, wherever possible, be cumulative
with all other remedies at law or in equity.
33.4 Exhibits: Addenda. Exhibits and Addenda, if any, affixed to this
Lease are a part of and incorporated into this Lease.
33.5 lnterpretation. This Lease has been submitted to the scrutiny of
all parties hereto and their counsel, if desired, and shall be
given a fair and reasonable interpretation in accordance with the
words hereof, without consideration or weight being given to its
having been drafted by any party hereto or its counsel.
33.6 Joint Obligation. If there is more than one Tenant under this
Lease, the obligations hereunder imposed upon Tenants shall be
joint and several.
33.7 Keys. Upon expiration or termination of this Lease, Tenant shall
surrender all keys to the Premises to Landlord at the place then
fixed for payment of Rent and shall inform Landlord of all
combination locks, safes, and vaults, if any, in the Premises.
33.8 Late Charges; Interest. Late payment by Tenant to Landlord of Rent
or other sums due under this Lease will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which
would be difficult and impractical to ascertain. Such costs include
without limitation processing and accounting charges and late
charges which may be imposed on Landlord by the terms of any
mortgage or trust deed covering the
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Premises. Accordingly, in the event Tenant shall fail to pay Rent
or Additional Rent within five (5) days of the date such sums are
due, Tenant shall pay to Landlord as Additional Rent a late charge
equal to five percent of such installment as liquidated damages for
such late payment, other than for time value damages. A $50-00
charge will be paid by Tenant to Landlord for each returned check.
In addition, any Rent or other sums due under this Lease to
Landlord that is not paid when due shall bear interest at the rate
per annum of two percent over the prime rate in effect at
Seattle-First National Bank, Main Office, on the day such Rent or
other sum was due. The existence or payment of charges and interest
under this Section shall not cure or limit Landlord's remedies for
any Default under this Lease
33.9 Light, Air, and View. Landlord does not guarantee the continued
present status of light, air, or view in, to or from the Premises.
33.10 Measurements. All measurements of the Premises stated in this
Lease, even if approximations, shall govern and control over any
actual measurement of the Premises. The Rent provided in this Lease
and Tenant's Share shall not be modified or changed by reason of
any measurement or re-measurement of the Premises that may occur
after the date of this Lease, and is agreed by Landlord and Tenant
to constitute the negotiated rent for the Premises. The foregoing
shall not be deemed to modify any obligation of Landlord to
construct the Premises in accordance with the Work Letter.
33.11 Name. Tenant shall not use the name of the Building or Business
Park for any purpose other than as an address of the business
conducted by the Tenant in the Premises.
33.12 Prior Agreements: Amendments. This Lease contains all of the
agreements of the parties with respect to any matter covered or
mentioned in this Lease, and no prior agreements of understandings
pertaining to any such matters shall be effective for any purpose.
No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties or their respective
successors in interest. This Lease shall not be effective or
binding on any party until fully executed by both parties hereto.
33.13 Recordation. Tenant shall not record this Lease or a short form
memorandum of this Lease without the prior written consent of
Landlord.
33.14 Liability. If Landlord is a partnership, any claim by Tenant
against Landlord shall be limited to the assets of such
partnership, and Tenant expressly waives any right to proceed
against the partners or the officers, directors, or shareholders of
any partner in Landlord, except to the extent necessary to subject
the assets of such partnership to such claim.
33.15 Severability. That any provision of this Lease is invalid, void, or
illegal shall in no way affect, impair, or invalidate any other
provision of this Lease and such other provision shall remain in
full force and effect.
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33.16 Time. Time is of the essence of this Lease and each of its
provisions.
33.17 Waiver. No provision of this Lease shall be deemed to have been
waived by Landlord unless such waiver is in writing signed by
Landlord's duly authorized representatives. The waiver by either
party of any provision of this Lease shall not be deemed to be a
waiver of such provision or any other provision, in any subsequent
instance. The acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding Default or breach by Tenant under this
Lease, whether known or unknown to Landlord, other than the failure
of the Tenant to pay the particular Rent so accepted.
33.18 No Waste. Tenant shall not commit or suffer to be committed any
waste, damage or nuisance in or upon the Premises.
