LEASE AGREEMENT

Exhibit 10.2

LEASE AGREEMENT

This Lease Agreement (the “Lease”) is made this 16 ^th day of January, 2009 by and between Integrated Holdings, LLC, a Washington limited liability company (“Landlord”), and Integrated Technologies, Inc., a Washington corporation (“Tenant”), who agree as follows:

 

1.   Fundamental Terms .   As used in this Lease, the following capitalized terms shall have the following meanings:

 

1.1   “ Premises ” means that real property commonly known as 1910 Merrill Creek Parkway, Everett, WA  98203 and legally described in the attached Exhibit A, and all improvements thereon.

 

1.2   “ Building ” means the structure on the Premises.

 

1.3   “ Commencement Date ” means January 16 ^th , 2009.

 

1.4   “ Expiration Date ” means, August 31, 2016.

 

1.5   “ Term ” means the period of time commencing on the Commencement Date and ending on the Expiration Date (the “ Initial Term ” as defined below), plus any extension of the Term, unless sooner terminated pursuant to the terms of this Lease.

 

1.6   “Base Monthly Rent ” means the following amounts as to the following periods during the Term of this Lease:

1.7    “ Permitted Use ” means use for light manufacturing, materials testing, and general offices.

 

1.8   “ Security Deposit ” means Nineteen Thousand Eight Hundred and Sixty-Eight Dollars ($19,868.00).

 

1.9   “ Landlord's Address for Notice ” means

 

 

1.10   “ Landlord's Address for Payment of Rent ” means same address as for Notice.

 

1.11   “ Tenant's Address for Notice ” means

 

 

1.12   “ Landlord's Agent ” means such other agent as Landlord may appoint from time to time.

 

1.13   “ Broker(s) ” does not refer to any existing or past broker relationships.

 

1.14   “ Exhibits ” means the following Exhibits to this Lease:

 

 

1.15   “ Definitions ” means the words and phrases defined in Section 42 captioned “ Definitions ,” and other defined terms herein.

 

2.   Consent and Notices .   Except as otherwise expressly provided in this Lease, whenever the consent of either Landlord or Tenant is required under this Lease, such consent shall not be effective unless given in writing and shall not be unreasonably withheld or delayed, provided, however, that such consent may be conditioned as provided in this Lease. All notices or requests required or permitted under this Lease shall be in writing as provided in Section 43.7.

 

3.   Premises and Appurtenances .

 

3.1   Premises; Changes.   Landlord leases to Tenant and Tenant leases from Landlord the Premises for the Term.  Landlord shall have the right, in Landlord's sole discretion, from time to time to make changes to the Building exterior.

 

3.2   Easements.   Tenant understands and accepts that the Premises have the benefit and the burden of those easements set forth on the title commitment (NBU No. 20804148) issued by Chicago Title Insurance Company dated December 15, 2008.  Tenant accepts, and agrees to be bound by, the terms of the easements, and acknowledges that it has received and examined a copy of each of the easements.  Tenant agrees to reimburse Landlord within thirty (30) days of Tenant’s receipt of an invoice from Landlord evidencing the payment of its share of expenses accrued after the Commencement Date and associated with the maintenance of the driveway described in that certain Joint Use and Maintenance Agreement dated October 29, 1996 and recorded in Document No. 9610290128 of the Snohomish County, Washington real estate records.  Any driveway maintenance expenses owed in connection with this Section 3.2 shall be prorated on the basis of a 360 day year to account for any fractional portion of a year included in the Term at its commencement and expiration.

 

4.   Term .

 

4.1   Commencement Date.   The initial term of this Lease (the “ Initial Term ”) shall be for seven (7) years, commencing on the Commencement Date and expiring on the Expiration Date.  The Commencement Date shall be the date specified in Section 1.

