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COLUMBIA TECH CENTER OFFICE LEASE BY AND BETWEEN COLUMBIA TECH CENTER, L.L.C., a Washington limited liability company

Office Lease Agreement

COLUMBIA TECH CENTER OFFICE LEASE BY AND BETWEEN COLUMBIA TECH CENTER, L.L.C., a Washington limited liability company | Document Parties: NAUTILUS, INC. | COLUMBIA TECH CENTER, LLC | NAUTILUS, INC | PacTrust Realty, Inc | US Express You are currently viewing:
This Office Lease Agreement involves

NAUTILUS, INC. | COLUMBIA TECH CENTER, LLC | NAUTILUS, INC | PacTrust Realty, Inc | US Express

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Title: COLUMBIA TECH CENTER OFFICE LEASE BY AND BETWEEN COLUMBIA TECH CENTER, L.L.C., a Washington limited liability company
Date: 7/7/2009
Industry: Retail (Catalog and Mail Order)     Sector: Services

COLUMBIA TECH CENTER OFFICE LEASE BY AND BETWEEN COLUMBIA TECH CENTER, L.L.C., a Washington limited liability company, Parties: nautilus  inc. , columbia tech center  llc , nautilus  inc , pactrust realty  inc , us express
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Exhibit 99.1

COLUMBIA TECH CENTER

OFFICE LEASE

BY AND BETWEEN

COLUMBIA TECH CENTER, L.L.C.,

a Washington limited liability company

AND

NAUTILUS, INC.,

a Washington corporation


Table of Contents

 

1.

  

Basic Lease Terms.

  

1

2.

  

Delivery of Possession and Commencement; Landlord’s Work.

  

4

3.

  

Lease Term; Early Occupancy.

  

5

4.

  

Rent Payment.

  

6

5.

  

Security Deposit.

  

6

6.

  

Use of the Premises; Hazardous Substances.

  

6

7.

  

Utilities and Services.

  

10

8.

  

Maintenance and Repairs.

  

11

9.

  

Taxes, Assessments and Operating Expenses.

  

13

10.

  

Parking and Storage Areas.

  

14

11.

  

Tenant’s Indemnification.

  

14

12.

  

Insurance; Waiver of Subrogation.

  

15

13.

  

Property Damage.

  

16

14.

  

Condemnation.

  

17

15.

  

Assignment, Subletting and Other Transfers.

  

17

16.

  

Tenant Default.

  

18

17.

  

Landlord Default.

  

19

18.

  

Surrender at Expiration or Termination.

  

19

19.

  

Mortgage or Sale by Landlord; Estoppel Certificates.

  

20

20.

  

Liens.

  

21

21.

  

Attorneys Fees; Waiver of Jury Trial.

  

21

22.

  

Limitation on Liability; Transfer by Landlord.

  

21

23.

  

Real Estate Brokers; Finders.

  

22

24.

  

Other.

  

22

25.

  

Landlord Termination Right.

  

24

26.

  

Special Provisions.

  

26

 

Page i


LEASE

THIS LEASE (this “Lease”) is made and entered into as of the Reference Date of Lease (as defined below), by and between COLUMBIA TECH CENTER, L.L.C., a Washington limited liability company, and NAUTILUS, INC., a Washington corporation, and is made with reference to the following facts, intentions and objectives:

A. Landlord and Tenant are currently parties to that certain Lease for the entire Building (as defined below) fully executed as of November 23, 2004 (as may be amended from time to time, the “Full Building Lease”).

B. Tenant desires to reduce the square footage of the premises occupied by Tenant in the Building and Landlord is willing to so reduce the square footage of the premises occupied by Tenant, subject to the terms and conditions set forth in this Lease and Tenant’s termination of the Full Building Lease under the terms and conditions thereof.

NOW THEREFORE, in consideration of the foregoing, the receipt of which is acknowledged, and of the mutual agreement of the parties hereto to the terms and conditions hereinafter contained, Landlord and Tenant hereby covenant and agree as follows:

1. Basic Lease Terms.

1.1. Reference Date of Lease . June       , 2009

1.2. Landlord . COLUMBIA TECH CENTER, L.L.C. , a Washington limited liability company (“Landlord”)

 

Address for Payment of Rent:

  

Columbia Tech Center, L.L.C.

  

Unit 37 – ctc550 – nautil01

  

P. O. Box 4800

  

Portland, OR 97208-4800

  

(The unit number must be listed on a separate line from the PO Box.)

  

Telephone (503) 624-6300

  

Facsimile  (503) 624-7755

Address For Notices:

  

Columbia Tech Center, L.L.C.

  

Attn: Legal Dept – ctc550 – nautil01

  

15350 S.W. Sequoia Parkway, Suite 300

  

Portland, OR 97224

  

Telephone (503) 624-6300

  

Facsimile  (503) 624-7755

1.3. Tenant . NAUTILUS, INC. , a Washington corporation (“Tenant”)

 

Trade Name: Nautilus

  

Address for Invoices:

  

Nautilus, Inc.

  

Attn: Accounts Payable

  

16400 SE Nautilus Drive

  

Vancouver, WA 98683

  

Telephone: 360-859-2968

  

Email: ap@nautilus.com

Address for Notices:

  

Nautilus, Inc.

  

Attn: Wayne Bolio

  

16400 SE Nautilus Drive

  

Vancouver, WA 98683

  

Telephone: (360) 859-2511

  

Facsimile:  (360) 694-7755

Taxpayer ID Number:

  

94-3002667

 

Page 1


1.4. Building; Basement . The approximately 488,808 rentable square foot building shown on Exhibit A (the “Building”). That portion of the Building which comprises the basement of the Building shall be known herein as the “Basement”.

