|
Exhibit 10.27
LEASE
RREEF AMERICA REIT II CORP. II,
a Maryland corporation,
Landlord,
and
MONTEREY GOURMET FOODS, INC.,
a Delaware corporation,
Tenant
<PAGE>
TABLE OF CONTENTS
Page
1. USE AND RESTRICTIONS ON USE
...................................... 1
2. TERM
............................................................. 1
3. RENT
............................................................. 2
4. RENT ADJUSTMENTS
................................................. 2
5. SECURITY DEPOSIT
................................................. 4
6. ALTERATIONS
...................................................... 4
7. REPAIR
........................................................... 5
8. LIENS
............................................................ 6
9. ASSIGNMENT AND SUBLETTING
........................................ 6
10. INDEMNIFICATION
.................................................. 7
11. INSURANCE
........................................................ 7
12. WAIVER OF SUBROGATION
............................................ 8
13. SERVICES AND UTILITIES
........................................... 8
14. HOLDING OVER
..................................................... 8
15. SUBORDINATION
.................................................... 8
16. RULES AND REGULATIONS
............................................ 9
17. REENTRY BY LANDLORD
.............................................. 9
18. DEFAULT
.......................................................... 9
19. REMEDIES
......................................................... 10
20. TENANT'S BANKRUPTCY OR INSOLVENCY
................................ 12
21. QUIET ENJOYMENT
.................................................. 13
22. CASUALTY
......................................................... 13
23. EMINENT DOMAIN
................................................... 14
24. SALE BY LANDLORD
................................................. 14
25. ESTOPPEL CERTIFICATES
............................................ 14
26. SURRENDER OF PREMISES
............................................ 14
27. NOTICES
.......................................................... 15
28. TAXES PAYABLE BY TENANT
.......................................... 15
29. RELOCATION OF TENANT
............................................. 15
30. DEFINED TERMS AND HEADINGS
....................................... 16
31. TENANT'S AUTHORITY
............................................... 16
32. FINANCIAL STATEMENTS AND CREDIT REPORTS
.......................... 16
33. COMMISSIONS
...................................................... 16
34. TIME AND APPLICABLE LAW
.......................................... 16
35. SUCCESSORS AND ASSIGNS
........................................... 16
36. ENTIRE AGREEMENT
................................................. 16
i
<PAGE>
TABLE OF CONTENTS
Page
37. EXAMINATION NOT OPTION
........................................... 17
38. RECORDATION
...................................................... 17
39. LIMITATION OF LANDLORD'S LIABILITY
............................... 17
ADDENDUM TO LEASE
EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES
EXHIBIT A-1 - SITE PLAN
EXHIBIT A-2 - LEGAL DESCRIPTION
EXHIBIT B - INITIAL ALTERATIONS
EXHIBIT C - COMMENCEMENT DATE MEMORANDUM
EXHIBIT D - RULES AND REGULATIONS
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
ii
<PAGE>
MULTI-TENANT INDUSTRIAL NET LEASE
REFERENCE PAGES
<TABLE>
<S> <C>
BUILDING: Kent 228, Building A
LANDLORD: RREEF AMERICA REIT II CORP. II,
a Maryland corporation
LANDLORD'S ADDRESS: RREEF AMERICA REIT II CORP. II
c/o RREEF
12720 Gateway Drive, Suite 200
Tukwila, WA 98168
WIRE INSTRUCTIONS AND/OR ADDRESS FOR RREEF AMERICA REIT II CORP.
II
RENT PAYMENT: 75 Remittance Drive, Suite 6142
Chicago, IL 60675-6142
LEASE REFERENCE DATE: November 8, 2007
TENANT: MONTEREY GOURMET FOODS, INC.,
a Delaware corporation
TENANT'S NOTICE ADDRESS:
(a) As of beginning of Term: Monterey Gourmet Foods, Inc.
Attn: Jerry Wuori
8010 South 228th Street
Kent, WA 98032
(b) Prior to beginning of Term (if different): Monterey Gourmet
Foods, Inc.
1938 Occidental Avenue South, Suite F
Seattle, WA 98134
PREMISES ADDRESS: Kent 228, Building A
8010 South 228th Street
Kent, WA 98032
PREMISES RENTABLE AREA: Approximately 93,306 sq. ft. total which
includes
approximately 13,351 sq. ft. of office area (for outline of
Premises see Exhibit A).
USE: Food processing and distribution and related
administrative
office uses; other general industrial uses.
COMMENCEMENT DATE: January 1, 2008
TERM OF LEASE: Initial Term: Approximately ten (10) years
beginning on
the Commencement Date and ending on the Termination
Date.
Option: One (1) Five (5) year term, to be exercised in
writing 120 days in advance. After exercise of first option,
Tenant may exercise one (1) additional five (5) year
option, in writing, 120 days prior to expiration of first
option term.
