EXHIBIT 10.23
LEASE AGREEMENT
THIS LEASE, dated this 4th day of April, 1997 for reference purposes
only, is made and entered into by and between EMCON, a California corporation
("Landlord") and Columbia Analytical Services, Inc., a Washington corporation
("Tenant").
Landlord and Tenant agree to the terms, covenants and conditions of
this Lease, as follows:
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1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those certain premises (the "Premises") described on the Lease Summary.
The term "Buildings" as used herein shall mean the entire laboratories and
administrative buildings more particularly described in Exhibit A attached
hereto. The term "Property" shall mean and include all of the area described in
Exhibit "A" attached hereto and all of the buildings, improvements, fixtures and
equipment now or hereafter situated thereon.
2. USE.
2.1 Permitted Uses. Tenant shall use the Premises solely for the purpose
stated on the Lease Summary and for no other purpose.
2.2 Compliance with Law. Tenant shall, at Tenant's sole cost, promptly
comply with all laws, ordinances, codes, rules, orders, directives and
regulations of governmental authority (collectively, "Governmental Regulations")
regulating the condition, use or occupancy of the Premises, including but not
limited to, any alterations, additions or modifications (collectively,
"Alterations") to the Premises required by Governmental Regulations.
2.3 Restriction on Use. Tenant shall not use or permit the use of the
Premises in any manner that will tend to create waste on the Premises or
constitute a nuisance to any other occupant or user of the Buildings or the
Property or any property adjacent thereto or do or keep anything that will cause
cancellation of or an increase in rates of any insurance covering the Buildings.
Tenant shall not use any apparatus, machinery or other equipment in or about the
Premises that may cause substantial noise or vibration or overload existing
electrical systems, and shall not place any loads upon the floors, walls, or
ceilings of the Premises which may jeopardize the structural integrity of the
Buildings or any part thereof. Tenant shall not make any penetrations of the
roof or exterior of the Buildings or attach any antennas or equipment thereon
without the prior written approval of Landlord which will not be unreasonably
withheld. Any penetrations of the roof allowed by Landlord shall be properly
flashed and caulked and shall be removed and the roof membrane restored upon
expiration of the Lease term. No materials or articles of any nature shall be
stored outside the Premises, unless in compliance with any applicable
Governmental Regulations.
2.4 Hazardous Materials
A. Definitions. As used herein, the term "Hazardous Material" -
shall mean any substance: (i) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; (ii) which is or becomes defined as a
"hazardous waste," "hazardous substance," pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority, department, commission, board, agency or
instrumentality of the United States, the State of Washington or any political
subdivision thereof; (iv) the presence of which on the Premises poses or
threatens to pose a known material risk to the health or safety of persons on or
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about the Premises; (v) without limitation which contains gasoline, diesel fuel
or other petroleum hydrocarbons; (vi) without limitation which contains
polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation;
or (vii) without limitation radon gas.
B. Tenant shall not use, analyze, store, dispose, handle,
transport, release, discharge or generate any Hazardous Materials in, on, to,
under, from or about the Premises or Buildings, except in accordance with all
governmental laws, rules and regulations.
C. Tenant shall not cause or permit any Hazardous Materials used
by Tenant to be discharged into the plumbing or sewage system of the Building or
onto the land underlying the Building or anywhere on the Property. Tenant shall,
at its sole cost, comply with any and all Governmental Regulations respecting
the handling, use, storage and disposal of Hazardous Materials used by Tenant.
Tenant shall, at its sole cost, make any and all improvements to the Premises
necessary to assure legal and safe use of Tenant's Hazardous Materials. All such
improvements shall be subject to Landlord's approval in accordance with
Paragraph 10 hereof. Tenant shall remove all Hazardous Materials used by Tenant
or brought onto the Premises or the Property by Tenant prior to the expiration
of the Lease term or sooner termination thereof.
D. Tenant shall indemnify, defend and hold Landlord harmless
from and against any and all claims, judgments, liability, damage, decrees,
liens, demands, taxes, penalties, fines, expenses, costs (including but not
limited to those costs associated with investigation, removal and remedial
activities as may be sought, initiated or required in connection with any local,
state or federal governmental or private party demands or claims), fees
(including without limitation attorneys fees), obligations, orders, liabilities
or losses (including without limitation, diminution in the value of the
Property, damages for the loss or restriction on the use, marketability or any
other amenity of the Property) (all of the foregoing collectively referred to
hereinafter as "Environmental Claims"), which arise during or after the Lease
term as a result of Tenant's use, storage, disposal, transportation, release,
discharge or generation of any Hazardous Materials at, in, onto or under the
Property, or any contamination of the Property caused by Tenant. The foregoing
indemnity ("Tenant's Environmental Indemnity") shall survive the expiration or
earlier termination of this Lease. Tenant agrees to defend all Environmental
Claims on behalf of Landlord with counsel reasonably acceptable to Landlord.
E. Without limiting the foregoing, if there is a release or
discharge of any Hazardous Materials at, in, onto or under the Property or
contamination of the Property that is covered by Tenant's Environmental
Indemnity, Tenant shall promptly take all action, at its sole cost, as is
necessary to return the Property to the condition required by all applicable
laws and regulations, provided that Landlord's written approval of such action
shall first be obtained and Landlord's approval of any remediation plan shall
not be unreasonably withheld.
F. Landlord shall have the right to enter the Premises and
Property and perform such environmental investigations, remediation and
assessments of the Premises as Landlord shall in Landlord's sole discretion deem
advisable. Landlord shall provide Tenant with at least two (2) business days'
notice prior to entering the Premises hereunder, except in the case of
emergency. Landlord shall use reasonable efforts to minimize interference with
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Tenant's business, but shall not be liable for any interference caused thereby.
The cost of any such investigation, remediation or assessment shall be
reimbursed by Tenant to Landlord within thirty (30) days of receipt of written
invoices therefor only if any contamination found has been caused by Tenant.
G. If at anytime Tenant shall become aware of or have
reasonable cause to believe that any Hazardous Materials have come to be located
on or beneath the Premises or Property. Tenant shall, immediately upon
discovering such presence or suspected presence of Hazardous Materials, give
written notice of such condition to Landlord. In addition, Tenant shall
immediately notify Landlord in writing if Tenant becomes aware of (1) any
enforcement, cleanup, removal or other governmental regulatory action
instituted, completed, or threatened relating to any Hazardous Materials on or
about the Property, (2) any claim made or threatened by any person against
Tenant, Landlord or the Property relating to damage, contribution, cost
recovery, compensation, loss or injury relating from or claimed to result from
any Hazardous Materials that have come to be located on or about the Property,
and (3) any reports made to any local, state or federal environmental agency
arising out of or in connection with any Hazardous Materials on or about the
Property, including any complaints, notices, warnings or violations in
connection therewith.
H. Any default under this Paragraph 2.4 shall constitute a
material default enabling Landlord to exercise any of the remedies set forth in
this Lease.
3. TERM
3.1 Commencement Date. The Commencement Date of the term of this Lease
shall be as set forth in the Lease Summary. If the Commencement Date is other
than the first day of a calendar month, the Lease term shall be extended by the
number of days remaining in the month during which the Commencement Date occurs,
and Base Rent for such period shall be a prorated portion of the same Base Rent
set forth in the Lease Summary for the first calendar month of the Lease term.
3.2 Proration. In the event that the Lease term commences on a date
other than the first day of a calendar month, Tenant shall pay to Landlord on
the Commencement Date as rent for the period from the Commencement Date to the
first day of the next succeeding calendar month that proportion of the rent
payable hereunder which the number of days between the Commencement Date and the
first day of the next succeeding calendar month bears to thirty (30). In the
event that the Lease term for any reason ends on a date other than the last day
of a calendar month, on the first day of the last calendar month of the Lease
term, Tenant shall pay to Landlord as rent for the period from the first day of
said last calendar month to and including the last day of the term hereof that
proportion of the rent then due hereunder which the number of days between the
first day of said last calendar month and the last day of the term hereof bears
to thirty (30).
4. RENT
4.1 Base Rent. Tenant shall pay monthly base rent ("Base Rent") in the
amounts set forth on the Lease Summary to Landlord without deduction, offset,
prior notice, or demand, in advance on the first day of each calendar month of
the Lease term and in lawful money of the United States. Base Rent shall be
abated for months 1 through 24 provided Tenant is not in default of any of its
obligations under this Lease.
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4.2 Additional Rent.
A. Tenant shall pay to Landlord in addition to Base Rent during the
Lease term additional rent ("Additional Rent") equal to the sum of the
following:
1. Tenant's Share of all Real Property Taxes relating to the
Property as set forth in Paragraph 11, unless Tenant shall pay the Real Property
taxes directly to the charging authority;
2. Tenant's Share of all Operating Expenses relating to the
Buildings and the Property as set forth in Paragraph 7, except to the extent
Tenant maintains and repairs the Buildings as provided herein;
3. All other charges, costs and expenses which Tenant is required
to pay hereunder and all damages, costs and expenses which Landlord may incur by
reason of default of Tenant or failure on Tenant's part to comply with the terms
of this Lease, including attorney's fees and court costs; and
B. In the event of nonpayment by Tenant of Additional Rent, Landlord
shall have all the rights and remedies with respect thereto as Landlord has for
nonpayment of Base Rent. Tenant's Share of all expenses to be paid by it with
respect to the Buildings and Tenant's Share of all expenses to be paid by it
with respect to the Property are separately set forth in the Lease Summary.
