BUILD-TO-SUIT
WAREHOUSE AND DISTRIBUTION CENTER LEASE
LESSOR: KENT CENTRAL, L.L.C.
LESSEE: EAGLE HARDWARE & GARDEN DISTRIBUTION SERVICES, INC.
DATED: As of June 18, 1997
RECITALS
A. LESSOR is the owner of that certain real property described on
Exhibit A attached hereto in Kent, Washington consisting of a parcel of land
containing approximately 1,292,000 square feet +/- of land area.
B. LESSOR desires to lease to LESSEE such real property, and also
the related assets described herein, following completion of construction of
the improvements substantially in accordance with the Site Plan depicted on
Exhibit B and the specifications depicted on Exhibit C and on the schedule
depicted on Exhibit D, and LESSEE desires to lease the same, on the terms and
conditions set forth in this Lease (the "Lease").
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are acknowledged by each of the parties hereto, LESSOR and
LESSEE agree as follows.
SECTION 1: SUBJECT MATTER
The subject matter of this Lease is the following assets (herein
collectively the "Assets"):
(a) The LESSOR's right, title and interest in the real property
described on Exhibit A hereto, together with all such right, title and
interest in and to all abutting roads and appurtenant easements (herein the
"Real Property").
(b) All buildings, structures, fixtures and other improvements to be
built on the Real Property (herein the "Improvements"). The Real Property and
the Improvements are herein sometimes collectively referred to as the
"Premises".
(c) All personal property, (except personal property owned by
construction contractors of the Improvements) of every kind and nature used
by LESSOR in connection with the operation of the Premises (herein the
"Personal Property"). The Personal Property includes, without limitation, all
files, records and plans related to the Assets.
(d) All warranties in favor of LESSOR, and all permits, licenses,
operating agreements, reciprocal easement agreements, service contracts
related to the Premises and/or the Personal Property, (herein collectively
the "Intangible Assets").
(e) The LESSORS's interest as Owner in all construction contracts
and related agreements with respect to the Premises and all guarantees
related thereto.
SECTION 2: AGREEMENT TO LEASE
Subject to the satisfaction of all the conditions contained herein,
LESSOR shall lease to LESSEE and LESSEE shall lease from LESSOR the Assets at
the rental and on the terms and conditions set forth herein. It is understood
and agreed between the parties that this is an absolute "net" lease wherein
LESSEE not only pays rent but is responsible for all costs and expenses of
maintaining and operating the Premises during the term of the Lease
including, but not limited to, the payment of taxes, insurance and all
maintenance, repairs and replacements.
It is understood and agreed that LESSEE shall have the right, at its
own expense, to perform any and all fixturing and other work that LESSEE
deems necessary or desirable for its purposes preparatory to opening for
business, and LESSOR hereby grants permission to LESSEE, at any time or times
subsequent to execution of this Lease and prior to commencement of the term
hereof, to come upon, enter, and have access to the Premises, and such
adjacent areas as may be necessary, to accomplish such purposes, so long as
LESSEE does not interfere with LESSOR's construction, fixturing and other work.
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LESSEE may, with LESSOR's written consent, which LESSOR covenants
shall not be unreasonably withheld, enter the Premises prior to the
Commencement Date solely for the purpose of installing LESSEE's Personal
Property and equipment as long as such entry does not interfere with the
orderly construction and completion of the Premises. LESSEE shall notify
LESSOR of its desired time(s) of entry and shall submit for LESSOR's approval
the scope of the work to be performed and the name(s) of the contractor(s)
who will perform such work. LESSEE hereby indemnifies and agrees to protect,
defend and hold LESSOR harmless from and against any and all suits, claims,
actions, losses, costs or expenses (including claims for worker's
compensation) for any nature whatsoever; together with reasonable attorney
fees for counsel of LESSOR's choice, arising out of or in connection with the
installation of LESSEE's Personal Property or equipment (including, but not
limited to, claims for breach of warranty, personal injury or property
damage).
