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EXHIBIT 10.38
OFFICE LEASE
THIS LEASE , made on the
July 18, 2006 , by and between Five
Pilgrims, LLC, a Washington limited liability company, whose
address is 12505 Bel-Red Road, Bellevue, Washington 98005,
hereinafter referred to as "Lessor’, and Trace
Technologies LLC (a
Nevada Corporation) , hereinafter referred
to as "Lessee".
1. DESCRIPTION:
Lessor, in consideration of the agreements contained
in this Lease, does hereby lease to Lessee, upon the terms and
conditions hereinafter set forth, that certain space situated in
the Forum Office Building, 12505 Bellevue-Redmond Road, Bellevue,
in the State of Washington, the description of which is Suite 105
of the Forum Office Building as described in Exhibits A and B
attached hereto, hereinafter referred to as "Premises" and
incorporated herein by this reference. As shown in Exhibit B, the
Lessee is sharing one of the two offices with Metro Escrow
personnel and will allow them unrestricted access to said
office.
The Rentable Area of the Premises is
approximately 829 square
feet, (less the shared office space) and the Rentable Area of the
total Building is approximately 17,713 square feet
2. TERM: This Lease shall be for a period of three (3) months, after
that the suite will be leased on a month to month basis, commencing
on the 1 st day of August 2006
. Effective the 1 st day of August 2006,
Trace Technologies LLC will have vacated Suite 201 with no adverse
cost consequences. This lease may be terminated by either party
with 30 days prior notice.
3. BASE RENTAL:
Lessee covenants and agrees to pay Lessor rent each
month in advance on the first day of each calendar month the
following rental payments:
Months 1 and on: One thousand thirty six and 00/100
dollars ($1,036.00)
Rent for any fractional calendar month, at the
beginning or end of the term shall be the pro-rated portion of the
rent. The Lessee shall also pay rent for any
fractional calendar month at the time of making the first calendar
month payment. In the event the described
monthly payment is not received by Lessor by 5 P.M. on the tenth
(10th) day of any month in which the rent is due, Lessor will have
the right to levy a late payment penalty equal to five percent (5%)
of the monthly rent then in effect for each delinquent month of the
lease, which, if levied will immediately be due and will be in
addition to the Base Rental.
4. CONSIDERATION:
As consideration for the execution of this Lease,
Lessee agrees to pay to Lessor the sum of One thousand thirty six
and 00/100 dollars ($1,036.00), which represents the first
month’s rent. Lessee shall not be entitled to interest on the
monies deposited as set forth in this paragraph and Lessor shall
not be required to keep these monies separate from its general
fund.
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5. SECURITY DEPOSIT: The Lessor
shall continue to hold Lessee’s security/damage deposit for
Suite 201 as a Security/Damage Deposit for
this Lease. This amount is due prior to taking occupancy of the
premises by Lessee. Said sum shall be held by Lessor as security
for the faithful performance by Lessee of all terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during
the term hereof. If Lessee defaults with respect to any provision
of this Lease, including, but not limited to, the provisions
relating to the payment of rent, Lessor may (but shall not be
required to) use, apply or retain all or any part of this security
deposit for the payment of any rent or any other sum in default, or
for the payment Of any amount which Lessor may spend or become
obligated to spend by reason of Lessee’s default, or to
compensate Lessor for any other loss or damage which Lessor may
suffer by reason of Lessee’s default.
If any portion of said deposit is so used or
applied, Lessee shall within five (5) days after written demand
therefore, deposit cash with Lessor in an amount sufficient to
restore the security deposit to its original amount and
Lessee’s failure to do so shall be a material breath of this
Lease. Lessor shall not be required to keep this security deposit
separate from the general funds, and Lessee shall not be entitled
to interest on such deposit. If Lessee shall fully and faithfully
perform every provision of this Lease to be performed by it, the
security deposit or any balance thereof shall be returned to Tenant
(or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) at the expiration of the Lease
term. In the event of termination of Lessor’s interest in
this Lease, Lessor shall transfer said deposit to Lessor’s
successor in interest.
6. USES: Lessee agrees that Lessee will use and occupy the Premises for
general office use only, and no other purposes.
7. CARE OF PREMISES:
The Lessor shall not be called upon to make any
improvements or repairs of any kind upon the Premises, except for
those required for normal maintenance or damage repair. The
Premises shall at all times be kept and used in accordance with the
laws of the State of Washington, and in accordance with all
directions, rules and regulations of the health officer, fire
marshal, building inspector, or other proper officer of any
pertinent and authorized public authority, at the sole cost and
expense of said Lessee, and Lessee will permit no waste, damage or
injury to the Premises and if damage is caused by Lessee, then
Lessee will repair the damage at Lessee’s own cost and
expense including damage caused by the clogging of the drain within
the premises.
