6710 LLC COMMERCIAL LEASE
Date: June 30, 1999
Between: 6710 LLC, ("Landlord")
an Oregon Limited Liability Company
P O Box 82448
Portland, Oregon 97282
And: Phoenix Gold International, Inc., ("Tenant")
an Oregon Corporation
9300 N. Decatur
Portland, Oregon __________
Landlord leases to Tenant and Tenant leases from Landlord the following
described property (the "Premises") on the terms and conditions stated below:
SEE EXHIBIT "A " ATTACHED HERETO AND MADE A PART HEREOF
SECTION 1. OCCUPANCY
1.1 ORIGINAL TERM. The term of this lease shall commence July 1, 1999, and
continue through June 30, 2009 (the "Original Term"), unless sooner terminated
as hereinafter provided.
1.2 POSSESSION. Tenant is currently in possession of the property.
1.3 RENEWAL OPTION. If the lease is not in default at the time the option
is exercised or at the time the renewal term is to commence, Tenant shall have
the option to renew this lease for one (1) term of ten (10) years, as follows:
(1) The renewal term shall commence immediately following expiration
of the Original Term.
(2) The option may be exercised by written notice to Landlord given
not less than 120 days prior to the last day of the Original Term. The giving of
such notice shall be sufficient to make the lease binding for the renewal term
without further act of the parties. Landlord and Tenant shall then be bound to
take the steps required in connection with the determination of rent as
specified below.
(3) The terms and conditions of the lease for the renewal term shall
be identical with the Original Term except for rent and except that Tenant will
no longer have any option to renew this lease. Rent for the renewal term shall
be the greater of (a) the rental during the Original Term or (b) fair market
rental for the ensuing term.
(4) If the parties do not agree on the rent within 30 days after the
notice of election to renew, the rent shall be determined by a qualified,
independent real property appraiser familiar with commercial rental values in
the area. The appraiser shall be chosen by Tenant from a list of not fewer than
five such individuals submitted by landlord. If Tenant does not make the choice
within five (5) days after submission of the list, Landlord may do so. If
Landlord does not submit such a list within ten (10) days after written request
from Tenant to do so, Tenant may name as an appraiser any individual with such
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qualifications. Within thirty (30) days after the appraiser's decision, which
shall be final and binding upon both parties. The cost of the appraisal shall be
borne equally by both parties. In determining fair market rental, the appraiser
shall not assign any value to the then existing improvements in the Premises.
SECTION 2. RENT
2.1 BASE RENT. Tenant hereby agrees to pay base monthly rental (herein
called the "Base Rental") in the sums and at the times as follows:
Month Base Rent Annual Rent
1-12 $43,400 $520,800
13-24 $44,485 $533,820
25-36 $45,597 $547,165
37-48 $46,737 $560,845
49-60 $47,905 $574,866
61-72 $49,103 $589,236
73-84 $50,331 $603,972
85-96 $51,589 $619,068
97-108 $52,879 $634,548
109-120 $54,201 $650,412
Rent shall be payable on the first day of each month in advance at such place
as may be designated by Landlord except that rent for the first and last months
has been paid upon the execution of this lease, and Landlord acknowledges
receipt of this sum.
2.2 SECURITY DEPOSIT. To secure Tenant's compliance with all terms of this
lease, Tenant has paid Landlord the sum of $43,400.00 as a deposit. The deposit
shall be a debt from Landlord to Tenant, refundable within thirty (30) days
after expiration of the lease term or other termination not caused by Tenant's
default. Landlord may commingle the deposit with its funds and Tenant shall not
be entitled to interest on the deposit. Landlord shall have the right to offset
against the deposit any sums owing from Tenant to Landlord and not paid when
due, any damages caused by Tenant's default, the cost of curing any default by
Tenant should Landlord elect to do so, and the cost of performing any repair or
cleanup that is Tenant's responsibility under this lease. Offset against the
deposit shall not be an exclusive remedy in any of the above cases, but may be
invoked by Landlord, at its option, in addition to any other remedy provided by
law or this lease for Tenant's nonperformance. Landlord shall give notice to
Tenant each time an offset is claimed against the deposit, and, unless the lease
is terminated, Tenant shall within ten (10) days after such notice deposit with
Landlord a sum equal to the amount of the offset so that the total deposit
amount, not of offset, shall remain constant throughout the lease term.
2.3 ADDITIONAL RENT. All taxes, insurance costs, utility charges that
Tenant is required to pay by this lease, and any other sum that Tenant is
required to pay to Landlord or third parties shall be additional rent.
SECTION 3. USE OF THE PREMISES.
3.1 PERMITTED USE. The Premises shall be used for office, warehouse and
manufacturing. Tenant shall also have the right to sublease up to 30% of the
facility to any other tenant as long as that tenant's occupancy does not
increase the wear and tear on the facility, does not increase the cost of
property insurance, and complies with all other terms and requirements of this
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lease. Tenant shall provide Landlord with an executed copy of any sublease
entered into between Tenant and any other tenant, and shall notify Landlord when
any other tenant comes into possession or vacates any portion of the Premises.
3.2 RESTRICTIONS ON USE. In connection with the use of the Premises,
Tenant shall:
(1) Conform to all applicable laws and regulations of any public
authority affecting the premises and the use, and correct at Tenant's own
expense any failure of compliance created through Tenant's fault or by reason of
Tenant's use, but Tenant shall not be required to make any structural changes to
effect such compliance unless such changes are required because of Tenant's
specific use.