LESSEE shall keep the Premises free from any liens arising out of
any work performed, materials furnished, equipment supplied, or obligations
incurred by or on behalf of LESSEE. No work performed, material furnished,
equipment supplied or obligations incurred by or on behalf of LESSEE shall be
deemed to be for the immediate use and benefit of LESSOR so that no
mechanic's lien or other lien shall be allowed against LESSOR's estate in the
premises. LESSEE shall provide, at LESSEE's own cost, waivers of lien signed
by any party (including the LESSEE) who performs work, furnishes materials or
supplies equipment to the Premises. LESSOR may require, at LESSEE's sole cost
and expense, a lien release and completion bond in an amount equal to either
the actual contract price or one and one-half times the estimated cost of any
improvements, additions or alterations in the Premises which LESSEE desires
to make, to insure LESSOR against any liability for lien and to insure
completion of the work. Nothing contained herein shall preclude LESSEE from
contesting liens from time to time in good faith provided LESSEE posts the
requisite bonds or other security to prevent enforcement of judgment on any
lien.
SECTION 3: TERM
The term of this Lease shall be for twenty (20) years and shall
commence on the Completion Date, as described in Section 6.2 below. LESSEE's
obligation to pay rent shall commence on the Completion Date. LESSEE shall be
entitled to possession of the Premises from and after the Completion Date.
LESSEE is hereby granted an option to extend the term of this Lease
for two (2) separate and successive option periods of five (5) years each
upon the same terms and conditions as are provided for herein, except that
the amount of rent shall be negotiated promptly after the exercise of the
option. Such option shall be executed by LESSEE giving LESSOR written notice
of exercise of the option at least six (6) months prior to the expiration of
the initial term of this Lease or the term of the then existing option
period, as the case may be.
SECTION 4: RENT
SECTION 4.1: INITIAL RENT. The annual rental during the first five
(5) years of this Lease shall be Two Million Four Hundred Dollars
($2,400,000.00) per year to be paid in equal monthly installments of Two
Hundred Thousand Dollars ($200,000.00) per month. All rentals required to be
paid by the terms of this clause shall be paid to the LESSOR on or before the
first of each month, in advance, provided that should this Lease commence or
terminate on a date other than the end of the month then such rent shall be
prorated in proportion to the number of days in that first or last month.
SECTION 4.2: ADJUSTMENT TO RENT. To provide an equitable adjustment
of rent to offset the effects of inflation, the annual rental shall be
adjusted at the end of each five year anniversary of the commencement date of
this Lease, the adjustment to be determined by the Index (as defined below)
published closest, but prior to, the first month of the first year of the
Lease term (the "Base Index") and every fifth year of the term (the
"Subsequent Index") in accordance with changes in the Consumer Price Index
for all Urban Consumers for the Seattle/Tacoma area on the 1982 - 84 = 100
base published by the Bureau of Labor Statistics, U.S. Department of Labor
(the "the Index") using the procedures set forth in Section 4.3 below. If the
Index is discontinued or revised during the term, such other government index
or computation with which it is replaced by the Bureau shall be used in order
to obtain substantially the same result as would be obtained if the Index had
not been discontinued or raised, and if the Index is not so replaced, LESSOR
shall adopt a substitute index or substitute procedure which reasonably
reflects changes in the purchasing power of the U.S. dollar.
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SECTION 4.3: ADJUSTED MINIMUM RENT. During each five year period
following the first five year period of the term, LESSEE shall pay LESSOR
rent equal to the Subsequent Index divided by the Base Index and multiplied
by the rent set forth in Section 4.1 above (the "Adjusted Rent"), computed in
accordance with the following formula:
Subsequent Index x Rent
Adjusted Rent = -----------------------
Base Index
SECTION 4.4: SALES TAX EXEMPTION
This Lease is intended to qualify under the Warehouse and Grain
Elevator Operations Tax Exemption act effective May 20, 1997, enacted by the
State of Washington to encourage and stimulate the construction of large
regional distribution centers in the State of Washington by offering tax
incentives in the form of sales tax exemptions on such projects. LESSOR
hereby agrees to pass all of the economic benefit of such exemptions on to
LESSEE in the form of reduced rent payments. The total amount of the rebates
received by LESSOR shall be applied against rent beginning with the
commencement date of the term of the Lease and continuing thereafter until
the rebates are fully applied. In the event that the State of Washington
rejects or disputes the appropriateness of the rebate at any time after any
rebates has been received by LESSOR and applied as provided hereunder LESSEE
will defend LESSOR and hold LESSOR harmless in connection with such claim. If
LESSOR is required to pay or reimburse the State of Washington any amount in
connection with such rebate, LESSEE will reimburse LESSOR the entire amount
immediately on demand by LESSOR. The terms of this agreement will survive the
termination of this Lease.