INITIAL TERM TERMINATION DATE: December 31, 2017
</TABLE>
iii
<PAGE>
ANNUAL RENT and MONTHLY INSTALLMENT OF RENT(Article 3)
<TABLE>
<CAPTION>
Period
---------------- Rentable Square Annual Rent Monthly
Installment
from through Footage Per Square Foot Annual Rent of Rent
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1/1/2008 6/30/2008 93,306 $2.88 $268,812.00 $22,401.00
-----------------------------------------------------------------------------------------
7/1/2008 12/31/2008 93,306 $5.76 $537,624.00 $44,802.00
-----------------------------------------------------------------------------------------
1/1/2009 12/31/2009 93,306 $5.93 $553,752.00 $46,146.00
-----------------------------------------------------------------------------------------
1/1/2010 12/31/2010 93,306 $6.11 $570,360.00 $47,530.00
-----------------------------------------------------------------------------------------
1/1/2011 12/31/2011 93,306 $6.30 $587,472.00 $48,956.00
-----------------------------------------------------------------------------------------
1/1/2012 12/31/2012 93,306 $6.49 $605,100.00 $50,425.00
-----------------------------------------------------------------------------------------
1/1/2013 12/31/2013 93,306 $6.68 $623,256.00 $51,938.00
-----------------------------------------------------------------------------------------
1/1/2014 12/31/2014 93,306 $6.88 $641,952.00 $53,496.00
-----------------------------------------------------------------------------------------
1/1/2015 12/31/2015 93,306 $7.09 $661,212.00 $55,101.00
-----------------------------------------------------------------------------------------
1/1/2016 12/31/2016 93,306 $7.30 $681,048.00 $56,754.00
-----------------------------------------------------------------------------------------
1/1/2017 12/31/2017 93,306 $7.52 $701,484.00 $58,457.00
-----------------------------------------------------------------------------------------
</TABLE>
INITIAL ESTIMATED MONTHLY INSTALLMENT $ 11,196.00
OF RENT ADJUSTMENTS (Article 4)
TENANT'S PROPORTIONATE SHARE: 23.41%
SECURITY DEPOSIT: $ 60,000.00
ASSIGNMENT/SUBLETTING FEE $ 1,000, but waived for Tenant's
first request.
REAL ESTATE BROKER DUE COMMISSION: GVA Kidder Mathews and
CBRE
TENANT'S SIC CODE: 2000
AMORTIZATION RATE: 12.00%
The Reference Pages information is TENANT:
incorporated into and made a part of the
Lease. In the event of any conflict
between any Reference Pages information
and the Lease, the Lease shall control.
This Lease includes Addendum to Lease and
Exhibits A through D, all of which are
made a part of this Lease. LANDLORD:
RREEF AMERICA REIT II CORP. II, MONTEREY GOURMET FOODS,
INC.,
a Maryland corporation a Delaware corporation
By: RREEF Management Company,
a Delaware corporation,
its Manager
By: _________________________________ By:
_______________________________
Name: Cathleen Meyer Name: Eric Eddings
Title: District Manager Title: Chief Executive Officer
Dated: ______________________________ Dated:
____________________________
iv
<PAGE>
LEASE
By this Lease Landlord leases to Tenant and Tenant leases from
Landlord
the Premises in the Building as set forth and described on the
Reference Pages.
The Premises are depicted on the floor plan attached hereto as
Exhibit A, and
the Building is depicted on the site plan attached hereto as
Exhibit A-1. This
Lease is solely a lease of space in the Building and does not
constitute a lease
of any land. The Reference Pages, including all terms defined
thereon, are
incorporated as part of this Lease.
1. USE AND RESTRICTIONS ON USE.
1.1 The Premises are to be used solely for the purposes set
forth on the
Reference Pages. Tenant shall not do or permit anything to be
done in or about
the Premises which will in any way obstruct or interfere with
the rights of
other tenants or occupants of the Building or injure, annoy, or
disturb them, or
allow the Premises to be used for any improper, immoral,
unlawful, or
objectionable purpose, or commit any waste. Tenant shall not do,
permit or
suffer in, on, or about the Premises the sale of any alcoholic
liquor without
the written consent of Landlord first obtained. Tenant shall
comply with all
governmental laws, ordinances and regulations applicable to the
use of the
Premises and its occupancy and shall promptly comply with all
governmental
orders and directions for the correction, prevention and
abatement of any
violations in the Building or appurtenant land, caused or
permitted by, or
resulting from the specific use by, Tenant, or in or upon, or in
connection
with, the Premises, all at Tenant's sole expense. Tenant shall
not do or permit
anything to be done on or about the Premises or bring or keep
anything into the
Premises which will in any way increase the rate of, invalidate
or prevent the
procuring of any insurance protecting against loss or damage to
the Building or
any of its contents by fire or other casualty or against
liability for damage to
property or injury to persons in or about the Building or any
part thereof.
1.2 Without prior consent of Landlord, Tenant shall not, and
shall not
direct, suffer or permit any of its agents, contractors,
employees, licensees or
invitees (collectively, the "Tenant Entities") to at any time
handle, use,
manufacture, store or dispose of in or about the Premises or the
Building any
(collectively "Hazardous Materials") flammables, explosives,
radioactive
materials, hazardous wastes or materials, toxic wastes or
materials, or other
similar substances, petroleum products or derivatives or any
substance subject
to regulation by or under any federal, state and local laws and
ordinances
relating to the protection of the environment or the keeping,
use or disposition
of environmentally hazardous materials, substances, or wastes,
presently in
effect or hereafter adopted, all amendments to any of them, and
all rules and
regulations issued pursuant to any of such laws or ordinances
(collectively
"Environmental Laws"), nor shall Tenant suffer or permit any
Hazardous Materials
to be used in any manner not fully in compliance with all
Environmental Laws, in
the Premises or the Building and appurtenant land or allow the
environment to
become contaminated with any Hazardous Materials.