(2) Refrain from any activity that would make it impossible to insure
the Premises against casualty, would increase the insurance rate, or would
prevent Landlord from taking advantage of any ruling of the Oregon Insurance
Rating Bureau, or its successor, allowing Landlord to obtain reduced premium
rates for long-term fire insurance policies, unless Tenant pays the additional
cost of the insurance.
(3) Refrain from any use that would be reasonably offensive to other
tenants or owners or users of neighboring premises or that would tend to create
a nuisance or damage the reputation of the premises.
(4) Refrain from loading the electrical system or floors beyond the
point considered safe by a competent engineer or architect selected by Landlord.
(5) Refrain from making any marks on or attaching any sign, insignia,
antenna, aerial, or other device to the exterior or interior walls, windows, or
roof of the premises without the written consent of Landlord, which consent
shall not be unreasonably withheld or delayed
(6) Tenant shall not cause or permit any Hazardous Substance to be
spilled, leaked, disposed of, or otherwise released on or under the Premises.
Tenant may use or otherwise handle on the Premises only those Hazardous
Substances typically used or sold in the prudent and safe operation of the
business specified in Section 3.1. Tenant may store such Hazardous Substances on
the Premises only in quantities necessary to satisfy Tenant's reasonably
anticipated needs. Tenant shall comply with all Environmental Laws and exercise
the highest degree of care in the use, handling, and storage of Hazardous
Substances and shall take all practicable measures to minimize the quantity and
toxicity of Hazardous Substances used, handled, or stored on the Premises. Upon
the expiration or termination of this Lease, Tenant shall remove all Hazardous
Substances from the Premises. The term Environmental Law shall mean any federal,
state, or local statute, regulation, or ordinance or any judicial or other
governmental order pertaining to the protection of health, safety or the
environment. The term Hazardous Substance shall mean any hazardous, toxic,
infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include, without limitation, petroleum oil and
its fractions.
SECTION 4. REPAIRS AND MAINTENANCE
4.1 LANDLORD'S OBLIGATIONS. The following shall be the responsibility of
Landlord:
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(1) Other than maintenance and repair of the roof membrane (not
including the concrete roof used to park vehicles), Landlord shall be under no
obligation to make or perform any repairs, maintenance, replacement,
alterations, or improvements on or to the Premises or the building of which the
Premises are a part.
(2) Notwithstanding the provisions of subsection (1) above, within
one (1) year from the commencement date of this lease, Landlord shall repair the
roof of the Premises substantially in accordance with the specifications set
forth in the proposals dated May 18, 1999, from Interstate Roofing Inc., copies
of which are attached hereto as Exhibit "B". It is expressly understood and
agreed that Landlord need not contract with Interstate Roofing Inc. for such
repairs but may use a roofing contractor of Landlord's choosing to perform the
work.
4.2 TENANT'S OBLIGATIONS. The following shall be the responsibility of
Tenant:
(1) Except for Landlord's obligation under Section 5.1, Tenant, at
its expense, shall keep the Premises (including, without limitation, the
exterior paint) in first-class repair, operating condition, working order, and
appearance.
4.3 LANDLORD'S INTERFERENCE WITH TENANT. In performing any repairs,
replacements, alterations, or other work performed on or around the Premises,
Landlord shall not cause unreasonable interference with use of the Premises by
Tenant. Tenant shall have no right to an abatement of rent nor any claim against
Landlord for any inconvenience or disturbance resulting from Landlord's
activities performed in conformance with the requirement of this provision.
4.4 REIMBURSEMENT FOR REPAIRS ASSUMED. If Tenant fails or refuses to make
repairs that are required by this Section 4, Landlord may make the repairs and
charge the actual costs of repairs to Tenant. Such expenditures by Landlord
shall be reimbursed by Tenant on demand together with interest at the rate of
12% per annum from the date of expenditure by Landlord. Except in an emergency
creating an immediate risk of personal injury or property damage, Landlord may
not perform repairs which are the obligation of Tenant and charge Tenant for the
resulting expense unless at least 20 days before work is commenced, Tenant is
given notice in writing outlining with reasonable particularity the repairs
required, and Tenant fails within that time to initiate such repairs in good
faith.
4.5 INSPECTION OF PREMISES. Landlord shall have the right to inspect the
Premises at any reasonable time or times to determine the necessity of repair.
Whether or not such inspection is made, the duty of Landlord to make repairs
shall not mature until a reasonable time after Landlord has received from Tenant
written notice of the repairs that are required. Landlord shall attempt to
schedule its inspections with Tenant so as to minimize disruption of Tenant's
business operations at the Premises.
SECTION 5. ALTERATIONS.
5.1 ALTERATIONS PROHIBITED. Tenant shall make no improvements or
alterations on the Premises of any kind costing over $50,000 without first
obtaining Landlord's written consent, which consent shall not be unreasonably
withheld or delayed. Tenant shall present to Landlord plans and specifications
for such work at the time consent is sought. Landlord may require Tenant to
provide Landlord with a performance and payment bond prior to commencing any
work. All alterations shall be made in a good
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and workmanlike manner, and in compliance with applicable laws and building
codes. As used herein, "alterations" includes the installation of computer and
telecommunications wiring, cables, and conduit.