 

4.2   Extension .

 

4.2.1   Provided Tenant is not in default beyond the applicable cure period at the time of each of Tenant’s Extension Notices (defined below in this Section 4.2), Tenant shall have the option to extend the Term of this Lease for two (2) additional periods of five (5) years and three (3) years respectively (each an “ Extension Term ”), upon the same terms and conditions as contained in this Lease.  The rent for each Extension Term shall be as set forth in Section 1.6 herein.  To exercise an extension option, Tenant shall give Landlord written notice at least ninety (90) days prior to the then-current Expiration Date (“ Tenant’s Extension Notice ”).  Tenant’s Extension Notice for each Extension Term shall be effective to extend the Term of the Lease for one Extension Term without further documentation except as expressly provided in Section 4.2.2 below.

 

4.2.2   Each time after Tenant has exercised its option to extend the Term of this Lease and the rent for that Extension Term has been finally determined, Landlord and Tenant, upon request of either, will each timely sign and acknowledge a written memorandum evidencing Tenant’s exercise of the option to extend the Term and stating the date to which such Extension Term will extend and the rental rates that will be applicable during each such Extension Term.

 

5.   Base Monthly Rent; Late Charge .

 

5.1   Base Monthly Rent.   Tenant shall pay to Landlord the Base Monthly Rent without deduction, offset, prior notice or demand, in advance on the first day of each month during the Term.  Base Monthly Rent for any partial month shall be prorated at the rate of 1/30th of the Base Monthly Rent per day.  Base Monthly Rent is exclusive of any state tax based on rents (to the extent such a tax is passed and implemented by the legislature of the State of Washington) and should such taxes be implemented and apply during the Term, the Base Monthly Rent shall be increased by the amount of such taxes.  All Rent shall be paid to Landlord at Landlord's Address for Payment of Rent or at such other address as Landlord may specify by notice to Tenant.

 

5.2   Extension Term Rent.   Beginning with the first Extension Term, Base Rent for each Extension Term shall be the then current fair market rent for the Premises.  As used herein, “ Fair Market Rent ” means an amount equal to the then prevailing rate for similar space in a comparable building located in a comparable location within Snohomish County, Washington during the previous six (6) month period.  In the event that Landlord and Tenant are unable to agree upon the Fair Market Rent within thirty (30) days after the date of Tenant’s Extension Notice, then Fair Market Rent shall be determined by appraisal as set forth below in this Section 5.2:

 

5.2.1   Either Landlord or Tenant may submit the matter to appraisal by notifying the other party in writing.  Not less than ten (10) days after the date of such notice, Landlord and Tenant shall each (a) appoint an appraiser; and (b) give written notice to the other identifying that party’s appraiser and indicating whether that party will submit supplemental written or oral evidence to support its proposal for Fair Market Rent.  Any appraiser selected under this subsection shall be an appraiser with at least ten (10) year experience in the appraisal of industrial space in Snohomish County, Washington and who has not been regularly employed or retained as a consultant, appraiser or agent of either party during the last twelve (12) months.

 

5.2.2   Upon selection, such appraisers shall work together to agree upon the prevailing fair rental of the Premises.  If said appraisers cannot agree within twenty (20) days after their appointment, then, within ten (10) days after the expiration of such twenty (20) day period, such appraisers shall select a third appraiser with at least ten (10) years of experience in the appraisal of industrial space in Snohomish County, Washington.  Once the third appraiser has been selected, then such third appraiser shall within ten (10) days after appointment make its determination of the prevailing fair rental amount and such determination shall be binding upon both Landlord and Tenant as the rental rate for such extended term.  The parties shall each bear the costs of their own appraiser and shall share equally in the costs of the third appraiser.  Notwithstanding the foregoing, in the event that the prevailing fair rental amount (as determined above) is less than the minimum annual rental payable during the final lease year of the Initial Term or the final lease year of the first Extension Term, Landlord shall have the right to decline the upcoming Extension Term and the Term shall terminate six (6) months after written notice to the Tenant of Landlord’s decision to decline the Extension Term (the “Modified Expiration Date”) (it being the agreement of the parties that this provision may extend the Term beyond the then-current Expiration Date in which event the Lease shall continue on the same terms and conditions as contained in this Lease (including Rent at the rate then in effect as of the then-current Expiration Date) until the Modified Expiration Date).