Except as provided below, Additional Rent due hereunder shall be paid to
Landlord within thirty (30) days of written notice by Landlord. At Landlord's
option, Tenant shall pay to Landlord monthly, in advance, on the first day of
each calendar month Tenant's Share of an amount estimated by Landlord to be
Landlord's approximately monthly expenditure for such items included in
Additional Rent (the "Estimated Monthly Expense"). Actual expenses incurred by
Landlord shall be reconciled against the Estimated Monthly Expense by Landlord,
at its option, or at the end of each calendar quarter or year. Within one
hundred twenty (120) days following each calendar quarter or year, as the case
may be, Landlord shall furnish Tenant a statement of the actual expenses
incurred by Landlord for such period. If Tenant's total payments of the
Estimated Monthly Expense for such period are less than the amount of actual
expenses incurred by Landlord, Tenant shall pay to Landlord the amount of such
deficiency within thirty (30) days after receipt of such statement. If Tenant's
total payments of the Estimated Monthly Expense exceed actual expenses incurred
by Landlord for such period, Landlord shall apply the excess amount against the
next payment of Base Rent or Additional Rent due hereunder or any other sums
then due under this Lease, at Landlord's sole discretion. The Estimated Monthly
Expense may be adjusted by Landlord upon thirty (30) days' written notice to
Tenant. The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or earlier termination of the term of this Lease,
and if the term hereof shall expire or shall otherwise terminate on a day other
than the last day of a calendar year, the actual Additional Rent incurred for
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the calendar year in which the Lease term expires or otherwise terminates shall
be determined and settled on the basis of the statement of actual Additional
Rent for such calendar year and shall be prorated in the proportion which the
number of days in such calendar year preceding such expiration or termination
bears to 365.
C. Audit. Tenant shall have the right, at such time and place as
Landlord may reasonably designate, to inspect and audit Landlord's books and
records related to the operation and maintenance of the Building for the purpose
of verifying Landlord's adjusted year-end statement of Operating Expenses
payable by Tenant. Tenant may employ an independent public accounting firm to
conduct the audit. The costs of the audit shall be paid by Tenant unless the
audit shows that Landlord's adjusted statement over-charged Tenant its share of
Operating costs by more than ten percent (10%), in which case Landlord shall pay
all Tenant's costs of the audit.
4.3 Late Charge and Interest. Tenant hereby acknowledges that late
payment by Tenant to Landlord of Base Rent, Additional Rent or other sums due
hereunder (collectively, "Rent") will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Landlord by the
terms of any mortgage or deed of trust covering the Building or Property.
Accordingly, if any installment of Rent due from Tenant shall not be received by
Landlord within (10) days after such amount shall be due, then Tenant shall pay
to Landlord a late charge equal to five percent (5%) of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder. In the
event any Rent due hereunder remains delinquent for a period in excess of thirty
(30) days, Tenant shall pay to Landlord, in addition to the late payment,
interest from and after said date at the rate of twelve percent (12%) per annum
(the "Interest Rate") until paid in full. Payment of such interest shall not
excuse or cure any default by Tenant.
4.4 Place of Payment. All payments of Rent shall be paid to Landlord at
its office as shown on the Lease Summary or to such other person or to such
other place as Landlord may from time to time designate in writing.
4.5 Security Deposit. Tenant shall not be required to post a security
deposit.
5. PARKING. Tenant shall have the right to use all available parking spaces for
the Property in accordance with the local zoning rules.
6. MAINTENANCE AND REPAIRS
6.1 General. Except as otherwise specifically provided herein, Tenant
shall, at Tenant's sole cost, keep in good and safe condition, order and repair,
and replace when necessary, all non-structural portions of the Building,
including all areas of the Building and exterior portions thereof and outside
areas, including without limitation, (1) all plumbing, automatic fire
extinguishing and sewage systems, including water and drain lines, sinks,
toilets, faucets, drains, showers and water fountains, (2) all parts of the
heating, ventilation and air conditioning system ("HVAC System") serving the
Buildings, including all ducts, pipes, vents, compressors, Building fans, air
handlers, thermostats, time clocks, boilers, heaters, and supply and return
grills serving the Building, (3) all electrical and lighting facilities, and
other operating systems, appliances, and equipment serving the Building,
including all wiring, panels, conduit, outlets, lighting fixtures, lamps, bulbs,
tubes and ballasts, (4) the elevator and all components thereof, (5) all
fixtures, interior walls, interior and exterior surfaces of exterior walls, wall
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coverings, window coverings, carpets, floors, floor coverings, partitioning,
ceilings and ceiling tiles, (6) all windows (including glazing), doors,
entrances, truck doors, glass, plate glass and skylights located in the
Building, and (7) all landscaping and parking areas, including routine cleaning,
maintenance, patching, resealing, repairing and restripping.
Tenant shall maintain the HVAC system in accordance with EPA and State
of Washington DOE mandated requirements. Tenant shall have the benefit of all
warranties available to Landlord regarding the equipment in the HVAC System, the
roof membrane and other equipment or items in the Building which are Tenant's
obligation to maintain. All repairs and maintenance required to be made by
Tenant hereunder shall be made promptly by a licensed contractor with new
materials of like kind and quality. If the repair work affects the
non-structural parts of the Building and the estimated cost of any item of
repair exceeds $25,000, then Tenant shall first obtain Landlord's written
approval of the scope of work, plans therefor, materials to be used and the
contractor. Landlord's approval thereof shall not be unreasonably withheld.
Tenant hereby waives the benefit of any statute now or hereinafter in effect
which would otherwise afford Tenant the right to make repairs at Landlord's
expense or to terminate this Lease because of Landlord's failure to keep the
Premises in good condition, order and repair. Upon expiration of the Lease Term,
Tenant shall deliver the HVAC System in good working order, condition and
repair.
6.2 Certain Capital Expenditures by Landord. Landlord shall maintain,
repair and replace if, and when necessary, all structural portions of the
Building, including the roof structure, roof membrane, foundation and floor
slabs; and shall be responsible for repaving the parking areas, if and when
necessary, with the costs of any such structural repairs and replacements or
repaving to be divided over 120 months and Tenant will reimburse Landlord by
making supplemental monthly payments equal to 1/120th of such costs each month
for the remaining duration of the Lease and; such monthly supplemental payments
to be considered additional Operating Expenses for which Tenant shall be
responsible in accordance with Section 4.2.
7. OPERATING EXPENSES
7.1 Tenant's Obligation to Reimburse. Tenant shall pay Tenant's Share of
all Operating Expenses (as hereinafter defined) as may be paid or incurred by
Landlord during the term of this Lease as Additional Rent in accordance with
Paragraph 4.2 hereof. The term "Operating Expenses" shall mean the sum of the
following:
A. All costs or expenses paid or incurred by Landlord, if any, in
maintaining, operating and repairing the Buildings, excluding only those items
required to be maintained by Tenant at its sole cost, pursuant to Paragraph 6.
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B. The cost of insurance carried by Landlord in accordance with
Paragraphs 12.4 and 12.5 hereof and fairly allocable to the Building, and any
insurance deductible payable under such policies.
C. The cost of all utilities furnished to the Premises if not paid by
Tenant directly.
D. The additional monthly amounts, if any, payable by Tenant pursuant
to Paragraph 6.2 above.
7.2 Tenant's Negligence. Notwithstanding anything in Paragraphs 7.1 to
the contrary, and subject to the waiver of subrogation rights set forth in
Paragraph 12.7, Tenant shall pay for the entire uninsured cost of maintaining
and repairing the Buildings and the exterior areas thereof and any insurance
deductible if such cost or deductible is incurred as a result of the negligence
or willful misconduct of Tenant, its agents, customers, employees, contractors
or invitees.
8. ACCEPTANCE AND SURRENDER OF PREMISES. Except as otherwise expressly provided
herein, by entry hereunder, Tenant accepts the Premises as being in good and
sanitary order, condition and repair and accepts the Buildings and improvements
included in the Premises in their present condition and without representation
or warranty by Landlord as to the condition of the Buildings or as to the use or
occupancy which may be made thereof. Except as otherwise expressly provided for
herein, Landlord shall not be responsible for any tenant improvements to the
Premises of any kind or nature whatsoever. Tenant agrees on the last day of the
Lease term, or on the sooner termination of this Lease, to surrender the
Premises promptly to Landlord in good condition and repair (damages by acts of
God, fire, normal wear and tear excepted), with all interior walls painted, or
cleaned so that they appear freshly painted, and all holes in the walls
repaired, patched and repainted, all floors cleaned and waxed, all carpets
cleaned and shampooed and replaced to the extent of excessive wear through
failure to use carpet shields, all broken, damaged, stained or nonconforming
ceiling tiles replaced. The HVAC System and roof membrane shall be in good
condition and repair. Landlord shall have the right, at its expense, to retain a
qualified and licensed roof and HVAC contractor to perform an inspection thereof
and do an inventory of all components thereof which need repair or replacement.