1.5. Premises; Premises Area . A portion of the Building located at the address commonly known as 16400 SE Nautilus Drive, Vancouver, WA 98683, as generally shown on the attached Exhibit A-2 (the “Premises”) and which includes a depiction of the points of ingress and egress with respect to the Premises. Subject to the provisions of Paragraph 2.2 , the Premises shall consist of approximately 93,099 usable square feet of office space (the “Premises Area”).

1.6. Outside Area . All areas and facilities within the Park (as defined below) not appropriated to the exclusive occupancy of tenants, including all non-reserved vehicle parking areas, traffic lanes, driveways, sidewalks, pedestrian walkways, landscaped areas, signs, service delivery facilities, truck maneuvering areas, trash disposal facilities, common storage areas, common utility facilities and all other areas for non-exclusive use (the “Outside Area”). Landlord reserves the right to change, reconfigure or rearrange the Outside Area and to do such other acts in and to the Outside Area as Landlord deems necessary or desirable.

1.7. Park . The project in which the Premises and Building are located (and which includes the Premises and Building) is commonly known as Columbia Tech Center (the “Park”), as more particularly shown on Exhibit A-1 attached hereto and incorporated herein.

1.8. Permitted Use . Tenant shall use the Premises only for (i) general office purposes, call center, storage, retail sales and displays, and such other lawful uses as are incidental to and required to support the general office use of the Premises by Tenant, such as computer operations, telecommunications and employee support areas (i.e., training facilities, lunchrooms and vending machines) for the exclusive use of Tenant and its employees, (ii) research and development functions provided that only the portion of the Premises located in the Basement is used for such research and development functions, and (iii) reliability testing and engineering, machine shop, shipping and receiving of items not typically received in a general office use, prototyping, product development, and electrical engineering provided that only the portion of the Premises located in the Basement is used for any uses listed in this clause (iii) (as used in this clause (iii), the “Basement Uses”); the respective uses set forth herein shall be known singularly and collectively as the “Permitted Use”. Notwithstanding the foregoing, employees performing various functions may use any portion of the Premises so long as the locational limitations set forth above regarding the Permitted Use are fulfilled.

1.9. Lease Term .

Commencement Date: July 3, 2009 provided that Tenant has complied with all applicable provisions of the Full Building Lease including, without limitation, timely payment to Landlord of the Termination Fee equal to One Million Nine Hundred Thousand and No/100 Dollars ($1,900,000.00) (the “Commencement Date”). If the conditions in the immediately preceding sentence have not been met as of July 3, 2009, the Commencement Date shall be that day immediately following the Cancellation Date, as such term is used and defined in the Full Building Lease. Effective upon payment of the Termination Fee, the Full Building Lease shall be deemed terminated as provided in that certain Lease Termination Agreement by and between Landlord and Tenant dated as of the same date as this Lease.

Expiration Date: The last day of the sixtieth (60 th ) full calendar month following the month in which the Commencement Date occurs (the “Expiration Date”), subject to the provisions of Paragraph 26.1 . The period of time commencing on the Commencement Date and expiring on the original Expiration Date as set forth above shall be known as the “Initial Term”.

Number of Full Calendar Months: Approximately sixty (60); if the Commencement Date does not occur on the first day of a month, the Lease Term shall include that portion of the month in which the Commencement Date occurs which follows the Commencement Date (the “First Partial Month”).

 

Page 2


Early Lease Period: The period of the Lease Term commencing on the Commencement Date and continuing through ninety (90) days thereafter, during which Early Lease Period the provisions of Paragraph 3.2 of this Lease shall control over any conflicting provisions in this Lease or otherwise.

1.10. Base Rent . Subject to Paragraphs 3, 4.1 and 26.1 , monthly payments of base rent (“Base Rent”) during the Initial Term and (if applicable) the Renewal Term shall be according to the following schedule (monthly payments of Base Rent during the Early Lease Period shall be as set forth in Paragraph 3.2 ):

 

Period of Time

  

Annual Full Service Base Rent

per usable square foot (“psf”)

  

Total Monthly
Base Rent

Initial Term following expiration of Early Lease Period:

  

$9/psf per year for portion of Premises in Basement

 

$16/psf per year for remaining portion of Premises

  

$

112,855.58

Renewal Term:

  

$9.90/psf per year for portion of Premises in Basement

 

$17.60/psf per year for remaining portion of Premises

  

$

124,141.14

If the Commencement Date does not occur on the first day of a month, Base Rent for the First Partial Month shall be equal to the initial monthly Base Rent set forth in the chart above, prorated to reflect the number of days during the First Partial Month.

1.11. Security Deposit . One Hundred Twelve Thousand Eight Hundred Fifty-Five and 58/100 Dollars ($112,855.58) (the “Security Deposit”).

1.12. Tenant’s Proportionate Share(s) . Subject to Paragraphs 3.2 and 9.2 , (i) Tenant’s initial proportionate share for Taxes (as defined in Paragraph 9.3 ) is 22.86%, and (ii) Tenant’s initial proportionate share for Operating Expenses (as defined in Paragraph 9.4 ) is 22.86%. Tenant acknowledges and agrees that a 20.03% load factor (the “Load Factor”) has been applied (and will be applied) to convert the usable square footage of the Premises to rentable square footage for purposes of calculating Tenant’s proportionate share(s) set forth herein.