SECTION 5: USE OF PREMISES
LESSEE shall use the Premises as a warehouse and distribution center
and for any other lawful purpose and shall comply with all laws, rules and
regulations applicable to said Premises.
SECTION 6: CONDITIONS TO LESSEE'S OBLIGATIONS
The obligation of LESSEE hereunder to lease the Premises is subject
to the satisfaction of each of the following conditions, and all other
conditions contained herein, any or all of which may be waived by LESSEE, in
whole or in part (but only expressly and in writing). LESSOR agrees to use
its reasonable best efforts to satisfy such conditions, and to cooperate with
LESSEE in the satisfaction of the same.
SECTION 6.1: TITLE TO PROPERTY. All the Completion Date, title to
the Premises must be free and clear of all defects, easements, restrictions,
liens, security interests and encumbrances except for those which are deemed
to be Permitted Exceptions as shown on Exhibit E attached hereto.
SECTION 6.2: COMPLETION OF CONSTRUCTION. Prior to commencement of
the term of this Lease, and in no event later than December 31, 1998, LESSOR
shall complete construction of the Improvements substantially in accordance
with the Site Plan and Schematic Design depicted on Exhibit B and the
specifications depicted on Exhibit C and on the schedule depicted on Exhibit
D. This condition shall be deemed satisfied when the City of Kent delivers
its Certificate of Occupancy and the Architect has executed a Certificate of
Substantial Completion. (The "Completion Date"). As used herein, the term
"Substantial Completion" shall mean that the Improvements have been completed
in substantial accordance with the Final Plans subject only to completion of
minor punch list items which do not interfere with the utilization of the
Improvements for the purpose for which they were intended in any material way
and that if a conditional or temporary occupancy permit is customarily issued
for construction of the Improvements before punchlist items are completed,
then such permit has been issued by the appropriate local government
authority. Landscaping and other exterior items shall not prevent the
occurrence of Substantial Completion.
SECTION 6.3: ENVIRONMENTAL CLEANUP. Seller shall have completed the
required environmental cleanup of the property required to obtain the
anticipated Consent Decree prior to the Completion Date.
SECTION 6.4: ZONING AND PERMITS. The Premises may be lawfully used
by LESSEE as a warehouse and distribution center and there are no restrictive
covenants, zoning or other ordinances or regulations which will prevent
LESSEE from conducting such business on or about the Premises. LESSOR
covenants, warrants and represents to LESSEE that possession of the Premises
will be delivered to LESSEE free and clear of all liens and encumbrances
(except permitted Exceptions) and violations of law on or before the
commencement date of this Lease.
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SECTION 7: REPRESENTATIONS AND WARRANTIES OF LESSOR (a "Warranty")
SECTION 7.1: TITLE AND CONVEYANCE. LESSOR owns the Assets free and
clear of any and all liens, claims, encumbrances and adverse interests other
than the Permitted Exceptions; at the Completion Date, title to the Assets
shall be free and clear of all liens, claims, encumbrances and adverse
interests except only that the Permitted Exceptions shall apply to the
Premises. LESSOR has full right, power and authority to lease the Assets in
accordance with this Lease. No approval or consent of any person, firm or
other entity is required to be obtained by LESSOR to permit LESSOR to lease
the Premises to LESSEE.
SECTION 7.2: INFORMATION AND DOCUMENTS. To the best of LESSOR's
actual knowledge, all information and documents delivered by LESSOR in
connection with the transaction contemplated hereby, including all documents
and information to be delivered pursuant to Section 6 above, are and shall be
completed, true and accurate.
SECTION 7.3: EXISTING TENANCIES. To the best of LESSOR's actual
knowledge, there are no leases or tenancies affecting all or any part of the
Premises. There are no written or oral promises, understandings, agreements
or other commitments between LESSOR any tenant or any other person affecting
the Assets which have not been disclosed, in writing, to LESSEE.
SECTION 7.4: HAZARDOUS MATERIALS
(a) Definition. The term "Hazardous waste or materials or
substances" as used in this Lease is used in its very broadest sense and
includes, but is not limited to, materials and substances designated as
hazardous under any federal, state or local act or ordinance.
