EXHIBIT 10.22
REAL PROPERTY LEASE AND SUBLEASE
THIS REAL PROPERTY LEASE AND SUBLEASE (this "Lease"), dated for
reference purposes the 28th day of June, 1996, is by and between 810
DEXTER L.L.C., a Washington limited liability company (the "Landlord"),
and KORRY ELECTRONICS CO., a Delaware corporation (the "Tenant").
Landlord and Tenant agree as follows:
1. PREMISES. Landlord hereby leases to Tenant and Tenant leases
from Landlord, upon the terms and subject to the conditions set forth in
this Lease, that certain real property and improvements thereon, commonly
known as 810 Dexter Avenue North, Seattle, Washington, along with the
Adjoining Parking Lot (defined hereafter), all as legally described on
Exhibit A attached hereto and incorporated herein by this reference (the
"Real Property"). The leased premises (the "Premises") shall contain the
entire building (the "Building"), which is approximately 93,000 square
feet, and the Adjoining Parking Lot. Tenant may not use, occupy or
penetrate the roof of the Premises without Landlord's consent.
2. PARKING. The Premises leased by Tenant hereunder shall include
without additional cost or charge the Adjoining Parking Lot (the
"Adjoining Parking Lot") adjacent to the Building subject to Landlord's
sublease of all but thirty two (32) unreserved parking spaces. At the
commencement of the Fourth Lease Year (defined hereinafter) Landlord
shall sublease only one-third of the Adjoining Parking Lot and at the
commencement of the Sixth Lease Year (defined hereinafter) Landlord shall
cease subleasing any of the Adjoining Parking Lot. Landlord hereby grants
to Tenant a first right of refusal on all parking spaces Landlord is
subleasing from Tenant which may become available and which are not
needed by other tenants from time to time, at a price of $50 per space
per month. Landlord recognizes that Tenant may need additional parking
and accordingly Landlord agrees to discuss in good faith with Tenant, at
Tenant's request, Landlord's construction of a parking garage for Tenant
on property in the present parking lot. So long as Landlord fulfills its
obligation to discuss construction of the parking garage in good faith,
it shall not be obligated to build same. In addition, Landlord reserves
the right to construct at its sole cost and expense and at no cost to
Tenant a parking garage structure on the Adjoining Parking Lot. Landlord
shall provide Tenant with at least four (4) months prior written notice
of commencement of construction. In either event, upon completion Tenant
shall have the same number of spaces in the garage that are provided
above at no additional cost, and during construction of the garage, to
the extent Tenant is not able to use the portion of the Adjoining Parking
Lot which Landlord is not then subleasing, Landlord shall provide Tenant
at Landlord's expense with substitute parking within two (2) blocks of
the Adjoining Parking Lot. During construction Landlord shall not
unreasonably disrupt Tenant's use of the remainder of the Premises.
3. TERM.
3.1 Initial Term. The initial term (the "Initial Term") of this
Lease shall be for a period, commencing on the Commencement Date (defined
hereinafter) and ending July 31, 2011, unless sooner terminated pursuant
to any provision hereof. For purposes of this Lease, the term "Lease
Year" shall be the one year period beginning on an anniversary of the
Commencement Date and continuing through the day before the next
anniversary of the Commencement Date (except the final Lease Year ending
July 31, 2011 may be less than twelve (12) months).
3.2 Commencement Date. This Lease shall be effective when signed
by Landlord and Tenant. The Initial Term shall commence (the
"Commencement Date") on the earlier of Tenant's occupancy of the Premises
to conduct business or the issuance of a "Certificate of Occupancy" after
completion of Tenant's Work (defined in Section 9.2 hereafter), whichever
occurs first, but in no event later than December 1, 1996; provided,
however, that if Tenant has not been issued a "Certificate of Occupancy"
for the Premises by December 1, 1996, Tenant shall have the right to
terminate this Lease on notice to Landlord so long as Tenant completes
Tenant's Work (for which Landlord must reimburse Tenant up to $150,000
within ten (10) days of completion), and all Tenant's Work shall become
property of Landlord. Tenant shall use all reasonable efforts to complete
Tenant's Work by December 1, 1996.
3.3 Extensions. If Tenant is not in default under this Lease
beyond the applicable cure period either at the time of option exercise
or at any time until commencement of an Extension Term, Tenant shall have
the right and option ("Option to Renew") of extending the term of this
Lease for two (2) additional successive terms (each an "Extension Term")
of five (5) years each, upon the terms and conditions provided herein. If
Tenant elects to exercise such option, it shall do so by giving notice in
writing to Landlord of such election at least one hundred eighty (180)
days prior to the expiration of the Initial Term or as such Initial Term
may be extended.
3.4 Tenant's Early Termination Rights. Tenant shall have the
right to terminate this Lease by providing Landlord two (2) years
irrevocable advance notice of its intent to terminate. If Tenant so
terminates this Lease, Landlord shall reimburse Tenant for the
unamortized portion of Tenant's costs (as specified by Tenant) to obtain
all permits and approvals for its work on the Premises, costs of
complying with energy codes and costs of installed heating and
air-conditioning systems ("Reimbursable Costs"). The Reimbursable Costs
shall be amortized on a straight line basis over fifteen (15) years, and
the amount owed by Landlord shall not exceed $300,000 for the top floor,
$100,000 for the middle floor, and $100,000 for the bottom floor. For
example, if Tenant terminates at the end of the Third Lease Year, Tenant
will be entitled to receive 12/15th's of the first $300,000 of its top
floor Reimbursable Costs.
Tenant shall also have the right to terminate this Lease at any
time in the event soil or groundwater contamination is discovered on,
under or near the Premises and a local, state or federal agency requires
investigations, testing or cleanup that materially interfere with
Tenant's use of the Premises; provided, if such contamination is confined
to the Adjoining Parking Lot Landlord may defeat Tenant's termination by
notifying Tenant in writing within fifteen (15) days of receipt of
Tenant's notice that Landlord will eliminate the contaminated area from
the Premises and supply Tenant with replacement parking within two (2)
blocks of the Premises, for all spaces eliminated from the Premises.
Landlord and Tenant shall enter into an amendment to this Lease to
evidence such elimination. If the Lease is terminated pursuant to this
paragraph Reimbursable Costs shall be capped at $150,000.
4. MONTHLY AND ADDITIONAL RENT.
4.1 Minimum Monthly Rent - Initial Term. Subject to reduction
pursuant to Section 10 and Section 43, but otherwise without offset or
deduction except as expressly set forth herein, Tenant shall pay to
Landlord, without notice or demand, on or before the first day of each
calendar month, at the address specified below Landlord's signature
hereon or at such other place as Landlord shall designate, minimum
monthly rent during the Initial Term for the Premises as follows:
(a) For the first lease year, the ("First Lease Year") which
begins on the Commencement Date and continues through the day before the
first anniversary of the Commencement Date, minimum monthly rent shall be
$36,000 per month (prorated for partial months);
(b) For the second lease year the ("Second Lease Year"), which
begins on the first anniversary of the Commencement Date and continues
through the day before the second anniversary of the Commencement Date,
minimum monthly rent shall be $38,000 per month;
(c) For the third lease year (the "Third Lease Year"), which
begins on the second anniversary of the Commencement Date and continues
through the day before the third anniversary of the Commencement Date,
minimum monthly rent shall be $40,000 per month;
(d) For the fourth lease year (the "Fourth Lease Year"), which
begins on the third anniversary of the Commencement Date and continues
through the day before the fourth anniversary of the Commencement Date,
and for each successive lease year thereafter continuing until the last
month of the Initial Term, minimum monthly rent shall be $40,000 per
month; provided that beginning with the first month of the Fourth Lease
Year and continuing on the first day of every other succeeding Lease
Year, the minimum monthly rent shall be increased by a percentage equal
to the percentage increase in the Index (defined below) during the prior
two-year period, up to a maximum percentage increase of two and one-half
percent (2-1/2%) in any one year, for a maximum of five percent (5%)
increase for each two-year period.