Tenant shall perform all such repair and replacement reasonably designated by
such contractor. All plumbing, electrical and lighting systems, both interior
and exterior shall be in good repair and condition. Tenant shall remove all
monument and other signs and repair any damage caused thereby. The term "normal
wear and tear" shall be deemed to exclude items of neglected or deferred
maintenance. All alterations, additions, and improvements which may have been
made in, to, or on the Premises by Tenant (except movable trade fixtures
installed at the expense of Tenant) shall be surrendered in good condition and
repair, except that Tenant shall ascertain from Landlord within thirty (30) days
before the end of the Lease term whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration
existing when the Premises were delivered to Tenant, and if Landlord shall so
desire, then Tenant shall restore said Premises or such part or parts thereof to
their condition existing before the Lease term, at Tenant's sole cost, except,
however, that Tenant's obligation to restore if elected by Landlord does not
include the removal of the Tenant Improvements outlined in Paragraph 40. On or
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before the end of the Lease term or sooner termination of this Lease, Tenant
shall remove all of Tenant's personal property and trade fixtures from the
Premises, and all property not so removed shall be deemed abandoned by Tenant
and title to same shall thereupon pass to Landlord without compensation to
Tenant. Upon termination of this Lease, Landlord may remove all moveable
furniture and equipment so abandoned by Tenant, at Tenant's sole cost, and
repair any damage caused by such removal.
9. ALTERATIONS.
9.1 Landlord's Consent. Tenant shall not make any alterations,
improvements, additions, or utility installations (collectively, the
"Alterations") in, on or about the Premises without Landlord's prior written
consent, which shall not be unreasonably withheld, except for any non-structural
alterations to the interior of the Premises which do not exceed twenty-five
thousand dollars ($25,000) in cost per project. As used herein, the term
"utility installation" means power panels, wiring, florescent fixtures, space
heaters, conduits, air conditioning and plumbing.
9.2 Plans and Permits. Any alteration that Tenant desires to make in or
about the Premises and which requires the consent of Landlord shall be presented
to Landlord in written form for Landlord's approval, with proposed detailed
plans and specifications therefor, including an original sepia at 1/8 inch
scale, prepared at Tenant's sole cost. Any consent by Landlord thereto shall be
deemed conditioned upon Tenant's acquisition of all permits required to make
such Alterations from all appropriate governmental agencies, the furnishing of
copies thereof to Landlord prior to commencement of the work, and the compliance
by Tenant with all conditions of said permits in a prompt and expeditious
manner, all at Tenant's sole cost. Landlord shall be deemed to have consented to
any alteration, improvement addition or utility installation if Landlord fails
to respond within ten (10) business days of receipt of the plans, permits and
documents referenced herein and written request for Landlord's consent. Upon
completion of any such Alterations, Tenant shall, at Tenant's sole cost,
immediately deliver to Landlord "as-built" plans and specifications therefor. No
later than January 10th each year during the Lease term, Tenant shall deliver to
Landlord bluelines and mylar plan updates showing the configuration of the floor
plan in the Building.
9.3 Construction Work Done by Tenant. Except as hereinafter provided,
all construction work required or permitted to be done by Tenant shall be
performed by a licensed contractor approved by Landlord and in a prompt,
diligent, and good and workmanlike manner. In lieu of the foregoing, Tenant
shall have the right to use its own work crews. All such construction work shall
conform in quality and design with the Premises existing as of the Commencement
Date and shall not diminish the value of the Buildings or the Property. All such
construction work shall be performed in compliance with all applicable
Governmental Regulations.
9.4 Roof Repairs. Any installation of air conditioning equipment and
duct work or antennas on the roof permitted by Landlord and requiring
penetration of the roof shall be properly flashed and caulked. Any equipment
placed by Tenant on the roof shall be elevated and supported by Tenant so as not
to create vibration or inhibit drainage or repair and maintenance of the roof.
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9.5 Title to Alterations. Unless Landlord requires the removal thereof
as set forth in this Paragraph 9, any Alterations which may be made on the
Premises by Tenant shall, upon expiration or termination of this Lease, become
the property of Landlord and shall remain upon and be surrendered with the
Premises at the expiration or sooner termination of this Lease. Without limiting
the generality of the foregoing, all heating, lighting, electrical (including
all wiring, conduits, main and subpanels), air conditioning, plumbing,
partitioning (except movable partitions), drapery, and carpet installations made
by Tenant, regardless of how affixed to the Premises, together with all other
alterations that have become an integral part of the Premises, shall be and
become the property of Landlord upon expiration or termination of this Lease and
shall not be deemed trade fixtures, and shall remain upon and be surrendered
with the Premises at the expiration or sooner termination of this Lease.
Tenant's furnishings, machinery and equipment, except that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises, shall remain the property of Tenant and may be removed by Tenant, and
Tenant shall, at Tenant's sole cost, immediately after removal repair any damage
to the Premises caused thereby. Tenant shall be solely responsible for the
maintenance and repair of any and all Alterations made by Tenant to the
Premises.
9.6 Notice. Tenant shall give Landlord notice of the date of
commencement of any work in the Premises not less than ten (10) days prior
thereto, and Landlord shall have the right to post notices of non-responsibility
or similar notices in or on the Premises in connection therewith.
10. UTILITIES AND SERVICES. Tenant shall pay all charges for water, gas,
electricity, telephone, refuse pickup, janitorial services, and all other
utilities and services supplied or furnished to the Buildings and the Property
during the term of this Lease, together with any taxes thereon, directly to the
charging authority. In no event shall Landlord be liable to Tenant for any
failure or interruption in utility or service unless caused by the willful
misconduct of Landlord. No failure or interruption of any such utilities or
services shall entitle Tenant to terminate this Lease or to withhold rent or
other sums due hereunder. Landlord shall not be responsible for providing
security guards or other security protection for any portion of the Premises or
the Property, and Tenant shall at its own expense provide or obtain such
security services as Tenant shall desire to ensure the safety of the Premises
and the Property.
11. TAXES.
11.1 Real Property Taxes. Tenant shall pay directly to the charging
authority Tenant's Share of all Real Property Taxes (as hereinafter defined)
which become due during the Lease term. If Landlord is required to make such
payments because Tenant fails to do so, such payments shall be reimbursed by
Tenant to Landlord promptly on demand, as Additional Rent in accordance with
Paragraph 4.2 hereof. The term "Real Property Taxes" as used herein shall mean
(1) all taxes, assessments, levies, and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any general or special
assessments for public improvements and any increases resulting from
reassessments caused by any change in ownership of the Property) now or
hereafter imposed by any governmental or quasi-governmental authority or special
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or community facilities district having the direct or indirect power to tax or
levy assessments, which are levied or assessed against, or with respect to (a)
the value, occupancy, ownership or use of, all or any portion of the Property
(as now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein; (b) any improvements located
on the Property (regardless of ownership); (c) the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part of the
Property; (d) the gross receipts, income and rentals from the Property, or (e)
the use of public utilities or energy in the Buildings; (2) all charges, levies
or fees in the nature of a tax or assessment imposed by reason of environmental
regulation or other governmental control of the Property; (3) excise,
transaction, sales, privilege or other taxes now or hereafter imposed upon
Landlord as a result of this Lease; and (4) all costs and fees (including
attorneys' fees) incurred by Landlord in contesting any Real Property Taxes and
in negotiating with public authorities as to any Real Property Taxes, but only
to the extent of savings realized by Tenant as a result thereof. If at any time
during the Lease term the taxation or assessment of the Property prevailing as
of the Commencement Date shall be altered so that in lieu of or in addition to
any Real Property Taxes described above there shall be levied, assessed or
imposed (whether by reason of a change in the method of taxation or assessment,
creation of a new tax or charge, or any other cause) an alternate, substitute or
additional tax or charge (a) on the value, use or occupancy of the Property or
Landlord's interest therein; (b) on or measured by the gross receipts, income or
rentals from the Property; (c) on Landlord's business of leasing the Property;
or (d) computed in any manner with respect to the operation of the Property,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes". Notwithstanding the foregoing, the
term "Real Property Taxes" shall not include estate, inheritance, gift or
franchise taxes of Landlord or the federal or state net income tax imposed on
Landlord's income from all sources.
11.2 Taxes on Tenant's Property.
A. Tenant shall pay at least ten (10) days prior to delinquency all
taxes, license fees and public charges assessed or levied against all equipment,
personal property or trade fixtures placed by Tenant in or about the Premises.
If any such taxes, fees or charges are levied against Landlord or the Property
or if the assessed value of the Premises is increased by the inclusion therein
of the value placed upon such equipment, personal property or trade fixtures of
Tenant and if Landlord pays the taxes, fees or charges based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, Tenant shall upon demand, repay to Landlord the taxes, fees or charges
so levied against Landlord, or the portion of such taxes resulting from such
increase in the assessment.
B. If Tenant's improvements in the Premises, whether installed,
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which standard office
improvements in other space in the Property are assessed, then the real property
taxes and assessments levied against Landlord or the Property by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Paragraph 11.2A.
If the records of the County Assessor are available and sufficiently detailed to
serve as a basis for determining whether said Tenant's improvements are assessed
at a higher valuation than standard office improvements in other space on the
Property, such records shall be binding on both Landlord and Tenant. If the
records of the County Assessor are not available or sufficiently detailed to
serve as a basis for making such determination, the actual cost of construction
shall be used.
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12. INSURANCE.