Notwithstanding the foregoing,
Tenant may handle, store, use or dispose of products containing
small quantities
of Hazardous Materials (such as aerosol cans containing
insecticides, toner for
copiers, paints, paint remover and the like) to the extent
customary and
necessary for the use of the Premises for general office
purposes; provided that
Tenant shall always handle, store, use, and dispose of any such
Hazardous
Materials in a safe and lawful manner and never allow such
Hazardous Materials
to contaminate the Premises, Building and appurtenant land or
the environment.
Tenant shall protect, defend, indemnify and hold each and all of
the Landlord
Entities (as defined in Article 30) harmless from and against
any and all loss,
claims, liability or costs (including court costs and attorney's
fees) incurred
by reason of any actual or asserted failure of Tenant to fully
comply with all
applicable Environmental Laws, or the presence, handling, use or
disposition in
or from the Premises of any Hazardous Materials by Tenant or any
Tenant Entity
(even though permissible under all applicable Environmental Laws
or the
provisions of this Lease), or by reason of any actual or
asserted failure of
Tenant to keep, observe, or perform any provision of this
Section 1.2.
1.3 Tenant and the Tenant Entities will be entitled to the
non-exclusive
use of the common areas of the Building as they exist from time
to time during
the Term, including the parking facilities, subject to
Landlord's rules and
regulations regarding such use. However, in no event will Tenant
or the Tenant
Entities park more vehicles in the parking facilities than
Tenant's
Proportionate Share of the total parking spaces available for
common use. The
foregoing shall not be deemed to provide Tenant with an
exclusive right to any
parking spaces or any guaranty of the availability of any
particular parking
spaces or any specific number of parking spaces.
2. TERM.
2.1 The Term of this Lease shall begin on the date
("Commencement Date")
which shall be the later of the Scheduled Commencement Date as
shown on the
Reference Pages and the date that Landlord shall tender
possession of the
<PAGE>
Premises to Tenant, and shall terminate on the date as shown on
the Reference
Pages ("Termination Date"), unless sooner terminated by the
provisions of this
Lease. Landlord shall tender possession of the Premises with all
the work, if
any, to be performed by Landlord pursuant to Exhibit B to this
Lease
substantially completed. Tenant shall deliver a punch list of
items not
completed within thirty (30) days after Landlord tenders
possession of the
Premises and Landlord agrees to proceed with due diligence to
perform its
obligations regarding such items. Tenant shall, at Landlord's
request, execute
and deliver a memorandum agreement provided by Landlord in the
form of Exhibit C
attached hereto, setting forth the actual Commencement Date,
Termination Date
and, if necessary, a revised rent schedule. Should Tenant fail
to do so within
thirty (30) days after Landlord's request, the information set
forth in such
memorandum provided by Landlord shall be conclusively presumed
to be agreed and
correct.
2.2 Tenant agrees that in the event of the inability of Landlord
to
deliver possession of the Premises on the Scheduled Commencement
Date for any
reason, Landlord shall not be liable for any damage resulting
from such
inability, but Tenant shall not be liable for any rent until the
time when
Landlord can, after notice to Tenant, deliver possession of the
Premises to
Tenant. No such failure to give possession on the Scheduled
Commencement Date
shall affect the other obligations of Tenant under this Lease,
except that if
Landlord is unable to deliver possession of the Premises within
one hundred
twenty (120) days after the Scheduled Commencement Date (other
than as a result
of strikes, shortages of materials, holdover tenancies or
similar matters beyond
the reasonable control of Landlord and Tenant is notified by
Landlord in writing
as to such delay), Tenant shall have the option to terminate
this Lease unless
said delay is as a result of: (a) Tenant's failure to agree to
plans and
specifications and/or construction cost estimates or bids; (b)
Tenant's request
for materials, finishes or installations other than Landlord's
standard except
those, if any, that Landlord shall have expressly agreed to
furnish without
extension of time agreed by Landlord; (c) Tenant's change in any
plans or
specifications; or, (d) performance or completion by a party
employed by Tenant
(each of the foregoing, a "Tenant Delay"). If any delay is the
result of a
Tenant Delay, the Commencement Date and the payment of rent
under this Lease
shall be accelerated by the number of days of such Tenant
Delay.
2.3 In the event Landlord permits Tenant, or any agent, employee
or
contractor of Tenant, to enter, use or occupy the Premises prior
to the
Commencement Date, such entry, use or occupancy shall be subject
to all the
provisions of this Lease other than the payment of rent,
including, without
limitation, Tenant's compliance with the insurance requirements
of Article 11.
Said early possession shall not advance the Termination
Date.
3. RENT.
3.1 Tenant agrees to pay to Landlord the Annual Rent in effect
from time
to time by paying the Monthly Installment of Rent then in effect
on or before
the first day of each full calendar month during the Term,
except that the first
month's rent shall be paid upon the execution of this Lease. The
Monthly
Installment of Rent in effect at any time shall be one-twelfth
(1/12) of the
Annual Rent in effect at such time. Rent for any period during
the Term which is
less than a full month shall be a prorated portion of the
Monthly Installment of
Rent based upon the number of days in such month. Said rent
shall be paid to
Landlord, without deduction or offset and without notice or
demand, at the Rent
Payment Address, as set forth on the Reference Pages, or to such
other person or
at such other place as Landlord may from time to time designate
in writing.