5.2 OWNERSHIP AND REMOVAL OF ALTERATIONS. All improvements and alterations
performed on the Premises by either Landlord or Tenant shall be the property of
Landlord when installed unless the applicable Landlord's consent or work sheet
specifically provides otherwise. Improvements and alterations installed by
Tenant shall, at Landlord's option, be removed by Tenant and the Premises
restored unless the applicable Landlord's consent or work sheet specifically
provides otherwise.
SECTION 6. INSURANCE
6.1 INSURANCE REQUIRED. Tenant shall keep the Premises insured against
fire and other risks covered by a standard fire insurance policy with an
endorsement for extended coverage naming Landlord as an additional insured.
Tenant shall carry similar insurance insuring the property of Tenant on the
Premises against such risks. Tenant shall also carry employer's liability and
workers compensation insurance as required by law, and rent loss insurance in an
amount sufficient to compensate Landlord for rent abated pursuant to Section 8
of this lease or otherwise for a period of up to twelve months. Certificates
evidencing such insurance and bearing endorsements requiring ten (10) days'
written notice to Landlord prior to any change or cancellation shall be
furnished to Landlord prior to Tenant's occupancy of the Premises.
6.2 WAIVER OF SUBROGATION. Neither party shall be liable to the other (or
to the other's successors or assigns) for any loss or damage caused by fire or
any of the risks enumerated in a standard fire insurance policy with an extended
coverage endorsement, and in the event of insured loss, neither party's
insurance company shall have a subrogated claim against the other. This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance company agrees in writing that such a waiver
will not affect coverage under the policies. Each party agrees to use best
efforts to obtain such an agreement from its insurer if the policy does not
expressly permit a waiver of subrogation.
SECTION 7. TAXES; UTILITIES.
7.1 PROPERTY TAXES. Tenant shall pay as due all taxes on its personal
property located on the Premises. Landlord shall pay as due all real property
taxes and special assessments levied against the Premises. As used herein, real
property taxes includes any fee or charge relating to the ownership, use, or
rental of the Premises, other than taxes on the net income of Landlord or
Tenant. Tenant shall reimburse Landlord for all real property taxes and special
assessments within 30 days of billing therefore by Landlord.
7.2 SPECIAL ASSESSMENTS. If an assessment for a public improvement is made
against the Premises, Landlord may elect to cause such assessment to be paid in
installments, in which case all of the installments payable with respect to the
lease term shall be treated the same as general real property taxes for purposes
of Section 7.1.
7.3 CONTEST OF TAXES. Tenant shall be permitted to contest the amount of
any tax or assessment as long as such contest is conducted in a manner that does
not cause any risk that Landlord's interest in the Premises will be foreclosed
for nonpayment.
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7.4 PRORATION OF TAXES. Tenant's share of real property taxes and
assessments for the years in which this lease commences or terminates shall be
prorated based on the portion of the tax year that this lease is in effect.
7.5 NEW CHARGES OR FEES. If a new charge or fee relating to the ownership
or use of the Premises or the receipt of rental therefrom or in lieu of property
taxes is assessed or imposed, then, to the extent permitted by law, Tenant shall
pay such charge or fee. Tenant, however, shall have no obligation to pay any
income, profits, or franchise tax levied on the net income derived by Landlord
from this lease.
7.6 PAYMENT OF UTILITIES CHARGES. Tenant shall pay when due all charges
for services and utilities incurred in connection with the use, occupancy,
operation, and maintenance of the Premises, including (but not limited to)
charges for fuel, water, gas, electricity, sewage disposal, power,
refrigeration, air conditioning, telephone, and janitorial services. If any
utility services are provided by or through Landlord, charges to Tenant shall be
comparable with prevailing rates for comparable services. If the charges are not
separately metered or stated, Landlord shall apportion the charges on an
equitable basis, and Tenant shall pay its apportioned share on demand.
SECTION 8. DAMAGE AND DESTRUCTION
8.1 PARTIAL DAMAGE. If the Premises are partly damaged and Section 8.2
does not apply, the Premises shall be repaired by Landlord at Landlord's
expense. Repairs shall be accomplished with all reasonable dispatch subject to
interruptions and delays from labor disputes and matters beyond the control of
Landlord and shall be performed in accordance with the provisions of 4.3;
provided, however, that the rent shall be abated as set forth in Section 8.3
below.
8.2 DESTRUCTION. If the Premises are destroyed or damaged such that the
cost of repair exceeds 50% of the value of the structure before the damage,
either party may elect to terminate the lease as of the date of the damage or
destruction by notice given to the other in writing not more than forty-five
(45) days following the date of damage. In such event all rights and obligations
of the parties shall cease as of the date of termination, and Tenant shall be
entitled to the reimbursement of any prepaid amounts paid by Tenant and
attributable to the anticipated term. If neither party elects to terminate,
Landlord shall proceed to restore the Premises to substantially the same form as
prior to the damage or destruction. Work shall be commenced as soon as
reasonably possible and thereafter shall proceed without interruption except for
work stoppages on account of labor disputes and matters beyond Landlord's
reasonable control; provided, however, that the rent shall be abated as set
forth in Section 8.3 below.
8.3 RENT ABATEMENT. Rent shall be abated during the repair of any damage
to the extent the premises are untenantable, except that there shall be no rent
abatement where the damage occurred as the result of the fault of Tenant.