12.1 Tenant's Liability Insurance. Tenant shall, at Tenant's sole cost,
keep in force during the Lease term a policy of commercial general liability
insurance covering property damage and liability for personal injury occurring
in, on or about the Premises, the Buildings and the Property, with limits in the
amount of at least $2,000,000 per occurrence for injuries to or death of persons
and $1,000,000 per occurrence for property damage, and with a contractual
liability endorsement insuring Tenant's performance of Tenant's obligation to
indemnify Landlord contained in Paragraph 13.
12.2 Tenant's Casualty Insurance. Tenant shall, at Tenant's sole cost,
maintain during the Lease term a policy or policies of fire and property damage
insurance in "all risk" form, with a sprinkler leakage and flood endorsement,
insuring the personal property, inventory; and trade fixtures, within the leased
Premises for the full replacement cost thereof. The proceeds form any of such
policies shall be used for the repair or replacement of such items so insured.
12.3 Form and Certificates. Each policy of insurance required to be
carried by Tenant pursuant to Paragraphs 12.1 and 12.2 shall be with a company
approved by Landlord and shall name Landlord and such other parties in interest
as Landlord reasonably designates as additional insured. Tenant's insurance
policy shall also be primary insurance, without right of contribution from any
policy carried by Landlord, and shall contain a cross-liability and severability
endorsement. A certificate of insurance shall be provided to Landlord prior to
the Commencement Date which indicates that the coverage required hereunder is in
effect and which provides that such policy is not subject to cancellation,
expiration or change, except upon thirty (30) days' prior written notice to
Landlord.
12.4 Landlord's Liability Insurance. Landlord shall maintain a policy or
policies of commercial general liability insurance insuring Landlord (and such
other entities as may be designated by Landlord) against liability for personal
injury, bodily injury or death and damage to property occurring or resulting
from an occurrence in, on, or about the Property with such coverage as Landlord
may from time to time determine is reasonably necessary for its protection.
12.5 Property Insurance. Landlord shall obtain and keep in force during
the term of this Lease a policy or policies of insurance for the benefit of
Landlord covering loss or damage to the Buildings, and the Property (excluding
coverage of merchandise, fixtures, equipment and leasehold improvements of
Tenant) in the amount of the full replacement value thereof, providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, special extended perils (all
risk), including earthquake, flood, sprinkler leakage, boiler and machinery
coverage and an inflation endorsement. In addition, Landlord shall obtain and
keep in force, during the term of this Lease, a policy of rental loss insurance
covering a period of one year, commencing on the date of loss, with proceeds
payable to Landlord, which insurance shall also cover all Real Property Taxes,
Operating Expenses, and other sums payable by Tenant hereunder for said period.
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All proceeds under such policies of insurance shall be payable to Landlord, and
Tenant shall have no interest in or right to such proceeds. Tenant shall be
responsible for paying any deductible under the property insurance policy
carried by Landlord hereunder, not to exceed Fifty Thousand Dollars ($50,000)
per occurrence.
12.6 Payment. Tenant shall pay to Landlord during the term hereof
Tenant's Share of the premiums and deductibles for any insurance obtained by
Landlord pursuant to Paragraphs 12.4 and 12.5; provided, however, that Tenant's
responsibility to pay Landord for the premium cost of rental loss insurance
shall not exceed $500 per year and the deductible cost shall not exceed Ten
Thousand Dollars ($10,000) per occurrence. Landlord may obtain liability
insurance for the Building separately, or together with other buildings and
improvements under blanket policies of insurance. In such case Tenant shall be
liable for only such portion of the premiums for such blanket policies as are
allocable to the Premises, as reasonably determined by the insurer or Landlord.
12.7 Waiver of Subrogation. Tenant and Landlord each hereby waives any
and all rights of recovery against the other, and against the officers,
employees, agents and representatives of the other, for loss of or damage to the
property of the waiving party or the property of others under its control, to
the extent such loss or damage is covered by proceeds received under any
insurance policy carried by Landlord or Tenant and in force at the time of such
loss or damage. Tenant and Landlord shall, upon obtaining the policies of
insurance required hereunder, give notice to the insurance carrier or carriers
that the foregoing mutual waiver of subrogation is contained in this Lease.
12.8 No Limitation of Liability. Landlord makes no representation that
the limits of liability insurance specified to be carried by Tenant or Landlord
under the terms of this Lease are adequate to protect any party. If Tenant
believes that the insurance coverage required under this Lease is insufficient
to adequately protect Tenant, Tenant shall provide, at its own expense, such
additional insurance as Tenant deems adequate.
13. WAIVER AND INDEMNIFICATION. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury to or death of
any person or damage to or destruction of property in or about the Premises, the
Buildings or the Property or to Tenant's business from any cause whatsoever,
including without limitation, from theft, gas, fire, steam, oil, electricity or
leakage of any character from the roof, walls, basement or other portion of the
Premises, the Buildings or the Property, from rain, or defects in or breakage of
pipes, sprinklers, plumbing, HVAC or other sources, excluding, however, the
active gross negligence or willful misconduct of Landlord, its agents, servants,
employees, invitees, or contractors. Tenant shall indemnify, defend and hold
harmless Landlord, its agents, lenders, partners and officers from and against
any and all claims, judgments, damage, demands, losses, expenses, costs or
liability arising in connection with injury to person or property from Tenant's
use of the Premises, or from the conduct of Tenant's business or from any
activity, work or things done, permitted or suffered by Tenant in or about the
Premises or the Property by Tenant or by any of Tenant's agents, servants,
employees, invitees or contractors, or from any breach or default by Tenant in
the performance of any obligation on the part of Tenant to be performed under
the terms of this Lease (all of the foregoing collectively referred to
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hereinafter as "General Indemnity Claims"), excluding, however, the active
negligence and willful misconduct of Landlord, its agents, servants, employees,
invitees, or contractors. Tenant agrees to defend all General Indemnity Claims
on behalf of Landlord, with counsel acceptable to Landlord. The obligations of
Tenant contained in this Paragraph shall survive the expiration of the Lease
term, or sooner termination thereof.
14. LIENS. Tenant shall keep the Premises and the Property free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant. In the event that Tenant shall not, within ten (10) days following
notice of the imposition of any such lien, cause the same to be released of
record, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but no obligation, to cause the same to be released by
such means as Landlord shall deem proper, including payment of the claim giving
rise to such lien. All sums paid by Landlord for such purpose, and all expenses
incurred by it in connection therewith, shall be payable to Landlord by Tenant
on demand with interest at the Interest Rate.
15. ASSIGNMENT AND SUBLETTING.
15.1 Consent Required. Except as hereinafter provided, Tenant shall not
assign, transfer, encumber, grant any concession or license or hypothecate the
leasehold estate under this Lease, or any interest therein, and shall not sublet
the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person or entity to occupy or use the Premises, or
any portion thereof without, in each case, the prior written consent of
Landlord. Collectively, all of the foregoing prohibited actions shall
hereinafter be referred to as a "Transfer" of the Lease. The following
conditions or standards shall be satisfied as a condition to Landlord's consent
to a proposed Transfer: (1) The proposed transferee shall expressly assume in
writing (or in the case of a sublessee agree to be bound by) all of the
provisions, covenants and conditions of the Lease on the part of Tenant to be
kept and performed; (2) the proposed transferee shall satisfy Landlord's then
current credit standards and in Landlord's reasonable opinion shall have the
financial strength and stability to perform all of the obligations of Tenant
under this Lease as and when due; (3) the proposed use of the Premises by the
proposed transferee shall be lawful and be consistent with the permitted use of
the Premises under this Lease and shall not violate any restriction in any other
lease with tenants occupying other portions of the Property; (4) Tenant shall
pay Landlord's actual attorneys' fees incurred in connection with the
negotiation, review and processing of all proposed Transfer documents; (5) at
the time of the proposed Transfer, Tenant shall not be in default under this
Lease; (6) the proposed transferee shall not be a governmental entity and shall
not hold any exemption from the payment of ad valorem or after taxes which would
prohibit Landlord from collecting from the transferee any amounts otherwise
payable under this Lease; and (7) except for Transfers to affiliated entities
permitted by Paragraph 15.6 hereof, the proposed Transfer shall be at fair
market rent.
15.2 Documentation. In connection with any Transfer which Tenant
desires to make, Tenant shall provide to Landlord the name and address of the
proposed transferee, and true and complete copies of all documents relating to
Tenant's prospective agreement to Transfer, and audited financial statements of
the proposed transfer for the past two (2) years, or such other financial
information as is reasonably acceptable to Landlord. Tenant shall also specify
in writing on an itemized basis all consideration to be received by Tenant for
such Transfer in the form of lump sum payments, installments of rent, or
otherwise. For purposes of this Paragraph 15, the term "consideration" shall
include, without limitation, all monies or other consideration of any kind,
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including but not limited to, bonus money, and payments (in excess of book value
thereof) for Tenant's assets, fixtures, inventory, accounts, good will,
equipment, furniture, general intangibles, and any capital stock or other equity
ownership of Tenant. Within thirty (30) days after the receipt of such
documentation and other information, Landlord shall notify Tenant in writing
that Landlord elects to terminate this Lease as to the portion of the Premises
to be Transferred or if Landlord does not elect any such termination, then
Landlord shall either (1) consent in writing to the proposed Transfer, subject
to the terms and conditions hereinafter set forth, or (2) notify Tenant in
writing that Landlord refuses such consent and stating the reasons therefor.