(b) LESSOR's Representations. LESSOR represents that the subject
site is the former site of Birmingham Steel. This site contains some
materials designated as hazardous by the DOE. LESSOR is in the process of
cleanup necessary to obtain a Consent Decree and Covenant Not To Sue from the
Department of Ecology. The Consent Decree will allow the uses of the site
including warehousing. It is anticipated that the Consent Decree will
prohibit access to the ground water and uses such as residential uses and
schools. The Consent Decree will be assigned to LESSEE at the Completion Date.
SECTION 7.5: CONTRACTS. All contracts which are a part of the Assets
(including, without limitation, all contracts included in the Intangible
Assets), are valid and enforceable obligations of the signatories thereto.
LESSOR has not assigned its interest in or waived any right under any of such
contracts. No consents are necessary for assignment of any contract pursuant
hereto and no such assignment will be a default under any such contract.
There shall not be, at the Completion Date, any contracts affecting the
Assets other than those previously reviewed by LESSEE or entered into by
LESSEE. Each of such contracts will be free from default and no act, event,
occurrence or omission has occurred or exists which, together with notice,
the passage of time, or both, would constitute such a default.
SECTION 8: REPRESENTATIONS AND WARRANTIES OF LESSEE
SECTION 8.1: AUTHORITY. LESSEE has full right, power and authority
to lease the Premises in accordance with this Lease. No approval or consent
of any person, firm, lender or other entity is required to be obtained by
LESSEE to permit LESSEE to lease the Premises from LESSOR.
SECTION 9: INDEMNIFICATION
Except as otherwise specifically provided herein, LESSOR shall be
responsible for and pay, and shall defend, indemnify and hold LESSEE and the
Assets harmless from any and all liens, liabilities, losses, claims and
causes of action (including related attorneys' fees, fines, remediation costs
and all other costs) which are related to the required environmental cleanup
described in Section 6.3, the inaccuracy or alleged inaccuracy of any
Warranty and/or are related to breach of any covenant of LESSOR contained
herein. LESSEE shall hold harmless and defend LESSOR from any action,
liabilities, losses, claims and causes of action (including related
attorney's fees, fines, remediation costs and all other costs), (a) which are
incurred or which arise relating to the Assets after the Completion Date,
and/or (b) are related to the inaccuracy or alleged inaccuracy of any
Warranty and/or are related to breach of any covenant of LESSEE contained
herein.
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SECTION 10: BROKERS
Each party represents to the other party that it has not had
dealings with any real estate broker or finder which has created the
obligation to pay a commission or fee with respect to this transaction other
than Brett Hartzell/Lane Bockman of CB Commercial and Dick Fosness/Chris Corr
of Kidder Mathews and Sogner (the "Brokers"). A commission will be paid by
LESSOR to the Brokers pursuant to a separate agreement. Each party shall
indemnify the other against any claim arising out of the indemnifying party's
conduct with any other brokers or finders.
SECTION 11: MAINTENANCE AND REPAIR
LESSEE agrees to keep and maintain the Premises, including, but not
limited to, roof, ceilings, foundations, insulation, footings, exterior
walls, underground utilities, sprinkler system and air conditioning of the
Premises in a reasonable state of repair during the term of this Lease and
the LESSEE will at all times keep the Premises neat and clean and in a
sanitary condition and will replace any glass of windows and doors that may
become cracked or broken and, except for reasonable wear and tear and damage
by fire and/or other unavoidable casualty, will at all times preserve said
Premises in as good repair as they now are or may hereafter be placed.
SECTION 12: LESSEE'S RIGHT TO MAKE ALTERATIONS
Subject to the qualifications of Paragraph 11, LESSEE may at its own
expense, from time to time during the term hereof, remodel and make such
alterations, additions and changes to the interior and exterior of the
Premises as it finds necessary or convenient for its normal business
purposes, including its own choice of paints, colors, designs, displays and
signs; provided, such work when completed will not impair the structural
integrity or value of the building. LESSEE agrees that all alterations,
additions and changes made by it will be made in a first-class, workmanlike
manner, and shall comply with all local and state laws or ordinances, and
anything in this Lease to the contrary notwithstanding, the LESSOR and LESSEE
agree that the LESSEE shall have neither the right not the obligation at the
end of the term of this Lease or any extension thereof to remove the same or
to change such structure or restore the Premises to the condition in which
they were originally.