 

5.3   Late Charge.   Tenant acknowledges that the late payment by Tenant of any Rent will cause Landlord to incur administrative, collection, processing and accounting costs and expenses not contemplated under this Lease, the exact amount of which are extremely difficult or impracticable to fix. Therefore, if any Rent is not received by Landlord from Tenant by the fifth (5th) calendar day after such Rent is due, Tenant shall immediately pay to Landlord a late charge equal to the lesser of five percent (5%) of the amount of Rent due or Five Hundred and No/100th Dollars ($500.00).  Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for its loss caused by Tenant's nonpayment.  Should Tenant pay said late charge but fail to pay contemporaneously therewith all unpaid amounts of Rent, Landlord's acceptance of this late charge shall not constitute a waiver of Tenant's default with respect to Tenant's nonpayment nor prevent Landlord from exercising all other rights and remedies available to Landlord under this Lease or under law.

 

6.   Prepaid Rent and Security Deposit .   As partial consideration for Landlord’s execution of this Lease, on execution of this Lease, Tenant shall deposit with Landlord rent and the Security Deposit, as a Security Deposit for the performance by Tenant of the provisions of this Lease.  If Tenant is in default, Landlord may use the Security Deposit, or any portion of it, to cure the default, including without limitation, paying for the cost of any work necessary to restore the Premises, the Tenant improvements and any alterations to good condition or to compensate Landlord for all damage sustained by Landlord resulting from Tenant's default.  Tenant shall within five (5) days of demand pay to Landlord a sum equal to the portion of the Security Deposit expended or applied by Landlord as provided in this Section so as to maintain the Security Deposit in the sum initially deposited with Landlord.  If Tenant is not in default as of the expiration or termination of the Term, including without limitation, in default in payment of the Rent for the last month of the Term, then Landlord shall return the Security Deposit, without interest, to Tenant within a reasonable period of time not to exceed thirty (30) days after the expiration or termination of the Term.  Landlord's obligations with respect to the Security Deposit are those of a Tenant and not a trustee. Landlord may commingle the Security Deposit with Landlord's general and other funds.

 

7.   Real Property Taxes .  Tenant shall pay, as Additional Rent, directly to the applicable taxing authority all Real Property Taxes that are or will be levied or assessed against the Premises during each calendar year during the Term on or prior to the date on which such Real Property Taxes are due.  Such Additional Rent shall not include any sales, franchise, business or occupation or other tax based on rents which may apply during the Term.  Tenant shall provide Landlord with a receipt from the taxing authority evidencing that Tenant paid the Real Property Taxes prior to delinquency.  Tenant, at Tenant’s cost and expense, may attempt to have the assessed valuation of the Property reduced or may initiate proceedings to contest the real property taxes.

 

8.   Personal Property Taxes .   Tenant shall pay prior to delinquency all personal property taxes assessed against and levied upon Trade Fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere.  If possible, Tenant shall cause such Trade Fixtures, furnishings, equipment and all other personal property of Tenant to be assessed and billed separately from the Premises.

 

9.   Landlord Representations and Warranties .  Landlord represents and warrants that as of the Commencement Date (1) the Building shall contain no structural defects or defective systems (whether known or unknown); (2) the Building systems (including, but not limited to, the heating, air conditioning and ventilation system) shall be in proper working order and condition and shall be sufficient for the operation of Tenant’s business in the Premises; (3) the Building and the Premises shall be in compliance and operated in accordance with all applicable laws, ordinances, rules, regulations and codes (including, but not limited to all environmental laws, ordinances, rules, regulations and codes); (4) the Building is served by all utilities necessary for the operation thereof and such utilities are adequate with respect to service and capacity for the operation thereof; and (5) the Premises shall not contain Hazardous Substances, except as set forth in the report(s) identified in Schedule 9 and except in compliance with applicable laws, codes, rules and regulations.

 

10.   Intentionally Deleted .

 

11.   Use .   Tenant shall use the Premises for the Permitted Use and for no other use without Landlord's prior consent. Landlord represents and warrants that the Permitted Use of the Premises is a permissible use under all applicable zoning codes, laws, rules and regulations.  Tenant's use of the Premises shall be in accordance with the following:

 

11.1   Insurance.   Tenant shall not do, bring, or keep anything in or about the Premises or the Premises that will cause a cancellation of any insurance covering the Premises.