15.3 Additional Terms and Conditions. As a condition to Landlord's
granting its consent to any Transfer, except as to any Permitted Transfer,
Landlord may require that Tenant pay to Landlord, as and when received by Tenant
seventy-five percent (75%) of any excess of consideration to be received by
Tenant in connection with said Transfer over and above the rental amount fixed
by this Lease and payable by Tenant to Landlord, provided that Tenant shall
first be entitled to deduct Leasing commissions and advertising costs incurred
in obtaining the subtenant or assignee and any unamortized Tenant Improvements
paid by Tenant in connection with such Transfer. Each Transfer to which Landlord
has consented shall be an instrument in writing in form satisfactory to
Landlord, and shall be executed by both Tenant and the transferee, as the case
may be. Each such Transfer agreement shall recite that it is and shall be
subject and subordinate to the provisions of this Lease, that the transferee
accepts such Transfer and agrees to perform all of the obligations of Tenant
thereunder, and that the termination of this Lease shall, at Landlord's sole
election, constitute a termination of such Transfer. In the event Landlord shall
consent to a Transfer, Tenant shall nonetheless remain primarily liable for all
obligations and liabilities of Tenant under this Lease, including but not
limited to the payment of Rent. Each proposed Transfer agreement that
constitutes a sublease, license or concession shall provide that Landlord, at
its option, may require the sublessee, licensee or concessionaire to pay all
rent due under such sublease, license or concession directly to Landlord instead
of Tenant to the extent Tenant is in default of payment of any Rent due
hereunder.
15.4 Partnership. If Tenant is a partnership, a transfer, voluntary or
involuntary, of all or any part of an interest in the partnership, or the
dissolution of the partnership, shall be deemed a Transfer requiring Landlord's
prior written consent.
15.5 Corporation. If Tenant is a corporation any dissolution or other
reorganization of Tenant
shall constitute a Transfer.
15.6 Permitted Transfers. Tenant shall be entitled to Transfer
("Permitted Transfer") this Lease to any parent or subsidiary corporation or
upon merger, sale of stock or consolidation without the prior written consent of
Landlord. No permitted Transfer shall relieve Tenant of any obligations
hereunder.
15.7 Landlord's Remedies. Subject to Paragraph 15.6, any Transfer
without Landlord's prior written consent shall at Landlord's election be void,
and shall constitute a default under this Lease. The consent by Landlord to any
Transfer shall not constitute a waiver of the provisions of this Paragraph 15,
including the requirement of Landlord's prior written consent, with respect to
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any subsequent Transfer. If Tenant shall purport to assign this Lease, or
sublease all or any portion of the Premises, or permit any person or persons
other than Tenant to occupy the Premises, without Landlord's prior written
consent, Landlord may collect rent from the person or persons then or thereafter
occupying the Premises and apply the net amount collected to the Rent reserved
herein, but no such collection shall be deemed a waiver of Landlord's rights and
remedies under this Paragraph 15, or the acceptance of any such purported
assignee, sublessee or occupant, or a release of Tenant from the further
performance by Tenant of covenants on the part of Tenant herein contained.
16. DEFAULT BY TENANT.
16.1 Event of Default. The occurrence of any one or more of the
following events (an "Event of Default") shall constitute a default and breach
of this Lease by Tenant:
A. The failure by Tenant to make any payment of Rent or any other
payment required to be made by Tenant hereunder, as and when due, and such
failure shall not have been cured within ten (10) days after written notice
thereof from Landlord;
B. Tenant's failure to perform any other term, covenant or condition
contained in this Lease and such failure shall have continued for thirty (30)
days after written notice of such failure is given to Tenant; provided that,
where such failure cannot reasonably be cured within said thirty (30) day
period, Tenant shall not be in default if Tenant commences such cure within said
thirty (30) day period and thereafter diligently continues completion thereof;
C. Tenant's failure to continuously and uninterruptedly conduct its
business in the Premises for a period of more than ninety (90) consecutive days,
or Tenant's removal of all or substantially all of its equipment and other
possessions from the Premises, without providing security protection for the
Premises reasonably satisfactory to Landlord;
D. Tenant's assignment of its assets for the benefit of its
creditors;
E. The sequestration of, attachment of, or execution on, any
substantial part of the property of Tenant or on any property essential to the
conduct of Tenant's business on the Premises, and Tenant shall have failed to
obtain a return or release on such property within thirty (30) days thereafter,
or prior to sale pursuant to such sequestration, attachment or execution,
whichever is earlier;
F. An entry of any of the following orders by a court having
jurisdiction, and such order shall have continued for a period of thirty (30)
days: (1) an order for relief in any proceeding under Title 11 of the United
States Code, or an order adjudicating Tenant to be bankrupt or insolvent; (2) an
order appointing a receiver, trustee or assignee of Tenant's property in
bankruptcy or any other proceeding; or (3) an order directing the winding up or
liquidation of Tenant; or
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G. The filing of a petition to commence against Tenant an involuntary
proceeding under Title 11 of the United States Code, and Tenant shall fail to
cause such petition to be dismissed within thirty (30) days thereafter.
16.2 Remedies. Upon any Event of Default, Landlord shall have the
following remedies, in addition to all other rights and remedies provided by law
or equity:
A. Landlord shall be entitled to keep this Lease in full force and
effect for so long as Landlord does not terminate Tenant's right to possession
(whether or not Tenant shall have abandoned the Premises) and Landlord may
enforce all of its rights and remedies under this Lease, including the right to
recover Rent and other sums as they become due under this Lease; or
B. Landlord may terminate the Tenant's right to possession by giving
Tenant written notice of termination. Any termination under this paragraph shall
not release Tenant from the payment of any sum or performance then due Landlord
or from any claim for damages or Rent previously accrued or then accruing
against Tenant.
In the event this Lease is terminated pursuant to this Paragraph
16.2B., Landlord may recover from Tenant:
(i) the worth at the time of award of the unpaid rent which had
been earned at the time of termination; plus
(ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss for the same period that Tenant
proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss for the same period that Tenant proves could be
reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including but not limited to attorneys' fees, court costs and
remodeling expenses.
The "worth at the time of award" of the amounts referred to in
subparagraphs (i) and (ii) of this Paragraph 16.2B. shall be computed by
allowing interest at the lower of five percent (5%) per annum plus the discount
rate of the Federal Reserve Bank of San Francisco, or the maximum rate then
permitted by law. The "worth at the time of award" of the amount referred to in
subparagraph (iii) of this paragraph shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%). The term "Rent" as used in this paragraph
shall include all sums required to be paid by Tenant to Landlord pursuant to the
terms of this Lease.
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C. This Lease may be terminated by a judgment specifically providing for
termination, or by Landlord's delivery to Tenant of written notice specifically
terminating this Lease. In no event shall any one or more of the following
actions by Landlord, in the absence of a written election by Landlord to
terminate this Lease, constitute a termination of the Lease or a waiver of
Landlord's right to recover damages under this Paragraph 16:
(i) appointment of a receiver in order to protect Landlord's interest
hereunder;
(ii) consent to any subletting of the Premises or assignment of this
Lease by Tenant, whether pursuant to provisions hereof concerning subletting and
assignment or otherwise; or
(iii) any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects of any breach of this Lease by Tenant, including
without limitation any action taken to maintain and preserve the Premises, or
any action taken to relet the Premises or any portion thereof for the account of
Tenant and in the name of Tenant.
16.3 No Relief From Forfeiture After Default. To the fullest extent
allowed by Washington law, Tenant waives all rights of redemption or relief from
forfeiture under RCW 59.12.010 et seq., and under any other present or future
law, in the event Tenant is evicted or Landlord otherwise lawfully takes
possession of the Premises by reason of any Event of Default.
16.4 Landlord's Right to Perform Tenant's Obligations. If Tenant shall
at any time fail to make any payment or perform any other act required to be
made or performed by Tenant under this Lease, then Landlord may, but shall not
be obligated to after five (5) business days notice, except in the case of any
emergency, make such payment or perform such other act to the extent Landlord
may deem desirable, and may, in connection therewith, pay any and all expenses
incidental thereto and employ counsel. No such action by Landlord shall be
deemed a waiver by Landlord of any rights or remedies Landlord may have as a
result of such failure by Tenant, or a release of Tenant from performance of
such obligation. All sums so paid by Landlord, including without limitation all
penalties, interest and costs in connection therewith, shall be due and payable
by Tenant to Landlord on the day immediately following any such payment by
Landlord. Landlord shall have the same rights and remedies for the nonpayment of
any such sums as Landlord may be entitled to in the case of default by Tenant in
the payment of Rent.
16.5 Additional Rent. For purposes of any unlawful detainer action by
Landlord against Tenant pursuant to RCW 59.12.010, or any similar or successor
statutes, Landlord shall be entitled to recover as Rent not only such sums
specified in Paragraph 4 as Base Rent and Additional Rent as may then be
overdue, but also all such additional sums of Rent as may then be overdue.
16.6 Remedies Not Exclusive. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies herein provided or permitted at law or in equity.
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17. DEFAULT BY LANDLORD.
