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EXHIBIT 10.8
INDUSTRIAL REAL ESTATE LEASE
(BUILDING 2)
DATED: September 10, 1996
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and are
to be read in conjunction with the Basic Terms.
Section 1.01. LANDLORD: WASHINGTON CAPITAL MANAGEMENT, INC., as
Investment Manager for Locals 302 and 612, International Union of Operating
Engineers - Employers Construction Industry Retirement Fund. Address of
Landlord: 0000 0xx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000.
Section 1.02. TENANT: SeaMED Corporation, a Delaware corporation.
Address of Tenant:14560 X.X. 00xx Xxxxxx, Xxxxxxx, XX 00000.
Section 1.03. PREMISES: The "Premises" shall be the first floor of the
building (the "Building") to be constructed pursuant to the provisions of
Exhibit B. The Building will be located on a portion of the real property
described in Exhibit A, which portion is shown on Exhibit A-1 (which portion,
together with all improvements thereon, is referred to as the "Property").
Section 1.04. COMMON AREAS: Tenant shall have the non-exclusive right
to use the Common Areas as described in Section 6.03.
Section 1.05. LEASE TERM: 10 years commencing (the "Commencement Date")
on the later of (a) the date Landlord obtains a certificate of occupancy for the
first floor of the Building or (b) January 1, 1999. Notwithstanding the
foregoing, if Tenant wishes to occupy the Premises prior to January 1, 1999,
Tenant shall so notify Landlord and Landlord will use good faith efforts to
complete the Premises earlier and the Lease Term shall commence on the date
Landlord obtains the certificate of occupancy for the first floor.
Section 1.06. TENANT'S SHARE OF COMMON EXPENSES: During any period that
the Premises are composed of only the first floor of the Building, Tenant's
Share shall be 50%. During any period that the Premises is composed of the
entire Building, Tenant's Share shall be 100%.
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Section 1.07. PERMITTED USES: (See Article Six) Design, manufacturing
and distribution of medical and commercial equipment and general office uses and
for no other purpose.
Section 1.08. BROKERS: (See Article Fifteen) Landlord's Broker:
Xxxxxxxx Xxxx NW, Inc. Tenant's Broker: Xxxxxx, Xxxxxxx & Xxxxxx, Inc.
Section 1.09. SECURITY DEPOSIT: (See Section 3.02) $25,000.
Section 1.10. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT: The monthly Base Rent for the first floor of the
Building shall be $30,000 for the first 3 years of the Lease Term; $33,000 for
years 4-6 of the Lease Term; $36,000 for years 7-9 of the Lease Term; and
$40,500 for year 10 of the Lease Term. If Tenant exercises its option under
Article Seventeen, the monthly Base Rent for the second floor shall be $30,000
for the first 3 years; $33,000 for years 4-6; $36,000 for years 7-9; and $40,500
for year 10.
(b) OTHER PERIODIC PAYMENTS: (i) Common Expenses (see Section 4.01);
and (ii) Utilities (see Section 4.04).
Section 1.11. TENANT IMPROVEMENTS. See Exhibit B.
Section 1.12. EXHIBITS. The following Exhibits are attached to and made
a part of this Lease: Exhibits A (Description of Property), and B (Landlord's
Work) and C (Tenant's Party in Interest Certificate).
ARTICLE TWO: LEASE TERM
Section 2.01. LEASE OF PREMISES FOR LEASE TERM. Landlord leases the
Premises to Tenant and Tenant leases the Premises from Landlord for the Lease
Term stated in Section 1.05 above.
Section 2.02. EARLY OCCUPANCY. Landlord will permit Tenant to enter the
Premises during the final phases of the tenant improvement work to begin
installing its fixtures and equipment, provided that Tenant shall at all times
cooperate with Landlord and provided that such installations do not interfere
with or delay Landlord's Work (as defined in Exhibit B). Tenant's presence on
the Premises shall be subject to all of the provisions of this Lease, but
excluding the payment of Base Rent and Other Periodic Payments.
Section 2.03. OPTIONS TO EXTEND.
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(a) Provided that Tenant is not in default at the time of exercise or
at commencement of the extended term, and otherwise has timely cured all
defaults, then Tenant shall have 2 consecutive options to extend the Lease term
for 5 years each (each, an "Extended Term"). In order to exercise such options,
Tenant shall provide written notice ("Notice of Exercise") to Landlord of its
election no later than 6 months before the end of the initial lease term (or
first Extended Term). The exercise of such options to extend shall be for the
entire Premises and shall be on the same terms and conditions as set forth in
the Lease except the Base Rent shall be adjusted as set forth in Paragraph (b)
below. The options provided in this Section 2.03 are personal to Tenant and may
not be exercised by any assignee or sublessee.
(b) If Tenant exercises an extension right pursuant to Paragraph (a)
above, the initial Base Rent and the periodic increases for the applicable
Extended Term shall be equal to the market rent for a 5 year term for comparable
space ("Fair Market Rent Schedule") but in no event shall the initial Base Rent
be less than the Base Rent paid in Year 10 of the Lease Term (for the first
Extended Term) or the Base Rent paid in Year 5 of the first Extended Term (for
the second Extended Term). Tenant's estimation of the Fair Market Rent Schedule
shall be included with Tenant's option exercise notice. Landlord shall give
Tenant notice of Landlord's estimation of Fair Market Rent Schedule ("Landlord's
Value Notice") by the later of 20 days after receipt of Tenant's exercise notice
or 6 months before the end of the initial Lease Term or first Extended Term, as
the case may be. If there is a disagreement on the Fair Market Rent Schedule,
the parties shall promptly meet to attempt to resolve their differences. If the
differences are not resolved then either party may apply for arbitration in
accordance with the below paragraphs.
If neither party applies for arbitration within 10 business days after
receipt by Tenant of Landlord's Value Notice, Tenant shall be bound to the Fair
Market Rent Schedule stated in Landlord's Value Notice. Should either party
elect to arbitrate, and if the arbitration is not concluded before the
commencement of the applicable Extended Term, Tenant shall pay Monthly Base Rent
to Landlord in an amount equal to the Fair Market Rent Schedule set forth in
Landlord's Value Notice, until the Fair Market Rent Schedule is determined in
accordance with the arbitration provisions hereof. If the Fair Market Rent
Schedule as determined by arbitration differs from that stated in Landlord's
Value Notice, then any adjustment required to correct the amount previously paid
by Tenant shall be made by payment by the appropriate party within 30 days after
the determination of Fair Market Rent Schedule by arbitration has been
concluded, as provided herein. Tenant shall be obligated to make payment during
the entire Extended Term of the Monthly Base Rent determined in accordance with
the arbitration procedures hereunder.
(c) If either party seeks arbitration of Fair Market Rent Schedule
under the provisions hereof for the applicable Extended Term, the other party
shall be bound to submit the matter for determination by arbitration. The
arbitration shall be conducted and determined in the county where the Property
is located.