 

11.2   Compliance with Laws.   Tenant shall comply with all laws concerning the Premises and Tenant's use of the Premises.  Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C. §12101 et seq. and regulations and guidelines promulgated thereunder (“ ADA ”), and any similarly motivated state and local Laws (“ Local Barriers Acts ”), as the same may be amended and supplemented from time to time (collectively referred to herein as the “ Disabilities Acts ”) establish requirements for business operations, accessibility and barrier removal, and that such requirements may or may not apply to the Premises and Premises depending on, among other things: (i) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”, (ii) whether such requirements are “readily achievable,” and (iii) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties hereby agree that: (a) if required by the Disabilities Acts, Tenant shall maintain the Premises in compliance with ADA Title III and related Local Barriers Acts and shall perform any required ADA Title III and related Local Barriers Acts compliance in the Premises, and (b) if required by the Disabilities Acts, Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III and related Local Barriers Acts “path of travel” and other requirements triggered by any public accommodation or other use of, or alterations in, the Premises. If Tenant’s use of the Premises triggers compliance requirements by the Disabilities Acts, Tenant shall be responsible for ADA Title I and related Local Barriers Acts requirements relating to Tenant’s employees, and Landlord shall be responsible for ADA Title I and related Local Barriers Acts requirements relating to Landlord’s employees.

 

11.3   Waste, Nuisance and Improper Use.   Tenant shall not use the Premises in any manner that will constitute waste, nuisance or unreasonable annoyance to neighbors of the Premises, including without limitation, (i) the use of loudspeakers or sound or light apparatus that can be heard or seen outside the Premises, (ii) or for lodging or sleeping rooms.  Notwithstanding the foregoing, Landlord represents and warrants that the manner in which the Premises is being used on the Commencement Date shall not be deemed to constitute a waste, nuisance or an unreasonable annoyance.

 

11.4   Damage to Premises.   Tenant shall not do anything in, on or about the Premises that will cause damage to the Premises, reasonable wear and tear excluded.

 

12.   Hazardous Substances .   Tenant shall not dispose of or otherwise allow the release of any Hazardous Substances in, on or under the Premises, or in any tenant improvements or alterations placed on the Premises by Tenant.  Tenant represents and warrants to Landlord that Tenant's intended use of the Premises does not involve the use, production, disposal or bringing on to the Premises of any Hazardous Substances, except for products normally used in general business offices and light manufacturing and industrial testing facilities which constitute Hazardous Substances, provided that such products are used, stored and disposed of in accordance with applicable laws and manufacturer's and supplier's guidelines.  Tenant shall promptly comply with all laws and with all orders, decrees or judgments of governmental authorities or courts having jurisdiction, relating to the use, collection, treatment, disposal, storage, control, removal or cleanup of Hazardous Substances, on or under the Premises, or incorporated in any tenant improvements or alterations, at Tenant's expense.

 

12.1   Compliance; Notification.   After notice to Tenant and a reasonable opportunity for Tenant to effect such compliance, Landlord may, but is not obligated to, enter upon the Premises and take such actions and incur such costs and expenses to effect such compliance as it deems advisable to protect its interest in the Premises, provided, however that Landlord shall not be obligated to give Tenant notice and an opportunity to effect such compliance if (i) such delay might result in material adverse harm to the Premises, or (ii) an emergency exists.  So long as Landlord had a commercially reasonable belief that a compliance issue existed on the Premises, Tenant shall reimburse Landlord for the full amount of all costs and expenses incurred by Landlord in connection with such compliance activities, and such obligation shall continue even after expiration or termination of the Term. Tenant shall notify Landlord immediately of any release of any Hazardous Substances on or from the Premises.

 

12.2   Indemnity by Tenant.   Tenant agrees to defend, hold harmless, and indemnify Landlord from and against any and all damages, charges, cleanup costs, remedial actions, costs and expenses, which may be imposed on, incurred or paid by, or asserted against Landlord, the Premises by reason of, or in connection with (1) any misrepresentation, breach of warranty or other default by Tenant under this Lease, or (2) the acts or omissions of Tenant, its authorized representatives, or any subtenant or other person for whom Tenant would otherwise be liable, resulting in the release of any Hazardous Substances on the Premises.