8.4 DAMAGE LATE IN TERM. If damage or destruction to which Section 8.2
would apply occurs within one (1) year before the end of the then-current lease
term, Tenant may elect to terminate the lease by written notice to Landlord
given within thirty (30) days after the date of the damage. Such termination
shall have the same effect as termination by Landlord under Section 8.2.
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SECTION 9. EMINENT DOMAIN
9.1 PARTIAL TAKING. If a portion of the Premises is condemned and Section
9.2 does not apply, the lease shall continue on the following terms:
(1) Landlord shall be entitled to all of the proceeds of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation.
(2) Landlord shall proceed as soon as reasonably possible to make
such repairs and alterations to the Premises as are necessary to restore the
remaining Premises to a condition as comparable as reasonably practicable to
that existing at the time of the condemnation.
(3) After the date on which title vests in the condemning authority
or an earlier date on which alterations or repairs are commenced by Landlord to
restore the balance of the Premises in anticipation of taking, the rent shall be
reduced in proportion to the reduction in value of the Premises as an economic
unit on account of the partial taking. If the parties are unable to agree on the
amount of the reduction of rent, the amount shall be determined by arbitration
in the manner provided in Section 17.
(4) If a portion of Landlord's property not included in the Premises
is taken, and severance damages are awarded on account of the Premises, or an
award is made for detriment to the Premises as a result of activity by a public
body not involving a physical taking of any portion of the Premises, this shall
be regarded as a partial condemnation to which Sections 9.1(1) and 9.1(3) apply,
and the rent shall be reduced to the extent of reduction in rental value of the
Premises as though a portion had been physically taken.
(5) Notwithstanding any contrary provision in this lease, Tenant
shall be entitled to negotiate for and retain condemnation compensation for the
value of Tenant's improvements to the Premises taken in connection with the
condemnation.
9.2 TOTAL TAKING. If a condemning authority takes all of the Premises or a
portion sufficient to render the remaining premises reasonably unsuitable for
the use that Tenant was then making of the premises, the lease shall terminate
as of the date the title vests in the condemning authorities. Such termination
shall have the same effect as a termination under Section 9.1(1). Landlord shall
be entitled to all of the proceeds of condemnation, and Tenant shall have no
claim against Landlord as a result of the condemnation. Notwithstanding any
contrary provision in this lease, Tenant shall be entitled to negotiate for and
retain condemnation compensation for the value of Tenant's improvements to the
Premises taken in connection with the condemnation.
9.3 SALE IN LIEU OF CONDEMNATION. Sale of all or part of the premises to a
purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 9 as a taking by condemnation.
SECTION 10. LIABILITY AND INDEMNITY.
10.1 LIENS
(1) Except with respect to activities for which Landlord is
responsible, Tenant shall pay as due all claims for work done on and for
services rendered or material furnished to the Premises, and shall keep the
Premises free from any liens. If Tenant fails to pay any such claims or to
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discharge any lien, Landlord may do so and collect the cost as additional rent.
Any amount so added shall bear interest at the rate of 12% per annum from the
date expended by Landlord shall not constitute a waiver of any right or remedy
which Landlord may have on account of Tenant's default.
(2) Tenant may withhold payment of any claim in connection with a
good-faith dispute over the obligation to pay, as long a Landlord's property
interests are not jeopardized. If a lien is filed as a result of nonpayment,
Tenant shall, within ten (10) days after knowledge of the filing, secure the
discharge of the lien or deposit with Landlord cash or sufficient corporate
surety bond or other surety satisfactory to Landlord in an amount sufficient to
discharge the lien plus any costs, attorney fees, and other charges that could
accrue as a result of a foreclosure or sale under the lien.
10.2 INDEMNIFICATION. Tenant shall indemnify and defend Landlord from any
claim, loss, or liability arising out of or related to any activity of Tenant on
the Premises or any condition of the Premises in the possession or under the
control of Tenant. Landlord shall have no liability to Tenant for any injury,
loss, or damage caused by third parties, or by any condition of the Premises.
10.3 LIABILITY INSURANCE. Before going into possession of the Premises,
Tenant shall procure and thereafter during the term of the lease shall continue
to carry the following insurance at Tenant's costs: comprehensive general
liability insurance in a responsible company with limits of not less than
$1,000,000 for injury to one person, $2,000,000 for injury to two or more
persons in one occurrence, and $2,000,000 for damage to property. Such insurance
shall cover all risks arising directly or indirectly out of Tenant's activities
on or any condition of the premises whether or not related to an occurrence
caused or contributed to by Landlord's negligence. Such insurance shall cover
all risks arising directly or indirectly out of Tenant's activities on or any
condition of the premises whether or not related to an occurrence caused or
contributed to by Landlord's negligence. Such insurance shall protect Tenant
against the claims of Landlord on account of the obligations assumed by Tenant
under Section 10.2, and shall name Landlord as an additional insured.
Certificates evidencing such insurance and bearing endorsements requiring ten
(10) days' written notice to Landlord prior to any change or cancellation shall
be furnished to Landlord prior to Tenant's occupancy of the Premises.
SECTION 11. QUIET ENJOYMENT; MORTGAGE PRIORITY
11.1 LANDLORD'S WARRANTY. Landlord warrants that it is the owner of the
Premises and has the right to lease them free of all encumbrances except those
set forth on the attached schedule entitled "Exceptions to Title." Subject to
these exceptions, Landlord will defend Tenant's right to quiet enjoyment of the
Premises from the lawful claims of all persons during the lease term.
