TENTH AMENDMENT TO LEASE AGREEMENT

Exhibit 10.7(k)

TENTH AMENDMENT TO LEASE AGREEMENT

THIS TENTH AMENDMENT TO LEASE AGREEMENT is made and entered into as of the 16th day of December, 2005 between RAINIER COMMONS, LLC, a Washington limited liability company (“Lessor”), and TULLY’S COFFEE CORPORATION, a Washington corporation (“Lessee”).

RECITALS

A. Pursuant to that certain Lease Agreement dated August 16, 1999, entered into between Kent Central, LLC (“KCL”) and Lessee, as modified by those certain amendments described in the attached Exhibit B (collectively, the “KCL Lease”). KCL agreed to lease to Lessee certain premises as further described in the Lease (the “Original Lease Premises”) on the real property located at 3100 Airport Way South, Seattle, Washington, which is legally described as set forth on the attached Exhibit A (the “Property”). On July 17, 2003. Lessor purchased the Property from KCL, and thereby assumed all of KCL’s rights and obligations under the Lease. Lessor and Lessee modified the lease by the Sixth Amendment to Lease Agreement dated as of June 26, 2003, which became effective upon the July 17. 2003 closing of the purchase of the Property from KCL (the “Sixth Amendment”) and further modified the lease by the Seventh Amendment to Lease Agreement dated as of July 23, 2004 (the “Seventh Amendment”), the Eighth Amendment to Lease Agreement dated as of October 7, 2004 (the “Eighth Amendment”) and the Ninth Amendment to Lease Agreement dated as of October 7, 2004 (the “Ninth Amendment”). The KCL Lease, as modified by the Sixth Amendment, Seventh Amendment, Eighth Amendment and Ninth Amendment, is referred to herein as the “Lease.”

B. Lessor and Lessee have agreed to make certain modifications to the Lease on the terms and conditions set forth in this Tenth Amendment to Lease Agreement (the “Tenth Amendment”).

AGREEMENT

NOW, THEREFORE, in consideration of foregoing and the promises made below, and other good and valuable consideration, the parties agree as follows:

1. Definitions . Except as otherwise stated in this Tenth Amendment, terms which are defined in the Lease shall have the same meanings for this Tenth Amendment.

2. Amendments . The effective date of this Tenth Amendment shall be December 2, 2005 (the “Effective Date”). Effective as provided herein, the Lease is hereby amended as follows:

2.1. Correction of Misstatement Contained in Previous Amendments.

(a) The parties have identified that Exhibit C to the Sixth amendment misstated the approximate square footage of Level 1 of Building 10 as

 

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l,279 rather than 1,112 and the approximate square footage of Level 3 of Building 10 as 504 rather than 1,112. Further Exhibit D to the Eight Amendment misstated the allocation of Levels I and 3 of Building 10 as set forth below:

 

(b) The parties have now noticed that the actual approximate square footage for these portions of Building 10 is as set forth below:

 

(c) In connection with the modifications to the Premises contemplated by this Tenth Amendment, the parties now desire to correct these misstatements. Accordingly, Exhibit D to the Eighth Amendment is restated as set forth on the “Restated Exhibit D to Eighth Amendment to Lease Agreement, attached hereto as Exhibit C . These corrections and restatements shall not result in any change to the amount of Rent and Monthly Operating Expenses payable by Lessee under the Lease.

2.2. Modifications of Premises. Lessor and Lessee agree to modify Tully’s Premises and the Available Space as set forth below:

(a) The following space is removed from the Tully’s Premises and added to the Available Space on the Effective Date:

 

(b) Additionally, approximately 525 square feet (consisting of 175 square feet in each of Levels 2, 3 and 4 of Building 6) is removed from the Tully’s Premises on the Effective Date for Lessor’s construction (at Lessor’s sole expense) of a common area stairwell at the Northeast corner of Building 6. The stairwell is for the common use of Lessor and all occupants of Building 22 and Building 6, including Lessee. Lessee will reasonably cooperate to provide Lessor with access for the construction of the stairwell. Lessor agrees that the construction will not disrupt or

 

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interfere with Tully’s use of the Tully’s Premises, and Lessor will take all necessary actions to protect Lessee’s inventories, properties and personnel from construction dust, debris, odors, contamination and all other hazards of this construction.