 

12.3   Indemnity by Landlord.   Landlord agrees to hold Tenant harmless from and against any and all damages, charges, cleanup costs, remedial actions, costs and expenses, which may be imposed on, incurred or paid by, or asserted against Tenant, the Premises by reason of, or in connection with (1) any misrepresentation, breach of warranty or other default by Landlord under this Lease, (2) the acts or omissions of Landlord, or its employees or authorized representatives, resulting in the release of any Hazardous Substances on the Premises or (3) the environmental condition of the Premises as of the Commencement Date.

 

12.4   Acknowledgment as to Hazardous Substances.   Tenant acknowledges that the Premises may contain Hazardous Substances, and Tenant accepts the Premises and the Building notwithstanding such Hazardous Substances.  If Landlord is required by any law to take any action to remove or abate any Hazardous Substances, or if Landlord deems it necessary to conduct special maintenance or testing procedures with regard to any Hazardous Substances, or to remove or abate any Hazardous Substances, Landlord may take such action or conduct such procedures at times and in a manner that Landlord deems appropriate under the circumstances, and Tenant shall permit the same; provided that Landlord use commercially reasonable efforts to avoid interference with the operation of Tenant’s business on the Premises.

 

12.5   Survival.   The provisions of this Section shall survive the expiration or sooner termination of the Term. No subsequent modification or termination of this Lease by agreement of the parties or otherwise shall be construed to waive or to modify any provisions of this Section unless the termination or modification agreement or other document expressly so states in writing.

 

13.   Landlord's Maintenance .  Except as provided in Section 14 captioned “Tenant's Maintenance; Remedies”, Section 24 captioned “Destruction” and Section 25 captioned “Condemnation” and except for damage caused by any negligent or intentional act or omission of Tenant or its authorized representatives (which damage shall be the responsibility of Tenant), Landlord shall maintain in good condition and repair the following: (i) the structural parts of the Building, which structural parts include only the foundations, bearing and exterior walls, and roof, (ii) the unexposed electrical, plumbing and sewage systems, including without   limitation, those portions lying outside the Premises.

 

14.   Tenant's Maintenance; Remedies .

 

14.1   Tenant's Maintenance.   Except as provided in Section 13 captioned “Landlord's Maintenance”, Section 24 captioned “Destruction” and Section 25 captioned “Condemnation” and except for damage caused by any grossly negligent or intentional act or omission of Landlord or its authorized representatives (which damage shall be the responsibility of Landlord), Tenant, at its cost, shall maintain in good condition and repair the Premises including the Building, including without limitation, all of the Tenant Improvements, the heating, ventilating and air-conditioning system servicing the Building, Tenant's alterations, Tenant's Trade Fixtures, Tenant's personal property, signs, walls, interior partitions, wall coverings, windows, window coverings, interior and exterior glass, doors, interior and exterior glass entrance doors, carpeting and resilient flooring, ceiling tiles, plumbing fixtures, and lighting fixtures.

 

14.2   Landlord's Remedies.   If Tenant fails to maintain the Premises in good condition and repair as required by Section 15.1, and if such failure is not cured within thirty (30) days after notice of such failure is given by Landlord to Tenant, then Landlord may, at its option, cause the Premises to be maintained in good condition and repair and Tenant shall promptly reimburse Landlord for all reasonable costs incurred by Landlord in performance of Tenant's obligation to maintain the Premises.

 

15.   Tenant Improvements; Alterations and Trade Fixtures .

 

15.1   Tenant Improvements.   Tenant accepts the Premises in their “AS IS” condition without any agreements, representations, understandings or obligations on the part of Landlord to perform any alterations, repairs or improvements or to provide any allowances.  Tenant shall not make any improvements or alterations to the Premises without Landlord's prior consent, which consent shall not be unreasonably withheld.

