EXHIBIT 10.5C
-------------
SECOND AMENDMENT TO LEASE AGREEMENT
BETWEEN THOMAS AND ELSA KANE AND
PACIFIC BIOMETRICS, INC.
THIS SECOND AMENDMENT to this Lease, made this 20th day of April,
2007,
by and between Thomas and Elsa Kane ("Landlord") and Pacific
Biometrics, Inc.
("Tenant").
R E C I T
A L S:
A. In accord with the terms of "Lease Agreement" of April 23, 1997
(as
amended by First Amendment to Lease Agreement of January 20, 1998)
Landlord has
leased to Tenant the premises described in Exhibit A of the Lease
Agreement. The
Lease presently expires October 31, 2007.
B. Landlord and Tenant wish to extend the Lease until October 31,
2012
and also wish to grant to Tenant an option to extend for an
additional five (5)
years thereafter.
C. Landlord and Tenant wish to retain and reaffirm most of the
paragraphs of the Lease Agreement of April 23, 1997 with those
retained
provisions controlling the Landlord Tenant relationship during the
extended
period(s). The retained provisions are attached as Exhibit A to
this Second
Amendment.
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
1. The Lease of April 23, 1997 be and hereby is extended for a five
(5)
year period and it will accordingly terminate at midnight on
October 31, 2012.
It is agreed that during the extended period the provisions of the
Lease
contained in Exhibit A attached will control.
2. During the five (5) year extended term, the monthly rent will
be:
Year 1
$20,361.00
Year 2
$21,000.00
Year 3
$21,639.00
Year 4
$22,278.00
Year 5
$22,917.00
The above rental reflects an agreed reduction in rent by Landlord
of
$38,325.00 as a rent allowance to Tenant for Landlord's
contribution to cost of
improvements performed and to be performed by Tenant. In addition,
Landlord
shall pay to Tenant an additional $38,325.00 in cash upon mutual
execution of
this Second Amendment as
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a cash allowance to Tenant for Landlord's contribution to cost of
improvements
performed, and to be performed, by Tenant. These approved
improvements are
scheduled on Exhibit B attached.
3. Landlord grants to Tenant the exclusive option and privilege
of
extending the term of this Lease for an additional five (5) year
period
following October 31, 2012 upon the same terms and conditions in
Exhibit A
attached hereto and incorporated herein. If Tenant decides to
exercise this
option, Tenant shall give written notice to Landlord of its
election not less
than sixty (60) days prior to October 31, 2012. Upon the giving of
such notice,
the Lease shall be extended and shall continue for the additional
five (5) year
period and the execution of a new lease or instrument of any kind
shall not be
required, PROVIDED THAT the amount of rent for the period following
October 31,
2012 shall be agreed by Landlord and Tenant or if unable to agree,
in accord
with the following procedure: Within ten (10) days after the Notice
of Election
to Exercise, Landlord and Tenant shall each appoint a commercial
real estate
broker or appraiser with at least ten (10) years of experience with
properties
similar to the Premises in the general geographical area in which
the Premises
are located. The appraiser must be a licensed appraiser or a
licensed real
estate broker who has not been regularly employed or retained as a
consultant,
appraiser or agent for the appointing party.
Within ten (10) days after both appraisers have been appointed,
the
appraisers shall decide what the fair market rent for the extended
term would be
and shall promptly notify Landlord and Tenant of their decision
which shall be
final and binding. In the event the appraisers do not agree, they
shall each
propose one (1) fair market value rent number in writing and shall
then jointly
appoint a third appraiser, who, after consultation, shall select
one (1) rent
number or the other as the fair market rent.
4. Notwithstanding anything to the contrary in the Lease
Agreement,
Tenant may, upon delivery of notice to Landlord, sublease all or
part of the
Premises. Tenant's notice of intent to sublease must be delivered
to Landlord at
least fourteen (14) days prior to the proposed date of sublease.
Tenant's notice
must contain (1) the form of Sublease Agreement to be used; (2) the
legal name
of the subtenant; (3) a description of the nature of subtenant's
business; (4) a
summary of its business history; and (5) a brief financial summary
of subtenant
(which Landlord shall treat as confidential) sufficient to inform
Landlord with
regard to the subtenant's financial viability. As noted in the
Lease Agreement,
any such assignment or sublease shall not release Tenant from
Tenant's Lease
Agreement obligations. Landlord, after making a reasonable
evaluation of items
(1) through (5) may refuse to consent to the sublease, if the
proposed subtenant
would be unsatisfactory.