(e) As used herein, the term "Index" shall mean the Consumer
Price Index for all Urban Consumers - All Items, West Cities A Average,
as published by the U.S. Department of Labor's Bureau of Labor
Statistics.
(f) In addition to the rental adjustments described above, and
not in lieu thereof, a rent adjustment shall be made on August 1, 2001,
which shall be an amount equal to one-half of the sum of Monthly Excess
Amounts (defined below) computed at the end of each of the following two-
year periods: 8/1/97 through 7/31/99, and 8/1/99 through 7/31/01.
(g) As used herein, the term "Monthly Excess Amount" means the
difference between (a) the monthly increase that would have been made for
the upcoming two-year period if the two and one-half percent annual limit
were not in effect, and (b) the monthly rent increase actually payable
(i.e., with the two and one-half percent annual limit in effect).
(h) In addition to the rental adjustments described above, and
not in lieu thereof, a rent adjustment shall be made on August 1, 2005,
which shall be an amount equal to one-half of the sum of the Monthly
Excess Amounts computed at the end of each of these two-year periods:
8/1/01 through 7/31/03 and 8/1/03 through 7/31/05.
(i) If the Index is discontinued, the parties shall substitute a
comparable index of consumer prices.
4.2 Minimum Monthly Rent - Extension Terms.
(a) Subject to reduction pursuant to Section 10 and Section 43,
but otherwise without offset or deduction except as specifically set
forth herein, Tenant shall pay to Landlord, without notice or demand, on
or before the first day of each calendar month, at the address specified
below Landlord's signature hereon or at such other place as Landlord
shall designate, minimum monthly rent for: (i) the first Lease Year of
each Extension Term shall be determined pursuant to Section (b) below,
and (ii) the final four (4) Lease Years of each Extension Term shall be
an amount equal to the minimum monthly rent applicable during the first
year of such Extension Term, increased by a percentage increase equal to
the percentage increase in the Index over the prior two (2) Lease Years;
provided the increase shall not be less than two and one-half percent
(2-1/2%) or more than five percent (5%) for any two (2) year period. In
no event will minimum monthly rent decrease.
(b) Following Tenant's exercise of an Option to Renew, and at
least one hundred fifty (150) days prior to the commencement of each
Extension Term, Landlord and Tenant shall attempt in good faith to agree
on minimum monthly rent for the first Lease Year of the Extension Term.
If Landlord and Tenant fail to agree, rent for said Lease Year shall be
equal to the prevailing market rent as determined by appraisal (the
"Prevailing Market Rent"). Landlord and Tenant shall each designate an
appraiser to determine the Prevailing Market Rent. If the two (2)
appraisers so selected are unable to agree upon the Prevailing Market
Rent within twenty (20) days of their appointment, they shall jointly
designate a third appraiser. If the three (3) appraisers do not agree,
the closest two (2) shall be averaged, to determine rent. The appraisers
shall complete their determination of the Prevailing Market Rent on or
before Ninety (90) days prior to the commencement of such Extension Term.
All appraisers designated for the foregoing purpose shall be duly
licensed and members of the American Institute of Real Estate Appraisers
or any comparable successor certifying organization if such institute is
not then in existence. The determination of rent hereunder shall be
conclusive and binding on Landlord and Tenant.
(c) The Prevailing Market Rent shall be determined by taking into
account the size and location of the Premises, its usage and which party
paid for the various improvements.
5. USE. The Premises may be used by Tenant for any purpose in
accordance with law. Tenant shall not do or permit to be done in or about
Premises anything which is illegal or unlawful, or which would constitute
a nuisance.
6. UTILITIES. Tenant hereby covenants and agrees to pay all
charges (including, without limitation, all taxes by governmental units
billed with or on utilities) for water, sewer, garbage removal, heat,
light, and for all other utilities which shall be used in or charged
against the Premises during the Initial Term of this Lease and as it may
be extended. In the event any such utilities are not separately metered
for the Premises, Tenant shall pay its share ("Tenant's Share") of such
utilities, as reasonably determined by Landlord based on increases over
usage in the Building immediately prior to the Commencement Date and
reflecting the usage by all Building occupants. Tenant's Share shall be
rebuttably presumed to be a reasonable determination, unless Tenant
within thirty (30) days of such notice provides Landlord with a
professional opinion of a qualified consultant which concludes that a
different allocation is more accurate. Landlord shall not be liable in
any manner whatsoever should the furnishing of any of these services be
delayed, interrupted or prevented unless caused by the negligence or
wilful misconduct of Landlord. If, at the commencement of the Initial
Term, any extension thereof, or any time thereafter, Landlord or Tenant
shall elect to separately meter any utilities to the Premises, Tenant
shall timely and directly pay all such separately metered utilities
relating to Tenant's use of the Premises. Utilities payments required by
Tenant shall be additional rent. Landlord may pay Tenant's Share of said
utilities if and to the extent Tenant does not pay after receipt of
notice of default and expiration of the applicable cure period.
7. REPAIR AND CARE OF PREMISES. The Premises have been inspected
and are accepted by Tenant in their present condition, AS IS, and Tenant
will at all times keep the Premises neat, clean and in a sanitary
condition. Tenant will at all times preserve the Premises in as good
repair as they now are or may hereafter be put to, ordinary wear and tear
excepted. Tenant will commit no waste, damage or injury to the Premises,
Building or Real Property. All repairs and maintenance shall be at
Tenant's sole cost and expense, except that (i) at all times Landlord
shall be responsible for structural repairs to the Building, and for
repair of damage caused by sink holes in the Adjoining Parking Lot and
(ii) from the Commencement Date through the end of the Third Lease Year,
Landlord shall be responsible for maintenance, repair and replacement of
the asphaltic portions of the roof of the Building.
Should either party fail to make any repairs required of it
hereunder within a reasonable time (which, except in the event of an
emergency, shall mean within thirty (30) days after prior written notice
from the non-repairing party or longer if necessary if the repair is
commenced within such thirty (30) day period and diligently prosecuted to
completion), or fail to make any payments of any kind required of it by
any provisions of this Lease, the other party may, at its option, make
the same, and the amount or cost thereof shall immediately become due and
payable by the other. Regardless of the allocation of responsibility of
care of the Premises, Landlord and Tenant shall be responsible for damage
caused by themselves, their agents, tenants, employees or contractors.
8. Intentionally deleted.
9. IMPROVEMENTS.
9.1 Landlord's Work. Landlord shall provide for the benefit of
the Premises, at its sole cost and expense, each of the following
("Landlord's Work"):
(a) Proper removal from the Premises of all asbestos and other
hazardous materials from the Premises as of the Commencement Date;
provided Tenant is responsible for all lead based paint, for all asbestos
removed by Tenant without prior notice to Landlord, and for any removal
or other remediation of hazardous materials which are discovered as a
result of Tenant's penetration of the Real Property.