Unless specified in this Lease to the contrary, all amounts and
sums payable by
Tenant to Landlord pursuant to this Lease shall be deemed
additional rent.
3.2 Tenant recognizes that late payment of any rent or other sum
due under
this Lease will result in administrative expense to Landlord,
the extent of
which additional expense is extremely difficult and economically
impractical to
ascertain. Tenant therefore agrees that if rent or any other sum
is not paid
when due and payable pursuant to this Lease, a late charge shall
be imposed in
an amount equal to the greater of: (a) Fifty Dollars ($50.00),
or (b) five
percent (5%) of the unpaid rent or other payment. The amount of
the late charge
to be paid by Tenant shall be reassessed and added to Tenant's
obligation for
each successive month until paid. The provisions of this Section
3.2 in no way
relieve Tenant of the obligation to pay rent or other payments
on or before the
date on which they are due, nor do the terms of this Section 3.2
in any way
affect Landlord's remedies pursuant to Article 19 of this Lease
in the event
said rent or other payment is unpaid after date due.
4. RENT ADJUSTMENTS.
4.1 For the purpose of this Article 4, the following terms are
defined as
follows:
2
<PAGE>
4.1.1 Lease Year: Each fiscal year (as determined by Landlord
from
time to time) falling partly or wholly within the Term.
4.1.2 Expenses: All costs of operation, maintenance, repair,
replacement and management of the Building (including the amount
of any credits
which Landlord may grant to particular tenants of the Building
in lieu of
providing any standard services or paying any standard costs
described in this
Section 4.1.2 for similar tenants), as determined in accordance
with generally
accepted accounting principles, including the following costs by
way of
illustration, but not limitation: water and sewer charges;
insurance charges of
or relating to all insurance policies and endorsements deemed by
Landlord to be
reasonably necessary or desirable and relating in any manner to
the protection,
preservation, or operation of the Building or any part thereof;
utility costs,
including, but not limited to, the cost of heat, light, power,
steam, gas; waste
disposal; the cost of janitorial services; the cost of security
and alarm
services (including any central station signaling system); costs
of cleaning,
repairing, replacing and maintaining the common areas, including
parking and
landscaping, window cleaning costs; labor costs; costs and
expenses of managing
the Building including management and/or administrative fees;
air conditioning
maintenance costs; elevator maintenance fees and supplies;
material costs;
equipment costs including the cost of maintenance, repair and
service agreements
and rental and leasing costs; purchase costs of equipment;
current rental and
leasing costs of items which would be capital items if
purchased; tool costs;
licenses, permits and inspection fees; wages and salaries;
employee benefits and
payroll taxes; accounting and legal fees; any sales, use or
service taxes
incurred in connection therewith. In addition, Landlord shall be
entitled to
recover, as additional rent (which, along with any other capital
expenditures
constituting Expenses, Landlord may either include in Expenses
or cause to be
billed to Tenant along with Expenses and Taxes but as a separate
item), Tenant's
Proportionate Share of: (a) an allocable portion of the cost of
capital
improvement items which are reasonably calculated to reduce
operating expenses;
(b) the cost of fire sprinklers and suppression systems and
other life safety
systems; and (c) other capital expenses which are required under
any
governmental laws, regulations or ordinances which were not
applicable to the
Building at the time it was constructed; but the costs described
in this
sentence shall be amortized over the reasonable life of such
expenditures in
accordance with such reasonable life and amortization schedules
as shall be
determined by Landlord in accordance with generally accepted
accounting
principles, with interest on the unamortized amount at one
percent (1%) in
excess of the Wall Street Journal prime lending rate announced
from time to
time. Expenses shall not include depreciation or amortization of
the Building or
equipment in the Building except as provided herein, loan
principal payments,
costs of alterations of tenants' premises, leasing commissions,
interest
expenses on long-term borrowings or advertising costs.
4.1.3 Taxes: Real estate taxes and any other taxes, charges
and
assessments which are levied with respect to the Building or the
land
appurtenant to the Building, or with respect to any
improvements, fixtures and
equipment or other property of Landlord, real or personal,
located in the
Building and used in connection with the operation of the
Building and said
land, any payments to any ground lessor in reimbursement of tax
payments made by
such lessor; and all fees, expenses and costs incurred by
Landlord in
investigating, protesting, contesting or in any way seeking to
reduce or avoid
increase in any assessments, levies or the tax rate pertaining
to any Taxes to
be paid by Landlord in any Lease Year. Taxes shall not include
any corporate
franchise, or estate, inheritance or net income tax, or tax or
tax increase
imposed upon any transfer by Landlord of its interest in this
Lease or the
Building or any taxes to be paid by Tenant pursuant to Article
28.
4.2 Tenant shall pay as additional rent for each Lease Year
Tenant's
Proportionate Share of Expenses and Taxes incurred for such
Lease Year.