1.13. CC&R’s . For purposes of this Lease, the term “CC&R’s,” as such CC&R’s may be amended from time to time, shall mean collectively (i) that certain Master Declaration of Covenants, Conditions, Restrictions and Easements for Columbia Tech Center dated January 5, 1997 and recorded as Instrument No. 9701170005 on January 17, 1997 in the records of Clark County, Washington, as amended by Amendment to Master Declaration of Covenants, Conditions, Restrictions and Easements for Columbia Tech Center dated July 30, 2002 and recorded as Instrument No. 3500189 on August 13, 2002 in the Records of Clark County, Washington, and also as amended by Second Amendment to Master Declaration of Covenants, Conditions, Restrictions and Easements for Columbia Tech Center dated August 12, 2002, and recorded as Instrument No. 3500390 on August 13, 2002, in the records of Clark County, Washington, and also as amended by Third Amendment to Master Declaration of Covenants, Conditions, Restrictions and Easements for Columbia Tech Center dated November 15, 2004, and recorded as Instrument No. 3910991 on November 22, 2004, in the records of Clark County, Washington (the “Master Covenants”), and (ii) that certain Development Agreement between Columbia Tech Center, L.L.C., a Washington limited liability company, and the City of Vancouver, Washington, a Washington municipal corporation, as recorded in the records of Clark County, Washington as Instrument No. 3305320, as amended by First Addendum to Columbia Tech Center Development Agreement dated February 3, 2003 and recorded as Instrument No. 3589540, and also as amended Second Addendum to Columbia Tech Center Development Agreement dated May 19, 2003, and recorded as instrument No. 3667929 (the “Development Agreement”), and also as amended by Third Addendum to Columbia Tech Center Development Agreement dated June 20, 2005, and recorded as instrument No. 4017454.

1.14. Landlord’s Work . Those improvements to the Premises to be constructed by Landlord pursuant to Exhibit B (“Landlord’s Work”).

 

Page 3


1.15. Guarantor(s) . Not applicable.

1.16. Fiscal Year . January 1 through December 31 (each, a “Fiscal Year”).

1.17. Base Year . The 2010 Fiscal Year (“Base Year”).

This lease (this “Lease”) is entered into by Landlord and Tenant described in the Basic Lease Terms on the date set forth for reference only in the Basic Lease Terms.

2. Landlord’s Work; Measurement of Premises.

2.1. Landlord’s Work; As-Is .

2.1.1. Tenant acknowledges that Tenant shall remain in possession of the Premises during performance of Landlord’s Work. Landlord and Tenant shall reasonably cooperate with each other with respect to performance of Landlord’s Work such that, subject to force majeure as described in Paragraph 24.1 , Tenant is entirely moved into the Premises no later than October 1, 2009. However, delays in the performance of Landlord’s Work shall not postpone the Commencement Date of this Lease. Tenant hereby acknowledges that Tenant has inspected the Premises and, subject to the performance of Landlord’s Work, agrees to continue Tenant’s possession of the Premises “AS IS” and in their present condition, and without any representation or warranty by or from Landlord as to the condition of the Premises, the habitability of the Premises, the fitness of the Premises for the Permitted Use and/or the conduct of Tenant’s business in the Premises, or the zoning of the Premises.

2.1.2. Landlord agrees to competitively bid the major subcontractor portions of Landlord’s Work construction with qualified tenant subcontractors that are reasonably acceptable to Landlord. Tenant shall pay all costs associated with Landlord’s Work including, but not limited to, costs and fees associated with architectural, engineering and construction, as follows:

(i) Not more than one (1) time per month during performance of Landlord’s Work, Tenant shall pay to Landlord the costs incurred by Landlord to date in connection with Landlord’s Work (each, a “Progress Payment”); each Progress Payment shall be paid by Tenant within twenty (20) days after Landlord has paid for those sums, costs and expenses due for, or purporting to be due for, that portion of work, labor, services, materials, supplies or equipment furnished or claimed to be furnished to or for, or in connection with, the Landlord’s Work to date and has provided Tenant with copies of such paid invoices.

(ii) Upon completion by Landlord of all Landlord’s Work, Tenant shall pay to Landlord any remaining portion of the costs and fees of Landlord’s Work not previously paid to Landlord within twenty (20) days after Landlord has paid for all sums, costs and expenses due for, or purporting to be due for, any work, labor, services, materials, supplies or equipment furnished or claimed to be furnished to or for, or in connection with, Landlord’s Work and has provided Tenant with copies of such paid invoices.

2.1.3. Landlord and Tenant agree to communicate and reasonably cooperate with each other with respect to the performance of Landlord’s Work such that Landlord is able to perform Landlord’s Work economically and efficiently without unreasonable disruption to Tenant’s continuing operations in the Premises. However, Tenant understands that Landlord generally shall be performing Landlord’s Work during business hours and that Landlord’s Work must be performed in the Premises and the remainder of the Building leased by Tenant under the Full Building Lease prior to termination thereof, provided, however, that Landlord will confine to after work hours any portion of Landlord’s Work mutually reasonably determined by Tenant and Landlord to be unreasonably disruptive to the conduct of Tenant’s business and operations in the Premises. Accordingly, notwithstanding any provision to the contrary contained in this Lease or in the Full Building Lease, Landlord and Landlord’s contractors, agents and employees shall have all access and other rights reasonably required in order to perform and complete Landlord’s Work and such performance and completion of Landlord’s Work shall in no way constitute constructive eviction of Tenant from any portion of the Premises or the Building nor shall Tenant be entitled to abatement or reduction of Base Rent, Additional Rent or other charges payable by Tenant under this Lease or the Full Building Lease as a result thereof. Tenant’s reasonable cooperation with Landlord shall include, without limitation, removing from the

 

Page 4


interior walls of the Premises and/or the Building (as applicable) all pictures, posters, artwork, pins, tape and other items not intended to receive paint and moving any and all furniture, equipment and other property away from the portion(s) of the Premises and/or the Building (as applicable) where Landlord’s Work is being performed prior to Landlord commencing the relevant portion of Landlord’s Work.