(b) Resurface the floor of the top floor at a cost not to exceed
$100,000, as necessary to receive Tenant's floor covering per Tenant's
specifications.
(c) Remove (and not permit replacements of) any sign on the
exterior of the Premises except for those floor(s) subleased by Landlord.
Where signs may be retained, Landlord may retain only existing signs or
their comparable replacements.
9.2 Tenant's Work. Tenant shall construct those initial Tenant
improvements specified on Exhibit B attached hereto ("Tenant's Work").
Tenant's Work shall include sealing or other repairs to the roof,
including the vents and skylights, to prevent leakage. Such roof work
shall be done prior to the end of the Third Lease Year in a manner
reasonably approved by Landlord and Tenant. Any and all unused portion of
the $100,000 floor allowance from Landlord specified in Section 9.1(b)
above shall be applied to Tenant's roof repair work set forth above, to
the extent of the cost of such work.
After completion of Tenant's Work and upon notice by Tenant to
Landlord, Tenant shall have the right during the term of this Lease to
make such interior alterations, changes and improvements to the Premises,
as Tenant desires. Any alterations, changes or improvements which
adversely affect the structural members of the Building or involve
penetration of the surface of the Real Property or modify the exterior of
the Building, or impair any street access to the Real Property, require
Landlord's advance written approval, which may be granted or withheld in
Landlord's sole discretion.
With respect to Tenant's Work and any other alterations, changes
or improvements to the Premises by Tenant, Tenant shall comply with the
following:
(a) Compliance with Laws. All work shall be performed in
conformity with all permits, rules, orders, regulations, ordinances, laws
and other requirements of all governmental authorities having
jurisdiction over such work.
(b) Disputes. Tenant shall have sole responsibility to resolve
any and all disputes relating to any construction it undertakes under
this Lease, and shall pay all fees, costs, expenses, judgments, awards
and liabilities incurred in connection therewith.
(c) No Liens. At no time during or after the completion of any
such work shall Tenant or any contractor of Tenant create or suffer there
to be any lien or encumbrance upon the Premises including, without limit
construction liens or other claims for lien made by parties claiming to
have provided labor or material (collectively, "Construction Liens").
Notwithstanding the foregoing prohibition against Construction Liens,
Tenant may in good faith and with due diligence contest the validity or
amount of any Construction Lien and defer payment and discharge thereof
during the pendency of such contest provided that: (i) such contest shall
have the effect of preventing the sale or forfeiture of the Real
Property, Building or any part thereof; (ii) within ten (10) days after
Tenant has been notified of the filing of such Construction Lien, Tenant
shall have notified Landlord in writing of Tenant's intention to contest
such Construction Lien, and (iii) Tenant shall have deposited or caused
to be deposited with Landlord a sum of money which shall be sufficient to
pay in full such Construction Lien and all interest which might become
due thereon, and shall keep on deposit an amount so sufficient at all
times, increasing such amount to cover additions to the amount of such
Construction Lien or additional interest. Such deposits are to be held
without any allowance of interest. Landlord may apply such deposit as
necessary to discharge the Construction Lien in dispute following the
entry of a judgment and shall return any unused funds to Tenant.
(d) Damage to Building or Property. Tenant agrees that at no time
will Tenant (i) destroy, damage or impair the Building or any portion
thereof including, without limitation, any systems or structural
components thereof, (ii) impair the access to or from the Building or the
Real Property except as reasonably necessary in connection with work
consented to or approved by Landlord, or (iii) eliminate any access to a
public street.
(e) Disruption of Other Tenants. Tenant will take all reasonable
measures to minimize all sounds, vibrations, debris, activities,
impairment of access to or egress from, interruption or disruption of
utility services or mechanical or other Building services, and other
conditions that disrupt or impair the use and enjoyment of the Building
or the Real Property by any other tenant. Tenant shall give such tenants
reasonable notice of when disruptions or interruptions to access,
utilities or building services shall occur and will take reasonable steps
to minimize their duration and their impact on other tenants. To the
extent practicable, Tenant shall schedule any disruptions or
interruptions to access, utilities or Building services to occur on
weekends or during evening hours.
(f) Ownership of Improvements. All alterations, additions and
improvements made or constructed by Tenant shall be and remain the
property of Tenant during the Term of this Lease and shall become the
property of Landlord as of the date of termination of this Lease or upon
earlier vacating of the Premises and shall be delivered up to the
Landlord with the Premises, normal wear and tear and damage by casualty
and condemnation excepted. All trade fixtures installed by Tenant may be
removed by Tenant upon the termination of this Lease if Tenant so elects,
and shall be removed by the date of termination of this Lease or upon
earlier vacating of the Premises if required by Landlord. Upon any such
removal Tenant shall repair any damage to the Premises caused by such
removal.
In all projects other than Tenant's Work for which Tenant's
construction costs are budgeted to exceed $750,000, Tenant shall in
addition comply with the following terms and conditions:
(a) Compliance with Plans and Specifications. All work shall be
performed in accordance with all plans and specifications reasonably
approved by Landlord and Tenant.
(b) Approval of Contractors. All general contractors or other
contractors directly engaged by Tenant shall be subject to Landlord's
advance reasonable approval. All contracts entered into directly by
Tenant shall name Landlord as a third-party beneficiary. Copies of all
such agreements shall be delivered to Landlord promptly upon execution
thereof. All construction and consultants' reports delivered to Tenant
relating to any construction matters shall also be delivered and
addressed to Landlord.
(c) Bonding. Landlord may condition its approval of any work
exceeding a cost of $750,000 upon a requirement that the contractor
provide payment and performance bonds in adequate amounts to assure the
full completion of the work undertaken.
(d) Security for Tenant's Performance. Tenant shall grant to
Landlord a security interest in all of the construction plans,
specifications, purchase orders, agreements, work orders, permits and
other rights and interests necessary to enable Landlord to complete any
such work in the event Tenant defaults in any of its construction
obligations. Landlord's lien shall be junior to the liens of Tenant's
construction lender(s), if any. Tenant shall not otherwise pledge,
encumber or transfer any such assets or rights.
(e) Insurance. In addition to the other insurance to be purchased
hereunder, Tenant shall purchase, at its expense, appropriate casualty
and liability insurance to fully protect to commercially reasonable
standards Tenant's and Landlord's respective interests. Tenant agrees
that all general or other contractors it hires will carry general
liability and builder's risk insurance on commercially reasonable terms.
10. SEISMIC UPGRADES.
10.1 If seismic upgrades are required by the City of Seattle or
any other governmental entity as a result of a change in laws that
affects all improvements and not as the sole result of Tenant's Work,
Tenant shall perform such work and shall share in the cost of seismic
upgrades in an amount equal to 50% of the portion of the Premises leased
by Tenant (but not subleased to Landlord), e.g. 1/3 space occupied X 50%
= 17%.