4.3 The annual determination of Expenses shall be made by
Landlord and
shall be binding upon Landlord and Tenant, subject to the
provisions of this
Section 4.3. During the Term, Tenant may review, at Tenant's
sole cost and
expense, the books and records supporting such determination in
an office of
Landlord, or Landlord's agent, during normal business hours,
upon giving
Landlord five (5) days advance written notice within sixty (60)
days after
receipt of such determination, but in no event more often than
once in any one
(1) year period, subject to execution of a confidentiality
agreement acceptable
to Landlord, and provided that if Tenant utilizes an independent
accountant to
perform such review it shall be one of national standing which
is reasonably
acceptable to Landlord, is not compensated on a contingency
basis and is also
subject to such confidentiality agreement. If Tenant fails to
object to
Landlord's determination of Expenses within ninety (90) days
after receipt, or
if any such objection fails to state with specificity the reason
for the
objection, Tenant shall be deemed to have approved such
determination and shall
have no further right to object to or contest such
determination. In the event
that during all or any portion of any Lease Year or Base Year,
the Building is
not fully rented and occupied Landlord shall make an appropriate
adjustment in
occupancy-related Expenses for such year for the purpose of
avoiding distortion
of the amount of such Expenses to be attributed to Tenant by
reason of variation
in total occupancy of the Building, by employing consistent and
sound accounting
and management principles to determine Expenses that would have
been paid or
3
<PAGE>
incurred by Landlord had the Building been at least ninety-five
percent (95%)
rented and occupied, and the amount so determined shall be
deemed to have been
Expenses for such Lease Year.
4.4 Prior to the actual determination thereof for a Lease Year,
Landlord
may from time to time reasonably estimate Tenant's liability for
Expenses and/or
Taxes under Section 4.2, Article 6 and Article 28 for the Lease
Year or portion
thereof. Landlord will give Tenant written notification of the
amount of such
estimate and Tenant agrees that it will pay, by increase of its
Monthly
Installments of Rent due in such Lease Year, additional rent in
the amount of
such estimate. Any such increased rate of Monthly Installments
of Rent pursuant
to this Section 4.4 shall remain in effect until further written
notification to
Tenant pursuant hereto.
4.5 When the above mentioned actual determination of Tenant's
liability
for Expenses and/or Taxes is made for any Lease Year and when
Tenant is so
notified in writing, then:
4.5.1 If the total additional rent Tenant actually paid pursuant
to
Section 4.3 on account of Expenses and/or Taxes for the Lease
Year is less than
Tenant's liability for Expenses and/or Taxes, then Tenant shall
pay such
deficiency to Landlord as additional rent in one lump sum within
thirty (30)
days of receipt of Landlord's bill therefor; and
4.5.2 If the total additional rent Tenant actually paid pursuant
to
Section 4.3 on account of Expenses and/or Taxes for the Lease
Year is more than
Tenant's liability for Expenses and/or Taxes, then Landlord
shall, at Tenant's
option, refund or credit the difference against the then next
due payments to be
made by Tenant under this Article 4, or, if the Lease has
terminated, refund the
difference in cash.
4.6 If the Commencement Date is other than January 1 or if the
Termination
Date is other than December 31, Tenant's liability for Expenses
and Taxes for
the Lease Year in which said Date occurs shall be prorated based
upon a three
hundred sixty-five (365) day year.
5. SECURITY DEPOSIT. Tenant shall deposit the Security Deposit
with Landlord
upon the execution of this Lease. Said sum shall be held by
Landlord as security
for the faithful performance by Tenant of all the terms,
covenants and
conditions of this Lease to be kept and performed by Tenant and
not as an
advance rental deposit or as a measure of Landlord's damage in
case of Tenant's
default. If Tenant defaults with respect to any monetary
provision of this
Lease, Landlord may use any part of the Security Deposit for the
payment of any
rent or any other sum in default, or for the payment of any
amount which
Landlord may spend or become obligated to spend by reason of
Tenant's default,
or to compensate Landlord for any other loss or damage which
Landlord may suffer
by reason of Tenant's default. If any portion is so used, Tenant
shall within
thirty (30) days after written demand therefor, deposit with
Landlord an amount
sufficient to restore the Security Deposit to its original
amount and Tenant's
failure to do so, after notice and reasonable opportunity to
cure, shall be a
material breach of this Lease. Except to such extent, if any, as
shall be
required by law, Landlord shall not be required to keep the
Security Deposit
separate from its general funds, and Tenant shall not be
entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every
provision of
this Lease to be performed by it, the Security Deposit or any
balance thereof
shall be returned to Tenant at such time after termination of
this Lease when
Landlord shall have determined that all of Tenant's obligations
under this Lease
have been fulfilled.
6. ALTERATIONS.
6.1 Except for those, if any, specifically provided for in
Exhibit B to
this Lease, Tenant shall not make or suffer to be made any
alterations,
additions, or improvements, including, but not limited to, the
attachment of any
fixtures or equipment in, on, or to the Premises or any part
thereof or the
making of any improvements as required by Article 7, without the
prior written
consent of Landlord. When applying for such consent, Tenant
shall, if requested
by Landlord, furnish complete plans and specifications for such
alterations if
required by the applicable planning or building department,
additions and
improvements. Landlord's consent shall not be unreasonably
withheld with respect
to alterations which (a) are not structural in nature, (b) are
not visible from
the exterior of the Building, (c) do not affect or require
modification of the
Building's electrical, mechanical, plumbing, HVAC or other
systems, and (d) in
aggregate do not cost more than $5.00 per rentable square foot
of that portion
of the Premises affected by the alterations in question.