(d) A party demanding arbitration hereunder shall make its demand in
writing ("Demand Notice") within 10 business days after service of Landlord's
Value Notice. A copy of the Demand Notice shall be sent to the President of the
Real Estate Board for the county in which the Property
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is located. If there is no Real Estate Board President in the county in which
the Property is located, then a copy of the Demand Notice shall be sent to the
Presiding Judge of the highest trial court in such county for the state in which
the Property is located. The Board President, or Presiding Judge, whichever is
applicable, is hereinafter referred to as the "Appointer." The Appointer, acting
in his personal, private capacity, shall appoint within 10 days thereafter a
real estate broker with at least 7 years' experience leasing property in the
same county for the general type of use to which the Property is devoted under
the terms of this Lease. The arbitrator shall be a person who would be qualified
to serve as an expert witness and to give opinion testimony addressed to the
issue in a court of competent jurisdiction. Such a party is hereinafter referred
to as the "Arbitrator." The parties may, however, before sending the Demand
Notice to the Appointer, mutually agree upon an Arbitrator of their own choice,
in which event such appointment shall nullify the necessity of appointment of an
Arbitrator by an Appointer.
(e) The Arbitrator so selected, within 90 days after appointment, shall
determine whether Landlord's valuation, or Tenant's valuation of Fair Market
Rent Schedule most closely approximates the Arbitrator's and shall provide
written notice of the decision to the parties. The Arbitrator is strictly
limited to the selection of Landlord's Fair Market Rent Schedule evaluation as
stated in Landlord's Value Notice or Tenant's Fair Market Rent Schedule
evaluation as stated in the Notice of Exercise. The Arbitrator shall have the
right to consult experts and competent authorities with factual information or
evidence pertaining to a determination of Fair Market Rent Schedule, but any
such consultation shall be made in the presence of both parties with full right
to cross examine. The Arbitrator shall have no right to propose a middle ground
or any modification of either of the proposed valuations, and shall have no
power to modify the provisions of this Lease. The evaluation so chosen as most
closely approximating that of the Arbitrator shall constitute the decision of
the Arbitrator and shall be final and binding upon the parties, absent fraud or
gross error. The Arbitrator shall render a decision and award in writing, with
counterpart copies to each party and judgment thereon may be entered in any
court of competent jurisdiction.
(f) If the Arbitrator fails, refuses or is unable to act in a timely
manner, a successor shall be appointed in the same manner as such Arbitrator was
first chosen hereunder, if such Arbitrator was chosen by an Appointer. If chosen
by mutual agreement, the parties shall, in this succeeding instance, choose the
Arbitrator through means of the procedure for the Appointer. The fees and
expenses of the Arbitrator and the administrative hearing fee, if any, shall be
divided equally between the parties. Each party shall bear its own attorneys'
fees and the other expenses including fees for witnesses in presenting evidence
to the Arbitrator.
Section 2.04. HOLDING OVER. Tenant shall vacate the Premises upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnify Landlord against all damages which Landlord incurs from
Tenant's delay in vacating the Premises. If Tenant does not vacate the Premises
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant's occupancy of the Premises shall be a
"month-to-month" tenancy, subject to all of the terms of this Lease applicable
to a month-to-month tenancy, except that the Base Rent then in effect shall be
increased by 50% if Tenant does not have Landlord's written consent to holdover.
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ARTICLE THREE: BASE RENT
Section 3.01. TIME AND MANNER OF PAYMENT. Commencing on the
Commencement Date and continuing on the first day of each month thereafter,
Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction
or prior demand. The Base Rent shall be payable at Landlord's address set forth
in Section 1.01 or at such other place as Landlord may designate in writing.
Section 3.02. SECURITY DEPOSIT. Upon the execution of this Lease,
Tenant shall deposit with Landlord the Security Deposit specified in Section
1.09. Landlord may apply all or part of the Security Deposit to any unpaid rent
or other charges due from Tenant or to cure any other defaults of Tenant. If
Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its original amount within 10 days after Landlord's written
request. Tenant's failure to do so shall be a material default under this Lease.
The Security Deposit shall be commingled with Landlord's other funds and shall
not bear interest.
Section 3.03. TERMINATION: ADVANCE PAYMENTS. Upon termination of this
Lease under Article Eight (Damage or Destruction), Article Nine (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Premises in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord which apply to any time periods after termination of the Lease.
ARTICLE THREE: COMMON EXPENSES
Section 4.01 DEFINITIONS. The following terms shall have the following
meanings:
Common Expenses. All costs incurred by Landlord in connection with the
Property including payroll costs, insurance, utilities, Real Property Taxes,
repairs, operation, maintenance and replacements and any other expenses which in
accordance with generally accepted accounting and management practices would be
considered an expense of maintaining, managing (not to exceed 3% of Base Rent),
operating, owning, or repairing the Property excluding (i) initial leasing costs
including tenant improvements and leasing commissions for other tenants; and
(ii) costs of any special services rendered to individual tenants for which a
special charge is collected, together with an amount equal to 10% of the total
thereof as compensation to Landlord for administrative services. Common Expenses
shall include amortization (including interest at the rate incurred by Landlord
in connection therewith) of repairs and improvements to the Property which are
capitalized.
Real Property Taxes: All taxes, governmental charges and assessments
levied on the Property, or any improvements, fixtures and equipment and all
other property of Landlord,
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real or personal, used in the operation of the Property; any taxes in addition
to or in lieu of, in whole or in part, such taxes; any tax upon leasing or rents
of the Property; any other governmental charge such as payments for transit or
carpooling or environmental facilities; and all costs and expenses incurred by
Landlord in connection with the attempt to reduce any of the foregoing, whether
by negotiation or contest. Real Property Taxes shall not include any franchise
or state income tax, inheritance tax, estate tax, business and occupation tax,
or other similar tax, and do not include any late payment penalties if Tenant
has paid the amounts due under Section 4.02(a) as and when due.
Section 4.02 PAYMENT OF TENANT'S SHARE. Tenant shall pay to Landlord,
Tenant's Share of Common Expenses. Tenant's Share of Common Expenses for any
portion of a year at the beginning or end of the Term shall be prorated.
Tenant's Share of Common Expenses shall be paid in estimated monthly
installments on the first day of each month of the Lease Term in an amount
specified by Landlord. Landlord may at any time revise the estimate by notice to
Tenant and subsequent payments shall be based upon the new estimate. Within 90
days after the close of each year, or as soon thereafter as practicable,
Landlord shall deliver to Tenant a statement with the total amount of Tenant's
Share of Common Expenses for the prior year, and there shall be a final
adjustment between Landlord and Tenant with Tenant paying Landlord any amount
due Landlord and any amount due Tenant shall be credited to the next amounts due
Landlord, or if the Lease has terminated or expired, such amount shall be
credited against any amounts still due Landlord and the balance shall be
refunded to Tenant.