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5. NOTICE OF LANDLORD'S INTENTION TO LIST AND/OR SELL THE PROPERTY
AND
TO PERMIT TENANT TO MAKE THE FIRST OFFER. Landlord agrees that if,
at any time
during the term of this Lease, a decision is made to enter a
listing agreement
and/or sell the property, Landlord will give written notice to
Tenant that such
decision has been made thirty (30) days prior to signing a Listing
Agreement
and/or contract to sell the property. Landlord agrees that, during
the thirty
(30) day period, Landlord will neither accept nor consider any
purchase offers
from any other party. Tenant shall thereby be entitled to make the
first offer.
6. Except as modified herein, the Lease Agreement shall remain in
full
force and effect. IN WITNESS WHEREOF the parties have executed this
Second
Amendment to Lease Agreement on the day and
year first above written.
LANDLORD:
TENANT:
/s/ Thomas Kane
PACIFIC BIOMETRICS, INC.
------------------------
Thomas Kane
/s/ Elsa Kane
/s/ Ronald Helm
------------------------
-------------------------------
Elsa Kane
By: Ronald Helm, President/CEO
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<PAGE>
STATE OF WASHINGTON
)
) ss.
COUNTY OF KING
)
On this day personally appeared before me Thomas Kane and Elsa
Kane, to
me known to be the individuals described in and who executed the
within and
foregoing instrument, and acknowledged that they signed the same as
their free
and voluntary act and deed, for the uses and purposes therein
mentioned.
GIVEN under my hand and official seal this 20th day of April,
2007.
/s/ Cristyann Laxamana
(Printed Name:
Cristyann Laxamana
)
--------------------------
Notary Public for the State of Washington
residing at: 23302
59th Pl. S
----------------------------
My commission expires:
June 20, 2010
------------------
STATE OF WASHINGTON
)
) ss.
COUNTY OF KING
)
On this 20th day of April, 2007, before me, the undersigned, a
Notary
Public in and for the State of Washington, duly commissioned and
sworn,
personally appeared Ronald Helm, to me known to be the President
and CEO of
Pacific Biometrics, Inc., the corporation that executed the
foregoing
instrument, and acknowledged the said instrument to be the free and
voluntary
act and deed of said corporation, for the uses and purposes therein
mentioned,
and on oath stated that he is authorized to execute the said
instrument and that
the seal affixed is the corporate seal of said corporation.
Witness my hand and official seal hereto affixed the day and year
first
above written.
/s/ Cristyann Laxamana
(Printed Name:
Cristyann Laxamana
)
--------------------------
Notary Public for the State of Washington
residing at: 23302
59th Pl. S
----------------------------
My commission expires:
June 20, 2010
------------------
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<PAGE>
EXHIBIT A
LEASE AGREEMENT
(Single Tenant for Entire Parcel - Triple Net)
This Has Been Prepared For Submission To Your Attorney For Review
And Approval
Prior To Signing No Representation is Made By Licensee As To Its
Legal
Sufficiency Or Tax Consequences
CBA Text Disclaimer. Text deleted try licensee indicated by strike.
New text
inserted try licensee Indicated by small capital letters.
THIS LEASE AGREEMENT (the "Lease") is entered into this _____ day
of
________________ between TOM KANE AND ELSA KANE ("Landlord"), and
PACIFIC
BIOMETRICS, INC. ("Tenant"). Landlord and Tenant agree as
follows:
1. LEASE SUMMARY.
a.
Leased Premises. The leased premises (the "Premises") consist of
the
real
property legally described on attached Exhibit A, and all
improvements
thereon.
b.
Lease Commencement Date. The Lease shall commence on November 1,
2007,
or
such earlier or later date as provided in Section 3 (the
"Commencement
Date").
c.
Lease Termination Date. The Lease shall terminate at midnight on
October
31,
2012, or such earlier or later date as provided in Section 3
(the
"Termination Date").
d.
Base Rent. The base monthly rent shall be (check one): [__]
$_______, or
[XX]
according to the Rent Rider attached hereto. Rent shall be payable
at
Landlord's address shown in Section 1(h) below, or such other
place
designated in writing by Landlord.
g.
Permitted Use. The Premises shall be used only for GENERAL OFFICE
AND
TESTING LABORATORY and for no other purpose without the prior
written
consent of Landlord.
h.