SECTION 13: LIENS
LESSEE shall keep the Premises free of and hold LESSOR harmless from
any expense from any liens arising out of any work performed, materials
furnished or obligations incurred by LESSEE, provided, however, that LESSEE
shall have the right to contest any liens from time to time in good faith.
SECTION 14: ASSIGNMENT AND SUBLETTING
LESSEE may not assign, mortgage or encumber this Lease, in whole or
in part, nor sublet all or any part of the Premises without LESSOR's prior
written consent, which consent LESSOR covenants shall not be unreasonably
withheld. However, LESSEE may assign this Lease to its parent company or to
an affiliated company under common control. If this Lease be assigned or if
the Premises or any part thereof be occupied by anybody other than LESSEE,
LESSOR may collect rent from the assignee or occupant, and apply the net
amount collected to the rent herein reserved, but no such assignment,
underletting, occupancy or collection shall be deemed a release of LESSEE
from the further performance of the provisions on its part to be observed or
performed herein. Notwithstanding any assignment or sublease, LESSEE shall
remain fully liable and shall not be released from performing any of the
terms of this Lease.
SECTION 15: ACCESS
LESSEE shall allow LESSOR or LESSOR's agents free access at all
times to said Premises for the purpose of inspecting the Premises. The LESSOR
shall have the right to place and maintain reasonable and dignified "For
Rent" signs in a conspicuous place on said Premises for ninety (90) days
prior to the expiration of this Lease.
SECTION 16: DAMAGE OR DESTRUCTION
In the event the Premises are damaged or destroyed by fire or other
casualty against which the Premises are insured, LESSEE shall thereupon cause
such damage to be repaired as soon as reasonably possible and LESSOR agrees
to make the insurance proceeds available to LESSEE to repair or restore the
Premises.
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SECTION 17: TAXES AND UTILITIES
The LESSEE hereby covenants and agrees to pay for all real estate
taxes and assessments levied upon the Premises that become due and payable
during the term of this Lease. In the event that any such taxes cover any
period of time prior to commencement or after the expiration of the term of
this Lease, LESSEE's share of such taxes shall be equitably prorated to cover
only the period of time within the fiscal tax year during which this Lease is
in effect. LESSEE further agrees to pay all charges for heat, light and
water, and for all other public utilities which will be used in or charged
against the Premises during the full term of this Lease. In the event LESSEE
shall desire to contest in good faith any tax, LESSEE may file in the name of
LESSOR all such protests or other instruments and institute and prosecute
proceedings for the purpose of such contest.
SECTION 18: SIGNS
The LESSEE shall have the right to erect and place any and all signs
on the Premises, including the building, as it deems necessary or desirable
in the conduct of its business, but any signs placed on the Premises by the
LESSEE shall be removed by the LESSEE at the termination of this Lease and
LESSEE shall repair any damage or injury to the Premises caused by such
removal, and if not so removed by LESSEE then LESSOR may have the same so
removed at LESSEE's expense.
SECTION 19: DEFAULT AND REENTRY
SECTION 19.1: DEFAULT. The occurrence of any one or more of the
following events shall constitute a default of this Lease by LESSEE.
(a) Failure to Pay Rent. The failure by LESSEE to make any payment
-------------------
of rent reserved hereunder, or any part thereof, as and when due, where such
failure shall continue for a period of five (5) days after LESSEE's receipt
of written notice from the LESSOR of such default.
(b) Failure to Perform. The failure by LESSEE to observe or perform
-------------------
any of the covenants, conditions or provisions of this Lease to be observed
or performed by LESSEE, other than described in Paragraph 19.1(a)
above, where such failure shall continue for a period of thirty (30) days
after LESSEE's receipt of written notice thereof from LESSOR; provided,
however, that if the nature of LESSEE's default is such that more than thirty
(30) days are reasonably required for its cure, then LESSEE shall not be
deemed to be in default if LESSEE commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.