17.1 Cure Period. Landlord shall not be deemed to be in default in the
performance of any obligation required to be performed by it hereunder unless
and until it has failed to perform such obligation within the period of time
specifically provided herein, or if no period of time has been provided, then
within thirty (30) days after receipt of written notice by Tenant to Landlord
specifying therein the nature such obligation; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are
reasonably required for its performance, then Landlord shall not be deemed to be
in default if it shall commence such performance within such thirty (30) day
period and thereafter diligently complete such obligation.
17.2 Mortgage Protection. In the event of any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage encumbering the
Premises whose address shall have been furnished to Tenant, and before Tenant
shall have any right to terminate this Lease, Tenant shall grant such
beneficiary or mortgagee a reasonable period within which to cure the default,
if such action is necessary to effect a cure.
18. SUBORDINATION AND MORTGAGES. In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust upon the interest of
Landlord in the land and buildings in which the demised Premises are located to
secure a loan from a lender (hereinafter referred to as "Lender") to Landlord,
Tenant shall, within ten (10) business days of the request by Landlord or
Lender, execute and deliver to Landlord an agreement subordinating Tenants
rights under this Lease to the lien of such deed of trust, in form requested by
the Lender. Notwithstanding the foregoing, Tenant's possession under this Lease
shall not be disturbed if Tenant is not in default and so long as Tenant shall
pay all Rent and observe and perform all of the provisions set forth in this
Lease, and any subordination agreement shall expressly recognize Tenant's right
to continued occupancy under this Lease in accordance with the foregoing.
19. ENTRY BY LANDLORD. Landlord shall at all reasonable times and upon two (2)
business days' prior notice (except in emergencies) have the right to enter the
Premises to inspect them, to perform any services to be provided by Landlord
hereunder, to show the Premises to prospective purchasers, mortgagors or
tenants, to post notices of nonresponsibility and to alter, improve or repair
the Premises and any portion of the Property, all without abatement of rent;
provided, however, that Landlord shall use reasonable efforts to minimize
interference with Tenant's business. Landlord shall have the right to erect
scaffolding and other structures in or through the Premises when reasonably
required for by any work to be performed by Landlord. Landlord shall at all
times retain a key with which to unlock all of the doors to the Premises in an
emergency, and any entry to the Premises obtained by Landlord shall not under
any circumstances be construed or deemed to be a forcible or unlawful entry into
or a detainer of the Premises or an eviction, actual or constructive, of Tenant
from the Premises or any portion thereof.
20. VACATION OR ABANDONMENT. Tenant shall not vacate or abandon the Premises at
any time during the term of this Lease (except that Tenant may vacate for up to
thirty (30) during any twelve (12) month period so long as it pays Rent,
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provides an on-site security guard during normal business hours from Monday
through Friday, and otherwise performs its obligations hereunder), and if Tenant
shall abandon, vacate or surrender said Premises, or be dispossessed by the
process of law, or otherwise, any personal property belonging to Tenant and left
on the Premises shall be deemed to be abandoned, at the option of Landlord.
21. DAMAGE OR DESTRUCTION.
21.1 Partial Damage-Insured. Subject to the provisions of Paragraphs
21.3 and 21.4, if the Buildings are damaged to the extent of less than fifty
percent (50%) of the then replacement cost thereof (excluding excavations and
foundations) or the Laboratory Building is damaged to the extent of less than
thirty-three and one-third percent (33 1/3%) (collectively, the "Replacement
Cost"), and such damage was caused by an act or casualty covered under an
insurance policy obtained by Landlord or Tenant pursuant to Paragraph 12.4 or
12.5, and the proceeds of such insurance received by Landlord are sufficient to
repair the damage, Landlord shall at Landlord's expense repair such damage as
soon as reasonably possible and this Lease shall continue in full force and
effect; provided that if the repair will take more than one hundred and eighty
(180) days to complete from the date of damage, as reasonably estimated by an
independent licensed contractor mutually agreeable to the parties (the "Approved
Contractor"), either party shall have the right to terminate this Lease by
delivering written notice of such election to the other party within thirty (30)
days after receiving written notice of the Approved Contractor's estimated time
to complete such repair. In such event, this Lease shall terminate effective
ninety (90) days after delivery of such written notice.
21.2 Partial Damage-Uninsured. Subject to the provisions of Paragraphs
22.3 and 22.4, if at any time during the term hereof the Buildings are damaged
and the proceeds received by Landlord are not sufficient to repair such damage,
or such damage was caused by an act or casualty not covered under an insurance
policy obtained by Landlord or Tenant pursuant to Paragraph 12.4 or 12.5,
Landlord may at Landlord's option either (1) repair such damage as soon as
reasonably possible at Landlord's expense, in which event this Lease shall
continue in full force and effect, or (2) give written notice of termination of
this Lease to Tenant within thirty (30) days after the date of the occurrence of
such damage, with the effective date of such termination to be the date of the
occurrence of such damage. Notwithstanding the foregoing, if such repair
hereunder will take more than one hundred and eighty (180) days to complete from
the date of damage, as reasonably estimated by an Approved Contractor, either
party shall have the right to terminate this Lease by delivering written notice
of such election to the other party within thirty (30) days after receiving
written notice of the Approved Contractor's estimated time to complete such
repair. In such event, this Lease shall terminate effective ninety (90) days
after delivery of such written notice.
21.3 Total Destruction. If at any time during the term hereof either the
Premises or the Buildings are destroyed to the extent of sixty-six and
two-thirds percent (66 2/3%) or more of the then Replacement Cost, from any
cause whether or not covered by the insurance obtained pursuant to Paragraph
12.4 or 12.5, this Lease shall at the option of Landlord or Tenant terminate as
of the date of such destruction. Landlord or Tenant shall exercise its right to
terminate this Lease, if at all, by delivery of notice of termination to the
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other party within thirty (30) days after the date that Tenant notifies Landlord
of the occurrence of such damage. In the event neither party elects to terminate
this Lease, Landlord shall at Landlord's expense repair such damage as soon as
reasonably possible, and this Lease shall continue in full force and effect,
subject to the provisions of Paragraph 21.5.
21.4 Damage Near End of Term. If the Premises are destroyed or damaged
in whole or in material part during the last year of the Lease term and if it
would take more than ninety (90) days to repair or restore the Premises, either
Landlord or Tenant may terminate this Lease as of the date of occurrence of such
damage by giving written notice thereof to other party of such election within
thirty (30) days after the date of occurrence of such damage.
21.5 Abatement of Rent. Notwithstanding anything to the contrary
contained in this Lease, if the Premises are partially damaged and Landlord
repairs or restores them pursuant to the provisions of this Paragraph 21, Base
Rent and Additional Rent payable hereunder for the period commencing on the
occurrence of such damage and ending upon completion of such repair or
restoration shall be abated in proportion to the extent to which Tenant's use of
the Premises is impaired during the period of repair; provided that, nothing
herein shall be construed to preclude Landlord from being entitled to collect
the full amount of any rental loss insurance proceeds. Except for such
abatement, if any, Tenant shall have no claim against Landlord for any damage
suffered by reason of any such damage, destruction, repair or restoration.
21.6 Waiver. Tenant waives the provisions of any applicable law, and any
similar or successor statutes relating to termination of leases when the thing
leased is substantially or entirely destroyed, and agrees that any such
occurrence shall instead be governed by the terms of this Lease.
21.7 Tenant's Property. Landlord's obligation to rebuild or restore
shall not include restoration of Tenant's trade fixtures, equipment,
merchandise, or any improvements, alterations or additions made by Tenant to the
Premises.
21.8 Notice of Damage. Tenant shall notify Landlord within five (5) days
after the occurrence thereof of any damage to all or any portion of the
Premises. In no event shall Landlord have any obligation to repair or restore
the Premises pursuant to this Paragraph 21 until a reasonable period of time
after Landlord's receipt of notice from Tenant of the nature and scope of any
damage to the Premises, and a reasonable period of time to collect insurance
proceeds arising from such damage (unless such damage is clearly not covered by
insurance then in effect covering the Premises).
21.9 Replacement Cost. The determination in good faith by the Approved
Contractor of the estimated cost of repair of any damage, or of the Replacement
Cost, shall be conclusive for purposes of this Paragraph 21.
22. EMINENT DOMAIN. If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
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shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant. If (i) any action or proceeding is commenced for such
taking of the Premises or any part thereof, or if Landlord is advised in writing
by any entity or body having the right or power of condemnation of its intention
to condemn the Premises or any portion thereof, or (ii) any of the foregoing
events occur with respect to the taking of any other portion of the Buildings or
Property not leased hereby, and Landlord shall decide to discontinue the use and
operation of the Buildings or Property, or decide to demolish, alter or rebuild
the Buildings or Property, then, in any of such events Landlord shall have the
right to terminate this Lease upon thirty (30) days prior written notice to
Tenant. In the event of a partial taking or conveyance of the Premises under
power of eminent domain, if the portion of the Premises taken or conveyed is so
substantial that the Tenant can no longer reasonably conduct its business
therein, Tenant shall have the right to terminate this Lease within sixty (60)
days from the date of such taking or conveyance, upon written notice to Landlord
of its intention to terminate the Lease. Upon delivery of such notice, this
Lease shall terminate on the last day of the calendar month next following the
month in which such notice is given, upon payment by Tenant of the Rent from the
date of such taking or conveyance to the date of termination. If a portion of
the Premises be taken by condemnation or conveyance in lieu thereof and neither
Landlord nor Tenant shall terminate this Lease as provided herein, this Lease
shall continue in full force and effect as to the part of the Premises not so
taken or conveyed, and the Rent herein shall be thereafter be reduced to the
extent by Tenant's use or occupancy of the Premises has been adversely affected.