11.2 MORTGAGE PRIORITY. The Premises are subject to real estate mortgage
given to Ronald and Heather Killough as mortgagee. This lease is conditioned
upon its approval by the mortgagee and upon agreement by the mortgagee that the
rights of Tenant under the lease will be recognized so that in the event of
foreclosure of the mortgage this lease will remain in effect according to its
terms and Tenant's possession will not be disturbed as long as Tenant is in
compliance with this lease.
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This lease is and shall be prior to any mortgage or deed of trust
("Encumbrance") recorded after the date of this lease and affecting the
Premises. However, if any lender holding such an Encumbrance requires that this
lease be subordinate to the Encumbrance, then Tenant agrees that the lease shall
be subordinate to the Encumbrance if the holder thereof agrees in writing with
Tenant that as long as tenant performs its obligations under this lease no
foreclosure, deed given in lieu of foreclosure, or sale pursuant to the terms of
the Encumbrance, or other steps or procedures taken under the Encumbrance shall
affect Tenant's rights under this lease. If the foregoing condition is met,
Tenant shall execute the written agreement and any other documents required by
the holder of the Encumbrance to accomplish the purposes of this paragraph. If
the Premises are sold as a result of foreclosure of any Encumbrance thereon, or
otherwise transferred by Landlord or any successor, Tenant shall attorn to the
purchaser or transferee.
11.3 ESTOPPEL CERTIFICATE. Either party will, within twenty (20) days
after Notice from the other, execute and deliver to the other party a
certificate stating whether or not this lease has been modified and is in full
force and effect and specifying any modifications or alleged breaches by the
other party. The certificate shall also state the amount of monthly base rent,
the dates to which rent has been paid in advance, and the amount of any security
deposit or prepaid rent. Failure to deliver the certificate within the specified
time shall be conclusive upon the party from whom the certificate was requested
that the lease is in full force and effect and has not been modified
except as represented in the notice requesting the certificate.
SECTION 12. ASSIGNMENT AND SUBLETTING.
Except as provided in Section 3.1, no part of the Premises may be
assigned, mortgaged, or subleased, nor may a right of use of any portion of the
property be conferred on any third person by any other means, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed. This provision shall apply to mergers and all transfers by operation of
law. If Tenant is a corporation or partnership, this provision shall apply to
any transfer of a majority voting interest in stock or partnership interest of
Tenant. No consent in one instance shall prevent the provision from applying to
a subsequent instance. In determining whether to consent to assignment Landlord
may consider the following factors; financial ability of assignee; business
experience of assignee; and credit worthiness of assignee. Landlord shall be
required to consent when the assignee's use is allowed by this lease and the
assignee's net worth exceeds that of Tenant.
SECTION 13. DEFAULT
The following shall be events of default:
13.1 DEFAULT IN RENT. Failure of Tenant to pay any rent or other charge
within twenty (20) days following written notice to Tenant that rent has not
been received. Notwithstanding the foregoing, if Landlord has given the notice
provided in this Section 13.1 twice within any 12 consecutive month period, then
Landlord need not give such notice in the event of any further default within
that 12 month period and Tenant shall be in default if Tenant fails to pay any
rent or other charge within ten (10) days after it is due.
13.2 DEFAULT IN OTHER COVENANTS. Failure of Tenant to comply with any term
or condition or fulfill any obligation of the lease (other than the payment of
rent or other charges) within twenty (20) days after written notice by Landlord
specifying the nature of the default with reasonable particularity. If the
default is of such a nature that it cannot be completely remedied within the
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20-day period, this provision shall be complied with if Tenant begins correction
of the default within the 20-day period and thereafter proceeds with reasonable
diligence and in good faith to effect the remedy as soon as practicable.
13.3 INSOLVENCY. Insolvency of Tenant; an assignment by Tenant for the
benefit of creditors; the filing by Tenant of a voluntary petition in
bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a
receiver of the properties of Tenant; the filing of any involuntary petition of
bankruptcy and the failure of Tenant to secure a dismissal of the petition
within ninety (90) days after filing; attachment of or the levying of execution
on the leasehold interest and failure of Tenant to secure discharge of the
attachment or release of the levy of execution within thirty (30) days shall
constitute a default. If Tenant consists of two or more individuals or business
entities, the events of default specified in this Section 13.3 shall apply to
each individual unless within ten (10) days after an event of default occurs,
the remaining individuals produce evidence satisfactory to Landlord that they
have unconditionally acquired the interest of the one causing the default. If
the lease has been assigned, the events of default so specified shall apply only
with respect to the one then exercising the rights of Tenant under the lease.
13.4 ABANDONMENT. Failure of Tenant for ten (10) days or more to occupy
the Premises for one or more of the purposes permitted under this lease, unless
such failure is excused under other provisions of this lease. The foregoing
failure to occupy shall not constitute an event of default if, prior to vacating
the Premises, Tenant delivers to Landlord a surety bond in an amount equal to
the rent payable under this lease for the 12 months next succeeding the month in
which the abandonment will occur, guaranteeing payment of rent during that
period, issued by a reputable company licensed to issue surety bonds in Oregon.