2.2. Measurement of Premises . Within thirty (30) days following completion of Landlord’s Work as provided herein Tenant, at its sole cost and expense, shall have the right to cause a licensed architect or surveyor to measure the Premises for deviations in the usable square footage of the Premises using the BOMA office building standard of measurement (the “Tenant Remeasurement”). If Tenant elects to have the Premises remeasured, Tenant may provide the findings of the Tenant Remeasurement to Landlord on or prior to the expiration of the thirty (30) day period. If Tenant fails to deliver the findings of the Tenant Remeasurement to Landlord on or prior to the expiration of the thirty (30) day period, the usable square footage of the Premises Area stated in Paragraph 1.5 shall control for all purposes under this Lease. If the usable square footage of the Premises in any such Tenant’s Remeasurement timely provided to Landlord differs from the usable square footage of the Premises Area stated in Paragraph 1.5 , the parties, in good faith, shall resolve the disparity in the measurement of the usable square footage of the Premises and shall agree upon the correct usable square footage of the Premises within ten (10) days following receipt by Landlord of Tenant’s Remeasurement. Following the determination of the usable square footage of the Premises as set forth in this Paragraph 2.2 , the Base Rent set forth in Paragraph 1.10 and Tenant’s Proportionate Share shall be recalculated (subject to the provisions of Paragraph 9.2 and the Load Factor as set forth in Paragraph 1.12 ) and shall be confirmed in a writing executed by both Landlord and Tenant.

3. Lease Term; Initial Tenant Obligations.

3.1. Lease Term . The term of this Lease shall commence on the Commencement Date and expire on the Expiration Date (the “Lease Term”). The Expiration Date of this Lease shall be as defined in the Basic Lease Terms. Landlord and Tenant shall each have a one (1)-time right to obtain written confirmation of the Commencement Date and Expiration Date, which written confirmation shall be delivered by the other party within fifteen (15) days following receipt of written request from either Landlord or Tenant.

3.2. Early Lease Period . Notwithstanding any provision to the contrary set forth in this Lease or otherwise, during the Early Lease Period, the following provisions shall control:

3.2.1. Monthly Base Rent payable by Tenant for the Premises shall be One Hundred Fifty-Eight Thousand Three Hundred Thirty-Three and No/100 Dollars ($158,333.00) per month; and

3.2.2. Tenant’s proportionate share of Taxes and Operating Expenses shall be calculated and payable by Tenant as though Tenant were occupying the entire Building as set forth in the Full Building Lease; and

3.2.3. Tenant shall continue to provide its own utilities and services as set forth in Paragraph 6 of the Full Building Lease; and

3.2.4. Tenant shall continue to perform maintenance and repair of the full Building in the manner and as set forth in Paragraph 8 of the Full Building Lease including, without limitation, any replacement required in order for Tenant to put the Surrendered Space (as defined below) in the condition required under the Full Building Lease for surrender by Tenant to Landlord (Landlord shall continue to maintain and repair and replace the full Building in the manner and as set forth in Paragraph 7 of the Full Building Lease). Tenant shall have the right to use and occupy those portions of the Building not comprising the Premises (the “Surrendered Space”) for general office use only until Landlord’s Work is completed. In addition, within thirty (30) days following the execution of this Lease, Tenant shall provide to Landlord a list of all contracts and agreements to which Tenant is a party that concern any portion of the Building. Within fifteen (15) days following Tenant’s delivery of this list, Landlord shall confirm in writing to Tenant any contracts or agreements that Landlord desires to assume from Tenant and, provided such contracts or agreements are assumable, Landlord and Tenant shall execute such documents as are reasonably necessary for Landlord to assume those contracts and agreements

 

Page 5


which Landlord has elected to assume. Tenant shall terminate, effective as of the expiration of the Early Lease Period, all other contracts and agreements to which Tenant is a party that concern any portion of the Building other than the Premises. Tenant will surrender to Landlord the Surrendered Space in the condition required under the Full Building Lease (which shall be determined based on a walk-through inspection conducted and documented jointly by representatives of Landlord and Tenant within sixty (60) days of substantial completion of Landlord’s Work and which shall include, without limitation, an inspection of the mechanical, electrical and plumbing systems serving the Building to ensure that all such systems are in good operating condition and repair).

4. Rent Payment.

4.1. Base Rent; Additional Rent . Tenant shall pay to Landlord the Base Rent for the Premises set forth in this Lease and all amounts other than Base Rent that this Lease requires (“Additional Rent”) without demand, deduction or offset. Payment shall be made in U.S. currency by checks payable to Landlord and mailed to the address for rent payments as set forth above or as otherwise may be designated in writing by Landlord. Base Rent and Additional Rent shall be payable in advance on the first day of each month during the Lease Term. Base Rent and Additional Rent for any partial month during the Lease Term shall be prorated to reflect the number of days during the relevant month. Payment by Tenant or receipt by Landlord of any amount less than the full Base Rent or Additional Rent due from Tenant, or any disbursement or statement on any check or letter accompanying any check or rent payment, shall not in any event be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rental or pursue any other remedy provided in this Lease.