 

15.2   Alterations.   Any improvements and alterations made by either party shall remain on and be surrendered with the Premises on expiration or termination of the Term, except that Landlord can elect by giving notice to Tenant within thirty (30) days before the expiration of the Term, or within thirty (30) days after termination of the Term, to require Tenant to remove any improvements and alterations and tenant improvements that Tenant has made to the Premises.  If Landlord so elects, Tenant, at its cost, shall restore the Premises to the condition designated by Landlord in its election, before the last day of the Term, or within thirty (30) days after notice of election is given, whichever is later.  Any improvements and alterations that remain on the Premises on expiration or termination of the Term shall automatically become the property of Landlord and title to such improvements and alterations shall automatically pass to Landlord at such time without any payment therefore by Landlord to Tenant.  If Tenant or its authorized representatives make any improvements or alterations to the Premises as provided in this Section, then such improvements and alterations (i) shall be made in compliance with the reasonable directions of Landlord given in writing to Tenant prior to commencement of construction, (ii) shall be made pursuant to a valid building permit to be obtained by Tenant, at its cost, and (iii) shall be made in conformity with then applicable laws, including without limitation, building codes.

 

15.3   Trade Fixtures.   Tenant shall not install any Trade Fixtures in or on the Premises without Landlord's prior consent, which consent shall not be unreasonably withheld.  If Tenant shall install Trade Fixtures, and if Landlord so elects, Tenant, at its cost, shall remove such fixtures and restore the Premises to the condition designated by Landlord in its election, before the last day of the Term, or within thirty (30) days after notice of election is given, whichever is later.  Any Trade Fixtures that remain on the Premises on expiration or termination of the Term shall automatically become the property of Landlord, and title to Trade Fixtures shall automatically pass to Landlord at such time without any payment therefore by Landlord to Tenant.

 

16.   Mechanics' Liens . Tenant shall pay, or cause to be paid, all costs of labor, services and/or materials supplied in connection with any Work.  Tenant shall keep the Premises free and clear of all mechanics' liens and other liens resulting from any Work.  Prior to the commencement of any Work costing more than an amount equal to one (1) month’s Base Monthly Rent, or the supply or furnishing of any labor, services and/or materials in connection with any such Work, Tenant shall provide Landlord with a labor and material payment bond, a letter of credit or other security satisfactory to Landlord in an amount equal to one hundred percent (100%) of the aggregate price of all contracts therefore, with release of the bond conditioned on Tenant's payment in full of all claims of lien claimants for such labor, services and/or materials supplied in the prosecution of the Work.  Said payment bond shall name Landlord as a primary obligee, shall be given by a surety which is satisfactory to Landlord, and shall be in such form as Landlord shall approve in its sole discretion.  Tenant shall have the right to contest the correctness or validity of any such lien if, immediately on demand by Landlord, it procures and records a lien release bond issued by a responsible corporate surety in an amount sufficient to satisfy statutory requirements therefore in the State of Washington. Tenant shall promptly pay or cause to be paid all sums awarded to the claimant on its suit, and, in any event, before any execution is issued with respect to any judgment obtained by the claimant in its suit or before such judgment becomes a lien on the Premises, whichever is earlier. If Tenant shall be in default under this Section, by failing to provide security for or satisfaction of any mechanic's or other liens, then Landlord may (but shall not be obligated to), in addition to any other rights or remedies it may have, discharge said lien by (i) paying the claimant an amount sufficient to settle and discharge the claim, (ii) procuring and recording a lien release bond, or (iii) taking such other action as Landlord shall deem necessary or advisable, and, in any such event, Tenant shall pay as Additional Rent, on Landlord's demand, all reasonable costs (including reasonable attorney fees) incurred by Landlord in settling and discharging such lien together with interest thereon in accordance with Section 40 captioned “Interest on Unpaid Rent” from the date of Landlord's payment of said costs. Landlord's payment of such costs shall not waive any default of Tenant under this Section.

 

17.   Utilities and Services .

 

17.1   Utilities and Services Furnished by Landlord.   Landlord shall not furnish any utilities.

 

17.2   Payment for Excess Utilities and Services. Tenant shall install or connect, if necessary, and be directly responsible for all electricity, water, sewer, janitorial services, security services or systems, snow removal, telephone, garbage removal services, or other utilities and services supplied to the Premises, and Tenant shall contact the suppliers to directly bill Tenant for those services.