Section 4.03 PERSONAL PROPERTY TAXES. Tenant shall pay, prior to
delinquency, all personal property taxes on Tenant's property.
Section 4.04. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Premises. Any utilities which are not separately metered shall be (a)
allocated between the users by Landlord and paid within 10 days after receipt of
Landlord's invoice or, at Landlord's election, or (b) included in Common
Expenses.
Section 4.05. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent". Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "Rent" shall mean Base Rent and Additional Rent.
Section 4.06. LATE CHARGES. Tenant's failure to pay Rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any financing on the Property. If Landlord does not
receive any Rent payment within 10 days after it becomes due, Tenant shall pay
Landlord a late charge equal to 10% of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.
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Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate of
6% per annum over the prime rate of interest, as announced by Seattle First
National Bank or its successors, from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease.
ARTICLE FIVE: INSURANCE.
Section 5.01 TENANT'S INSURANCE. During the Lease Term, Tenant shall
maintain a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Landlord and
Tenant against liability for bodily injury, property damage (including loss of
use of property) and personal injury arising out of the operation, use or
occupancy of the Premises and common areas. Tenant shall name Landlord as an
additional insured under such policy. The initial minimum coverage for the
liability insurance shall be $2,000,000 per occurrence and in the aggregate.
During the Lease Term, Tenant shall also maintain fire and extended coverage
insurance for Tenant's property to their full replacement cost. Landlord may
increase the minimum levels and types of insurance required to be carried by
Tenant periodically based upon inflation, increased liability awards,
recommendations of Landlord's professional insurance advisers, lender
requirements and other relevant factors, so long as such changes are
commercially reasonable. The liability insurance obtained by Tenant under this
Section 5.01 shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant's
performance under Section 6.06, if the matters giving rise to the indemnity
under Section 6.06 result from the negligence of Tenant. The amount and coverage
of such insurance shall not limit Tenant's liability nor relieve Tenant of any
other obligation under this Lease.
Section 5.02 LANDLORD'S INSURANCE. As part of Common Expenses, Landlord
shall maintain (a) policies of insurance covering loss of or damage to the
Property, including flood and earthquake insurance if required by any lender
holding a security interest in the Property; (b) commercial general liability
insurance in an amount and with coverage determined by Landlord insuring
Landlord against liability arising out of ownership, operation, use or occupancy
of the Property; and (c) a rental income insurance policy, with loss payable to
Landlord, in an amount equal to one year's Base Rent, plus the estimate of
Tenant's Share of Common Expenses real property taxes and insurance premiums.
The policy obtained by Landlord shall not be contributory and shall not provide
primary insurance. Landlord shall not obtain insurance for Tenant's fixtures or
equipment or building improvements installed by Tenant in the Premises. Common
Expenses shall include any deductible amount under insurance policies maintained
pursuant to this Section 5.02, other than Landlord's liability insurance policy.
Tenant shall not do or permit anything to be done which invalidates any such
insurance policies.
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Section 5.03 GENERAL INSURANCE PROVISIONS.
(i) Before Tenant enters the Property to begin installing
fixtures and equipment or to store any items, Tenant shall deliver to
Landlord a copy of any policies of insurance which Tenant is required
to maintain under this Article Five. At least 30 days prior to the
expiration of any such policy, Tenant shall deliver to Landlord a
renewal of such policy. As an alternative to providing a policy of
insurance, Tenant shall have the right to provide Landlord a
certificate of insurance, executed by an authorized officer of the
insurance company, showing that the insurance which Tenant is required
to maintain under this Article Five is in full force and effect and
containing such other information which Landlord reasonably requires.
(ii) Any insurance which Tenant is required to maintain under
this Lease shall include a provision which requires the insurance
carrier to give Landlord not less than 30 day's written notice prior to
any cancellation or modification of such coverage.
(iii) If Tenant fails to deliver any policy, certificate or
renewal to Landlord required under this Lease within the prescribed
time period or if any such policy is canceled or modified during the
Lease Term without Landlord's consent, Landlord may obtain such
insurance, and Tenant shall reimburse Landlord for the cost of such
insurance within 15 days after receipt of an invoice from Landlord.
(iv) Tenant shall maintain all insurance required under this
Lease with companies holding a "General Policy Rating" reasonably of
A-12 or better, as set forth in the most current issue of "Best Key
Rating Guide" or such other rating as is required by a lender on the
Property. Landlord and Tenant acknowledge that the insurance markets
are rapidly changing and that insurance in the form and amounts
described in this Article Five may not be available in the future. If
that situation occurs, the parties agree to work together in good faith
to determine types and levels of coverage which will provide sufficient
protection for the interests of Landlord and any lender on the
Property. Landlord makes no representation as to the adequacy of such
insurance to protect Tenant's interests and Tenant shall obtain any
such additional property or liability insurance which Tenant deems
necessary to protect Landlord and Tenant.
(v) Unless prohibited under any applicable insurance
policies, Landlord and Tenant each hereby waive any and all rights of
subrogation. Upon obtaining the required policies of insurance,
Landlord and Tenant shall give notice to the insurance carriers of this
mutual waiver of subrogation.
ARTICLE SIX: USE OF PROPERTY
Section 6.01. PERMITTED USES. Tenant may use the Premises only for the
Permitted Uses set forth in Section 1.07 above.
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Section 6.02. MANNER OF USE. Tenant shall not cause or permit the
Premises to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of other tenants or Landlord, or which constitutes a nuisance or
waste. Landlord shall be responsible for obtaining a Certificate of Occupancy
for the Premises at the conclusion of the construction, except to the extent
that issuance of such certificate is delayed or withheld on the basis of work
which is not included in Landlord's Work.
Tenant, at its own expense, shall obtain and pay for all permits
related to its business and/or its specific use of the Premises, for example,
racking permits. Tenant shall promptly take all actions necessary to comply with
all applicable statutes, ordinances, rules, regulations, orders and requirements
regulating the use by Tenant of the Premises and Common Areas, including the
Occupational Safety and Health Act. There shall be no "vehicle maintenance"
performed on the Premises or Common Areas, except as permitted otherwise by
separate agreements with Landlord.
Section 6.03. COMMON AREAS: Landlord shall make available from time to
time such "common areas" as Landlord deems appropriate (the "Common Areas"). As
part of Common Expenses (as defined in Article Four) Landlord is responsible for
operating and maintaining the Common Areas and Landlord may change the size,
location, nature and use of any Common Areas. Tenant has the nonexclusive right
to use those Common Areas which from time to time are designated for such use by
Landlord, subject to any rules Landlord may impose. Landlord may close
temporarily any Common Areas to make repairs or changes or to prevent the
acquisition of public rights in such areas.