4.2. Lockbox Payments . If Landlord directs Tenant to pay Base Rent, Additional Rent or other charges under this Lease to a “lockbox” or other depository whereby checks issued in payment of such items are initially cashed or deposited by a person or entity other than Landlord (albeit on Landlord’s authority) then, for any and all purposes under this Lease: (i) Landlord shall be deemed to have accepted such payment if (and only if) Landlord shall not have immediately refunded (or attempted to immediately refund) such payment to Tenant, and (ii) Landlord shall not be bound by any endorsement or statement on any check or any letter accompanying any check or payment and no such endorsement, statement or letter shall be deemed an accord and satisfaction. Landlord or Landlord’s bank may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy provided in this Lease, at law or in equity.

5. Security Deposit.

Simultaneous with Tenant’s execution and delivery of this Lease to Landlord, Tenant shall pay the Security Deposit stated in the Basic Lease Terms. The Security Deposit shall be a debt from Landlord to Tenant. Landlord may commingle the Security Deposit with its funds and shall have no obligation to pay any interest on the Security Deposit. Landlord shall have the right to offset against the Security Deposit any sums owing from Tenant to Landlord and not paid when due, any damages caused by Tenant’s default, the cost of curing any default by Tenant should Landlord elect to do so, and the cost of performing any repair, maintenance or cleanup that is the responsibility of Tenant under this Lease. Offset against the Security Deposit shall not be an exclusive remedy in any of the above cases but may be invoked by Landlord, at its option, in addition to any other remedy provided by law or this Lease for Tenant’s nonperformance. Landlord shall give notice to Tenant each time an offset is claimed against the Security Deposit, and unless the Lease is terminated, Tenant shall within ten (10) days after such notice deposit with Landlord a sum equal to the amount of the offset so that the total deposit amount, net of offset, shall remain constant throughout the Lease Term. Tenant’s failure to make such deposit after offset shall be a default under this Lease. Any remaining balance of such Security Deposit shall be returned by Landlord to Tenant (or the then current assignee of Tenant’s right, title and interest in and to this Lease) when Tenant’s obligations under this Lease have been fulfilled.

6. Use of the Premises; Hazardous Substances.

6.1. Permitted Use . Subject to Tenant’s acknowledgment set forth in Paragraph 2.1 , the Premises shall be used for the Permitted Use set forth in the Basic Lease Terms and for no

 

Page 6


other purpose without Landlord’s prior written consent which (i) as to all portions of the Premises other than the portion of the Premises located in the Basement, may be withheld in Landlord’s sole and absolute discretion and (ii) with respect to the portion of the Premises located in the Basement, shall not be unreasonably withheld.

6.2. Compliance with Applicable Laws and Requirements . In connection with its use of the Premises, Tenant shall at its expense comply with the CC&R’s, all applicable laws, ordinances, regulations, codes and orders of any governmental or other public authority including without limitation, any and all Environmental Laws as defined in Paragraph 6.7.6 (together with any supplements or modifications thereto, “Applicable Laws”), and also including, without limitation, those requiring alteration of the Premises because of Tenant’s specific use or required pursuant to Paragraph 6.7 ; shall create no nuisance nor allow any objectionable liquid, odor, or noise to be emitted from the Premises; shall store no gasoline or other highly combustible materials on the Premises which would violate any applicable fire code or regulation nor conduct any operation that shall increase Landlord’s fire insurance rates for the Premises, the Building or the Park; shall not invalidate or impair any roof warranty; and shall not overload the floors or electrical circuits of the Premises. Tenant, at Tenant’s sole cost and expense, shall obtain and maintain any and all permits and licenses required in order for Tenant to operate the Permitted Use in the Premises. Landlord certifies that as of the completion of Landlord’s Work all portions of the Premises improved or modified, or both, by Landlord’s Work shall comply with the requirements of the Americans with Disabilities Act of 1990, as amended (the “ADA”) to the extent required for obtaining a permanent Certificate of Occupancy for use of the Premises for the Permitted Use.

6.3. No Overloading . Without limiting the foregoing and subject to Paragraph 6.5 , Tenant, at Tenant’s sole cost and expense, shall install (i) in the Premises other than the portion thereof located in the Basement only such equipment as is customary for general office use and (ii) in the portion of the Premises located in the Basement such equipment as is customary for the Basement Uses, and in any event shall not overload the walls, ceilings, floors or electrical circuits of the Premises or Building. Prior to Tenant’s installation of any equipment other than as described in the immediately preceding sentence which is required for the Basement Uses under Paragraph 1.8 , Tenant, at Tenant’s sole cost and expense, shall confirm (and deliver proof of such confirmation to Landlord) that the installation and use of any such equipment will not overload the walls, ceiling, floors or electrical circuits of the Premises or Building. Any power-driven machinery or equipment which Tenant proposes to install shall be subject to Landlord’s prior written consent; without limiting the foregoing, such consent may be conditioned upon Tenant retaining at Tenant’s sole cost and expense (A) a qualified electrician mutually selected by Landlord and Tenant whose opinion shall control regarding electrical circuits and (B) a qualified engineer or architect mutually selected by Landlord and Tenant whose opinion shall control regarding floor loads. If equipment installed or used by Tenant generates heat, any additional air conditioning or ventilation desired by Tenant shall be installed only following Tenant’s receipt of Landlord’s consent as provided in Paragraph 6.5 at Tenant’s sole cost and expense.