(c) Lessee shall remove its inventories and other properties (“Lessee Properties”) from the areas set forth in paragraph b) of this Section 2.2 no later than 30 days from the Effective Date (the “hand-over date”). If any Lessee Properties are in these areas after the hand-over date. Lessor may remove the Lessee Properties at Lessee’s reasonable expense upon five business days notice to Lessee, and Lessor shall not be responsible for loss or damage incurred as a consequence of such action.

(d) The following space will be removed from the Available Space and added to the Tully’s Premises on the Effective Date:

 

(e) Lessor shall remove its inventories and other properties (“Lessor Properties”) from the areas set forth in paragraph d) of this Section 2.2 no later than 30 days from the Effective Date (the “hand-over date”). If any Lessor Properties are in these areas after the hand-over date. Lessee may remove the Lessor Properties at Lessor’s reasonable expense upon five business days notice to Lessor, and Lessee shall not be responsible for loss or damage incurred as a consequence of such action.

(f) Lessor and Lessee agree that a portion of the Available Space (level 3 of building 10) being transferred to the Tully’s Premises contains a pipe that may contain asbestos. Both parties agree that the pipe shall be removed by the Lessor within (30) thirty days of the Effective Date. The expense for the removal of the pipe and abatement of asbestos on level 3 of building 10 shall be paid by the Lessor, provided that Lessee shall reimburse Lessor fifty percent (50%) of the cost of pipe removal and asbestos abatement up to $2,500.00. Except as stated above, all premises added to or removed from the Tully’s Premises under this Section 2.2 shall be in the “AS IS” condition, except that Lessor shall represent and warrant the environmental condition of each new space transferred to Lessee as “free and clear” of all unmitigated hazardous materials and shall provide the appropriate written documentation to Lessee showing that the added space is “free and clear” of all unmitigated hazardous materials and identifying any mitigated hazardous materials in such space.

(g) Exhibit C sets forth the Tully’s Premises as provided in the Eighth Amendment, restated as set forth in Section 2.1 above. As of the Effective

 

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Date, upon completion of the undertakings set forth in this Tenth Amendment, the Tully’s Premises shall be as set forth in Exhibit D , attached hereto. The square footage areas set forth in Exhibit C and Exhibit D are approximations accepted by the parties for purposes of administering the Lease and any remeasurement of these premises or recomputation of square footage shall not result in any change to the amount of Rent or Monthly Operating Expenses payable by Lessee under the Lease.

2.3. There will be no change in the amount of Rent or Monthly Operating Expenses payable by Lessee under the Lease as the result of this Tenth Amendment.

2.4. Commencing on the Effective Date, Lessor shall no longer be required to provide the additional storage area of 5,000 square feet as described in the Sixth Amendment, and the second paragraph of Section 2.1 of the Sixth Amendment shall be deleted in its entirety. Commencing on the Effective Date, Lessor shall no longer be required to provide the additional storage area of 5,000 square feet as described in the Sixth Amendment, and the second paragraph of Section 2.1 of the Sixth Amendment shall be deleted in its entirely.

2.5. Lessor agrees that from the date of this amendment it will not lease any portion of the Property, as defined by Exhibit “A” for the purpose of operating (i) a strip club, (ii) an adult novelty store whose primary focus is sexually oriented, (iii) an adult bookstore whose primary focus is sexually oriented, or (iv) an adult video store whose primary focus is sexually oriented. In consideration of this restriction, Lessee agrees to participate in any protest or lobbying efforts, subject to such reasonable costs, to try and prevent or revise any designation of the general area in which the Property is located as the designated area in the City of Seattle for latter uses.

2.6. Cell Towers Sublease. Under the Sublease Agreement dated as of April 23, 2004, attached hereto as Exhibit E . Lessee is Sub-Lessor to Cingular Wireless, as successor Sub-Lessee to AT&T Wireless. Lessee and Lessor wish for Lessee to assign its interest as Sub-Lessor to Lessor. At its sole expense. Lessor shall prepare a sub-lease assignment agreement reasonably acceptable to Lessee (the “Cingular Assignment”). Lessee shall reasonably cooperate in the preparation and execution of the Cingular Assignment. Lessor shall be entitled to all rentals received, if any. from Cingular Wireless under the Sublease Agreement after the effective date of the Cingular Assignment (the “Cingular Effective Date”). As of the Cingular Effective Date, the space utilized for the AWS Equipment shall be deleted from the Tully’s Premises and added to the Available Space.