SECTION 19.2: REMEDIES FOR DEFAULT. In the event of any such default
by LESSEE, LESSOR may terminate this Lease by giving notice of such
termination to LESSEE, which termination shall be effective as of the
thirtieth (30th) day following the date upon which such notice of termination
is received by LESSEE. If this Lease is terminated under the provisions of
this Paragraph 19.2, LESSOR may reenter the Premises, but notwithstanding
such reentry the liability of the LESSEE for rent herein provided for shall
not be extinguished for the balance of the term of this Lease and LESSEE
covenants and agrees to make good to LESSOR any deficiency from a reentry and
reletting of the Premises at a lesser rental than herein agreed to, provided
the LESSOR makes good faith efforts to relet the Premises at a rental equal
to or greater than that provided for under this Lease. The LESSEE shall pay
any such deficiency each month as the amount thereof is ascertained by LESSOR.
SECTION 20: NONWAIVER OF BREACH
The failure of the LESSOR or LESSEE to insist upon strict
performance of any of the covenants and agreements of this Lease, or to
exercise any right herein conferred in any one or more instances, shall not
be construed to be a waiver or relinquishment of any such, or any other
covenants or agreements, but the same shall be and remain in full force and
effect.
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SECTION 21: INSURANCE INDEMNITY
LESSEE shall during the entire term hereof keep in full force and
effect a policy of public liability insurance having limits of not less than
$1,000,000 per individual, $1,000,000 per accident and $500,000 for damage
to property, and which shall name the LESSOR and LESSEE as insureds. LESSEE
shall, during the entire term hereof, keep in full force and effect an
insurance policy covering the Premises against fire, extended coverage
endorsement, and vandalism and/or malicious mischief endorsement, excluding
earthquake and flood damage, in an amount sufficient to cover the replacement
cost of the leased building Premises, naming the LESSOR as loss payee. The
policies of insurance required under this clause shall require at least ten
(10) days' prior notice to the LESSOR of cancellation and LESSEE agrees to
provide LESSOR with a certificate of insurance for all such policies. It
shall be LESSOR's sole responsibility to inform LESSEE of any necessity to
increase the limits of the fire and property damage policy to insure that
replacement cost coverage is provided. All premiums for insurance provided
for or required under this Lease shall be paid by the LESSEE.
SECTION 22: OFFSET STATEMENTS
Within ten (10) days after receipt of written request either party
shall furnish to the other a statement certifying that this Lease is in full
force and effect (if such be the case) and either that there are no defenses
or offsets thereto or starting those defenses or offsets.
SECTION 23: EMINENT DOMAIN
In the event the entire Premises are appropriated or taken under the
power of eminent domain by any public or quasi-public authority this Lease
shall terminate and expire as of the date of such taking and LESSEE shall
thereupon be released from any further liability hereunder. All of the
eminent domain award shall be paid to LESSOR and LESSEE shall have no claim
therein or thereto except as hereinafter provided.
In the event any material part of the Premises are appropriated or
taken under the power of eminent domain by any public or quasi-public
authority so that LESSEE is unable to continue to conduct its business in a
manner it deems necessary, LESSEE shall have the right to cancel and
terminate this Lease as of the date of such taking upon giving to LESSOR
notice in writing of such election within thirty (30) days after receipt by
LESSEE from LESSOR of written notice that said Premises have been so
appropriated or taken. In the event of such cancellation LESSEE shall
thereupon be released from any further liability under this Lease. LESSOR
agrees immediately after any appropriation or taking to give LESSEE notice in
writing thereof.
If this Lease is terminated in either manner hereinabove provided,
the rent for the last month of the LESSEE's occupancy shall be prorated and
LESSOR agrees to refund to LESSEE any rent paid in advance.
If this Lease shall not be terminated, as in this article provided,
but shall continue as to that portion of the Premises which shall not have
been appropriated or taken, then in that event LESSOR agrees to make the
condemnation award available to LESSEE and LESSEE agrees to immediately
restore the building and/or parking lot and the land remaining to a complete
unit of similar quality and character as existed prior to such appropriation
or taking, and the rent hereinabove reserved for the Premises in their
original condition shall be adjusted and fixed at an amount equal to the then
fair rental value of the Premises as so restored.
In the event of any such taking or condemnation of said Premises, or
any portion thereof, owned by LESSOR and regardless of whether this Lease
survives, the entire amount awarded for the Premises in any such proceeding
shall belong to and be paid to the LESSOR, and LESSEE agrees to execute and
deliver any assignment or other document necessary to permit LESSOR to
recover any such award. However, any amount that may be awarded as relocation
expenses and/or for damages to any fixtures or equipment owned by LESSEE in
said Premises, so taken or condemned, shall belong to and be paid to LESSEE.