10.2 Except as described in Section 10.1, if any work by Tenant
on the Premises results in a requirement by the City of Seattle that
certain seismic upgrades be made to the Building, then the parties agree
that:
(a) Tenant shall pay all amounts up to $400,000 of the required
seismic upgrades;
(b) Landlord shall be responsible for all amounts in excess of
$400,000 up to $600,000;
(c) Tenant will finance Landlord's portion of the seismic
upgrades referred to in Subsection 10.2(b), which shall be payable by
Landlord to Tenant through a fifty percent (50%) rent reduction, plus
interest at a rate of eight percent (8%) per year, commencing as funds
are expended.
(d) Tenant and Landlord will share the additional cost of seismic
upgrades which exceed $600,000, on a 50/50 basis, with Tenant's portion
determined by multiplying fifty percent (50) times the percentage of
space leased (but not subleased by Landlord) (e.g. 50% x 2/3 Building =
34%).
11. INSURANCE AND TAXES.
11.1 Liability Insurance. Tenant shall, at all times during the
term hereof and at Tenant's cost and expense, maintain in effect primary
commercial general public liability insurance, naming Landlord as an
additional insured in an amount of not less than $2,000,000 per person
per occurrence and not less than $l,000,000 for damage to property in
connection with the use, operation or condition of the Premises. In no
event shall the limits of said policies be considered as limiting the
liability of Tenant under this Lease, nor shall Tenant's duty to carry
insurance create any legal responsibility of Tenant for any insured
casualty. The insurance shall be issued prior to commencement of Tenant's
Work by an insurance company or companies currently used by Tenant, in a
commercially reasonable form, and a copy of each policy or certificate of
insurance shall be delivered to Landlord before the commencement of
Tenant's Work and before the expiration of each policy. If Tenant does
not timely pay the premium for the insurance required hereunder Tenant
shall so notify Landlord and Landlord may immediately upon notice to
Tenant, pay such premium or provide a replacement policy.
11.2 Casualty Insurance. Tenant shall obtain and keep in full
force and effect such policy or policies of fire and all-risk extended
coverage insurance (including earthquake coverage at Tenant's option),
and including coverage for vandalism and malicious mischief, on the
Building and Premises, including any improvements thereon, insuring the
Building for its full replacement cost. Such policies shall be primary,
and the proceeds of any such insurance shall first be used to rebuild or
repair the Premises if and as required hereunder. Landlord shall be named
as an additional insured. Any such proceeds not required for such
rebuilding or repairing shall be paid to and belong to Landlord. Tenant
may also at its option obtain boiler insurance, rental loss insurance,
and plate glass insurance, and such other coverages (including for the
fire and all-risk extended coverage policies) as shall be commercially
reasonable from time to time. If Tenant does not timely pay the premium
for the insurance required hereunder Tenant shall so notify Landlord and
Landlord may immediately upon notice to Tenant, pay such premium or
provide a replacement policy.
11.3 Taxes And Assessments. In addition to the rent to be paid by
Tenant as above provided, during the term of this Lease, Tenant shall
timely pay directly to the taxing authority all real estate taxes and
assessments levied on the Real Property. Landlord shall supply Tenant
with the real estate tax statements at least two (2) months before taxes
are due. Tenant shall have the right to, at its expense, appeal the real
estate tax assessment for the Real Property. Such taxes and obligations
shall be apportioned during the Initial Term and any extension thereof if
applicable, so that Tenant shall pay only that proportion thereof as
shall accrue during said term. Landlord shall elect to pay assessments
over the maximum period possible.
11.4 Alternative Method Of Taxation. If at any time during the
Term, the present method of taxation shall be changed so that in lieu of
the whole or any part of any taxes, assessments, fees or charges levied,
assessed or imposed on the Premises, there shall be levied, assessed or
imposed on Landlord a capital levy or other tax directly on the rents
received therefrom and/or a franchise tax, assessment, levy charge
measured by or based, in whole or in part upon such rents, then all such
taxes, assessments, fees or charges (except income taxes), or the part
thereof so measured or based, shall be deemed to be included within the
term "rent" for the purposes hereof.
Tenant shall be liable for all taxes levied against personal
property placed by Tenant in the Premises. If any such taxes are levied
against Landlord or Landlord's property and if Landlord elects to pay the
same or if the assessed value of Landlord's property is increased by
inclusion of personal property placed by Tenant in the Premises and
Landlord elects to pay the taxes based on such increase, Tenant shall pay
as additional rent to Landlord upon demand that part of such taxes for
which Tenant is liable hereunder.
12. DAMAGE OR DESTRUCTION.
12.1 Repair and Restoration. All casualty insurance payments for
damage to the Building shall be used for the sole purpose of repairing,
rebuilding and/or restoring the Building. From the date hereof and
throughout the Initial Term, as it may be extended, if the Building is
damaged or destroyed by fire or other casualty Tenant shall promptly
rebuild and restore the Building to the extent of insurance proceeds and
any deductible to its condition existing immediately prior to such fire
or other casualty, provided that if Tenant reasonably estimates that it
will take more than one hundred eighty (180) days from the date of damage
to restore the Premises, or if the Building is damaged by an uninsured
casualty Tenant, may elect to terminate this Lease upon thirty (30) days
written notice to Landlord, given within thirty (30) days after such
damage. Any such proceeds not required for such rebuilding or repairing
shall be paid to and belong to Landlord. If the Lease is not so
terminated, the Building shall be repaired in the manner and subject to
the conditions provided for above and elsewhere in this Lease. If the
conditions set forth above which enable Tenant to terminate this Lease
occur during the last Lease Year, Landlord shall also have the right to
terminate this Lease, unless Tenant, within twenty (20) days of receipt
of Landlord's notice of termination, exercises the next remaining Option
to Renew, if any.
12.2 Rental Abatement. In the event of damage or destruction to
the Building which substantially affects Tenant's ability to operate its
business, minimum monthly rent (but no other charges under this Lease)
shall be abated in the same proportion that the area of the Premises used
by Tenant after such casualty bears to the total area of the Premises,
until the Building is repaired or restored, or the Lease expires or is
sooner terminated under the other terms of this Lease, but in no event
shall minimum monthly rent be abated for more than six (6) months.
13. INDEMNITY.
13.1 Indemnification by Tenant. Subject to the conditions and
provisions of this Paragraph 13.1 and commencing upon execution of this
Lease Tenant agrees to indemnify, defend and hold harmless Landlord and
Landlord's assigns, affiliates, owners, beneficiaries, trustees,
employees, representatives, officers, directors and agents
("Indemnitees") from and against any and all demands, claims, complaints,
actions or causes of action, suits, proceedings, investigations,
arbitrations, assessments, liens, losses, damages, liabilities, costs and
expenses, including, but not limited to, interest, penalties and
reasonable attorneys' fees and disbursements, asserted against, imposed
upon or incurred by any Indemnitee, directly or indirectly, by reason of
or resulting from any liability, obligation or claim (whether absolute,
accrued, contingent or otherwise and whether a contractual, tax or any
other type of liability, obligation or claim) arising out of, relating to
or resulting from (a) any misrepresentation or breach of the
representations, warranties, covenants or agreements of Tenant contained
in or made pursuant to this Lease; (b) any failure to timely perform or
comply in all material respects with any material covenant, agreement or
undertaking of Tenant contained in or made pursuant to this Lease; (c)
any violation or alleged violation by Tenant or any assignee or sublessee
of Tenant of any permits, rules, orders, regulations, ordinances, laws
and other requirements of any governmental authorities; (d) Tenant,
Tenant's employees acting in the course of their employment, Tenant's
business or operations, any assignee or sublessee of Tenant, their
employees acting in the course of their employment or their business or
operations; (e) any accident, injury or damage, howsoever and by
whomsoever caused, to any person or property, occurring on the Premises
unless caused by Landlord, its agents or other tenants of Landlord
pursuant to the Sublease; (f) any injury to persons, damage to property
or other liability caused by or resulting from Tenant's construction,
improvement or maintenance in any part of the Building or Real Property;
and (g) any damage to property or injury to the employees, business
invitees or guests of Tenant or any assignee or sublessee of Tenant
occurring in or about any other portion of the Project except if caused
by Landlord or its agents.