SECTION 14. REMEDIES ON DEFAULT
14.1 TERMINATION. In the event of a default the lease may be terminated at
the option of Landlord by written notice to Tenant. Whether or not the lease is
terminated by the election of landlord or otherwise, Landlord shall be entitled
to recover damages from Tenant for the default, and Landlord may reenter, take
possession of the premises, and remove any persons or property by legal action
or by self-help with the use of reasonable force and without liability for
damages and without having accepted a surrender.
14.2 RELETTING. Following reentry or abandonment, Landlord may relet the
Premises and in that connection may make any suitable alterations or refurbish
the Premises, or both, or change the character or use of the Premises, but
Landlord shall not be required to relet for any use or purpose other than that
specified in the lease or which Landlord may reasonably consider injurious to
the Premises, or to any tenant that Landlord may reasonably consider
objectionable. Landlord may relet all or part of the Premises, alone or in
conjunction with other properties, for a term longer or shorter than the term of
this lease, upon any reasonable terms and conditions, including the granting of
some rent-free occupancy or other rent concession.
14.3 DAMAGES. In the event of termination or retaking of possession
following default, Landlord shall be entitled to recover immediately, without
waiting until the due date of any future rent or until the date fixed for
expiration of the lease term, the following amounts as damages:
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(1) The loss of rental from the date of default until a new tenant
is, or with the exercise of reasonable efforts could have been, secured and
paying out.
(2) The reasonable costs of reentry and reletting including, without
limitation, the cost of any cleanup, refurbishing, removal of Tenant's property
and fixtures, costs incurred under Section 14.5, or any other expense occasioned
by Tenant's default including, but not limited to, any remodeling or repair
costs, attorney fees, court costs, broker commissions, and advertising costs.
(3) Any excess of the value of the rent and all of Tenant's other
obligations under this lease over the reasonable expected return from the
premises for the period commencing on the earlier of the date of trial or the
date the premises are relet, and continuing through the end of the term. The
present value of future amounts will be computed using a discount rate equal to
the prime loan rate of major Oregon banks in effect on the date of trial.
14.4 RIGHT TO SUE MORE THAN ONCE. Landlord may sue periodically to recover
damages during the period corresponding to the remainder of the lease term, and
no action for damages shall bar a later action for damages subsequently
accruing.
14.5 LANDLORD'S RIGHT TO CURE DEFAULTS. If Tenant fails to perform any
obligation under this lease, Landlord shall have the option to do so after
thirty (30) days' written notice to Tenant. All of Landlord's expenditures to
correct the default shall be reimbursed by Tenant on demand with interest at the
rate of 12% annum from the date of expenditure by Landlord. Such action by
Landlord shall not waive any other remedies available to Landlord because of
default.
14.6 REMEDIES CUMULATIVE. The foregoing remedies shall be in addition to
and shall not exclude any other remedy available to Landlord under applicable
law.
SECTION 15. SURRENDER AT EXPIRATION
15.1 CONDITION OF PREMISES. Upon expiration of the lease term or earlier
termination on account of default, Tenant shall deliver all keys to Landlord and
surrender the Premises in as good a condition as exists on the lease
commencement date, reasonable wear and tear excepted. Alterations constructed by
Tenant with permission from Landlord shall not be removed or restored to the
original condition unless the terms of permission for the alteration so require.
Depreciation and wear from ordinary use for the purpose for which the Premises
are leased shall be excepted but repairs for which Tenant is responsible shall
be completed to the latest practical date prior to such surrender. Tenant's
obligations under this section shall be subordinate to the provisions of Section
8 relating to destruction.
15.2 FIXTURES
(1) All fixtures placed upon the Premises during the term, other than
Tenant's trade fixtures, shall, at Landlord's option, become the property of
Landlord. If Landlord so elects, Tenant shall remove any or all fixtures that
would otherwise remain the property of Landlord, and shall repair any physical
damage resulting from the removal. If Tenant fails to remove such fixtures,
Landlord may do so and charge the cost to Tenant with interest at the legal rate
from the date of expenditure.
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(2) Prior to expiration or other termination of the lease term Tenant
shall remove all furnishings, furniture, and trade fixtures that remain its
property. If tenant fails to do so, this shall be an abandonment of the
property, and Landlord may retain the property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within twenty
(20) days after removal was required, Landlord may elect to hold Tenant to its
obligation of removal. If Landlord elects to require Tenant to remove, Landlord
may effect a removal and place the property in public storage for Tenant's
account. Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.
15.3 HOLDOVER
(1) If Tenant does not vacate the Premises at the time required,
Landlord shall have the option to treat Tenant as a tenant from month to month,
subject to all of the provisions of this lease except the provisions for term
and renewal and at a rental rate equal to 200 percent of the rent last paid by
Tenant during the original term, or to eject tenant from the Premises and
recover damages caused by wrongful holdover. Failure of tenant to remove
fixtures, furniture, furnishings, or trade fixtures that Tenant is required to
remove under this lease shall constitute failure to vacate to which this section
shall apply if the property not removed will substantially interfere with
occupancy of the Premises by another tenant or with occupancy by Landlord for
any purpose including preparation for a new tenant.
(2) If a month-to-month tenancy results from a holdover by Tenant
under this Section 15.3, the tenancy shall be terminable at the end of any
monthly rental period on written notice from Landlord given not less than thirty
(30) days prior to the termination date which shall be specified in the notice.