Section 6.04. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste, including any
substances included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials" or "toxic substances" now or subsequently
regulated under any applicable federal, state or local regulations, including
without limitation petroleum-based products, asbestos, PCBs and similar
compounds. Tenant shall not cause or permit any Hazardous Material to be
generated, produced, brought upon, used, stored, treated or disposed of in or
about the Premises except in complete compliance with all applicable laws and
regulations. In no event, however, shall the installation or use of any storage
tanks be permitted on the Property. Tenant shall dispose of any residue through
authorized disposal companies. Simultaneously with Tenant's filing of any
reports with or delivery of any notices or other information to any governmental
entity regarding Hazardous Materials, Tenant shall provide a copy of that
report, notice or information to Landlord.
Section 6.05. SIGNS AND AUCTIONS. Tenant shall not place any signs on
the Property or within the Premises without Landlord's prior written consent,
which shall not be
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unreasonably withheld. Tenant shall not conduct or permit any auctions or
sheriff's sales at the Property or within the Premises.
Section 6.06. INDEMNITY. Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising from:
(a) Tenant's use of the Premises; (b) the conduct of Tenant's business or
anything else done or permitted by Tenant to be done in or about the Premises,
including any contamination of the Property or any other property caused or
permitted by Tenant; or (c) other acts or omissions of Tenant. Tenant shall
defend Landlord against any such cost, claim or liability at Tenant's expense
with counsel reasonably acceptable to Landlord or, at Landlord's election,
Tenant shall reimburse Landlord for any legal fees or costs incurred by Landlord
in connection with any such claim. As a material part of the consideration to
Landlord, Tenant assumes all risk of damage to property or injury to persons in
or about the Premises arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except for any claim arising out of
Landlord's gross negligence or willful misconduct. As used in clauses (a), (b)
and (c) of the first sentence of this Section, the term "Tenant" shall include
Tenant's employees, agents, contractors and invitees, if applicable.
Section 6.07. LANDLORD'S ACCESS. Landlord or its agents may enter the
Premises to show the Premises to potential buyers, lenders, investors, tenants
or other parties; to do any other act or to inspect and conduct tests in order
to monitor Tenant's compliance with this Lease and applicable law; or for any
other purpose Landlord deems necessary. Landlord shall give Tenant prior notice
of such entry, except in the case of emergency. Landlord may place customary
"For Sale" or "For Lease" signs within the windows of the Premises.
Section 6.08. QUIET POSSESSION. If Tenant pays the Rent and complies
with all other terms of this Lease, Tenant may occupy and enjoy the Premises for
the full Lease Term, subject to the provisions of this Lease.
ARTICLE SEVEN: CONDITION OF PROPERTY: MAINTENANCE, REPAIRS AND
ALTERATIONS
Section 7.01. EXISTING CONDITIONS. Except as described in Exhibit B,
Tenant accepts the Premises in its condition as of the execution of the Lease,
subject to all recorded matters, laws, ordinances, and governmental regulations
and orders. Except as provided herein, Tenant acknowledges that neither Landlord
nor any agent of Landlord has made any representation as to the condition of the
Premises or the suitability of the Premises for Tenant's intended use. Tenant
represents and warrants that Tenant has made its own inspection of and inquiry
regarding the condition of the Premises and is not relying on any
representations of Landlord or any broker with respect thereto.
Section 7.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not
be liable for any damage or injury to the person, business (or any loss of
income therefrom), goods,
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wares, merchandise or other property of Tenant, Tenant's employees, invitees,
customers or any other person in or about the Premises, whether such damage or
injury is caused by or results from: (a) fire, steam, electricity, water, gas or
rain; (b) the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures
or any other cause; (c) conditions arising in or about the Premises or from
other sources or places; or (d) any act or omission of any other tenant of
Landlord. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 7.02 shall not, however, exempt
Landlord from liability for Landlord's gross negligence or willful misconduct.
Section 7.03. LANDLORD'S OBLIGATIONS. Landlord, at its expense, shall
maintain and repair the structural portions of the Building, including the floor
slab, foundation and the structural portions of the roof and exterior walls.
Landlord, as part of Common Expenses, shall also maintain, repair and replace
the other components of the Building and the Common Areas. Tenant waives the
benefit of any present or future law which might give Tenant the right to repair
the Property at Landlord's expense or to terminate the Lease due to the
condition of the Property. If Landlord is also maintaining exterior areas of
adjacent properties, the costs shall be allocated among the properties based on
the building square footage of those properties.
Section 7.04. TENANT'S OBLIGATIONS.
(a) Except as provided in Section 7.03, Article Eight (Damage or
Destruction), and Article Nine (Condemnation), Tenant shall keep all portions of
the Premises in good order, condition and repair, such as interior repainting
and refinishing, as needed, and repairs to any of its fixtures or equipment not
included in Landlord's Work. Tenant shall maintain a preventive maintenance
contract providing for the regular inspection and maintenance of the heating and
air conditioning system by a licensed heating and air conditioning contractor.
If any part of the Premises is damaged by any act or omission of Tenant, Tenant
shall pay Landlord the cost of repairing or replacing such damaged property,
whether or not Landlord would otherwise be obligated to pay the cost of
maintaining or repairing such property. It is the intention of Landlord and
Tenant that at all times Tenant shall maintain the portions of the Premises
which Tenant is obligated to maintain in an attractive, first-class and fully
operative condition.
(b) Tenant shall fulfill all of Tenant's obligations under this Section
7.04 at Tenant's sole expense. It is in the best interest of Landlord and Tenant
for the Premises to be well maintained, with a clean and professional
appearance. The parties agree that the determination of whether the Tenant has
satisfied its repair and maintenance and replacement obligations shall be based
on Landlord's commercially reasonable judgment. If Tenant fails to maintain,
repair or replace the Premises as required by this Section 7.04, Landlord may,
upon 10 days' prior notice to Tenant (except that no notice shall be required in
the case of an emergency), enter the Premises and perform such maintenance or
repair (including replacement, as needed)
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on behalf of Tenant. In such case, Tenant shall reimburse Landlord for all costs
incurred in performing such maintenance or repair immediately upon demand.
Section 7.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions or improvements to
the Premises without Landlord's prior written consent, which shall not be
unreasonably withheld. Landlord may condition its consent on various matters,
including, without limitation, Tenant agreeing to remove the alterations and
repair any resulting damage prior to the end of the Lease Term. Landlord may
require Tenant to provide payment and performance bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 7.05(a)
and restore the Premises to its condition prior to the unpermitted alteration
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Premises. Tenant shall give Landlord at least 20 days' prior
written notice of the commencement of any work on the Premises.