6.4. Signage . Landlord, as part of Landlord’s Work, shall relocate Tenant’s current entry sign as more particularly shown in Exhibit B . Tenant, at Tenant’s sole cost and expense, may maintain its current signage on the existing monument sign located at the main entrance to the parking area serving the Building off of SE 164 th Avenue. All signage and the installation and maintenance thereof shall comply with all Applicable Laws, the CC&R’s and Landlord’s then current signage criteria for the Building and/or Park. No signs shall be painted on or attached to the Building. All signs installed by Tenant shall be removed, at Tenant’s sole cost and expense, upon termination of this Lease with the sign location restored to its former state.

6.5. Alterations . Tenant shall make no alterations, additions or improvements to the Premises without Landlord’s prior written consent as provided herein (except for Cosmetic Alterations as defined below) and in any event without a valid building permit issued by the appropriate governmental agency. To the extent that any alterations, additions or improvements to the Premises constitute “Major Alterations” (as defined below), Landlord may withhold its consent in Landlord’s sole and absolute discretion; otherwise, Landlord’s consent to any alterations, additions or improvements to the Premises other than Major Alterations shall not be unreasonably withheld. As used herein, “Major Alterations” shall mean any alterations, additions or improvements (i) which are visible from outside the Premises and/or Building (including design and aesthetic changes), and/or (ii) to the exterior of the Building, the roof of

 

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the Building, the heating, ventilation and/or air conditioning systems serving the Premises, the fire sprinkler, plumbing, electrical, mechanical and/or any other systems serving the Premises, any interior, load-bearing walls and/or the foundation of the Building. “Cosmetic Alterations” shall mean alterations, additions or improvements to the interior of the Premises which do not constitute Major Alterations, are cosmetic in nature and have a cost (per project) not more than Thirty Thousand and No/100 Dollars ($30,000.00), for which Landlord’s prior written consent shall not be required provided Tenant complies with all other requirements of this Paragraph 6.5. Tenant shall notify Landlord in writing at least fifteen (15) days prior to commencement of any such work to enable Landlord to post a Notice of Non-Responsibility or other notice deemed proper before the commencement of such work. Any and all such alterations, additions or improvements shall comply with all Applicable Laws including, without limitation, obtaining any required permits or other governmental approvals. Upon termination of this Lease, any alterations, additions and improvements (including without limitation all electrical, lighting, plumbing, heating and air-conditioning equipment, doors, windows, partitions, drapery, carpeting, shelving, counters, and physically attached fixtures) made by Tenant shall at once become part of the realty and belong to Landlord unless the terms of the applicable consent provide otherwise, or Landlord requests that part or all of the additions, alterations or improvements be removed. In such case, Tenant, at its sole cost and expense, shall promptly remove the specified additions, alterations or improvements and shall fully repair and restore the relevant portion(s) of the Premises to the condition in which Tenant is otherwise required to surrender the Premises under Paragraph 18.1 , provided, however, that Tenant shall not be required to remove or restore the Premises with respect to (a) any portion of Landlord’s Work or (b) any of the additions, improvements or alterations to the Premises of any kind in the event Landlord terminates this Lease pursuant to Paragraph 25 or causes Tenant to relocate pursuant to Paragraph 25.4 or Paragraph 26.2 (provided that nothing in this sentence shall limit Tenant’s obligation to remove additions, improvements or alterations made to the Substitution Space (as defined in Paragraph 25.4 ), the Building Relocation Space (as defined in Paragraph 26.2.1 ) or the Executive Offices Relocation Space (as defined in Paragraph 26.2.2 ), as may be applicable.

6.6. Cabling . Any installation of cabling or wiring (collectively, “Cabling”) shall be performed pursuant to Paragraph 6.5 , shall meet the requirements of the National Electrical Code (as may be amended from time to time), and shall comply with all Applicable Laws. On or prior to the expiration or earlier termination of this Lease, Tenant, at Tenant’s sole cost and expense, shall remove all Cabling so installed during the Lease Term unless Landlord, in its sole and absolute discretion, elects in writing to waive this requirement. Any Cabling removed by Tenant shall be disposed of by Tenant, at Tenant’s sole cost and expense, in accordance with all Applicable Laws. Without limiting the foregoing, Tenant shall not be required to remove any cabling or wiring installed in the Building prior to commencement of the Lease Term under this Lease including, without limitation, installed under the terms and conditions of the Full Building Lease.

6.7. Hazardous Substances .

6.7.1. Use of Hazardous Substances . Tenant shall not cause or permit any Hazardous Substances (as defined in Paragraph 6.7.6 ) to be spilled, leaked, disposed of or otherwise released on, under or about the Premises, the Outside Area or any other portion of the Park. Subject to the provisions of this Paragraph 6.7 , (i) Tenant may use on the Premises only those Hazardous Substances typically used in the prudent and safe operation of the Permitted Use, and (ii) Tenant may store such Hazardous Substances on the Premises, but only in quantities necessary to satisfy Tenant’s reasonably anticipated needs. In addition to complying with Paragraph 6.2 , Tenant shall exercise the highest degree of care in the use, handling and storage of Hazardous Substances and shall take all practicable measures to minimize the quantity and toxicity of Hazardous Substances used, handled or stored on the Premises.