8. RULES AND
REGULATIONS: Lessee and their agents,
employees, servants or those claiming under Lessee will at all
times observe, perform and abide by all rules and regulations
printed on this instrument, or which may be hereafter promulgated
by Lessor, all of which it is covenanted and agreed by the parties
hereto shall be and are hereby made part of this Lease.
9. SERVICES AND
UTILITIES: Lessor agrees to furnish to the
Premises during reasonable hours of generally recognized business
days, subject to the rules and regulations of the Building of which
the Premises are a part, electricity for normal lighting and
fractional horsepower office machines, heat and air conditioning as
required in Lessor’s judgment for the comfortable use and
occupation of the Premises, and janitorial services.
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Lessee will not, without written consent of
Lessor, use any apparatus or device in the Premises, including, but
without limitation thereto, electronic data processing machines,
punch card machines, and machines which will in any way increase
the demand for electricity beyond the generally accepted demand for
the use of the Premises as general office space; nor connect with
electric current except through existing electrical outlets in the
Premises, any apparatus or device, for the purpose of using
electric current. If Lessee shall require water or electric current
in excess of that usually furnished or supplied for the use of the
Premises as general office space, Lessee shall first procure the
written consent of Lessor, which Lessor may refuse, to the use
thereof the Lessor may cause a water meter or electric current
meter to be installed in the Premises, so as to measure the amount
of water and electric current consumed for any such use. The cost
of any such meters and of installation, maintenance and repair
thereof shall be paid for by the Lessee and Lessee agrees to pay
Lessor promptly upon demand therefore by Lessor for all such water
and electric current consumed as shown by said meters, at the rates
charged for such services by the local public utility furnishing
the same, plus any additional expense incurred in keeping account
of the water and electric current so consumed. If a separate meter
is not installed, such excess cost for such water and electric
current will be established by an estimate made by a utility
company or electrical engineer.
10. REPLACEMENTS:
Lessee will replace at Lessee’s expense, any
glass or doors that may be cracked or broken on said premises by
Lessee, its employees, agents, or invitees with glass or doors of
the same size and quality, with signs thereon, if required, and
Lessee agrees that at the expiration of the said term or sooner
termination of this Lease, Lessee, without notice, will quit and
surrender the said premises in good order, condition and repair,
damage by reasonable wear and the elements of fire excepted, and
deliver all keys to said premises to Lessor.
11. ACCIDENTS:
All personal property on said leased Premises shall
be at the risk of Lessee. Lessor or Lessor’s agents shall not
be liable for any damage, either to person or property, sustained
by Lessee or others, caused by any defects now in said Premises or
hereafter occurring therein, or due to the building in which said
Premises are situate, or any appurtenance thereof, becoming out of
repair, or caused by fire or by bursting or leaking of water, gas,
sewer or steam pipes, or from any act of neglect of employees,
co-tenants or other occupants of said building, or any other
persons, including Lessor or Lessor’s agent, or due to the
happening of any accident from whatsoever cause in and about said
building. Lessee agrees to defend and hold Lessor and
Lessor’s agents harmless from any and all claims for damages
suffered in or about the leased Premises by any person, firm or
corporation. However in the event of property damage to the
premises caused by Lessor, or Lessor’s employees, the damage
will be paid by Lessor.
12. ALTERATIONS:
Lessee shall not make any alterations or
improvements in, or additions to said Premises without first
obtaining the written consent of Lessor, and all such alterations,
additions and improvements shall be at the sole cost and expense of
Lessee and shall become the property of Lessor and shall remain in
and be surrendered with the Premises as a part thereof at the
termination of this Lease, without disturbance, molestation or
injury, unless by prior mutual agreement it may be removed as
personal property.
13. RESTRICTIONS:
Lessee will not use or permit to be used in said
Premises anything that may be dangerous to life or limb; nor in any
manner deface or injure said building or any part thereof; nor
overload any floor or part thereof, nor permit any objectionable
noise vibrations or odor to escape or to be emitted from said
Premises, or do anything or permit anything to be done upon said
Premises in any way tending to create a nuisance or to disturb any
other tenant or occupant of any part of said building.