Section 7.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Premises to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under this Lease. However, Tenant shall not be
obligated to repair any damage which Landlord is required to repair under
Article Eight (Damage or Destruction). In addition, Landlord may require Tenant
to remove any alterations, additions or improvements prior to the expiration of
the Lease and to restore the Premises to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which Landlord has not
required Tenant to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the Lease,
except that Tenant may remove any of Tenant's machinery or equipment which can
be removed without material damage to the Premises. Tenant shall repair, at
Tenant's expense, any damage to the Premises caused by the removal of any such
machinery or equipment. In no event, however, shall Tenant remove any of the
following materials or equipment (which shall be deemed Landlord's property)
without Landlord's prior written consent: any power wiring or power panels;
lighting or lighting fixtures; wall coverings; drapes, blinds or other window
coverings; floor coverings; HVAC equipment; fencing or security gates; or other
similar building operating equipment.
ARTICLE EIGHT: DAMAGE OR DESTRUCTION
Section 8.01. PARTIAL DAMAGE.
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(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Premises. If the Building is only partially
damaged (i.e., less than 25% of the value of the Building) and if the insurance
proceeds received by Landlord are sufficient to pay for the necessary repairs,
this Lease shall remain in effect and Landlord shall repair the damage to
Landlord's Work as soon as is reasonably possible, and Tenant shall repair any
damage to Tenant's fixtures and equipment and any improvements installed by
Tenant.
(b) If (i) the insurance proceeds received by Landlord are not
sufficient to pay the entire cost of repair, or if the cause of the damage is
not covered by the insurance or (ii) if the damage exceeds 25% of the value of
the Building, then Landlord may elect either to (1) repair the damage to
Landlord's Work as soon as reasonably possible, in which case this Lease shall
remain in full force and effect, or (2) terminate this Lease. Landlord shall
notify Tenant within 60 days after receipt of notice of the occurrence of the
damage whether Landlord elects to repair the damage or terminate the Lease. If
Landlord elects to repair the damage, Tenant shall pay to Landlord Tenant's
Share of the "deductible amount" (if any) under Landlord's insurance policy and,
if the damage was due to an act or omission of Tenant or Tenant's employees,
agents, contractors or invitees, Tenant shall also pay to Landlord the
difference between the actual cost of repair and any insurance proceeds received
by Landlord.
(c) If the damage to the Premises occurs during the last 6 months of
the Lease Term, and such damage will require more than 30 days to repair, either
Landlord or Tenant may elect to terminate this Lease as of the date the damage
occurred regardless of the sufficiency of any insurance proceeds. The party
electing to terminate this Lease shall give written notification to the other
party of such election within 30 days after Tenant's notice to Landlord of the
occurrence of the damage.
Section 8.02. TOTAL DESTRUCTION. If the Building or Premises are
totally destroyed by any cause whatsoever, regardless of whether Landlord
receives any insurance proceeds, this Lease shall terminate as of the date the
destruction occurred. Notwithstanding the preceding sentence, if the Building or
Premises can be rebuilt within 6 months after the date of destruction, Landlord
may elect to rebuild, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within 31 days after
Tenant's notice of the occurrence of total destruction. If Landlord so elects,
Landlord shall rebuild the Building or Premises, except that if the destruction
was caused by an act or omission of Tenant, Tenant shall pay Landlord the
difference between the actual cost of rebuilding and any insurance proceeds
received by Landlord.
Section 8.03. TENANT'S RIGHT TO TERMINATE. If (a) the Premises are
damaged by casualty, and (b) the damage was not due to an act or omission of
Tenant, it's agents or employees, and (c) the Landlord's reasonable estimate of
the date that the repairs will be completed is more than 240 days from the date
of the damage, then Tenant shall have the right to terminate this Lease by
written notice to Landlord given within 30 days after Tenant's receipt of
Landlord's estimate of the repair completion date. Similarly, if the repair is
not
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sufficiently completed to allow Tenant to resume its operations in the Premises
within 240 days after the date of the damage, Tenant shall have the right to
terminate this Lease by 30 days written notice to Landlord if the Premises are
not tenantable by the end of that 30 day period.
ARTICLE NINE: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than 20% of the floor area of the Premises is taken, either Landlord or
Tenant may terminate this Lease as of the date the condemning authority takes
title or possession by delivering written notice to the other party within 10
days after receiving notice of such taking (or in the absence of such notice,
within 10 days after the condemning authority take title or possession). If
neither Landlord nor Tenant terminates this Lease, this Lease shall remain in
effect as to the portion of the Property not taken, except that the Base Rent
shall be reduced in proportion to the reduction in the floor area of the
Premises. Any Condemnation award shall be distributed in the following order:
(a) first, to any ground lessor, mortgagee or beneficiary under a deed of trust
encumbering the Property, the amount of its interest in the Property; (b)
second, to Tenant, only the amount of any award specifically designated for loss
or damage to Tenant's trade fixtures or removable personal property; and (c)
third, to Landlord, the remainder of such award, whether as compensation for the
taking of or reduction of the value in the leasehold, the taking of the fee, or
otherwise. If this Lease is not terminated, Landlord shall perform any necessary
repairs to Landlord's Work to restore the Building to a complete unit. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or to make
such repair at Landlord's expense. Landlord shall have exclusive authority to
negotiate the Condemnation award and the exclusive authority to grant
"possession" and use" to the condemning authority.
ARTICLE TEN: ASSIGNMENT AND SUBLETTING
Section 10.01. LANDLORD'S CONSENT REQUIRED. No portion of the Premises
or of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent except as
provided in Section 10.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 10.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
Section 10.02. TENANT AFFILIATE. Tenant may Lease or sublease the
Premises, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with
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Tenant ("Tenant Affiliate") but such sublease or assignment shall not release
Tenant from its obligations under this Lease. In such case, any Tenant Affiliate
shall assume in writing all of Tenant's obligations under this Lease.
Section 10.03. ENTITY TRANSFERS. The cumulative (i.e. in one or more
sales or transfers, by operation of law or otherwise) transfer of an aggregate
of 50% or more of the ownership interests, including by creation or issuance of
new ownership interests, in an entity which is (i) Tenant, (ii) an assignee of
Tenant, or (iii) any entity which is a general partner in a general or limited
partnership which is Tenant or assignee of this Lease; (except as the result of
transfers by gift or inheritance), shall be deemed a transfer of this Lease and
shall be subject to the provisions of Section 10.01. For the purpose of this
Article Ten, any entity which has undergone any of the changes described in this
Section 10.03 shall be deemed to be a Transferee. The two immediately preceding
sentences, however, shall not be applicable to any tenant corporation the
outstanding voting stock of which is listed on a national securities exchange
actively traded "over the counter."