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SECTION 24: ARBITRATION CONCERNING RENT
In the event LESSOR and LESSEE should be unable to agree upon the
amount of rent for any new term of this Lease arising from the options
provided in Paragraph 3 hereof, or in the event LESSOR and LESSEE should be
unable to agree upon an adjustment in rent following a partial taking of the
Premises by eminent domain as provided for in Paragraph 22 hereof, the amount
of rent in such instances shall be determined and fixed by a board of three
(3) arbiters, and a decision by a majority of the arbiters shall be deemed
final and binding on LESSOR and LESSEE. One of such arbiters shall be
appointed by LESSOR, the other by LESSEE, and the third arbiter shall be
selected by the first two so appointed. If either LESSOR or LESSEE elects to
have such arbitration, he shall give the other notice in writing of the name
and address of the arbiter appointed by him, and the party receiving such
notification shall then within fifteen (15) days give written notice to the
other party of the name and address of his appointed arbiter.
SECTION 25: HOLDING OVER
If the LESSEE shall hold over after the expiration of the term of
this Lease, such tenancy shall be for an indefinite period of time on a
month-to-month tenancy, which tenancy may be terminated as provided for by
the laws of the State of Washington then in effect. During such tenancy,
LESSEE agrees to pay to the LESSOR the same monthly rental as set forth
herein, unless a different rate is agreed upon, and be bound by all the
terms, covenants and conditions as herein specified, so far as applicable.
SECTION 26: QUITE ENJOYMENT
Upon payment by the LESSEE of the rents herein provided, and upon
the observance and performance of the covenants, terms and conditions on
LESSEE's part to be observed and performed, LESSOR covenants that LESSEE
shall peaceably and quietly hold and enjoy the Premises for the term hereby
demised without hindrance or interruption by LESSOR or any person or persons
lawfully or equitably claiming by, through or under the LESSOR.
SECTION 27: NO PARTNERSHIP
LESSOR does not in any way or for any purpose become a partner of
LESSEE in the conduct of its business, or otherwise, or joint venture or a
member of a joint enterprise with LESSEE.
SECTION 28: CAPTIONS
The captions appearing in this Lease are inserted only as a matter
of convenience and in no way define, limit, construe or describe the scope or
intent of such sections or in any way affect this Lease.
SECTION 29: REMOVAL OF PROPERTY
In the event of any entry in, or taking possession of, the Premises
as aforesaid, the LESSOR shall have the right, but not the obligation, to
remove from the Premises all personal property located therein, and may store
the same in any place selected by LESSOR, including but not limited to a
public warehouse, at the expense and the risk of the owners thereof, with the
right to sell such stored property after thirty (30) days' notice to LESSEE
and the owner thereof, after it has been stored for a period of one hundred
eighty (180) days or more, the proceeds of such sale to be applied first to
the cost of such sale, second to the payment of the charges for storage, if
any, and third to the payment of any other sums of money which may then be
due from LESSEE to LESSOR under the terms hereof, the balance, if any, to be
paid to the LESSEE.
8
SECTION 30: WAIVER OF SUBROGATION
Each party hereto waives any and every claim which arises or may
arise in its favor and against the other party hereto during the term of this
Lease or any renewal or extension thereof for any and all loss of, or damage
to, any improvements or any of its other property located within or upon, or
constituting a part of, the Premises leased to LESSEE hereunder, which loss
or damage is covered by valid and collectible fire, extended coverage
endorsement, and vandalism and/or malicious mischief endorsement insurance
policies, to the extent that such loss or damage is recoverable under said
insurance policies. Said mutual waivers shall be in addition to, and not in
limitation or derogation of, any other waiver or release contained in this
Lease with respect to any loss of, or damage to, property of the parties
hereto. Inasmuch as the above mutual waivers will preclude the assignment of
any aforesaid claim by way of subrogation (or otherwise) to an insurance
company (or any other person), each party hereto hereby agrees immediately to
give to each insurance company which has issued to it policies of fire,
extended coverage endorsement, and vandalism and/or malicious mischief
endorsement, written notice of the terms of said mutual waivers, and to have
said insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverages by reason of said waivers.