6.2 In the event Landlord consents to the making of any such
alteration,
addition or improvement by Tenant, the same shall be made by
using a contractor
reasonably approved by Landlord, in either event at Tenant's
sole cost and
expense. If Tenant shall employ any contractor other than
Landlord's contractor
and such other contractor or any
4
<PAGE>
subcontractor of such other contractor shall employ any
non-union labor or
supplier, Tenant shall be responsible for and hold Landlord
harmless from any
and all delays, damages and extra costs suffered by Landlord as
a result of any
dispute with any labor unions concerning the wage, hours, terms
or conditions of
the employment of any such labor. In any event Landlord may
charge Tenant a
construction management fee not to exceed five percent (5%) of
the cost of such
work to cover its overhead as it relates to such proposed work,
plus third-party
costs actually incurred by Landlord in connection with the
proposed work and the
design thereof, with all such amounts being due five (5) days
after Landlord's
demand.
6.3 All alterations, additions or improvements proposed by
Tenant shall be
constructed in accordance with all government laws, ordinances,
rules and
regulations, using Building standard materials where applicable,
and Tenant
shall, prior to construction, provide the additional insurance
required under
Article 11 in such case, and also all such assurances to
Landlord as Landlord
shall reasonably require to assure payment of the costs thereof,
including but
not limited to, notices of non-responsibility, waivers of lien,
surety company
performance bonds and funded construction escrows and to protect
Landlord and
the Building and appurtenant land against any loss from any
mechanic's,
materialmen's or other liens. Tenant shall pay in addition to
any sums due
pursuant to Article 4, any increase in real estate taxes
attributable to any
such alteration, addition or improvement for so long, during the
Term, as such
increase is ascertainable; at Landlord's election said sums
shall be paid in the
same way as sums due under Article 4.
7. REPAIR.
7.1 Landlord shall have no obligation to alter, remodel,
improve, repair,
decorate or paint the Premises, except as specified in Exhibit B
if attached to
this Lease and except that Landlord shall repair and maintain
the structural
portions of the roof, foundation and walls of the Building. By
taking possession
of the Premises, Tenant accepts them as being in good order,
condition and
repair and in the condition in which Landlord is obligated to
deliver them,
except as set forth in the punch list to be delivered pursuant
to Section 2.1.
It is hereby understood and agreed that no representations
respecting the
condition of the Premises or the Building have been made by
Landlord to Tenant,
except as specifically set forth in this Lease. Landlord shall
not be liable for
any failure to make any repairs or to perform any maintenance
unless such
failure shall persist for an unreasonable time after written
notice of the need
of such repairs or maintenance is given to Landlord by
Tenant.
7.2 Tenant shall at its own cost and expense keep and maintain
all parts
of the Premises and such portion of the Building and
improvements as are within
the exclusive control of Tenant in good condition, promptly
making all necessary
repairs and replacements, whether ordinary or extraordinary,
with materials and
workmanship of the same character, kind and quality as the
original (including,
but not limited to, repair and replacement of all fixtures
installed by Tenant,
water heaters serving the Premises, windows, glass and plate
glass, doors,
exterior stairs, skylights, any special office entries, interior
walls and
finish work, floors and floor coverings, heating and air
conditioning systems
serving the Premises, electrical systems and fixtures, sprinkler
systems, dock
boards, truck doors, dock bumpers, plumbing work and fixtures,
and performance
of regular removal of trash and debris). Tenant as part of its
obligations
hereunder shall keep the Premises in a clean and sanitary
condition. Tenant
will, as far as possible keep all such parts of the Premises
from deterioration
due to ordinary wear and from falling temporarily out of repair,
and upon
termination of this Lease in any way Tenant will yield up the
Premises to
Landlord in good condition and repair, reasonable wear and tear
and loss by fire
or other casualty excepted (but not excepting any damage to
glass). Tenant
shall, at its own cost and expense, repair any damage to the
Premises or the
Building resulting from and/or caused in whole or in part by the
negligence or
misconduct of Tenant, its agents, employees, contractors,
invitees, or any other
person entering upon the Premises as a result of Tenant's
business activities or
caused by Tenant's default hereunder.
7.3 Except as provided in Article 22, there shall be no
abatement of rent
and no liability of Landlord by reason of any injury to or
interference with
Tenant's business arising from the making of any repairs,
alterations or
improvements in or to any portion of the Building or the
Premises or to
fixtures, appurtenances and equipment in the Building. Except to
the extent, if
any, prohibited by law, Tenant waives the right to make repairs
at Landlord's
expense under any law, statute or ordinance now or hereafter in
effect.
7.4 Tenant shall, at its own cost and expense, enter into a
regularly
scheduled preventive maintenance/service contract with a
maintenance contractor
approved by Landlord for servicing all heating and air
conditioning systems and
equipment serving the Premises (and a copy thereof shall be
furnished to
Landlord). The service contract must include all services
suggested by the
equipment manufacturer in the operation/maintenance manual and
must become
effective within thirty (30) days of the date Tenant takes
possession of the
Premises. Should Tenant fail to do so, Landlord may, upon
notice
5
<PAGE>
to Tenant, enter into such a maintenance/ service contract on
behalf of Tenant
or perform the work and in either case, charge Tenant the cost
thereof.