6.7.2. Notice of Release . Tenant shall notify Landlord, including delivery of notice by facsimile (in addition to delivery of notice as set forth in Paragraph 24.7 ), immediately upon becoming aware of the following: (i) any spill, leak, disposal or other release of any Hazardous Substances on, under or about the Premises, the Outside Area or any other portion of the Park; (ii) any notice or communication from a governmental agency or any other person relating to any Hazardous Substances on, under or about the Premises; or (iii) any violation of any Environmental Laws with respect to the Premises or Tenant’s activities on or in connection with the Premises.

 

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6.7.3. Spills and Releases . In the event of a spill, leak, disposal or other release of any Hazardous Substances on, under or about the Premises, the Outside Area or any other portion of the Park caused by Tenant or any of its contractors, agents or employees or invitees, or the suspicion or threat of the same, Tenant shall (i) immediately undertake all emergency response necessary to contain, cleanup and remove the released Hazardous Substance(s), (ii) promptly undertake all investigatory, remedial, removal and other response action necessary or appropriate to ensure that any Hazardous Substances contamination is eliminated to Landlord’s reasonable satisfaction, and (iii) provide Landlord copies of all correspondence with any governmental agency regarding the release (or threatened or suspected release) or the response action, a detailed report documenting all such response action, and a certification that any contamination has been eliminated. All such response action shall be performed, all such reports shall be prepared and all such certifications shall be made by an environmental consultant reasonably acceptable to Landlord.

6.7.4. Investigations . If Landlord at any time during the Lease Term (including any holdover period) reasonably believes that Tenant is not complying with any of the requirements of this Paragraph 6.7 , Landlord may require Tenant to furnish to Landlord, at Tenant’s sole expense and within thirty (30) days following Landlord’s request therefor, an environmental audit or any environmental assessment with respect to the matters of concern to Landlord; provided, however, that Landlord will reimburse Tenant for such expense if the audit or assessment does not disclose any material noncompliance with the requirements of this Paragraph 6.7 . Such audit or assessment shall be prepared by a qualified consultant reasonably acceptable to Landlord.

6.7.5. Indemnity .

(i) Tenant’s Indemnity . Tenant shall indemnify, defend and hold harmless Landlord, its employees and agents, any persons holding a security interest in the Premises or any other portion of the Park, and the respective successors and assigns of each of them, for, from and against any and all claims, demands, liabilities, damages, fines, losses (including without limitation diminution in value), costs (including without limitation the cost of any investigation, remedial, removal or other response action required by Environmental Laws) and expenses (including without limitation attorneys fees and expert fees in connection with any trial, appeal, petition for review or administrative proceeding) arising out of or in any way relating to the use, treatment, storage, generation, transport, release, leak, spill, disposal or other handling of Hazardous Substances on, under or about the Premises by Tenant or any of its contractors, agents or employees or invitees. Landlord’s rights under this Paragraph 6.7.5(i) are in addition to and not in lieu of any other rights or remedies to which Landlord may be entitled under this Lease or otherwise. In the event any action is brought against Landlord by reason of any such claim, Tenant shall resist or defend such action or proceeding by counsel satisfactory to Landlord upon Landlord’s demand. The obligation to indemnify, defend and hold harmless shall include, without limitation, (A) reasonable costs incurred in connection with investigation of site conditions, (B) reasonable costs of any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision with respect to Hazardous Substances, (C) diminution in value of the Premises and/or any other portion of the Park, (D) damages arising from any adverse impact on marketing of space in the Building and/or any other portion of the Park, (E) reasonable sums paid in settlement of claims, attorneys fees, consultant and laboratory fees and expert fees, and (F) the value of any loss of the use of the Premises or any other portion of the Park or any part thereof.

(ii) Landlord’s Indemnification . Landlord shall indemnify, defend and hold harmless Tenant and its employees and agents and the respective successors and assigns of each of them, for, from and against any and all claims, demands, liabilities, damages, fines, losses (including without limitation diminution in value), costs (including without limitation the cost of any investigation, remedial, removal or other response action required by Environmental Laws) and expenses (including without limitation attorneys fees and expert fees in connection with any trial, appeal, petition for review or administrative proceeding) arising out of or in any way relating to the actual or alleged use, treatment, storage, generation, transport, release, leak, spill, disposal or other handling of Hazardous Substances on the Premises by Landlord, or any of its contractors, agents or employees or by Landlord’s previous tenants of the Premises. Tenant’s rights under this Paragraph 6.7.5(ii) are in addition to and not in lieu of any other rights or remedies to which Tenant may be entitled under this Lease or otherwise. In the event any action

 

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is brought against Tenant by reason of any such claim, Landlord shall resist or defend such action or proceeding by counsel satisfactory to Tenant upon Tenant’s demand. The obligation to indemnify, defend and hold harmless shall include, without limitation, reasonable sums paid in settlement of claims, attorneys fees, consultant and laboratory fees and expert fees.

(iii) Subject to the provisions of this Paragraph 6.7.5(iii) , as between Tenant and Landlord, Tenant’s and Landlord’s respective obligations under this Paragraph 6.7.5 shall survive for a period of sixty (60) full calendar months immediately following the expiration or termination of this Lease for any reason. Notwithstanding any provision to the contrary, nothing contained in the immediately preceding sentence shall be deemed to limit in any manner a party’s obligations under this Paragraph 6.7.5 or the survival thereof to the extent (A) arising in connection with any claim, investigation, action or other proceeding initiated or conducted by any governmental or other public or regulatory agency or authority or (B) of any rights of contribution one party may have against the other party under applicable Environmental Laws.