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14. ACCESS: Lessee will allow and does hereby grant Lessor and/or
Lessor’s agents the right of free access at all reasonable
times to said Premises for the purpose of inspection or of making
repairs, additions or alterations to the Premises or any property
owned by or under control of the Lessor. When reasonably necessary,
Lessor may temporarily close entrances, doors, corridors, elevators
or other facilities without liability to Lessee by reason of such
closures and without such action by Lessor being construed as an
eviction of Lessee or as relieving Lessee from the duty of
observing and performing any of the provisions of this Lease unless
it last longer than four (4) hours during a business day. Lessor
shall have the right to enter the Premises for the purposes of
showing the Premises to prospective Lessees within the period of
ninety (90) days prior to the expiration or sooner termination of
the lease term.
15. ATTORNEYS’
FEES: Lessee shall pay to Lessor any
attorneys’ fees and costs incurred by Lessor if Lessor is
required to consult with and obtain the services of an attorney in
connection with the breach of any portion of this Lease by Lessee.
In the event of litigation between the parties hereto, declaratory
or otherwise, in connection with or arising out of this Lease, the
non-prevailing party shall pay the costs thereof and
attorneys’ fees actually incurred by the prevailing party,
which shall be determined and fixed by the court as part of the
judgment. Lessor and Lessee agree that they intend by this
paragraph to compensate for attorneys’ fees actually incurred
by the prevailing party to the particular attorneys involved at
such attorneys’ then normal hourly rates and that this
paragraph shall constitute an instruction to the court that such
rate or rates shall be deemed reasonable.
16. INSOLVENCY:
If the Lessee becomes insolvent, makes an assignment
for the benefit of creditors, or a receiver is appointed for the
business or property of Lessee, it is optional with the Lessor to
terminate this Lease, which termination shall reserve unto Lessor
all of the rights and remedies available under Paragraph 17 hereof,
and Lessor may accept rent from such assignee or receiver without
waiving or forfeiting said right of termination; that the filing in
a court of competent jurisdiction of a petition seeking to have
Lessee adjudged bankrupt shall automatically forfeit and terminate
this Lease and Lessee shall immediately owe, and agrees to pay to
Lessor, a lump sum equal to the amount that the rental provided for
herein exceeds the reasonable rental value of the Premises for the
remainder of the term hereof.
17. DEFAULT AND
RE-ENTRY: If any rents above or any part
thereof shall be and remain unpaid when the same shall become due
for a period often (10) days, or if Lessee shall violate or default
in any of the covenants and agreements herein contained, then the
Lessor may cancel this Lease upon giving the notice required by
law, and re-enter said Premises, but not withstanding such re-entry
by the Lessor, the liability of the Lessee for the rent provided
for herein shall not be extinguished for the balance of the term of
this Lease, and Lessee covenants and agrees to make good to the
Lessor any deficiency arising from re-entry and re-letting of the
Premises at a lesser rental then herein agreed to. The Lessee shall
pay such deficiency each month as the amount thereof is ascertained
by the Lessor. In the event it becomes reasonably necessary to make
any changes, alterations or additions to the Premises or any part
thereof for the purpose of re-letting said Premises or any part
thereof, Lessee shall also be responsible for such costs in
reletting the Premises, including but not limited to, clean up
costs and remodeling to return the space to its original state and
condition. Lessee shall also be responsible for commissions and
advertising in re-letting the premises.
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In the event of any entry in, or taking
possession of, the Premises, Lessor shall have the right, but not
the obligation, to remove from the Premises all personal property
located therein, and may store the same in any place selected by
Lessor, including but not limited to a public warehouse, at the
expense and risk of the owners thereof, with the right to sell such
stored property, without notice to Lessee after it has been stored
for a period of thirty (30) days or more, with the proceeds of such
sale to be applied to the costs of such sale and to the payment of
charges for storage and to the payment of any other sums of money
which may then be due from Lessee to Lessor under any of the terms
thereof.
18. RISK: All personal property of any kind or description whatsoever in
the demised Premises shall be at the Lessee’s sole risk and
the Lessor shall not be liable for any damage done to or loss of
such property or damage or loss suffered by the business or
occupation of the Lessee arising from any acts or neglect of
co-tenants or other occupants of the building, or of the Lessor or
the employees of the Lessor or of any other persons or from
bursting, overflowing or leaking of water, sewer or steam pipes or
from the heating or plumbing fixtures or from electric wires, or
from gas, or odors, or caused in any other manner whatsoever except
in the case of willful neglect on the part of the
Lessor.
19. INDEMNIFICATION: Lessee will
indemnify and hold harmless Lessor from any claim, liability or
suit on behalf of any person, persons, corporation and/or firm for
any injuries or damages occurring in or about the said Premises or
on or about the sidewalk, stairs or thoroughfares a
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