Notice and Payment Addresses:
Landlord: 810 WEST
HIGHLAND DRIVE, SEATTLE, WA 98119 Fax No.: 206-298-2936
-------------------------------------------
Tenant: 220 WEST
HARRISON, SEATTLE, WA 98119 Fax No.: 206-298-9838
-------------------------------------
2. PREMISES.
Landlord leases to Tenant, and Tenant leases from Landlord the
Premises upon the terms specified in this Lease.
3. TERM.
a.
Commencement Date. The Lease shall commence on the date specified
in
Section 1(b).
4. RENT. Tenant
shall pay Landlord without demand, deduction or offset, in
lawful money of the United States, the monthly rental stated in
Section
1(d)
in advance on or before the first day of each month during the
Lease
Term, and any other additional payments due to Landlord
(collectively the
"Rent") when required under this Lease. Payments for any partial
month at
the
beginning or end of the Lease term shall be prorated.
If
any sums payable by Tenant to Landlord under this Lease are not
received
by
the TENTH (10TH) day of each month, Tenant shall pay Landlord
in
addition to the amount due, for the cost of collecting and handling
such
late
payment, an amount equal to the greater of $100 or five percent
(5%)
of
the delinquent amount. In addition, all delinquent sums payable
by
Tenant to Landlord and not paid within TEN (10) days of the due
date shall,
at
Landlord's option, bear interest at the rate of twelve percent
(12%) per
annum, or the highest rate of interest allowable by law, whichever
is less.
Interest on all delinquent amounts shall be calculated from the
original
due
date to the date of payment.
Landlord's acceptance of less than the full amount of any payment
due from
Tenant shall not be deemed an accord and satisfaction or compromise
of such
payment unless Landlord specifically consents in writing to payment
of such
lesser sum as an accord and satisfaction or compromise of the
amount which
Landlord claims.
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6. USES. The
Premises shall be used only for the use(s) specified in Section
1(g)
above (the "Permitted Use"), and for no other business or
purpose
without the prior written consent of Landlord. No act shall be done
on or
around the Premises that is unlawful or that will increase the
existing
rate
of insurance on the Premises. Tenant shall not commit or allow to
be
committed any waste upon the Premises, or any public or private
nuisance.
7. COMPLIANCE
WITH LAWS. Tenant shall not cause or permit the Premises to be
used
in any way which violates any law, ordinance, or governmental
regulation or order.
Landlord represents to Tenant that, to the best of
Landlord's knowledge, with the exception of any Tenant's Work, as
of the
Commencement Date, the Premises comply with all applicable laws,
rules,
regulations, or orders, including without limitation, the Americans
With
Disabilities Act, if applicable, and Landlord shall be responsible
to
promptly cure any noncompliance which existed on the Commencement
Date.
Tenant shall be responsible for complying with all laws applicable
to the
Premises as a result of Tenant's particular use, such as
modifications
required by the Americans With Disabilities Act as a result of
Tenant
opening the Premises to the public as a place of public
accommodation. If
the
enactment or enforcement of any law, ordinance, regulation or
code
during the Lease term requires any changes to the Premises during
the Lease
term, the Tenant shall perform all such changes at its expense, if
the
changes are required due to the nature of Tenant's activities at
the
Premises, or to alterations that Tenant seeks to make to the
Premises;
otherwise, Landlord shall perform all such changes at its
expense.
8. UTILITIES.
Landlord shall not be responsible for providing any utilities
to
the
Premises, but represents and warrants to Tenant that as of the
Commencement Date electricity, water, sewer, and telephone
utilities are
available to the Premises. Tenant shall determine whether the
available
capacity of such utilities
will meet Tenant's needs. Tenant shall install
and
connect, if necessary, and directly pay for all water, sewer,
gas,
janitorial, electricity, garbage removal, heat, telephone, and
other
utilities and services used by Tenant on the Premises during the
Term, SO
LONG
AS such services are billed directly to Tenant.
9. TAXES. Tenant
shall pay all Taxes (defined below) applicable to the
Premises during the Lease term. All payments for Taxes shall be
made at
least ten (10) days prior to their due date. Tenant shall promptly
furnish
Landlord with satisfactory evidence that Taxes have been paid. If
any Taxes
paid
by Tenant cover any period of time before or after the expiration
of
the
Term, Tenant's share of those Taxes paid will be prorated to cover
only
the
period of time within the tax fiscal year during which this Lease
was
in
effect, and Landlord shall promptly reimburse Tenant to the
extent
required. If Tenant fails to timely pay any Taxes, Landlord may pay
them,
and
Tenant shall repay such amount to Landlord with Tenant's next
rent
installment.