Section 10.04. NO RELEASE OF TENANT. No transfer permitted by this
Article Ten, whether with or without Landlord's consent, shall release Tenant or
change Tenant's primary liability to pay the Rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of Rent from any
other person is not a waiver of any provision of this Article Ten. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Lease, Landlord may proceed directly against Tenant without
pursuing remedies against the transferee. Landlord may consent to subsequent
assignments or modifications of this Lease by Tenant's transferee, without
notifying Tenant or obtaining its consent. Such action shall not relieve Tenant
of its liability under this Lease.
Section 10.05. LANDLORD'S CONSENT. Tenant's request for consent to any
transfer shall set forth in writing the details of the proposed transfer,
including the name, business and financial condition of the prospective
transferee, specific proposed use of the Premises, financial details of the
proposed transfer (e.g., the term of and the rent and security deposit payable
under any proposed assignment or sublease), and any other information Landlord
deems relevant. Landlord will not unreasonably withhold its consent, except
based on the following factors: (i) the net worth, creditworthiness and
financial reputation of the proposed assignee or subtenant; (ii) the expected
impact of the proposed assignee or sublessee on the common facilities; (iii) any
requested change in the terms of this Lease, including a change in permitted
use, and (iv) whether the presence of the proposed assignee or sublessee would
cause a diminuition in the reputation of the Building or Property of which the
Premises is a part.
Section 10.06. NO MERGER. No merger shall result from Tenant's sublease
of the Premises under this Article Ten, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
Section 10.07 ASSIGNMENT / SUBLETTING INCOME. 50% of any amounts
payable by an assignee to Tenant which exceed the Rent payable by Tenant
hereunder, whether in the form
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of assignment fees or increased Base Rent or otherwise, shall be immediately
paid on to Landlord as Additional Rent. 50% of any amounts payable by a
sublessee which, on a per square foot basis, exceed the Rent due from Tenant
hereunder shall be immediately paid on to Landlord.
ARTICLE ELEVEN: DEFAULTS: REMEDIES
Section 11.01. COVENANTS AND CONDITIONS. Tenant's performance of each
of Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.
Section 11.02. DEFAULTS. Tenant shall be in material default under this
Lease:
(a) If Tenant abandons the Premises or if Tenant's vacation of the
Premises results in the cancellation of any insurance described in Article Five;
(b) If Tenant fails to pay Rent or any other charge within 3 days after
written notice from Landlord;
(c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of 15 days after written notice from Landlord;
provided that, if more than 15 days are required to complete such performance,
Tenant shall not be in default if Tenant commences such performance within the
15 day period and thereafter diligently pursues its completion. However, the 15
day period shall not apply if Tenant's failure to perform constitutes a
non-curable breach of this Lease. The notice required by this paragraph is
intended to satisfy any and all notice requirements imposed by law on Landlord
and is not in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within 30 days; (iii) if a trustee or receiver is appointed to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease and possession is not restored to Tenant within
30 days; or (iv) if substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease is subjected to attachment, execution or
other judicial seizure which is not discharged within 30 days. If a court of
competent jurisdiction determines that any of the acts described in this
subparagraph (d) is not a default under this Lease, and a trustee is appointed
to take possession (or if Tenant remains a debtor in possession) and such
trustee or Tenant transfers Tenant's interest hereunder, then Landlord shall
receive, as Additional Rent, the excess, if any, of the rent (or any other
consideration) paid in connection with such assignment or sublease over the Rent
payable by Tenant under this Lease.
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Section 11.03. REMEDIES. On the occurrence of any default by Tenant,
Landlord may, at any time thereafter, with or without notice or demand and
without limiting Landlord in the exercise of any right or remedy which Landlord
may have:
(a) Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time
of the award of the amount by which the unpaid Base Rent, Additional Rent and
other charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the worth at the time of the award of the
amount by which the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves Landlord could have
reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under the Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, any costs or expenses
Landlord incurs in maintaining or preserving the Premises after such default,
the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation or alteration of the Property, Landlord's
attorneys' fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the time
of the award" is computed by allowing interest on unpaid amounts at the rate set
forth in Section 4.07. As used in subpart (iii) above, the "worth at the time of
the award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus 1%. If
Tenant has abandoned the Premises, Landlord shall have the option of (i)
retaking possession of the Premises and recovering from Tenant the amount
specified in this Paragraph 11.03(a), or (ii) proceeding under Paragraph
11.03(b);
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant has abandoned the Premises. In
such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the Rent as it becomes
due;
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Property is
located.
ARTICLE TWELVE: PROTECTION OF LENDERS
Section 12.01. SUBORDINATION. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof and any
renewals, modifications, consolidations, replacements or
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extensions thereof, whenever made or recorded. Tenant shall cooperate with
Landlord and any lender which is acquiring a security interest in the Property
or the Lease. Tenant's right to quiet possession of the Premises during the
Lease Term shall not be disturbed if Tenant pays the rent and performs all of
Tenant's obligations under this Lease and is not otherwise in default. If any
ground lessor, beneficiary or mortgagee elects to have this Lease prior to the
lien of its ground lease, deed of trust or mortgage and gives written notice
thereof to Tenant, this Lease shall be deemed prior to such ground lease, deed
of trust or mortgage whether this Lease is dated prior or subsequent to the date
of said ground lease, deed of trust or mortgage or the date of recording
thereof.
Section 12.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Premises upon the transfer
of Landlord's interest.
Section 12.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or document required by the lender to evidence any such attornment or
subordination or agreement to do so; provided that Tenant's obligations under
this Lease not be increased in any material way (the performance of ministerial
acts shall not be deemed material), and Tenant shall not be deprived of its
rights under this Lease. If Tenant fails to do so within 10 days after written
request, Tenant hereby makes, constitutes and irrevocably appoints Landlord, or
any transferee or successor of Landlord, the attorney-in-fact of Tenant to
execute and deliver any such instrument or document.
Section 12.04. ESTOPPEL CERTIFICATES.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge
and deliver to Landlord a written statement certifying the following information
to Landlord and any other entity Landlord requests: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been canceled
or terminated; (iii) the last date of payment of the Base Rent and other charges
and the time period covered by such payment; (iv) that Landlord is not in
default under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to Tenant
or the Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Property may require. Tenant shall deliver such
statement to Landlord within 10 days after Landlord's request. Landlord may give
any such statement by Tenant to any prospective purchaser or encumbrancer of the
Property. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct.
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(b) If Tenant does not deliver such statement to Landlord within such
10 day period, (a) Tenant shall be subject to a liquidated damages charge of
$100 per day of delay in delivering it and (b) Landlord, and any prospective
purchaser or encumbrancer, may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this Lease have not been changed
except as otherwise represented by Landlord; (ii) that this Lease has not been
canceled or terminated except as otherwise represented by Landlord; (iii) that
not more than one month's Base Rent or other charges have been paid in advance;
and (iv) that Landlord is not in default under the Lease. In such event, Tenant
shall be estopped from denying the truth of such facts.