The rights of Landlord and Tenant regarding any taking or conveyance under power
or threat of eminent domain shall be governed by the terms of this paragraph,
and each party waives the provisions of Washington Law allowing either party to
petition a court to terminate this Lease in the event of a partial taking of the
Premises.
23. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of the
Property or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
herein contained in favor of Tenant, and in such event, insofar as such transfer
is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such transferor in and to the Property and this Lease.
This Lease shall not be affected by any such sale or conveyance, and Tenant
agrees to attorn to the successor in interest of such transferor.
24. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of Landlord
in the land and buildings in which the leased Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold interest) is
encumbered by deed of trust, and such interest is acquired by the lender or any
third party through judicial foreclosure or by exercise of a power of sale at
private trustee's foreclosure sale, Tenant hereby agrees to attorn to the
purchaser at any such foreclosure sale and to recognize such purchaser as the
Landlord under this Lease. In the event the lien of the deed of trust securing
the loan from a Lender to Landlord is prior and paramount to the Lease, this
Lease shall nonetheless continue in full force and effect for the remainder of
the unexpired term hereof, at the same rental herein reserved and upon all the
other terms, conditions and covenants herein contained.
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25. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the monthly Base Rent shall be increased to an
amount equal to one hundred twenty-five percent (125%) of the monthly Base Rent
required during the last month of the Lease term.
26. ESTOPPEL CERTIFICATE. Tenant shall at any time upon not less than ten (10)
business days' prior written notice to Landlord execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the Rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any, are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
except as may be represented by Landlord, that there are no uncured defaults in
Landlord's performance, and that not more than one month's rent has been paid in
advance.
27. CONSTRUCTION CHANGES. It is understood that the description of the Premises
and the location of ductwork, plumbing and other facilities therein are subject
to such minor changes as Landlord or Landlord's architect determines to be
desirable in the course of construction of the Premises, and no such changes, or
any changes in plans for any other portions of the Property shall affect this
Lease or entitle Tenant to any reduction of Rent hereunder or result in any
liability of Landlord to Tenant. Landlord does not guarantee the accuracy of any
drawings supplied to Tenant and verification of the accuracy of such drawings
rests with Tenant.
28. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of Rent. If
Tenant shall fail to pay any sum of money, or other Rent, required to be paid by
it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) business
days after written notice of Landlord's intent to perform such term of
condition, Landlord, without waiving or releasing Tenant from any obligation of
Tenant hereunder, may, but shall not be obligated to, make any such payment or
perform any such other term or covenant on Tenant's part to be performed. All
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sums so paid by Landlord and all necessary costs of such performance by Landlord
together with interest thereon at the Interest Rate from the date of such
payment or performance by Landlord, shall be paid by Tenant to Landlord on
demand by Landlord, and Landlord shall have the same rights and remedies in the
event of nonpayment by Tenant as in the case of failure by Tenant in the payment
of Rent hereunder.
29. ATTORNEYS' FEES. In the event that either Landlord or Tenant should bring an
action or proceeding for the possession of the Premises, including on appeal and
petition for review for the recovery of any sum due under this Lease, or because
of the breach of any provision of this Lease, or for any other relief against
the other party hereunder, then all costs and expenses, including reasonable
attorneys' fees, incurred by the prevailing party therein shall be paid by the
other party.
30. WAIVER. The waiver by either party of the other party's failure to perform
or observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition with respect to any subsequent failure of the party
failing to perform or observe the same or any other such term, covenant or
condition therein contained, and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect, the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.
31. NOTICES. All notices, demands, requests, advices or designations which may
be or are required to be given by either party to the other hereunder shall be
in writing. All notices, demands, requests, advices or designations by Landlord
to Tenant shall be sufficiently given, made or delivered if sent by commercial
courier or by United States certified or registered mail, postage prepaid,
addressed to Tenant at the Premises. All notices, demands, requests, advices or
designations by Tenant to Landlord shall be sent by United States certified or
registered mail, postage prepaid, addressed to Landlord at its address set forth
on the Lease Summary. Each notice, request, demand, advice or designation
referred to in this paragraph shall be deemed received on the date of the
personal service or delivery thereof in the manner herein provided, as the case
may be.
32. EXAMINATION AND CONDITION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of the
Premises or option for a lease, and this instrument is not effective as a lease
or otherwise until its execution and delivery by both Landlord and Tenant.
33. AUTHORITY. If Tenant is a corporation or a partnership, each individual
executing this Lease on behalf of said corporation or partnership represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said corporation or partnership in accordance with the by-laws of said
corporation the partnership agreement and that this Lease is binding upon said
corporation or partnership in accordance with its terms.
34. LIMITATION OF LIABILITY. Tenant and all successors and assigns covenant and
agree that, in the event of any actual or alleged failure, breach or default
hereunder by Landlord:
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(i) the sole and exclusive remedy shall be against Landlord and
Landlord's assets;
(ii) no partner or owner of Landlord shall be sued or named as a
party in any suit or action (except as may be necessary to secure jurisdiction
of the partnership);
(iii) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);
(iv) no partner or owner of Landlord shall be required to answer
or otherwise plead to any service of process;
(v) no judgment will be taken against any partner or owner of
Landlord;
(vi) any judgment taken against any partner or owner of Landlord
may be vacated and set aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets
of any partner or owner of Landlord;
(viii) these covenants and agreements are enforceable both by
Landlord and also by any partner or owner of Landlord.
Tenant agrees that each of the foregoing covenants and agreements
shall be applicable to any covenant or agreement either expressly contained in
this Lease or imposed by statute or at common law.
35. MISCELLANEOUS AND GENERAL PROVISIONS.
A. Tenant shall not, without the written consent of Landlord, use the
name of the Buildings for any purpose other than as the address of the business
conducted by Tenant in the Premises.
B. This Lease shall in all respects be governed by and construed in
accordance with the laws of the State of Washington. If any provision of this
Lease shall be invalid, unenforceable or ineffective for any reason whatsoever,
all other provisions hereof shall be and remain in full force and effect.
C. The term "Premises" includes the space leased hereby and any
improvements now or hereafter installed therein or attached thereto. The term
"Landlord" or any pronoun used in place thereof includes the plural as well as
the singular and the successors and assigns of Landlord. The term "Tenant" or
any pronoun used in place thereof includes the plural as well as the singular
and individuals, firms, associations, partnerships and corporations, and their
and each of their respective heirs, executors, administrators, successors and
permitted assigns, according to the context hereof, and the provisions of this
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Lease shall inure to the benefit of and bind such heirs, executors,
administrators, successors and permitted assigns. The term "person" includes the
plural as well as the singular and individuals, firms, associations,
partnerships and corporations. Words used in any gender include other genders.
If there be more than one Tenant the obligations of Tenant hereunder are joint
and several. The paragraph headings of this Lease are for convenience of
reference only and shall have no effect upon the construction or interpretation
of any provision hereof.
D. Time is of the essence of this Lease and of each and all of its
provisions.
E. At the expiration or earlier termination of this Lease, Tenant shall
execute, acknowledge and deliver to Landlord, within ten (10) days after written
demand from Landlord to Tenant, any quitclaim deed or other document required by
any reputable title company, licensed to operate in the State of Washington, to
remove the cloud or encumbrance created by this Lease from the real property of
which the Premises are a part.
F. This instrument along with any exhibits and attachments hereto
constitutes the entire Agreement between Landlord and Tenant relative to the
Premises and this agreement and the exhibits and attachments may be altered,
amended or revoked only by an instrument in writing signed by both Landlord and
Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives
relative to the leasing of the Premises are merged in or revoked by this
agreement.
G. Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the consent of the other.
H. Tenant further agrees to execute any amendments required Landlord in
order to obtain financing for the Property, so long as Tenant's rights hereunder
are not substantially affected.
I. All Paragraphs listed in the Lease Summary as additional paragraphs
are added hereto and are included as a part of this Lease.
J. Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
K. Tenant covenants and agrees that no diminution or shutting off of
light, air or view by any structure which may be hereafter erected (whether or
not by Landlord) shall in any way affect his Lease, entitle Tenant to any
reduction of Rent hereunder or result in any liability of Landlord to Tenant.
L. The voluntary or other surrender of this Lease or the Premises by
Tenant or a mutual cancellation of this Lease shall not work as a merger and, at
the option of Landlord, shall either terminate all or any existing subleases or
subtenancies or operate as an assignment to Landlord of all or any such
subleases or subtenancies.
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M. Tenant acknowledges that Landlord may assign its interest in this
Lease to a partnership or a limited liability company upon acquisition of the
Property and that Tenant shall thereafter look solely to such partnership or
limited liability company for performance of all of Landlord's obligations
hereunder.
36. BROKERS. Tenant warrants that it had dealings with only the real estate
brokers or agents listed on the Lease Summary in connection with the negotiation
of this Lease and that it knows of no other real estate broker or agent who is
entitled to a commission in connection with this Lease.