The
term "Taxes" shall mean: (i) any form of real estate tax or
assessment
imposed on the Premises by any authority, including any city, state
or
federal government, or any improvement district, as against any
legal or
equitable interest of Landlord or Tenant in the Premises or in the
real
property of which the Premises are a part, or against rent paid for
leasing
the
Premises; and (ii) any form of personal property tax or
assessment
imposed on any personal property, fixtures, furniture, tenant
improvements,
equipment, inventory, or other items, and all replacements,
improvements,
and additions to them,
located on the Premises, whether owned by Landlord
or
Tenant. "Taxes" shall exclude any net income tax imposed on
Landlord for
income that Landlord receives under this Lease.
Tenant may contest the amount or validity, in whole or in part, of
any
Taxes at its sole expense, only after paying such Taxes or posting
such
security as Landlord may reasonably require in order to protect
the
Premises against loss or forfeiture. Upon the termination of any
such
proceedings, Tenant shall pay the amount of such Taxes or part of
such
Taxes as finally determined, together with any costs, fees,
interest
penalties, or other related liabilities. Landlord shall cooperate
with
Tenant in contesting any Taxes, provided Landlord incurs no expense
or
liability in doing so.
10. ALTERATIONS.
Tenant may make alterations, additions or improvements to the
Premises, including any Tenant's Work identified on attached
Exhibit B
("Alterations"), with the prior written consent of Landlord WHICH
CONSENT
WILL
NOT BE UNREASONABLY WITHHELD OR DELAYED. The term "Alterations"
shall
not
include the installation of shelves, movable partitions,
Tenant's
equipment, and trade fixtures which may be performed without
damaging
existing improvements or the structural integrity of the Premises,
and
Landlord's consent shall not be required for Tenant's installation
of those
items. Tenant shall complete Alterations in compliance with all
applicable
laws
and in accordance with plans and specifications approved by
Landlord,
and
using contractors approved by Landlord. Landlord shall be deemed
the
owner of all Alterations except for those which Landlord requires
to be
removed at the end of the Lease term. Tenant shall remove all
Alterations
at
the end of the Lease term unless Landlord conditioned its consent
upon
Tenant leaving a specified Alteration at the Premises, in which
case Tenant
shall not remove such Alteration. Tenant shall immediately repair
any
damage to the Premises caused by removal of Alterations.
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<PAGE>
11. REPAIRS AND
MAINTENANCE. Tenant shall, at its sole expense, maintain the
Premises in good condition and promptly make all NON-STRUCTURAL
repairs and
replacements necessary to keep the Premises in safe operating
condition,
but
excluding the roof, foundation and exterior walls, which Landlord
shall
maintain in good condition and repair at Landlord's expense. Tenant
shall
not
damage any demising wall or disturb the structural integrity of
the
Premises and shall promptly repair any damage or injury done to any
such
demising walls or structural elements caused by Tenant or its
employees,
agents, contractors, or invitees. Notwithstanding anything in this
Section
to
the contrary, Tenant shall not be responsible for any repairs to
the
Premises made necessary by the acts of Landlord or its agents,
employees,
contractors or invitees therein.
Upon
expiration of the Lease term, whether by lapse of time or
otherwise,
Tenant shall promptly and peacefully surrender the Premises,
together with
all
keys, to Landlord in as good condition as when received by Tenant
from
Landlord or as thereafter improved, reasonable wear and tear and
insured
casualty excepted.
12. ACCESS. After
reasonable notice from Landlord (except in cases of
emergency, where no notice is required), Tenant shall permit
Landlord and
its
agents and employees to enter the Premises at all reasonable times
for
the
purposes of repair or inspection. This Section shall not impose
any
repair or other obligation upon Landlord not expressly stated
elsewhere in
this
Lease. After reasonable notice to Tenant, Landlord shall have
the
right to enter the Premises for the purpose of showing the Premises
to
prospective purchasers or lenders at any time, and to prospective
tenants
within 180 days prior to the expiration or sooner termination of
the Lease
term.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD
RECOGNIZES
THE
WORK TO BE PERFORMED BY TENANT IS CONFIDENTIAL AND PROPRIETARY,
AND
LANDLORD WILL USE ITS BEST EFFORTS TO ENTER THE PREMISES, OR ALLOW
ITS
AGENTS AND EMPLOYEES TO ENTER THE PREMISES, ONLY WHEN ACCOMPANIED
BY AN
ESCORT PROVIDED BY TENANT. LANDLORD WILL BE LIABLE TO TENANT FOR
ANY DAMAGE
RESULTING FROM LANDLORD'S VIOLATION OF THIS SECTION 12.