Tenant waives any notice that would otherwise be provided by law with respect to
a month-to-month tenancy.
SECTION 16. RIGHT OF FIRST REFUSAL
16.1 OFFER TO TENANT. Landlord agrees not to sell, transfer, exchange,
grant an option to purchase, or otherwise dispose of the Premises or any part
of, or interest in, the Premises without first offering the Premises to Grantee
on the terms and conditions set forth in this Section 16.
(1) When Landlord receives from a third party (the "Third Party
Offeror") a bona fide offer to purchase the Premises, or a part of it, or an
interest in it, Landlord shall give Tenant written notice (the "Notice") of the
price, terms, and conditions of the offer and deliver a copy of the executed
contract evidencing the offer (the "Offer") to Tenant.
(2) When Tenant receives the Notice and a copy of the Offer,
Tenant shall have the prior and preferential right to purchase the Premises (or
the part of or interest in the Premises covered by the Offer, as the case may
be) at the same price and on the same terms and conditions as are contained in
the Offer, except that if Tenant exercises the right of first refusal by
electing to purchase the Premises then (1) the closing of the transaction
contemplated by the Offer shall take place no earlier than 30 days after the
date that Tenant elects to exercise the right of first refusal, and (2) Tenant
shall receive a credit against the sale price of the Premises in an amount equal
to any brokerage commission that Landlord may save by selling the Property to
Tenant rather than the Third-Party Offeror.
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(3) Tenant shall have 20 days from the date Tenant receives the Notice
and a copy of the Offer to notify Landlord whether Tenant elects to purchase the
Premises pursuant to the terms of the Offer. If Tenant elects to exercise its
right to purchase the Premises, then, in addition to giving Landlord written
notice of its election within the 20-day period, Tenant also shall tender an
amount equal to the earnest money deposit, if any, specified in the Offer, which
will be held and used in accordance with the terms of the Offer.
(4) If Tenant fails to timely exercise its right to purchase the
Premises pursuant to the terms of this Section, then Landlord shall be entitled
to sell the Premises according to the terms of the Offer to the Third-Party
Offeror, subject to the terms of paragraph (5) below.
(5) If Tenant fails to timely exercise its right to purchase the
Premises pursuant to the terms of this Section, and for any reason Landlord
shall not sell or convey the Premises to the Third-Party Offeror on the terms
contained in the Offer, then Landlord must submit any other offer to Tenant
before selling the Premises, and such offers shall be subject to Tenant's right
of first refusal under this Section.
16.2 TERM. The term of this Right of First Refusal commences as of the
date of this lease and terminates on the earlier to occur of (1) the expiration
of the lease term or earlier termination in the event of default, or (2) the
consummation of the sale of the Premises to a third party after Tenant has
elected not to exercise its right of first refusal. Tenant shall cooperate in
providing Landlord with any instruments that Landlord reasonably may require for
the purpose of removing from the public record any cloud on title to the
Premises attributable in any manner to the grant or existence of this right of
first refusal.
16.3 EXCLUDED TRANSFERS. The right of first refusal created by this
Section shall not apply to:
(1) Any sale or conveyance of the Premises by Landlord to any
partnership, limited partnership, joint venture, corporation, limited liability
company, or other entity in which Landlord owns and controls at least a 33%
ownership interest; or
(2) Any sale, conveyance, or other transfer to any partnership,
limited partnership, joint venture, corporation, limited liability company, or
other entity in which one or more members of 6710 LLC and/or their descendants
owns and controls at least a 33% ownership interest.
16.4 REAL ESTATE COMMISSION. Landlord and Tenant each agree to pay any
commission or finder's fees that may be due on account of Tenant's purchase of
the Premises to any broker or finder employed by it and to indemnify the other
against any claims for commissions or fees asserted by any broker claiming by,
through, or under the indemnifying party.
16.5 STATUTORY DISCLAIMER. THIS INSTRUMENT WILL NOT ALLOW USE OF THE
PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS
AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON
ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR
COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES.
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SECTION 17. MISCELLANEOUS
17.1 NONWAIVER. Waiver by either party of strict performance of any
provision of this lease shall not be a waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.
17.2 ATTORNEY FEES. If suit or action is instituted in connection with any
controversy arising out of this lease, the prevailing party shall be entitled to
recover in addition to costs such sum as the court may adjudge reasonable as
attorney fees at trial, on petition for review, and on appeal.
17.3 NOTICES. Any notice required or permitted under this lease shall be
given when actually delivered or 48 hours after deposited in United States mail
as certified mail addressed to the address first given in this lease or to such
other address as may be specified from time to time by either of the parties in
writing.
17.4 SUCCESSION. Subject to the above-stated limitations on transfer of
Tenant's interest, this lease shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.
17.5 RECORDATION.
(1) Landlord shall execute and acknowledge a memorandum of this lease
in a form suitable for recording, and Tenant may record the memorandum.
(2) Tenant agrees that upon expiration of the lease term or upon
sooner termination of this lease, Tenant will execute and acknowledge a
memorandum of termination of this lease in a form suitable for recording, and
Landlord may record the memorandum.
17.6 ENTRY FOR INSPECTION. Landlord shall have the right to enter upon the
Premises at any time to determine Tenant's compliance with this lease, to make
necessary repairs to the building or to the Premises, or to show the Premises to
any prospective tenant or purchaser, and in addition shall have the right, at
any time during the last two (2) months of the term of this lease, to place and
maintain upon the Premises notices for leasing or selling of the Premises.