13.2 Indemnification by Landlord. Subject to the conditions and
provisions of this Paragraph 13.2, and commencing upon execution of this
Lease, Landlord agrees to indemnify, defend and hold harmless Tenant and
Tenant's assigns, affiliates, owners, beneficiaries, trustees, employees,
representatives, officers, directors and agents ("Indemnitees") from and
against any and all demands, claims, complaints, actions or causes of
action, suits, proceedings, investigations, arbitrations, assessments,
liens, losses, damages, liabilities, costs and expenses, including, but
not limited to, interest, penalties and reasonable attorneys' fees and
disbursements, asserted against, imposed upon or incurred by any
Indemnitee, directly or indirectly, by reason of or resulting from any
liability, obligation or claim (whether absolute, accrued, contingent or
otherwise and whether a contractual, tax or any other type of liability,
obligation or claim) arising out of, relating to or resulting from (a)
any misrepresentation or breach of the representations, warranties,
covenants or agreements of Landlord contained in or made pursuant to this
Lease (which includes the sublease); (b) any failure to timely perform or
comply in all material respects with any material covenant, agreement or
undertaking of Landlord contained in or made pursuant to this Lease; (c)
any violation or alleged violation by Landlord or any assignee or
sublessee of Landlord of any permits, rules, orders, regulations,
ordinances, laws and other requirements of any governmental authorities;
(d) Landlord, Landlord's employees acting in the course of their
employment, Landlord's business or operations, any assignee or sublessee
of Landlord, their employees acting in the course of their employment or
their business or operations; (e) any accident, injury or damage,
howsoever and by whomsoever caused, to any person or property, occurring
on the Premises caused by Landlord, its agents, contractors or employees;
(f) any injury to persons, damage to property or other liability caused
by or resulting from Landlord's construction, improvement or maintenance
in any part of the Building or Real Property; and (g) any damage to
property or injury to the employees, business invitees or guests of
Landlord or any assignee or sublessee of Landlord occurring in or about
any other portion of the Project except if caused by Tenant or its
agents.
14. INSOLVENCY. In the event Tenant becomes insolvent,
voluntarily or involuntarily bankrupt, or if a receiver, assignee or
other liquidating officer is appointed for the business of Tenant, then
Landlord may cancel this Lease at Landlord's option, effective thirty
(30) days after giving Tenant and Guarantor notice of cancellation and
opportunity to cure.
15. DEFAULT AND RE-ENTRY. Tenant shall be in default if it fails
to pay any installment of rent when due after Landlord gives Tenant and
Guarantor ten (10) days prior written notice of such failure to pay and
opportunity to cure within such ten (10) days.
Tenant shall also be in default if it fails to perform any other
obligation under this Lease after Landlord gives Tenant and Guarantor
thirty (30) days prior written notice and opportunity to cure; provided
if Tenant commences to cure within the thirty (30) day period, but is
unable to complete the cure within the thirty (30) day period, and if
Tenant continues to proceed diligently to effect the cure, the thirty
(30) day period shall be extended for such time as is necessary to
reasonably allow Tenant to complete its cure of the default.
16. LANDLORD'S REMEDIES.
16.1 Remedies - General. If Tenant is in default, then Landlord
shall have all rights available to it under Washington law including,
without limit, the following rights and remedies, which are not
exclusive: (i) to declare the Term hereof ended and to reenter the
Premises and take possession thereof and remove all persons therefrom,
and Tenant shall have no further claim thereon or hereunder; (ii) to cure
such default on Tenant's behalf and at Tenant's sole expenses and charge
Tenant for all costs and expenses incurred by Landlord in effecting such
cure as additional rent with interest on such amounts at the rate
specified in this Lease until paid; (iii) without declaring this Lease
terminated, to reenter the Premises and occupy the whole or any part
thereof for and on account of Tenant and to collect any unpaid Rent which
has become payable, or which may thereafter become payable; or (iv) even
though it may have reentered the Premises, at any time thereafter elect
to terminate this Lease and all of the rights of Tenant in or to the
Premises.
16.2 Reentry. If Landlord reenters the Premises, Landlord shall
not be deemed to have terminated this Lease or the liability of Tenant to
pay any Rent thereafter accruing as it becomes due, or to have terminated
Tenant's liability for damages under any of the provisions hereof, by any
such reentry or by any action, in unlawful detainer or otherwise, to
obtain possession of the Premises, unless Landlord shall have notified
Tenant in writing that it has so elected to terminate this Lease, and
Tenant shall be liable for and reimburse Landlord upon demand for all
costs and expenses of every kind and nature incurred in retaking
possession of the Premises and all other losses suffered by Landlord as a
consequence of Tenant's default. In the event of any entry or taking
possession of the Premises, Landlord shall have the right, but not the
obligation, to remove therefrom all or any part of the personal property
located therein and may place the same in storage at a public warehouse
at the expense and risk of Tenant.
16.3 Termination. If Landlord elects to terminate this Lease
Landlord may recover from Tenant as damages, the following: (i) the worth
at the time of award of any unpaid Rent which had been earned at the time
of such 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 the Rent loss
that 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 the Rent loss that
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 its obligations under this Lease including, but not
limited to, any costs or expenses incurred by Landlord in retaking
possession of the Premises, including reasonable attorneys' fees
therefor; maintaining or preserving the Premises after such default;
preparing the Premises for reletting to a new tenant, including repairs
or alterations to the Premises for such reletting; leasing commissions;
and any other costs necessary or appropriate to relet the Premises; and
(v) such other amounts in addition to or in lieu of the foregoing as may
be permitted from time to time by the laws of the State of Washington. As
used in this Paragraph 16.3, the "worth at the time of award" shall be
computed by allowing interest at the greater of nine percent (9%) per
annum or two percentage points (2%) above the prime rate as publicly
announced by Seattle First National Bank, N.A., or its lawful successor.
For purposes of this Paragraph only, the term "rent" shall be deemed to
be the rent and all additional rent and other sums required to be paid by
Tenant pursuant to the terms of this Lease.
17. COSTS AND ATTORNEYS' FEES. If by reason of any default on the
part of Landlord, Tenant or Guarantor it becomes necessary for another
party hereto to employ an attorney, or in case Landlord, Tenant or
Guarantor shall bring suit to recover any amount due hereunder, or for
breach of any provision of this Lease (including the Guaranty), or to
recover possession of the leased Premises, or if Landlord, Tenant or
Guarantor shall bring any action for any relief against the other,
declaratory or otherwise, arising out of this Lease, then and in any of
such events, the prevailing party shall be entitled to a reasonable
attorneys' fee and all costs and expenses expended or incurred in
connection with such default or action, including any appellate action.