Section 12.05. TENANT'S FINANCIAL CONDITION. Within 20 days after
written request from Landlord, but not more often than once per year, Tenant
shall deliver to Landlord Tenant's most recent financial statements and tax
returns to verify the net worth of Tenant or any assignee, subtenant, or
guarantor of Tenant. In addition, Tenant shall deliver to any lender designated
by Landlord any financial statements required by such lender to facilitate the
financing or refinancing of the Property and copies of Tenant's current federal
income tax returns. Tenant represents and warrants to Landlord that each such
financial statement is a true and accurate statement as of the date of such
statement. All financial statements and tax returns shall be confidential and
shall be used only for the purposes set forth in this Lease.
ARTICLE THIRTEEN: LEGAL COSTS
Section 13.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys' fees and
costs. The losing party in such action shall pay such attorneys' fees and costs.
Tenant shall also indemnify Landlord against and hold Landlord harmless from all
costs, expenses, demands and liability Landlord may incur if Landlord becomes or
is made a party to any claim or action (a) instituted by Tenant against any
third party, or by any third party against Tenant, or by or against any person
holding any interest under or using the Premises by license of or agreement with
Tenant; (b) for foreclosure of any lien for labor or material furnished to or
for Tenant or such other person; (c) otherwise arising out of or resulting from
any act of Tenant or such other person; or (d) necessary to protect Landlord's
interest under this Lease in a bankruptcy proceeding, or other proceeding under
Title 11 of the United States Code, as amended. Tenant shall defend Landlord
against any such claim or action at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs Landlord incurs in any such claim or
action.
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Section 13.02. COSTS AND ATTORNEYS' FEES. In the event of litigation
between the parties hereto, declaratory or otherwise to enforce this Lease, the
non-prevailing party shall pay the costs thereof and attorneys' fees actually
incurred by the prevailing party, in such suit, at trial and on appeal. In
addition, if Landlord engages counsel to enforce the terms of this Lease,
including without limitation, for the purpose of preparing a delinquency notice,
Tenant shall be required to reimburse Landlord for all costs incurred before the
subject default is considered cured.
Section 13.03. LANDLORD'S CONSENT. Tenant shall pay Landlord's
reasonable attorneys' fees and other out-of-pocket costs incurred in connection
with Tenant's request for Landlord's consent under Article Ten (Assignment and
Subletting), or in connection with any other act which Tenant proposes to do and
which requires Landlord's consent.
ARTICLE FOURTEEN: MISCELLANEOUS PROVISIONS
Section 14.01. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) The Landlord is the Fiduciary Account described in Section 1.01.
All references to Landlord are to this Fiduciary Account. Tenant acknowledges
and agrees that Washington Capital Management, Inc. is the investment manager
only and therefore Tenant shall have no claim against Washington Capital
Management or any of its agents or employees for matters related to this Lease.
(b) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or the leasehold estate under a
ground lease of the Property at the time in question. Each Landlord is obligated
to perform the obligations of Landlord under this Lease only during the time
such Landlord owns such interest or title. Any Landlord who transfers its title
or interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds that Tenant
previously paid if such funds have not yet been applied under the terms of this
Lease.
(c) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address has been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within 30 days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than 30 days to cure, Landlord shall
not be in default if such cure is commenced within such 30 day period and
thereafter diligently pursued to completion.
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(d) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property, and neither the
Landlord nor its partners, shareholders, members, officers or other principals
shall have any personal liability under this Lease.
Section 14.02. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 14.03. INTERPRETATION. The captions of Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms and provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Premises with Tenant's expressed or
implied permission.
Section 14.04. INCORPORATION OF PRIOR AGREEMENTS: MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Premises and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 14.05. NOTICES. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.02 above, except that upon
Tenant's taking possession of the Premises, the Premises shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.01 above. All notices shall be effective upon
either delivery or 3 days after mailing in the manner described above. Either
party may change its notice address upon written notice to the other party.
Section 14.06. WAIVERS. All waivers must be in writing and signed by
the waiving party. Landlord's failure to enforce any provisions of this Lease or
its acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 14.07. NO RECORDATION. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord or Tenant
may require that a "Short Form" memorandum of this Lease executed by both
parties be recorded. The party requiring such recording shall pay all transfer
taxes and recording fees.
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Section 14.08. BINDING EFFECT; CHOICE OF LAW. This Lease binds any
party who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligations to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 14.09. AUTHORITY. Each person signing this Lease on behalf of
Tenant represents and warrants that he has full authority to do so and that this
Lease binds the Tenant entity.
Section 14.10. JOINT AND SEVERAL LIABILITY. All parties signing this
Lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
Section 14.11. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 14.12. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.
Section 14.13. ERISA CONTINGENCY. This Lease is contingent upon
Tenant executing Exhibit C to this Lease and taking any other actions requested
by Landlord to verify that this Lease is not a prohibited transaction under
ERISA. Landlord will rely on the statements by Tenant contained in Exhibit C in
agreeing to enter into this Lease. As a result, if Landlord later learns that
any of the statements by Tenant on Exhibit C are not correct, then (a) it shall
be deemed an incurable default by Tenant under the Lease and Landlord may
immediately terminate this Lease by notice to Tenant and Landlord shall be
entitled to collect the damages described in Section 16, and (b) Tenant shall
indemnify, defend and hold Landlord harmless from any and all damages, costs, or
liabilities incurred by Landlord in connection with the false statements.
ARTICLE FIFTEEN: BROKERS
Section 15.01 BROKER'S FEE. Landlord shall be responsible for the
commission due to Landlord's Broker and Tenant's Broker. Landlord's Broker
hereby discloses to Landlord and Tenant and Landlord and Tenant hereby consent
to Landlord's Broker acting in this transaction as the agent of Landlord only.
Section 15.02. NO OTHER BROKERS. Tenant represents and warrants to
Landlord that the brokers named in Section 1.08 above are the only agents,
brokers, finders or other parties
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with whom Tenant has dealt who are or may be entitled to any commission or fee
with respect to this Lease or the Premises.
ARTICLE SIXTEEN: UNIFORM COMMERCIAL CODE SECURITY AGREEMENT
Section 16.01 GRANT TO LANDLORD. This Lease constitutes a security
agreement pursuant to the Uniform Commercial Code with respect to:
(a) Any of the property in the Premises which, under applicable
law, is not real property or effectively made part of the real property
by the provisions of this Lease; and
(b) All fixtures and equipment now or hereafter located on the
Premises.
Tenant hereby grants Landlord a security interest in all property
described in clauses (a) and (b) above (collectively, the "Personal
Property").