Landlord shall attempt to schedule its inspections with Tenant so as to minimize
disruption of Tenant's business operations at the Premises.
17.7 INTEREST ON RENT AND OTHER CHARGES. Any rent or other payment
required of Tenant by this lease shall, if not paid within ten (10) days after
it is due, bear interest at the rate of 12% per annum (but not in any event at a
rate greater than the maximum rate of interest permitted by law) from the due
date until paid. In addition, if tenant fails to make any rent or other payment
required by this lease to be paid to landlord within five days after it is due,
landlord may elect to impose a late charge of five (5) cents per dollar of the
overdue payment to reimburse Landlord for the costs of collecting the overdue
payment. Tenant shall pay the late charge upon demand by Landlord. Landlord may
levy and collect a late charge in addition to all other remedies available for
Tenant's default, and collection of a late charge shall not waive the breach
caused by the late payment.
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17.8 PRORATION OF RENT. In the event of commencement or termination of
this lease at a time other than the beginning or end of one of the specified
rental periods, then the rent shall be prorated as of the date of commencement
or termination and in the event of termination for reasons other than default,
all prepaid rent shall be refunded to Tenant or paid on its account.
17.9 TIME OF ESSENCE. Time is of the essence of the performance of each
of Tenant's obligations under this lease.
17.10 NO PARTNERSHIP. Landlord is not by virtue of this lease a partner or
joint venturer with Tenant in connection with the business carried on under this
lease, and shall have no obligation with respect to Tenant's debts or other
liabilities, and no interest in Tenant's profits.
SECTION 18. ARBITRATION
18.1 DISPUTES TO BE ARBITRATED. If any dispute arises between the parties,
either party may request arbitration and appoint as an arbitrator an independent
real estate appraiser having knowledge of valuation of rental properties
comparable to the Premises. The other party shall also choose an arbitrator with
such qualifications, and the two arbitrators shall choose a third. If the choice
of the second or third arbitrator is not made within ten (10) days of the
choosing of the prior arbitrator, then either party may apply to the presiding
judge of the judicial district where the premises are located to appoint the
required arbitrator.
18.2 PROCEDURE FOR ARBITRATION. The arbitrator shall proceed according to
the Oregon statutes governing arbitration, and the award of the arbitrators
shall have the effect therein provided except that the arbitrators' award shall
be binding. The arbitration shall take place in the county where the leases
premises are located. Costs of the arbitration shall be shared equally by the
parties, but each party shall pay its own attorney fees incurred in connection
with the arbitration.
SECTION 19. EXHIBITS. The following Exhibits are attached hereto and
incorporated herein as a part of this lease:
Exhibit "A". The Premises
LANDLORD:
6710 LLC,
an Oregon Limited Liability Company
By: /s/ Howard N. Dietrich
Title: Manager
TENANT:
PHOENIX GOLD INTERNATIONAL, INC.,
an Oregon Corporation
By: /s/ Timothy C. Johnson
Title: Executive Vice President
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Order No: 196950
EXHIBIT A
LEGAL DESCRIPTION
PARCEL I:
Lots 1, 2, 3, 16, 17, 18 and the Southeasterly 15 feet of Lots 4 and 15, Block
3; Lots 6, 7, 8, 9, 10 and 11, Block 4; Lots 6, 7, 8, 9, 10 and 11, Block 5; and
Lots 1, 2, 3 and the Southeasterly 15 feet of Lot 4, Block 6, all in BYAR'S
ADDITION TO ST. JOHNS, in the City of Portland, County of Multnomah and State of
Oregon.
TOGETHER WITH those portions of North Crawford Street and North Trumbull Avenue
which accrued to said property by reason of vacation proceedings.
PARCEL II: AMENDED
A tract of land located in the Northwest 1/4 of Section 12, Township 1 North,
Range 1 West of the Willamette Meridian, in the City of Portland, County of
Multnomah and State of Oregon, more particularly described as follows:
All of Lots 1 through 5, and Lots 12 through 16, Block 4, BYAR'S ADDITION TO ST.
JOHNS.
EXCEPTING THEREFROM the Southwesterly 31 feet of Lots 12 through 16, Block 4,
BYAR'S ADDITION, more particularly described as follows:
Beginning at the Northwesterly corner of Lot 12, Block 4; thence along the
Northwesterly line of said Lot 12, North 57(degree)23'19" East, 31.00 feet to a
5/8" iron rod with yellow plastic cap marked "ACS&P 668-3151"; thence
Southeasterly and parallel to Northeasterly line of vacated N. Crawford Street,
South 32(degree)36'41" East 250.00 feet to a 5/8" iron rod with yellow plastic
cap marked "ACS&P 668-3151" on the Northwesterly right-of-way line of North St.
Louis Avenue and being on the Southeasterly line of Lot 16, Block 4, BYAR'S
ADDITION; thence Southwesterly along said Northwesterly right-of-way line South
57(degree)23'19" West 31.00 feet to the Southwesterly corner of said Lot 16 and
being on the Northerly right-of-way line of vacated N. Crawford Street; thence
Northwesterly along said Northerly right-of-way line North 32(degree)36'41" West
250.00 feet to the point of beginning.
EXHIBIT A