18. ASSIGNMENT AND SUBLETTING. On twenty (20) days prior notice
to Landlord, Tenant may assign its interest in this Lease or sublease all
or any portion of the Premises. Tenant and its guarantor, Esterline
Technologies Corporation, shall be released from liability under this
Lease if Tenant assigns its interest hereunder to an entity which assumes
this Lease and has a net worth of at least equal to guarantor's at the
time of assignment, otherwise no such assignment or subletting shall
relieve Tenant of any liability under this Lease, and Tenant and
guarantor shall remain primarily liable hereunder.
19. OPTION TO PURCHASE. Landlord hereby grants Tenant the option
to purchase the Real Property and Building ("Purchase Option"). The
Purchase Option must be exercised prior to the expiration of the Third
Lease Year for the purchase price of $7,000,000 plus one percent (1%) per
month beginning with the Commencement Date (the "Purchase Price"). Tenant
shall provide Landlord with written notice of its exercise of the
Purchase Option prior to expiration of the Third Lease Year.
In the event Tenant exercises its Purchase Option, such sale
shall close no later than six (6) months after option exercise and
Landlord shall, upon receipt of the Purchase Price together with full
payment of any unpaid Rent and other amounts due and payable by Tenant
with respect to any period ending on or before the date of the purchase,
deliver to Tenant a statutory warranty deed which conveys to Tenant the
Real Property and Building free and clear of all monetary liens and free
of all other encumbrances except those Tenant has agreed in writing to
accept; provided, Tenant's sole remedy in the event it does not accept
any nonmonetary encumbrance is to terminate its Purchase Option. Landlord
covenants and agrees that until the end of the Third Lease Year it will
not further encumber the Premises except with utility easements and/or
other items necessary for the use and operation of the Real Property;
provided, consensual monetary encumbrances which are removed by closing
are permitted. Upon such conveyance of the Real Property and Building,
this Lease shall terminate. Landlord shall pay the cost of standard title
insurance, attorneys' fees incurred by Landlord in connection with such
conveyance, real estate excise taxes and one-half of the escrow fee.
Tenant shall pay all recording fees and attorneys fees incurred by Tenant
in connection with the conveyance of the Real Property and Building, any
title insurance premium above standard coverage, any personal property
tax and one-half of the escrow fee. If such sale shall fails to be
consummated this Lease shall continue in full force and effect, and any
options to extend or renew the Term of this Lease which otherwise would
have expired during the escrow period of such proposed sale shall be
deemed to remain in effect for thirty (30) days after termination of the
escrow or other arrangement covering the closing of such proposed sale.
If such sale fails to close due to a default by Tenant, Tenant shall
reimburse Landlord all Landlord's out-of-pocket costs directly related to
such sale as Landlord's sole remedy. Tenant agrees to cooperate with
Landlord if Landlord elects to complete the sale as a like kind exchange
under Section 1031 of the Internal Revenue Code, and Landlord shall pay
Tenant for any additional cost incurred and indemnify and hold Tenant
harmless from and against any liability sustained as a result of such
cooperation. Landlord shall use a qualified intermediary and employ
direct deeding in any such exchange. Such purchase shall be on an "as-is"
basis, but without releasing or indemnifying Landlord from any liability,
and Landlord shall, as part of such sale, assign to Tenant all warranties
and indemnities received from its seller, the Seattle School District.
20. SUCCESSORS. All of the covenants, agreements, terms and
conditions contained in this Lease shall apply to and be binding upon
Landlord and Tenant and their respective heirs, executors,
administrators, successors and assigns.
21. SUBORDINATION. This Lease is subject to and is hereby
subordinated to all present mortgages, deeds of trust and other
encumbrances affecting the Premises. Tenant will execute such instruments
as may be required to subordinate the rights and interest of the Tenant
under this Lease to the lien of any mortgage or deeds of trust at any
time placed on the land of which the leased Premises are a part;
provided, however, that any subordination effected by this Section shall
not affect Tenant's rights under this Lease, including without limitation
Tenant's right to possession, use and occupancy of the Premises. Tenant
further agrees that any such subordination agreement will contain a
provision whereby Tenant will agree, in the event of foreclosure of any
such mortgage or deeds of trust to attorn to and recognize as its
landlord under the terms of this Lease said lender or any purchaser of
the leased property at a foreclosure sale or their heirs, successors or
assigns.
22. NONDISTURBANCE AGREEMENT. Landlord covenants and agrees to
obtain from the holder of the sole existing loan secured by the Premises
a Nondisturbance Agreement in a form reasonably acceptable to Tenant no
later than twenty (20) days prior to the Commencement Date.
23. SURRENDER OF POSSESSION. Upon expiration of the term of this
Lease, whether by lapse of time or otherwise, Tenant shall promptly and
peacefully surrender Premises to Landlord in good condition and repair,
except for ordinary wear and tear, damage from condemnation or casualty
and such repairs as Tenant is not required to make hereunder. On or
before expiration of the term of this Lease, Tenant shall be entitled to
remove its trade fixtures and equipment installed by it from Premises.
Any damage caused by such removal shall be repaired by Tenant at its
expense.
24. HOLD OVER TENANCY. If (without execution of a new lease or
written extension) Tenant shall hold over after the expiration of the
term of this Lease (as it may have been extended pursuant to this Lease),
it shall be deemed to be occupying Premises as a Tenant from month to
month, which tenancy may be terminated by either party as provided by
law. During such tenancy, all terms and conditions of this Lease in
effect for the last month of the Term, as it may have been extended shall
apply, and the parties shall be bound by all of the terms, covenants and
conditions as herein specified; provided, if Tenant holds over without
Landlord's consent minimum monthly rent shall be 125% of that payable
prior to immediately prior to expiration.
25. WAIVER OF SUBROGATION. Landlord and Tenant each releases and
relieves the other and waives its entire right of recovery against the
other for loss or damage arising out of or incident to the perils of
fire, explosion, or any other perils described in the "extended coverage"
insurance endorsement approved for use in Washington, which occurs in, on
or about the Premises, whether due to the negligence of either party,
their agents, employees, or otherwise, provided liability and fire
extended coverage insurance providing said waiver is reasonably available
without a significant increase in the premiums.
26. NOTICES. All notices under this Lease shall be in writing and
delivered in person or sent by registered or certified mail, return
receipt requested, to Landlord at the address to which rent payments are
designated to be sent and to Tenant at the Premises, effective as of
personal delivery, if delivered, or two (2) business days after mailing,
if mailed. Either party may change the address for notice by giving
written notice thereof to the other party. Any notice to Landlord
hereunder shall also be given to Landlord's lender, which shall be given
a reasonable time to cure any default by Landlord. Landlord shall give
Tenant written notice of the name and address of its lender and, from
time to time, of the change in its lender.
27. CONDEMNATION. If all of the Premises or such portions thereof
as may be required for Tenant's reasonable use of the Premises as
determined by Tenant, are taken by eminent domain, this Lease shall
automatically terminate as of the date Tenant is required to vacate the
Premises and all rentals shall be paid to that date. In case of a taking
of a part of the Premises, or another portion of the Building or Real
Property not required for Tenant's reasonable use of the Premises, then
this Lease shall nonetheless continue in full force and effect and the
rental shall be equitably reduced based on the proportion by which the
floor area of the Premises is reduced (or Tenant's use of the Premises is
affected, if such taking pertains to the Building or the land upon which
it is located), such rent reduction to be effective as of the date
possession of such portion is delivered to the condemning authority, and
there shall be a corresponding reduction in sublease rent due from
Landlord. Landlord reserves all rights to damage to the Premises for any
taking by eminent domain, and Tenant hereby assigns to Landlord any right
Tenant may have to such damages or award, and Tenant shall make no claim
against Landlord for damages for termination of the leasehold interest or
interference with Tenant's business. Tenant shall, however, have the
right to claim against the condemning authority for any losses
compensable under relevant law; provided that the same does not reduce
the amount received by Landlord or Landlord's lender.