 

17.3   Temperature Balance.   Landlord represents to Tenant that the heating, ventilation and air conditioning systems in the Building are adequate to maintain temperatures that may be required for Tenant’s purposes as the Premises is being used on the Commencement Date.  Landlord shall have no liability for loss or damage suffered by Tenant or others if the temperature otherwise maintained in any portion of the Premises by the heating, air conditioning or ventilation system is affected as a result of (i) any lights, machines or equipment (including without limitation electronic data processing machines) used by Tenant in the Premises or the use of more than one personal computer per person, (ii) the occupancy of the Premises by more than one person per two hundred (200) square feet of rentable area therein, (iii) any rearrangement of partitioning or other improvements.  Tenant shall not install or operate window-mounted heating or air-conditioning units.

 

17.4   Special Electrical or Water Connections; Electricity Use.   Tenant shall not connect with electric current except through existing outlets in the Premises and shall not connect with water pipes except through existing plumbing fixtures in the Premises.  In no event shall Tenant's use of electricity exceed the capacity of existing feeders to the Building or the risers or wiring installation, and Landlord may prohibit the use of any electrical equipment which in Landlord's opinion will overload such wiring or interfere with the use thereof.  If Landlord consents to the use of equipment requiring such changes, Tenant shall pay the cost of installing any additional risers, panels or other facilities that may be necessary to furnish energy to the Premises.

 

Landlord will not permit additional coring of the floor of the Premises in order to install new electric outlets in the Premises unless Tenant furnishes Landlord with X-ray scans of the floor area where the Tenant wishes to place additional electrical outlets and Landlord, in its absolute discretion, is satisfied, on the basis of such X-ray scans and other information obtained by Landlord, that coring of the floor in order to install such additional outlets will not weaken the structure of the floor.

 

17.5   Landlord's Duties.   Landlord shall not be in default under this Lease or liable for any damages resulting from, or incidental to, any of the following, nor shall any of the following be an actual or constructive eviction of Tenant, nor shall the Rent be abated by reason of:  (i) failure to furnish, or delay in furnishing, any of the services described in this Section 17.5 when such failure or delay is caused by any condition beyond the reasonable control of Landlord, (ii) any electrical surges or spikes, or (iii) failure to make any repair or to perform any maintenance, provided, however, that Landlord shall be in default hereunder if such failure shall persist for thirty (30) days after notice of the need for such repair or maintenance is given to Landlord by Tenant.  If the default cannot reasonably be cured within thirty (30) days, then Landlord shall not be in default under this Lease if Landlord commences to cure the default within thirty (30) days and diligently and in good faith continues to cure the default.  Landlord shall use reasonable efforts to remedy any interruption in the furnishing of such services.

 

17.6   Governmental Regulations.   Any other provisions of this Section 17.6 notwithstanding, if any governmental authority or utility supplier imposes any laws, controls, conditions, or other restrictions upon Landlord, Tenant, or the Building, relating to the use or conservation of energy or utilities, mandated changes in temperatures to be maintained in the Premises or the Building or the reduction of automobile or other emissions (collectively, the “ Controls ”), or in the event Landlord is required to make alterations to the Building in order to comply with the Controls, Landlord may, in its sole discretion, comply and may require Tenant to comply with the Controls or make such alterations to the Building in order to comply with the Controls.  Such compliance and the making of such alterations shall not constitute an actual or constructive eviction of Tenant, impose on Landlord any liability whatsoever, or entitle Tenant to any abatement of Rent.

 

18.   Indemnity .

 

18.1   Generally.   Tenant shall defend, hold harmless and indemnify Landlord from and against any and all damages arising out of any damage to any persons or property occurring in, on or about the Premises resulting from the acts or omissions of Tenant or its authorized representatives.  Landlord shall defend, hold harmless and indemnify Tenant from and against any and all damages arising out of any damage to any persons or property occurring in, on or about the Premises resulting from the acts or omissions of Landlord or its authorized representatives.  A party's obligation under this Section 18.1 to indemnify and hold the other party harmless shall be limited to the sum that exceeds the amount of insurance proceeds, if any, received by the party being indemnified.