7.5 Landlord shall coordinate any repairs and other maintenance
of any
railroad tracks serving the Building and, if Tenant uses such
rail tracks,
Tenant shall reimburse Landlord or the railroad company from
time to time upon
demand, as additional rent, for its share of the costs of such
repair and
maintenance and for any other sums specified in any agreement to
which Landlord
or Tenant is a party respecting such tracks, such costs to be
borne
proportionately by all tenants in the Building using such rail
tracks, based
upon the actual number of rail cars shipped and received by such
tenant during
each calendar year during the Term.
8. LIENS. Tenant shall keep the Premises, the Building and
appurtenant land and
Tenant's leasehold interest in the Premises free from any liens
arising out of
any services, work or materials performed, furnished, or
contracted for by
Tenant, or obligations incurred by Tenant. In the event that
Tenant fails,
within ten (10) days following the imposition of any such lien,
to either cause
the same to be released of record or provide Landlord with
insurance against the
same issued by a major title insurance company or such other
protection against
the same as Landlord shall accept (such failure to constitute an
Event of
Default), Landlord shall have the right to cause the same to be
released by such
means as it shall deem proper, including payment of the claim
giving rise to
such lien. All such sums paid by Landlord and all expenses
incurred by it in
connection therewith shall be payable to it by Tenant within
thirty (30) days of
Landlord's demand.
9. ASSIGNMENT AND SUBLETTING.
9.1 Tenant shall not have the right to assign or pledge this
Lease or to
sublet the whole or any part of the Premises whether voluntarily
or by operation
of law, or permit the use or occupancy of the Premises by anyone
other than
Tenant, and shall not make, suffer or permit such assignment,
subleasing or
occupancy without the prior written consent of Landlord, such
consent not to be
unreasonably withheld, and said restrictions shall be binding
upon any and all
assignees of the Lease and subtenants of the Premises. In the
event Tenant
desires to sublet, or permit such occupancy of, the Premises, or
any portion
thereof, or assign this Lease, Tenant shall give written notice
thereof to
Landlord at least sixty (60) days but no more than one hundred
twenty (120) days
prior to the proposed commencement date of such subletting or
assignment, which
notice shall set forth the name of the proposed subtenant or
assignee, the
relevant terms of any sublease or assignment and copies of
financial reports and
other relevant financial information of the proposed subtenant
or assignee.
9.2 Notwithstanding any assignment or subletting, permitted or
otherwise,
Tenant shall at all times remain directly, primarily and fully
responsible and
liable for the payment of the rent specified in this Lease and
for compliance
with all of its other obligations under the terms, provisions
and covenants of
this Lease. Upon the occurrence of an Event of Default, if the
Premises or any
part of them are then assigned or sublet, Landlord, in addition
to any other
remedies provided in this Lease or provided by law, may, at its
option, collect
directly from such assignee or subtenant all rents due and
becoming due to
Tenant under such assignment or sublease and apply such rent
against any sums
due to Landlord from Tenant under this Lease, and no such
collection shall be
construed to constitute a novation or release of Tenant from the
further
performance of Tenant's obligations under this Lease.
9.3 In addition to Landlord's right to approve of any subtenant
or
assignee, Landlord shall have the option, in its sole
discretion, in the event
of any proposed subletting or assignment, to terminate this
Lease, or in the
case of a proposed subletting of less than the entire Premises,
to recapture the
portion of the Premises to be sublet, as of the date the
subletting or
assignment is to be effective. The option shall be exercised, if
at all, by
Landlord giving Tenant written notice given by Landlord to
Tenant within thirty
(30) days following Landlord's receipt of Tenant's written
notice as required
above. However, if Tenant notifies Landlord, within five (5)
days after receipt
of Landlord's termination notice, that Tenant is rescinding its
proposed
assignment or sublease, the termination notice shall be void and
the Lease shall
continue in full force and effect. If this Lease shall be
terminated with
respect to the entire Premises pursuant to this Section, the
Term of this Lease
shall end on the date stated in Tenant's notice as the effective
date of the
sublease or assignment as if that date had been originally fixed
in this Lease
for the expiration of the Term. If Landlord recaptures under
this Section only a
portion of the Premises, the rent to be paid from time to time
during the
unexpired Term shall abate proportionately based on the
proportion by which the
approximate square footage of the remaining portion of the
Premises shall be
less than that of the Premises as of the date immediately prior
to such
recapture. Tenant shall, at Tenant's own cost and expense,
discharge in full any
outstanding commission obligation which may be due and owing as
a result of any
proposed assignment or subletting, whether or not the Premises
are recaptured
pursuant to this Section 9.3 and rented by Landlord to the
proposed tenant or
any other tenant.
6
<PAGE>
9.4 [Deleted].