6.7.6. Definitions . The term “Environmental Laws” shall mean any and all federal, state, or local laws, statutes, rules, regulations, ordinances, or judicial or administrative decrees or orders relating to: (i) health, safety or environmental protection; (ii) the emissions, discharges, releases or threatened releases of pollutants, contaminants or toxic or hazardous materials into the environment (including, without limitation, ambient air, surface water, ground water or subsurface strata); or (iii) the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of, or exposure to pollutants, contaminants or toxic or hazardous materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §9601 et seq . (“CERCLA”), as amended and judicially and administratively interpreted through the date hereof, and all regulations promulgated thereunder as of such date. The term “Hazardous Substance” (collectively, “Hazardous Substances”) shall mean: (i) any products, materials, solvents, elements, compounds, chemical mixtures, contaminants, pollutants, or other substances identified as toxic or hazardous under CERCLA or any other Environmental Laws; and (ii) the following substances: PCBs, gasoline, kerosene or other petroleum products, toxic pesticides and herbicides, volatile and/or chlorinated solvents, materials containing asbestos or formaldehyde and radioactive materials.

6.8. Moving; Access . Tenant shall move large items in and out of the Building or make independent use of the elevators for any purposes other than the transport of individuals only prior to 8 a.m. or after 5 p.m. on weekdays, at any time on weekends, or otherwise at times previously approved by Landlord. To the extent Tenant is moving items other than machines and equipment in and out of the Building as part of Tenant’s normal business practices, Tenant shall provide Landlord with at least twenty-four (24) hours prior notice to Landlord of the intended move. Landlord will not unreasonably withhold its consent under this Paragraph 6.8 , provided that Tenant complies with all reasonable directives of Landlord regarding protection of the Building and Outside Area including, without limitation, laying plywood or other material suitable to protect against damage on all Building floor finishes.

6.9. Generator . During the Lease Term, Tenant shall continue to have exclusive use of that one (1) emergency generator model number 350DFCC-R, Serial Number G980775323 located (the “Generator”). Landlord, at Tenant’s sole cost and expense, shall (i) cause to be installed security mechanisms for purposes of alerting both Landlord and Tenant as to any leakage or other problems involving the functioning of the Generator and (ii) maintain and repair the Generator and all ancillary fuel storage tanks and facilities in good condition and repair and in compliance with all Applicable Laws. Tenant shall pay all costs and expenses incurred by Landlord in the performance of Landlord’s obligations under this Paragraph 6.9 as part of Tenant’s payment of Operating Expenses.

7. Utilities and Services.

7.1. Utility Charges . Subject to the provisions of Paragraph 3.2 , Landlord shall, at its expense, furnish Tenant with the services and utilities listed below in this Paragraph 7.1 in such quantity and of such quality as is customary in comparable office buildings in the Vancouver, Washington metropolitan area. For purposes hereof, “Normal Business Hours” shall mean Monday through Sunday, 6:00 A.M. through 9:00 P.M.

 

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7.1.1. Elevator service serving all floors of the Premises at all times, subject to repair, replacement and maintenance as necessary.

7.1.2. Heating and air conditioning serving the Premises to maintain a temperature condition which provides for comfortable occupancy of the Premises for a general office use during Normal Business Hours provided that Tenant complies with Landlord’s instructions regarding use of draperies and thermostats and Tenant does not utilize heat generating machines or equipment which affect the temperature otherwise maintained by the air conditioning system. Tenant may request heat and air conditioning during other than Normal Business Hours during the week or on Saturdays, Sundays or holidays. The cost of such additional service shall be borne by Tenant at rates established by Landlord, which rates shall be provided at Tenant’s request. Tenant acknowledges and agrees that the atrium area of the Building may not be heated and/or cooled to maintain occupant comfort with the understanding that such atrium area will be used by Tenant, its employees, agents, contractors and invitees for limited ingress and egress to and from the Premises.

7.1.3. Water for drinking, lavatory and toilet purposes.

7.1.4. Subject to the provisions of Paragraph 7.2 , electrical service for lighting and operation of customary office equipment for a general office use and the Basement Uses.

7.1.5. Janitorial service three (3) days per week and otherwise in the manner that such janitorial services are customarily furnished in “Class A” office buildings in the area.

7.2. Use of Utilities . Tenant shall comply with all Applicable Laws regarding the use or reduction of use of utilities in the Premises. If Tenant’s use of the Premises results in a material increase in the amount of electricity required beyond the amount required for typical office use during Normal Business Hours, then Tenant shall pay a reasonable charge for such increase in electricity requirements when requested to do so by Landlord. Without limiting the foregoing, Tenant shall pay all electricity and other utility charges in connection with the Basement Uses to the extent the use of electricity or other utilities for the Basement Uses exceeds the proportionate amount of electricity used by Tenant in the portion of the Premises located in the Basement at the commencement of the Lease Term (as reasonably estimated by Landlord).

7.3. No Warranty . Landlord does not warrant that any of the services and utilities referred to above will be free from interruption. Any service or utility may be suspended by reason of accident, necessary repairs, alterations or improvements, or force majeure as described in Paragraph 24.1 provided that any interruption in any service or utility caused by the actions of Landlord or Landlord’s agents, contractors or employees which, in Tenant’s reasonable judgment, severely interferes with Tenant&rsqu


 
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