33.19 Quiet Enjoyment. Provided Tenant observes its obligations under
this Lease, Tenant shall have peaceable and quiet enjoyment of the
Premises throughout the Term
34. Authority of the Parties. Landlord and Tenant each represent and warrant
to the other that each individual executing this Lease is duly authorized
by all necessary action of the directors of that party to execute and
deliver this Lease on behalf of that party, and that this Lease is binding
upon each of them in accordance with its terms.
35. Financial Statements. Tenant shall furnish to Landlord from time to time,
within 30 days of request, Tenant's most recent financial statements,
including at a minimum a balance sheet, income statement and statement of
changes in financial condition, or the equivalent, dated as of and for a
period ending not more than one quarter prior to the date of delivery.
Such statements shall be in the form furnished to Tenant's principal
lender and/or to Tenant's shareholders or other owners, but at a minimum
shall be reviewed or compiled by an independent certified public
accountant. Tenant shall accompany such statements with a certificate of
its chief financial officer that the statements fairly present the
financial condition and results of operations of Tenant as of and for the
period ending on the date of such statements. Landlord shall not request
financial statements under this Section more than once each calendar year.
36. Commissions. Any commissions payable as a result of the execution of this
Lease shall be paid pursuant to a separate commission contract. Each party
represents and warrants to the other that it has not had dealings with any
real estate broker other than the Broker identified in Section 1, agent or
salesperson with respect to this Lease that would cause the other party to
have any liability for any commissions or other compensation to such
broker, agent or salesperson, and that no such broker, agent or
salesperson has asserted any claim or right to any such commission or
other compensation. Such representing party shall defend and indemnify the
other party and hold the other party harmless from and against any and all
loss, cost, liability, damage and expense (including reasonable attorneys'
fees) whatsoever that may arise out of the breach of such representation
and warranty.
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37. Alternative Dispute Resolution. Landlord and Tenant shall attempt to
settle any claim or controversy arising out of this Lease through
consultation and negotiation in the spirit of mutual cooperation. If such
attempts fail, then with respect to the matters arising Under Section
18.4, the dispute shall first be submitted to a mutually acceptable
neutral advisor for mediation, fact-finding or other form of alternative
dispute resolution. Neither of the parties may unreasonably withhold
acceptance of such an advisor, and his or her selection will be made
within 30 days after notice by the other party demanding such remediation.
Cost of such mediation or any other alternative dispute resolution agreed
upon by the parties shall be shared equally by Landlord and Tenant. Any
dispute that cannot be so resolved between the parties within 90 days of
the date of initial demand by either party for such mediation shall be
finally determined by the courts. The use of such a procedure shall not be
construed to affect adversely the rights of either party under the
doctrines of laches, waiver or estoppel.
EXECUTED as of the date first above written.
LANDLORD:
CREEKSIDE BUILDING LLC, a Washington
limited liability company
By XXXXX FARGO BANK, N.A., AS
CORPORATE CO-TRUSTEE FOR
AUTOMOTIVE INDUSTRIES PENSION TRUST
FUND; AND FOR STATIONARY ENGINEERS
LOCAL NO. 39 PENSION TRUST FUND; AND
FOR STATIONARY ENGINEERS LOCAL NO.
39 ANNUITY TRU3T FUND, as authorized
signatory for all Members
By /s/
--------------------------------------
Its Vice President
-------------------------------------
By /s/
--------------------------------------
Its Vice President
-------------------------------------
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TENANT:
PACIFIC AEROSPACE AND ELECTRONICS, INC.
By /s/ X. X. XXXXXX
--------------------------------------
Xxxxxx X. Xxxxxx
Its President/CEO
-------------------------------------
STATE OF WASHINGTON )
) ss.
COUNTY OF CHELAN )
On this 3 day of OCTOBER, 1997, before me, the undersigned, a Notary Public
in and for the State of WASHINGTON personally appeared XXX X. XXXXXX, to me
known to be the PRESIDENT/CEO of PA&E, the CORP. that executed the foregoing
instrument, and acknowledged the said instrument to be the free and voluntary
act and deed of said CORP., for the uses and purposes therein mentioned, and on
oath stated that he/she was authorized to execute the said instrument on behalf
of said CORP.
WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day and year first
above written.
Name XXXXXX X. XXXXXXX
NOTARY PUBLIC in and for the State of
Washington, residing at CHELAN COUNTY
My commission expires 1-23-99
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