2.7. Signage. Section 2.7 of the Sixth Amendment is amended to append the following additional provision, effective as of the Effective Date:

In addition, subject to all applicable signage ordinances, laws and regulations. Lessor agrees that Lessee shall have the exclusive right (but not the obligation) to paint the exterior of the tower located in building 21 underneath the Tully’s green “T” sign currently in place (the “Tower”), including (but not limited to) the use of paint colors which reflect Lessee’s retail or product trade dress, and Lessee’s logos, graphics and trade marks, which may be modified from time to time in Lessee’s discretion. Lessor shall have the right to reasonably approve any changes in the exterior paint design for this

 

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portion of the building. Notwithstanding the foregoing in the event that Lessor determines that the Tower requires paint and Lessee does not paint the Tower within thirty (30) days after notice from Lessor of its desire to have the Tower painted. Lessor shall have the right to paint the tower to a standard consistent with the remainder of the Property.

2.8. Repainting Brewery Exterior: Lessor has proposed to repaint the exterior of substantially all of the buildings within the Property and has requested that Lessee participate in the cost of such painting. Lessor and Lessee have agreed to the following with respect to this painting project:

(a) The exterior of all, or substantially all of the buildings within the Property (but excluding the free-standing retail building with drive-through facilities to be constructed by Lessor pursuant to the lease agreement dated as of October 7, 2004, and excluding the brick facings of Buildings 1.2.24 and 26, which are collectively referred to as the No-paint Surfaces), shall be painted.

(b) The painting shall be done in a professional, first-class workmanlike manner at times that are practical in Lessor’s reasonable discretion, between October 2005 and June 2006, with the color scheme being materially consistent with Lessor’s painting plan dated                      furnished to Lessee,

(c) Lessor may utilize its own employees and/or independent contractors to complete this exterior painting. Lessor will warrant the work (labor and materials) to Lessee during the Lease term, and any required repainting of such areas during the Lease term will be at Lessor’s sole expense and will not be included in Monthly Operating Expenses payable by Lessee under the Lease. Lessee shall have no responsibility for any other costs related to painting of the building exteriors in the Project during the remainder of the Lease term, except for any cost associated with Lessee’s painting of the tower of Building 21 as provided in Section 2.6 of this Tenth Amendment,

(d) The costs of such painting shall be excluded from Monthly Operating Expenses payable by Lessee under the Lease,

(c) Lessee shall reimburse Lessor for the total amount of $50,000 for the exterior painting, payable as provided in this paragraph. Lessee shall reimburse Lessor a total of $30.000 in monthly payments between October 2005 and June 2006, based on the percentage of the total building surface square footage exclusive of the No-paint Surfaces which has been painted during each month (so that all $30,000 would be paid when 100% of the exterior building painting has been completed). Lessee shall pay the remaining $20.000 to Lessor upon the completion of the exterior painting to Lessee’s reasonable satisfaction.

 

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(I) The painting project shall be complete to both parties reasonable satisfaction no later than June 30, 2006.

3. No Other Changes . Except as modified by this Tenth Amendment and as otherwise agreed upon herein, all other terms of the Lease, including without limitation all exhibits thereto. remain unchanged and in full force and effect.

4. Conflict and Construction; Definitions . In the event of any conflict between the terms of this Tenth Amendment and the terms of the Lease, the terms and provisions of this Tenth Amendment shall prevail. Capitalized terms not otherwise defined in this Tenth Amendment shall have the meanings set forth in the Lease.

5. Successor and Assigns . The terms and provisions of this Tenth Amendment shall bind and inure to the benefit of Lessor and Lessee and their respective successors and assigns. This Tenth Amendment may not be assigned by either party except in connection with an assignment of the Lease in accordance with the terms of the Lease.

6. Legal Fees and Expenses . Each party will bear its own legal fees and expenses in connection with this Tenth Amendment.

7. Counterparts; Facsimile . This Tenth Amendment of Lease Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Executed counterparts may be executed and transmitted via facsimile and such version shall be deemed an original.

 

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IN WITNESS WHEREOF, Lessor and Lessee have executed this Tenth Amendment effective as the date set forth above.

 

LESSOR :				LESSEE :
RAINIER COMMONS, LLC				TULLY’S COFFEE CORPORATION
By:		/s/ Brett Goldfarb		By:		/s/ Kristopher S. Galvin
		Brett Goldfarb				KRISTOPHER S. GALVIN
Its:		Member		Its:		EXECUTIVE VICE PRESIDENT

 

LESSOR :
RAINIER COMMONS, LLC
By:		/s/ Herzel Hazan
		HERZEL HAZAN
Its:		Member

 

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STATE OF WASHINGTON         )

                                                         ) ss.