28. ESTOPPEL CERTIFICATE. Tenant or Landlord shall, from time to
time, within ten (10) business days after receiving a written request
from the other party, execute and deliver a written statement. This
written statement, which may be relied upon by Landlord and any third
party with whom Tenant or Landlord is dealing, shall certify:
28.1 The accuracy of the Lease document(s);
28.2 The beginning and ending dates of the Lease;
28.3 Whether or not the Lease is in full force and effect and the
date through which rent is paid;
28.4 Whether there is any known default or if Landlord or Tenant
has any claims or demands; and, if so, specifying the default claim or
demand; and
28.5 To the accuracy of other correct and ascertainable facts
that are covered by the Lease terms.
29. AUTHORITY. If either party is a corporation, partnership or
limited liability company, each individual executing this Lease on behalf
of said entity represents and warrants that he/she is duly authorized to
execute and deliver this Lease on behalf of said entity and that this
Lease is binding upon said entity in accordance with its terms.
30. MISCELLANEOUS.
30.1 Time is of the essence of this Lease.
30.2 This Lease contains all of the agreements between the
parties hereto relating to the subject matter hereof and may be amended
only in a writing signed by all the parties hereto.
30.3 The titles to Sections in this Lease are not a part of this
lease and shall have no effect upon the construction or interpretation of
any part thereof. Tenant will be referred to by the pronouns "it" and
"its" irrespective of number, gender or the fact of incorporation. This
Lease shall be construed and governed by the law of the State of
Washington. This Lease shall be interpreted without regard to which party
drafted any or all of its provisions.
30.4 In the event of any dispute between the parties in
connection with this Agreement, the parties hereby consent to the
jurisdiction of the Superior Court for the State of Washington with venue
in King County and confirm that said jurisdiction is exclusive.
30.5 Whenever provision is made in this Lease for any written
notice or demand by Landlord or Tenant to be given to the other party, it
shall be hand delivered, faxed (with receipt confirmed), or mailed
postage prepaid, return receipt requested, to Landlord or Tenant at the
following addresses or such other address as the parties shall inform
each other in writing:
FOR TENANT: Korry Electronics Co.
Attn: Bill Mason
901 Dexter Avenue North
Seattle, WA 98109
COPY TO Timothy R. Osborn
Bogle & Gates P.L.L.C.
Two Union Square
601 Union Street
Seattle, Washington 98101
FOR GUARANTOR: Esterline Technologies Corporation
Attn: Robert W. Stevenson
10800 N.E. 8th, Suite 600
Bellevue, Washington 98004
FOR LANDLORD: 810 Dexter L.L.C.
c/o Michael Maloney
The Highlands
Seattle WA 98177
COPY TO: Bruce H. Benson
Helsell Fetterman LLP
1500 Puget Sound Plaza
1325 Fourth Avenue
Seattle, WA 98101
30.6 If any term, covenant, condition or provision of this Lease
or the application thereof to any person or circumstances shall, at any
time or to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to person or
circumstances other than those as to which this Lease is held invalid or
unenforceable, shall not be affected thereby, and each term, covenant,
condition and provision of this Lease shall be valid and be enforced to
the fullest extent permitted by law.
30.7 This Lease shall not be recorded, but at the request of
either Landlord or Tenant the parties shall execute and acknowledge a
Memorandum of this Lease for recording. The Memorandum shall include such
provisions of this Lease as the parties desire, excluding, however, the
amount of rent and other monetary terms.
31. AGENCY. The parties represent and warrant to each other that
no real estate broker or agent has been involved in connection with this
Lease for which a claim may be made against Landlord or Tenant, and
Landlord or Tenant agree to indemnify the other against and hold the
other harmless from any claim, loss or liability in connection with a
breach of said representation and warranty. This indemnification and hold
harmless agreement shall survive the termination or expiration of this
Lease.
32. QUIET ENJOYMENT. So long as Tenant is not in default
hereunder past any applicable cure period Tenant shall have quiet
enjoyment of the Premises, free from any claims of parties claiming by,
under, or through Landlord and Landlord shall defend, indemnify and hold
Tenant harmless from any and all damages or liability (including actual
attorneys' fees) incurred as a result of a breach of the foregoing
provision, or any claim that if successful would result in breach.
33. SURVIVAL OF REPRESENTATIONS, ETC. The representations,
warranties, covenants and agreements in this Lease or pursuant hereto
shall survive the execution and delivery of this Lease and the expiration
or earlier termination of this Lease for the applicable statute of
limitations period.
34. ACCESS. Landlord and its agents shall have the right to enter
into and upon the Premises at all reasonable times and upon reasonable
notice (or without notice in the event of emergency such as fire) for the
purposes of inspecting the Premises, making repairs required of Landlord,
and/or showing the Premises to a prospective purchaser, tenant or lender.
Landlord shall have the right to place a "for rent" sign on the Premises
and show the Premises for one hundred seventy (170) days prior to the
expiration of the lease term.
35. BINDING ON SUCCESSORS AND ASSIGNS. The terms, provisions and
covenants, and conditions contained in this Lease shall apply to, inure
to the benefit of and be binding upon, the parties hereto and upon their
respective heirs, legal representatives, successors and permitted
assigns.
36. AMENDMENTS TO THE LEASE. This Lease may not be altered,
changed or amended except by an instrument in writing signed by both
parties hereto.
37. SEVERABILITY. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws effective
during the term of this Lease, then and in that event it is the intention
of the parties hereto that the remainder of this Lease shall not be
affected thereby.
38. INTEREST. Rent and any other sums due under this Lease from
Landlord or Tenant shall bear interest at the greater of nine percent
(9%) per annum or two percentage points (2%) over the prime rate as
announced by Seafirst Bank or its lawful successor, until paid in full.
39. NO IMPLIED WARRANTIES. LANDLORD AND TENANT EXPRESSLY AGREE
THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY,
HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND ARISING
OUT OF THIS LEASE REGARDING THE CONDITION OF THE BUILDING, THE PREMISES
OR THE REAL PROPERTY. LANDLORD MAKES NO WARRANTIES REGARDING THE
CONDITION OF THE BUILDING, THE PREMISES OR THE REAL PROPERTY.
40. BROKERS. Tenant and Landlord each represents and warrants to
the other that it has not entered into any agreement with, nor otherwise
had any dealings with, any broker or agent in connection with the
negotiation or execution of this Lease which could form the basis of any
claim by any such broker or agent for a brokerage fee or commission,
finder's fee or any other compensation of any kind or nature in
connection herewith. Each party shall indemnify, defend and hold the
other harmless from and against any costs (including but not limited to
court costs and attorneys' fees), expenses or liability for commissions
or other compensation claimed by any broker or agent other than those
listed above in this Paragraph with respect to this Lease which arises
out of any agreement or dealings, or alleged agreement or dealings,
between Landlord or Tenant and any such agent or broker.