9.5 Notwithstanding any other provision hereof, it shall be
considered
reasonable for Landlord to withhold its consent to any
assignment of this Lease
or sublease of any portion of the Premises if at the time of
either Tenant's
notice of the proposed assignment or sublease or the proposed
commencement date
thereof, there shall exist any uncured default of Tenant or
matter which will
become a default of Tenant with passage of time unless cured, or
if the proposed
assignee or sublessee is an entity: (a) with which Landlord is
already in
negotiation; (b) is already an occupant of the Building unless
Landlord is
unable to provide the amount of space required by such occupant;
(c) is a
governmental agency; (d) is incompatible with the character of
occupancy of the
Building; or (e) would subject the Premises to a use which
would: (i) involve
increased personnel or wear upon the Building; (ii) violate any
exclusive right
granted to another tenant of the Building; (iii) require any
addition to or
modification of the Premises or the Building in order to comply
with building
code or other governmental requirements; or, (iv) involve a
violation of Section
1.2. Tenant expressly agrees that for the purposes of any
statutory or other
requirement of reasonableness on the part of Landlord,
Landlord's refusal to
consent to any assignment or sublease for any of the reasons
described in this
Section 9.5, shall be conclusively deemed to be reasonable.
9.6 Upon any request to assign or sublet, Tenant will pay to
Landlord the
Assignment/Subletting Fee plus, on demand, a sum equal to all of
Landlord's
costs, including reasonable attorney's fees, incurred in
investigating and
considering any proposed or purported assignment or pledge of
this Lease or
sublease of any of the Premises, regardless of whether Landlord
shall consent
to, refuse consent, or determine that Landlord's consent is not
required for,
such assignment, pledge or sublease. Any purported sale,
assignment, mortgage,
transfer of this Lease or subletting which does not comply with
the provisions
of this Article 9 shall be void.
9.7 If Tenant is a corporation, limited liability company,
partnership or
trust, any transfer or transfers of or change or changes within
any twelve (12)
month period in the number of the outstanding voting shares of
the corporation
or limited liability company, the general partnership interests
in the
partnership or the identity of the persons or entities
controlling the
activities of such partnership or trust resulting in the persons
or entities
owning or controlling a majority of such shares, partnership
interests or
activities of such partnership or trust at the beginning of such
period no
longer having such ownership or control shall be regarded as
equivalent to an
assignment of this Lease to the persons or entities acquiring
such ownership or
control and shall be subject to all the provisions of this
Article 9 to the same
extent and for all intents and purposes as though such an
assignment.
10. INDEMNIFICATION. None of the Landlord Entities shall be
liable and Tenant
hereby waives all claims against them for any damage to any
property or any
injury to any person in or about the Premises or the Building by
or from any
cause whatsoever (including without limiting the foregoing, rain
or water
leakage of any character from the roof, windows, walls,
basement, pipes,
plumbing works or appliances, the Building not being in good
condition or
repair, gas, fire, oil, electricity or theft), except to the
extent caused by or
arising from the gross negligence or willful misconduct of
Landlord or its
agents, employees or contractors. Each party shall protect,
indemnify and hold
the other harmless from and against any and all loss, claims,
liability or costs
(including court costs and attorney's fees) incurred by reason
of (a) any damage
to any property (including but not limited to property of any
Landlord Entity)
or any injury (including but not limited to death) to any person
occurring in,
on or about the Premises or the Building to the extent that such
injury or
damage shall be caused by or arise from any actual or alleged
act, neglect,
fault, or omission by either party to meet any standards imposed
by any duty
with respect to the injury or damage; (b) the conduct or
management of any work
or thing whatsoever done by Tenant in or about the Premises or
from transactions
of the Tenant concerning the Premises; (c) Tenant's failure to
comply with any
and all governmental laws, ordinances and regulations applicable
to the
condition or use of the Premises or its occupancy; or (d) any
breach or default
on the part of either party in the performance of any covenant
or agreement to
be performed pursuant to this Lease. The provisions of this
Article shall
survive the termination of this Lease with respect to any claims
or liability
accruing prior to such termination.
11. INSURANCE.
11.1 Tenant shall keep in force throughout the Term: (a) a
Commercial
General Liability insurance policy or policies to protect the
Landlord Entities
against any liability to the public or to any invitee of Tenant
or a Landlord
Entity incidental to the use of or resulting from any accident
occurring in or
upon the Premises with a limit of not less than $1,000,000 per
occurrence and
not less than $2,000,000 in the annual aggregate, or such larger
amount as
Landlord may prudently require from time to time, covering
bodily injury and
property damage liability and $1,000,000 products/completed
operations
aggregate; (b) Business Auto Liability covering owned, non-owned
and hired
vehicles with a limit of not less than
7
<PAGE>
$1,000,000 per accident; (c) Worker's Compensation Insurance
with limits as
required by statute and Employers Liability with limits of
$500,000 each
accident, $500,000 disease policy limit, $500,000 disease--each
employee for
employers with employees in states other than Washington. For
employers with
employees solely in the State of Washington, evidence of
coverage in the state
worker's compensation program. Stop gap coverage is required
either through the
state program or as part of the employer's general liability
coverage; (d) All
Risk or Special Form coverage protecting Tenant against loss of
or damage to
Tenant's alterations, additions, improvements, carpeting, floor
coverings,
panelings, decorations, fixtures, inventory and other business
personal property
situated in or about the Premises to the full replacement value
of the property
so insured; and, (e) Business Interruption Insurance with limit
of liability
representing loss of at least approximately six (6) months of
income.
11.2 The aforesaid policies shall (a) be provided at
| 