 

18.2   Concurrent Negligence of Landlord and Tenant. Notwithstanding the provisions of Section 18.1 above, in the event of concurrent negligence of Tenant, or its authorized representatives, on the one hand, and that of Landlord, or its authorized representatives, on the other hand, which concurrent negligence results in damage to any persons or property occurring in, on or about the Premises, either party's obligation to indemnify the other party as set forth in Section 18.1 shall be limited to the extent of the negligence of the indemnifying party, or its authorized representatives, including the indemnifying party's proportional share of costs and attorneys' fees incurred in connection with any claims, actions or proceedings brought with respect to such damage.

 

18.3   Waiver of Worker's Compensation Immunity.   The indemnification obligations contained in this Section 18 shall not be limited by any worker's compensation, benefit or disability laws, and each indemnifying party hereby waives (solely for the benefit of the indemnified party) any immunity that said indemnifying party may have under the Industrial Insurance Act, Title 51 RCW and similar worker's compensation, benefit or disability laws.

 

18.4   Provisions Specifically Negotiated. LANDLORD AND TENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH OF THE INDEMNIFICATION PROVISIONS OF THIS LEASE (SPECIFICALLY INCLUDING BUT NOT LIMITED TO THOSE RELATING TO WORKER'S COMPENSATION BENEFITS AND LAWS) WERE SPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT.

 

19.   Exemption of Landlord from Liability .   Landlord and Landlord's Agent shall not be liable for injury to Tenant's business or loss of income therefrom or for damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, its authorized representatives, or any other person in or about the Premises, caused by or resulting from fire, steam, electricity, gas, water or rain, which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the same, whether the said damage or injury resulting from conditions arising upon the Premises or upon other portions of the Building unless such injury or damage is caused by the gross negligence or willful misconduct of Landlord or its authorized representatives or Landlord’s breach of this Lease.

 

20.   Commercial General Liability and Property Damage Insurance .   Landlord shall maintain “all-risk” real and personal property insurance against physical loss or damage to the Building under a “special form” property insurance policy in amounts not less than the full replacement cost of the Building (“Landlord’s Insurance”).  Tenant shall reimburse Landlord for the cost of Landlord’s Insurance within thirty (30) days of Tenant’s receipt of an invoice from Landlord evidencing the payment of costs incurred by Landlord to obtain Landlord’s Insurance. Any insurance costs owed to Landlord by Tenant pursuant to this Section 20 shall be prorated on the basis of a 360 day year to account for any fractional portion of a year included in the Term at its commencement and expiration.  Tenant, at its cost, shall maintain commercial general liability insurance (including contractual liability and products and completed operations liability) with liability limits of not less than $2,000,000 per occurrence, and $5,000,000 annual aggregate, insuring against all liability of Tenant and its authorized representatives arising out of or in connection with Tenant's use and occupancy of the Premises and property damage insurance with liability limits of not less than $1,000,000.  All such commercial general liability and property damage insurance shall insure performance by Tenant of the indemnity provisions of Section 18 captioned “Indemnity.”  Landlord shall be an additional named insured on such insurance policy.

 

21.   Tenant's Fire Insurance .   Tenant, at its cost, shall maintain on all of Tenant's Alterations, Trade Fixtures and Personal Property in, on or about the Premises, a policy of standard Special Causes of Loss or Special Form property insurance, in an amount equal to at least their full replacement cost.  The proceeds of any such policy shall be used by Tenant for the restoration of Tenant's Alterations and Trade Fixtures and the replacement of its Personal Property.  Any portion of such proceeds not used for such restoration shall belong to Tenant.

 

22.   Waiver of Claims; Waiver of Subrogation .   Landlord and Tenant release each other, and their respective authorized representatives, from, and waive their entire claim of recovery for, any claims for damage to the Premises and the Building and to Tenant's alterations, Trade Fixtures and personal property that are caused by or result from fire, lightning or any other perils normally included in an “Special Causes of Loss” or “Special Form” property insurance policy whether or not such loss or damage is due to the negligence of Landlord, or its authorized representatives, or of Tenant, or its authorized representatives. Landlord and Tenant shall cause each insurance policy obtained by it to provide th