37. SIGNS AND WINDOW COVERINGS. No sign, placard, picture, advertisement, name
or notice shall be inscribed, displayed or printed or affixed on or to any part
of the outside of the Premises or any exterior windows of the Premises except in
compliance with all Governmental Regulations. Upon expiration or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
38. ADDITIONAL PARAGRAPHS. Paragraphs 39 through 40 in the attached Addendum and
Exhibits A are added hereto and made part of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.
LANDLORD: TENANT:
EMCON, COLUMBIA ANALYTICAL SERVICES, INC.
a California corporation a Washington corporation
By: /s/R. Michael Momboisse By: /s/Steven W. Vincent
-------------------------------- -----------------------------
Its: CFO & VP Legal Its: President
------------------------------ -----------------------------
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ADDENDUM TO LEASE
The Addendum is executed by and between EMCON, a California
corporation, as Landlord, and Columbia Analytical Services, a Washington
corporation, as Tenant, with respect to those certain Premises located at 1317
13th Street, Kelso, Washington 98626-2845. This Addendum is an integral part of
the Lease to which it is attached. The provisions of this Addendum supersede the
provisions of the Lease to the extent inconsistent therewith.
39. FIRST RIGHT OF REFUSAL TO PURCHASE PROPERTY. If Landlord receives an offer
to purchase the Property at any time during the term of this Lease and Landlord
desires to accept such offer, then Landlord shall first offer to sell the
Property to Tenant upon the same terms and conditions by delivering written
notice to Tenant of all of the terms and conditions of the third party's offer;
provided, however, that Tenant shall receive as a credit against any down
payment requirement, the then current net book value on Tenant's books of the
costs expended by Tenant with Landlord's consent after the Lease Commencement
Date for construction of additional buildings or building additions or for the
buildout of the second floor of the administration building. Such notice shall
constitute an offer to sell the Property to Tenant on the terms and conditions
contained in the notice. Tenant shall have fifteen (15) days after receipt of
said notice in which to notify Landlord in writing that Tenant accepts such
offer. Tenant shall accept such offer, if at all, only by executing the purchase
agreement attached with Landlord's notice and returning the same to Landlord
within the fifteen (15) day period. If Tenant so executes said purchase
agreement and timely returns the same to Landlord, Landlord shall execute the
purchase agreement and return a fully executed copy to Tenant. If Tenant fails
to execute the purchase agreement or to return the same to Landlord within said
fifteen (15) day period, then Landlord shall be entitled to sell the Property to
any other party on such terms as Landlord desires; provided that, the purchase
price for any purchase agreement entered into with any such third party shall be
no less than that previously offered to Tenant, unless Landlord has first again
offered the Property to Tenant for sale on the terms provided in this Paragraph
39. The right of first refusal under this paragraph is granted for Tenant's
personal benefit and may not be assigned or transferred by Tenant, except in
connection with a Permitted Transfer. Likewise, if Tenant does not exercise its
right of first refusal hereunder, and the Property is sold to a third party, the
right of first refusal set forth herein shall terminate and be of no further
force or effect. Notwithstanding the terms of any offer received by Landlord to
purchase the Property from a third party, the purchase agreement provided by
Landlord to Tenant hereunder shall provide that Tenant shall purchase the
Property "As Is,"without any representation or warranty by Landlord. Tenant
shall close the escrow on the purchase of the Property within sixty (60) days
after it notifies Landlord in writing of Tenant's acceptance of Landlord's offer
to sell the Property to Tenant hereunder.
40. OPTION TO PURCHASE PROPERTY.
A. Subject to the terms and conditions hereof and provided that the
Property has not been previously conveyed to a third party pursuant to the terms
set forth in Paragraph 40 above, Tenant shall have an option (the "Option") to
purchase the Property. The Option shall be exercised, if at all, by Tenant
delivering written notice of its exercise of the Option to Landlord prior to the
earlier of (i) the date ninety (90) months after Landlord acquires title to the
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Property, or (ii) the date of Tenant's election not to exercise its right of
first refusal under Paragraph 39 hereof if the Property is in fact sold to the
third party pursuant to the terms and conditions set forth in the right of first
refusal notice. In the event Tenant shall fail to deliver written notice
exercising the Option when required, the Option shall automatically terminate
and be of no further force or effect. Tenant may not exercise the Option during
any period of an Event of Default under this Lease. If Tenant exercises the
Option in a timely manner, Landlord shall be obligated to sell, and Tenant shall
be obligated to purchase, the Property, as hereinafter provided. The purchase
price (the "Purchase Price") for the Property shall be the greater of (i) the
Property's appraised fair market value, as determined in Paragraph 40B below
reduced by an amount equal to the total of all supplemental payments paid by
Tenant to Landlord under the provisions of Paragraph 6.2 of this Lease, or (ii)
the then current net book value of the Property as carried on the Landlord's
books.
B. If the Tenant exercises the Option, Tenant and Landlord each shall,
within ten (10) business days from the date Tenant notifies Landlord of Tenant's
exercise of the Option, appoint a real estate appraiser who shall be a member of
the American Institute of Real Estate Appraisers ("AIREA") and such appraisers
shall each determine the fair market value of the Property, including all
improvements thereon. Each such appraiser shall have no less than five (5)years'
experience appraising commercial property in Kelso, Washington and the
surrounding County. Such appraisers shall, with twenty (20) business days after
their appointment, complete their appraisals and submit their appraisal reports
to Landlord and Tenant. If the fair market value established in the two (2)
appraisals varies by five percent (5%) or less of the higher appraisal, the
average of the two shall be controlling. If said fair market value varies by
more than five percent (5%) of the higher value, said appraisers, within ten
(10) days after submission of the last appraisal, shall appoint a third
appraiser who shall be a member of the AIREA and who shall also be experienced
in the appraisal of commercial properties in the vicinity of the Property. Such
third appraiser shall, within twenty (20) business days after his appointment,
determine by appraisal the fair market value of the Property taking into account
the same factors referred to above, and submit his appraisal report to Landlord
and Tenant. The fair market value determined by the third appraiser for the
Property shall be controlling, unless it is less than that set forth in the
lower appraisal previously obtained, in which case the value set forth in said
lower appraisal shall be controlling, or unless it is greater than that set
forth in the higher appraisal previously obtained, in which case the rental set
forth in said higher appraisal shall be controlling. The appraisal shall not
take into account any costs expended by Tenant after the Lease Commencement Date
for construction of additional buildings or building additions and for the
build-out of the second floor of the administration building. If either Landlord
or Tenant fails to appoint an appraiser, or if an appraiser appointed by either
of them fails, after his appointment, to submit his appraisal within the
required period in accordance with the foregoing, the appraisal submitted by the
appraiser properly appointed and timely submitting his appraisal shall be
controlling. If the two appraisers appointed by Landlord and Tenant are unable
to agree upon a third appraiser within the required period in accordance with
the foregoing, application shall be made within twenty (20) days thereafter by
either Landlord or Tenant to the AIREA, which shall appoint a member of said
institute willing to serve as appraiser. The cost of all appraisals under this
subparagraph shall be borne equally by Landlord and Tenant.
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C. Once the Purchase Price has been determined by the parties, close of
escrow shall take place sixty (60) days thereafter. At the close of escrow,
Landlord shall convey fee title to the Property to Tenant "As Is" and without
warranty or representation. The Purchase Price shall be paid by Tenant to
Landlord in cash at the close of escrow. Seller shall pay its normal closing
costs, including title insurance premiums, real estate excise taxes, and other
transfer taxes. Purchaser shall pay its normal closing costs, including
recording of the Deed and recording of any loan documents and title insurance
for any lender that may be involved in financing the cash Purchase Price. Seller
and Purchaser shall each pay one-half of the escrow fees.
D. The Option rights set forth in this Paragraph 40 are personal to
Tenant and may not be transferred or assigned, except in connection with a
Permitted Transfer.
LANDLORD:
EMCON,
a California corporation
Date: 4/4/97 By: /s/R. Michael Momboisse
------------------------------ ------------------------------------
Its: CFO & VP Legal
-----------------------------------
TENANT:
COLUMBIA ANALYTICAL SERVICES, INC.
a Washington corporation
Date: 4/4/97 By: /s/Steven W. Vincent
----------------------------- -----------------------------------
Its: President
----------------------------------
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State of Washington On April 4th, 1997
County of Cowlitz
Before me,
personally appeared Stephen W. Vincent,
President of Columbia Analytical Services, Inc.,
personally known to me to be
the person whose name is
subscribed to the within
instrument, and acknowledged to
me that he executed the same in
his authorized capacity, and
that by his signature on the
instrument the person, or the
entity upon behalf of which the
person acted, executed the
instrument.
WITNESS my hand and official
seal.
__________________________________
Notary's Signature
State of Washington On April 4th, 1997
County of Cowlitz
Before me,
personally appeared R, Michael Momboisse,
the Chief Financial Officer and Vice President
of EMCON,
personally known to me to be
the person whose name is
subscribed to the within
instrument, and acknowledged to
me that he executed the same in
his authorized capacity, and
that by his signature on the
instrument the person, or the
entity upon behalf of which the
person acted, executed the
instrument.
WITNESS my hand and official
seal.
_____________________________________
Notary's Signature
126