Section 16.02 LANDLORD'S RIGHTS AND REMEDIES. With respect to the
Personal Property, Landlord has all of the rights and remedies (i) of a secured
party under the Uniform Commercial Code, (ii) provided herein, including without
limitation the right to cause the Personal Property to be sold, and (iii) as
provided by law. In exercising its remedies, Landlord may proceed against the
items of real property and any items of Personal Property, separately or
together, and in any order whatsoever, without in any way affecting the
availability of Landlord's remedies. Upon demand by Landlord following a default
hereunder, Tenant will assemble any items of Personal Property and make them
available to Landlord at the Property, a place which is hereby deemed to be
reasonably convenient to both parties. Landlord shall give Tenant at least 5
days' prior written notice of the time and place of any public sale or
disposition of the Personal Property or of the time of or after which any
private sale or any other intended disposition is to be made. Any person
permitted by law to purchase at any such sale may do so. Such property may be
sold at any one or more public or private sales as permitted by applicable law.
All expenses incurred in realizing on the Personal Property shall be borne by
Tenant.
Section 16.03 FINANCING STATEMENT. At Landlord's request, Tenant shall
execute and deliver to Landlord UCC-1 and UCC-2 Financing Statements for filing
and recording and such other documents as Landlord requests for perfecting the
security interest granted by this Article.
Section 16.04 PRIORITY. Tenant warrants that Landlord's security
interest in the Personal Property shall be junior only to purchase money
financing on the Personal Property.
ARTICLE SEVENTEEN: RIGHT TO LEASE ENTIRE BUILDING
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Subject to the net worth condition described below, Tenant shall have
the option to lease the second floor of the Building. In order to exercise this
option, Tenant must give written notice to Landlord during the period between
May 1, 1997 and September 30, 1998. If Tenant exercises this option, then
Landlord agrees to lease to Tenant and Tenant agrees to lease from Landlord, the
second floor of the Building, on the terms contained in this Lease. Following
Tenant's exercise of the option, Landlord shall perform "Landlord's Work" (as
defined in Exhibit B) on the second floor and the leasing of the second floor
shall commence on the date Landlord receives a certificate of occupancy for the
second floor and shall continue for 10 years from that date. Tenant shall have a
tenant improvement allowance of $750,000 (inclusive of sales tax, permit fees
and space planning fees) and if the cost of the work is less than or more than
that amount, the difference shall be handled as described in paragraphs G, H and
I of Exhibit B.
Tenant's right to exercise this option is conditioned upon Tenant
providing to Landlord, with its notice of exercise of the option, audited
financial statements demonstrating that Tenant's tangible net worth, as of the
end of its most recently completed fiscal year equals or exceeds Tenant's
tangible net worth as of the date this Lease is executed. Net worth means the
total shareholder's equity (including capital stock, additional paid in capital,
and retained earnings after deducting treasury stock, but excluding minority
interests in subsidiaries) which appear on the balance sheet of Tenant, less the
sum of (a) all notes receivable from related parties, (b) the book value of
intangible assets including good will, patents, trademarks, franchises and
deferred charges (including organizational costs, deferred development expense,
etc.) and similar assets, and (c) the write-up of assets above acquisition cost.
ARTICLE EIGHTEEN: RIGHT OF FIRST OPPORTUNITY
During the Term of the Lease, Tenant shall have a right of
first opportunity to lease available space in the Building comprising 10,000
square feet or more prior to that space being offered to third parties for
lease, on the terms set forth in this Section. If Landlord wishes to lease an
available area in the Building and if that space is at least 10,000 square feet
in size, Landlord shall first offer to lease that space (the "Opportunity
Space") to Tenant for a ten year term at the rental rate(s) and tenant
improvement terms that Landlord is willing to accept from a third party. Tenant
shall have 10 days within which to notify Landlord in writing that it elects to
lease the space and to reach agreement with Landlord on all the terms,
conditions and rental rate for the Opportunity Space. If the parties reach
agreement on the terms (including commencement date), conditions and rental
rate, Landlord shall prepare a lease containing those terms for Tenant's
signature. If Tenant does not elect to lease the Opportunity Space or fails to
execute the new lease within 3 days after presentation by Landlord, then such
right shall be deemed to have lapsed and shall be of no further force or effect
as to that notification by Landlord. Landlord may thereafter freely lease all or
a portion of the Opportunity Space to any other party, at any time, on any
terms, in Landlord's sole discretion. The right of first opportunity shall be
null and void if Tenant is in default under the Lease at the date Landlord would
otherwise notify Tenant of Landlord's Offer or at any
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time thereafter and prior to delivery of possession of the Opportunity Space.
The right of first opportunity is personal to Tenant and may not be exercised or
enjoyed by any other person or entity.
This right of first opportunity is subject to the rights of
existing tenants or occupants of the Opportunity Space to renew their existing
leases whether pursuant to options to extend or renew previously granted. If
Tenant exercises this right of first opportunity, Landlord does not guarantee
that the Opportunity Space will be available on the commencement date for the
lease thereof, if the then existing occupants of the Opportunity Space hold-over
for for any other reason the space is not available for reasons beyond
Landlord's reasonable control. In that event, rent for the Opportunity Space
shall be abated unitl Landlord delivers possession of the Opportunity Space to
Tenant, as Tenant's sole remedy or recourse. Tenant's right of first opportunity
is a part of this Lease and shall automatically terminate upon any termination
or expiration of the Lease.
"LANDLORD"
WASHINGTON CAPITAL MANAGEMENT,
INC.,
As Investment Manager for Locals 302 and 612,
International Union of Operating Engineers -
Employers Construction Industry Retirement Fund
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx Xxxxxx
Its VP & Principal
---------------------------------------
"TENANT"
SeaMED CORPORATION,
a Delaware corporation
By: /s/ Xxx Xxxx
--------------------------------------------
Its V.P. of Operations
--------------------------------------------
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STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that
Xxxxxxx Xxxxxx is the person who appeared before me, and said person
acknowledged that he signed this instrument, on oath stated that he was
authorized to execute the instrument and acknowledged it as the VP & Principal.
of WASHINGTON CAPITAL MANAGEMENT, INC., as Investment Manager
for Locals 302 and 612, International Union of Operating Engineers Employers
Construction Industry Retirement Fund to be the free and voluntary act of such
party for the uses and purposes mentioned in this instrument.
Dated: 9/11/96 .
----------------------
/s/ Xxxxx X. Xxxxxxxx
------------------------------------
(Signature of Notary Public)
Xxxxx X. Xxxxxxxx
------------------------------------
(Printed Name of Notary Public)
My Appointment expires 4/23/00
-------------
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Xxx Xxxx
is the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument and acknowledged it as the Vice President of SeaMED Corporation, a
Delaware corporation, to be the free and voluntary act of such party for the
uses and purposes mentioned in this instrument.
Dated: 9/4/96 .
----------------------
/s/ Xxxxxxx X. Xxxx
------------------------------------
(Signature of Notary Public)
Xxxxxxx X. Xxxx
------------------------------------
(Printed Name of Notary Public)
My Appointment expires 1/18/97
-------------
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