13. SIGNAGE. Tenant
shall obtain Landlord's written consent before installing
any
signs upon the Premises WHICH CONSENT MAY NOT BE UNREASONABLY
WITHHELD
OR
DELAYED. Tenant shall install any approved signage at Tenant's
sole
expense and in compliance with all applicable laws. Tenant shall
not damage
or
deface the Premises in installing or removing signage and shall
repair
any
injury or damage to the Premises caused by such installation or
removal.
14. DESTRUCTION OR
CONDEMNATION.
a.
Damage and Repair. If the Premises are partially damaged but
not
rendered untenantable, by fire or other insured casualty, then
Landlord
shall diligently restore the Premises and this Lease shall not
terminate.
The
Premises shall not be deemed untenantable if less than
twenty-five
percent (25%) of the Premises are damaged. If insurance proceeds
are
available to Landlord but are not sufficient to pay the entire cost
of
restoring the Premises, then Landlord may elect to terminate this
Lease and
keep
the insurance proceeds, by notifying Tenant within sixty (60) days
of
the
date of such casualty. LANDLORD MAY, HOWEVER, CARRY "FULL
REPLACEMENT
COST" INSURANCE.
If
the Premises are entirely destroyed, or partially damaged and
rendered
TOTALLY untenantable, by fire or other casualty, Landlord may, at
its
option: (a) terminate this Lease as provided herein, or (b) restore
the
Premises to their previous condition. If, within 60 days after
receipt by
Landlord from Tenant of written notice that Tenant REASONABLY deems
the
Premises untenantable, Landlord fails to notify Tenant of its
election to
restore the Premises, or if Landlord is unable to restore the
Premises
within six (6) months
of the date of the casualty event, then Tenant may
elect to terminate the Lease.
If
Landlord restores the Premises under this Section 14(a), Landlord
shall
proceed with reasonable diligence to complete the work, and the
base
monthly rent shall be abated in the same proportion as the
untenantable
portion of the Premises bears to the whole Premises, provided that
there
shall be a rent abatement only if the damage or destruction of the
Premises
did
not result from, THE neglect of Tenant, or Tenant's officers,
contractors, licensees, agents, servants, employees, guests, OR
invitees.
Provided, Landlord complies with its obligations under this
Section, no
damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance directly, incidentally
or
consequentially arising from any repair or restoration of any
portion of
the
Premises. Landlord will not carry insurance of any kind for the
protection of Tenant or any improvements paid for by Tenant or as
provided
in
Exhibit B or on Tenant's furniture or on any fixtures,
equipment,
improvements or appurtenances of Tenant under this Lease, and
Landlord
shall not be obligated to repair any damage thereto or replace the
same
unless the damage is caused by Landlord's negligence.
b.
If the Premises are made untenantable by eminent domain, or
conveyed
under a threat of condemnation, this Lease shall automatically
terminate as
of
the earlier of the date title vests in the condemning authority or
the
condemning authority first has possession of the Premises and all
Rents and
other payments shall be paid to that date. In case of taking of a
part of
the Premises that does not
render the Premises untenantable, then this
Lease shall continue in full force and effect and the base monthly
rental
shall be equitably reduced based on the proportion by which the
floor area
of
any structures is reduced, such
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reduction in Rent to be effective as of the earlier of the date
the
condemning authority first has possession of such portion or title
vests in
the
condemning authority. Landlord shall be entitled to the entire
award
from
the condemning authority attributable to the value of the Premises
and
Tenant shall make no claim for the value of its leasehold. Tenant
shall be
permitted to make a separate claim against the condemning authority
for
moving expenses or damages resulting from interruption in its
business,
provided that in no event shall Tenant's claim reduce Landlord's
award.
15. INSURANCE.
a.
Liability Insurance. During the Lease term, Tenant shall pay for
and
maintain commercial general liability insurance with broad form
property
damage and contractual liability endorsements. This policy shall
name
Landlord as an additional insured, and shall insure Tenant's
activities and
those of Tenant's employees,
officers, contactors, licensees, agents,
servants