COUNTY OF KING                      )

On this 16 ^th day December, 2005, before me personally appeared Brett Goldfarb the Member of RAINIER COMMONS, LLC, who executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath slated that he was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.

 

STATE OF WASHINGTON         )

                                                         ) ss.

COUNTY OF KING                      )

On this 16 ^th day of December, 2005, before me personally appeared Herzel Hazan the Member of RAINIER COMMONS, LLC, who executed the within and foregoing instrument, and acknowledged 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 was authorized to execute said instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written.

 

 

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STATE OF WASHINGTON          )

                                                         ) ss.

COUNTY OF KlNG                       )

On this 16 ^th day of December , 2005, before me personally appeared Kristopher S. Galvin the Exec. Vice President of TULLY’S COFFEE CORPORATION, who executed the within and foregoing instrument, and acknowledged 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 was authorized to execute said instrument.

IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the day and year first above written.

 

 

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

PARCEL 2

Lots 1 through 6 Block 233. Seattle Tidelands in King County Washington, as shown on the official maps on file in the Office of the Commissioner of Public Lands at Olympia, Washington:

TOGETHER WITH Lots 1 through 12 Block 17 Hanford’s Addition to South Seattle,

according to the plat thereof recorded in Volume 1 of Plats, page 37, in King

County, Washington;

TOGETHER WITH ALL of vacated alley in said Block 17, as vacated under City of

Seattle Ordinance No. 38522:

TOGETHER WITH Lots 1 through 12 Block 16. Hanford’s Addition to South Seattle,

according to the plat thereof recorded in Volume 1 of Plats, page 37, in King

County, Washington:

TOGETHER WITH ALL of vacated alley in said Blocks 16, as vacated under City of

Seattle Ordinance No. 38521;

TOGETHER WITH ALL of vacated South Winthrop Street between said Blocks 16 and

17, as vacated under City of Seattle Ordinance No. 38522;

TOGETHER WITH that portion of vacated South Hanford Street adjoining Block 16,

as vacated under City of Seattle Ordinance No. 69571 and would attach by

operation of law;

TOGETHER WITH that portion of vacated Tenth Avenue South, as vacated under City

of Seattle Ordinance No. 95836, and described as follows:

BEGINNING at the intersection of the production south of the East line of Block 16 of said Plat of Hanford’s Addition to South Seattle and the Westerly right-of-way line of the Seattle Freeway (Primary State Highway No. 1); thence Northerly along said Westerly right-of-way line to the production east of the North line of Lot 12, Block 17 of said plat; thence West along said produced line to the East line of Block 17; thence South along said East line and the same produced and along the East line of Block 16 to the POINT OF BEGINNING; EXCEPT from the above described Parcel 2 any portion lying within the Northern Pacific Railway Company right-of-way; EXCEPT that portion as conveyed to the State of Washington for Primary State Highway No. 1 by deed recorded under Recording No. 6199964.

 

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EXHIBIT B

AMENDMENTS TO THE LEASE AGREEMENT

AMENDMENTS TO THE ORIGINAL LEASE

1. First Lease Amendment dated December 17, 1999, entered into between KCL and Lessee:

2. Second Lease Amendment dated June 6, 2000, entered into between KCL and Lessee:

3. Third Lease Amendment dated November 7, 2000, entered into between KCL and Lessee:

4. Fourth Lease Amendment dated February 21, 2001, entered into between KCL and Lessee; and

5. Fifth Lease Amendment dated November 1, 2002, entered into between KCL and Lessee.

AMENDMENTS BETWEEN LESSEE AND LESSOR

1. Sixth Amendment to Lease Agreement dated as of June 26, 2003, entered into between Lessor and Lessee and effective as of July 17, 2003.

2. Seventh Amendment to Lease Agreement dated as of July 23, 2004, entered into between Lessor and Lessee.

3. Eighth Amendment to Lease Agreement dated as of October 7, 2004, entered into between Lessor and Lessee.

4. Ninth Amendment to Lease Agreement dated as of October 7, 2004, entered into between Lessor and Lessee,

 

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EXHIBIT C

Restated Exhibit D to Eighth Amendment to Lease Agreement

Premises after Eight Amendment to Lease

 

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