41. NO WAIVER. No waiver by either party of any covenant,
condition or agreement in this Lease shall operate as a waiver of the
covenant, condition or agreement itself, or of any subsequent breach
thereof.
42. REMEDIES CUMULATIVE. The specified remedies to which Landlord
or Tenant may resort under the terms of this Lease are cumulative and are
not intended to be exclusive of any other remedies or means of redress to
which Landlord or Tenant may lawfully be entitled in case of any breach
or threatened breach by Tenant or Landlord of any provision of this
Lease. In addition to the other remedies in this Lease provided, Landlord
or Tenant shall be entitled to the restraint by injunction of the
violation, or attempted or threatened violation, of any of the covenants,
conditions or provisions of this Lease.
43. SUBLEASE. Landlord hereby subleases from Tenant and Tenant
subleases to Landlord on the following terms and conditions:
43.1 For the first three (3) years of the Lease, beginning on the
Commencement Date and continuing through the Third Lease Year, Landlord
will sublease from Tenant both the bottom floor and the middle floor of
the Building and the parking as referred to in Section 2 above for a
minimum monthly rental amount of $24,000 per month in advance.
43.2 For the fourth and fifth years of the Lease, beginning on
the first day of the Fourth Lease Year and continuing through the last
day of the Fifth Lease Year, Landlord will sublease from Tenant the
bottom floor of the Building for a minimum monthly rental amount of
$12,000 per month. The first five (5) Lease Years are sometimes referred
to herein as the "Sublease Term."
43.3 During the Sublease Term, Landlord shall pay when due a
share of taxes, insurance and utilities as follows:
(a) Taxes: Real estate taxes and assessments attributable to land
value shall be prorated on a Building square footage basis, and for
improvements shall be allocated based on 40% for the top floor, 30% for
the middle floor and 30% for the bottom floor for existing improvements
and, assuming no improvements to the subleased premises by Landlord,
Tenant shall be responsible for all increases in real estate taxes
subsequent to 1996 for improvements.
(b) Insurance: All Tenant's insurance costs shall be allocated
40% to the top floor, 30% to the middle floor and 30% to the bottom floor
which for allocation purposes shall be limited to Landlord's current cost
of insurance, which for 1996 is $6,000, subject to annual increase by the
percentage increase in the Index for the prior year.
(c) Utilities: Landlord shall pay all utilities of the type
required to be paid by Tenant pursuant to Section 6 of this Lease which
are metered separately to the subleased premises or are not allocated to
Tenant as Tenant's share under Section 6.
43.4 During the sublease term, Landlord shall maintain the
interior of the subleased premises in a manner determined by Landlord,
but Tenant shall retain control over the exterior of Premises, including
the premises subleased by Landlord, and Landlord's right to place or
retain signs on the exterior of the Building shall be as provided in
Section 9.1(c). Landlord shall have the right to paint the exterior of
the Building. Except for damage caused by Tenant or its employees,
contractors, agents or invitees, Tenant's obligations under Section 7 of
the Lease, "Repair and Care of Premises", shall not apply to the
subleased premises.
43.5 Tenant, as sublessor hereunder, agrees that with respect to
the sublease set forth in this Section, Landlord may use and sub-sublease
the property so subleased for any commercial use that is in accordance
with law, is consistent with the prime Lease and which would not, in
Tenant's reasonable judgment, materially impair or interfere with
Tenant's use of the Premises. No sub-sublease shall be for a term beyond
the Sublease Term except for the LCM International lease. Landlord
warrants and it has the right to eliminate LCM's right to lease beyond
the Sublease Term and shall do so at Tenant's request. Tenant approves
the existing uses identified as follows:
- bakery - storage of boats and vehicles
- auto repair and painting - auto detailing
- wholesale wine - distribution
- wholesale clothing - limo service
- delivery service - storage of advertising
materials
Landlord, as subtenant hereunder, shall not do or permit to be done in or
about Premises anything which is illegal or unlawful, or which will be
dangerous to life or limb, or which will constitute a nuisance or
increase the existing rate of insurance upon the Building, or cause
cancellation of any insurance policy covering any part of the Building or
the Premises.
43.6 Landlord and Tenant agree that with respect to the sublease
of premises from Tenant to Landlord set forth in this Section 43, Tenant
shall not be liable or held responsible for any actions of Landlord in
connection with its use of the premises so subleased hereunder.
43.7 Tenant shall not be responsible for any breach or default in
payment of rent or otherwise under this Lease if and to the extent caused
by Landlord's breach of this sublease.
43.8 In lieu of Landlord paying Tenant sublease rent and other
and sums due from Landlord to Tenant under this sublease, Tenant shall
deduct any and all amounts due from Landlord to Tenant under this
Sublease from any all amounts owed by Tenant to Landlord under this
Lease.
43.9 All obligations and duties of Tenant under this Lease
regarding the Premises shall not apply to subleased premises during the
Sublease Term. Landlord shall be subject to the same obligations with
respect to holding over and surrendering the subleased premises as Tenant
is under Sections 26 and 27 of this Lease regarding the Premises.
43.10 Landlord shall not assign its interest in this sublease. If
Landlord is a corporation, partnership or limited liability company,
transfer of a controlling interest in such entity shall be deemed as
assignment. Landlord may sub-sublease all or a portion of the subleased
premises pursuant to Section 43.5 During the first five (5) years of the
prime Lease, any new sub-subleases by Landlord shall contain a provision
allowing Landlord to terminate such sub-sublease on six (6) months
notice, which Landlord shall exercise if so directed by Tenant following
Tenant's irrevocable election to terminate the Sublease (by purchasing
the Premises or otherwise by mutual agreement) at the end of such six (6)
month period.
43.11 Tenant shall also have the first opportunity to terminate
the sublease as to all or portions of the subleased premises, as follows:
If Landlord desires to sub-sublease at least 2000 square feet of the
subleased premises, it shall first offer said space to Tenant in writing.
Tenant shall have twenty (20) days after receipt to accept said offer. If
Tenant accepts, the additional space shall automatically become part of
the Premises free of the sublease, subject to all terms of this Lease,
and rent for such space shall be determined based on the average square
footage rate being paid by Tenant at that time, and the sublease rent
shall be reduced based on the average square footage rate being paid by
Landlord at that time. If Tenant does not accept Landlord's offer within
the twenty (20) day period, Landlord may proceed to sub-sublease to the
proposed new tenant. Tenant's right of first opportunity shall again
become effective anytime Landlord desires to sub-sublease part of the
subleased premises at least 2000 square feet in area.
44. GUARANTY. Esterline Technologies Corporation ("Guarantor")
hereby guaranties Tenant's obligations under this Lease. Landlord may not
exercise its rights against Guarantor under this guaranty until thirty
(30) days have elapsed following expiration of the cure period specified
in the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease
on the day and year first above written.
Landlord: Tenant:
810 DEXTER L.L.C. KORRY ELECTRONICS CO.
By /s/ Michael J Maloney By /s/ David G. Elkins
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Michael J. Maloney
Its Sole Managing Member Its President
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Guarantor:
ESTERLINE TECHNOLOGIES CORPORATION
By /s/ Larry A. Kring
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Its Group Vice President
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