SECTION 31: CONSENT RESPONSES
In any case herein provided in which LESSOR's consent is necessary
before LESSEE may act and in which LESSOR has agreed not to unreasonably
withhold such consent, in the event that LESSOR fails to either give notice
of consent to such act or to give notice of refusal to consent to such act
within fourteen (14) days of receipt by LESSOR of written notice of request
for such consent, LESSOR's failure to so respond shall be deemed to be
consent by LESSOR to the requested act.
SECTION 32: NOTICE
Any notice required or permitted hereunder shall be in writing and
shall be deemed given and received only when personally delivered (by
overnight courier service or facsimile transmission or otherwise) and
actually received by the recipient at the following addresses or facsimile
numbers:
If to the LESSOR:
Benaroya Capital Company, L.L.C.
1001 Fourth Avenue, Suite 4700
Seattle, Washington 98154
Attn: Larry Benaroya, Manager
Fax No. (206) 447-9384
If to the LESSEE:
Eagle Hardware & Garden, Inc.
981 Powell Avenue SW
Renton, Washington 98055
Attn: Richard Takara, President and CEO
Fax No. (425) 204-5169
With a copy to:
William N. Moloney
Attorney for Eagle
5711 N.E. Tolo Road
Bainbridge Island, Washington 98110
Fax No. (206) 842-5340
Either party may change its address above by written notice given as
aforesaid.
SECTION 33: PARTIES BOUND: THIRD PARTIES
This Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. There are no
third party beneficiaries hereof, this Lease being solely for the benefit of
LESSOR, LESSEE and any assignee of LESSEE.
9
SECTION 34: TIME OF ESSENCE
Time is of the essence of this Lease.
SECTION 35: RISK OF LOSS
LESSOR shall bear the risk of all loss or damage to the Premises and
the Personal Property from all causes through the Completion Date. If, prior
to the Completion Date, all or part of the Premises or Personal Property is
damaged by fire or by any other insured casualty, or any portion of the
Premises is taken by eminent domain or threatened by such a taking, LESSOR
shall promptly give to LESSEE full written notice of the same and shall keep
LESSEE fully informed as to any insurance matters related thereto. LESSOR
shall use its reasonable best efforts to restore and repair damage and
replace damaged elements of the Premises and the Personal Property utilizing
the insurance proceeds or condemnation award such that the same shall be put,
to the extent possible, into at least as good of a quality and condition as
immediately prior to such damage and shall thereafter proceed to complete
construction of the Improvements as contemplated and within the timeframe
required herein.
SECTION 36: INTERPRETATION
This Lease is the full and final agreement of LESSOR and LESSEE with
respect to the Lease of the Assets and supersedes all prior negotiations,
offers, counter offers and letters of intent. This Lease may only be amended
by a written instrument, executed by LESSOR and LESSEE. No waiver of any
right by LESSEE shall be established absent proof of a written document,
executed by LESSEE, expressly setting forth such waiver. In the event any
provision hereof is unenforceable as written, the parties desire that such
provision be enforced to the fullest extent of the law, and that the balance
of this Lease remain fully enforceable. This Lease shall be governed by and
construed in accordance with the laws of the State of Washington.
SECTION 37: SURVIVAL
All Warranties, and LESSEE's right to enforce or assert a breach of
the same, shall survive any investigation by LESSEE, execution hereof, and
the Completion Date. All indemnity, default and attorneys' fees provisions
hereof, together with all provisions hereof which so contemplate shall
survive termination hereof and/or the Completion Date and shall not be so
merged.
SECTION 38: ATTORNEYS FEES
In the event of litigation between the parties concerning the
Assets, this Lease, or the rights and duties of either in relation thereto,
the prevailing party in such litigation shall be entitled, in addition to
such other relief as may be granted, to receive from the losing party a
reasonable sum as and for its costs and attorneys fees incurred both at and
in preparation for trial and any appeal or review, such sum to be set by the
court(s) before which the matter is heard. The foregoing provision shall
apply to arbitration proceedings, and also to any proceedings of any nature
in bankruptcy court, including proceedings regarding issues unique to
bankruptcy law.
SECTION 39: REPRESENTATION
Each of the parties hereto have been represented by legal counsel of
their choice in respect to this transaction. This Lease shall not be
construed adversely against either party by reason of the attorney for such
party having prepared the same for review by the parties.
SECTION 40: COUNTING OF DAYS
Whenever a time period set forth in this Lease would otherwise
expire on a Saturday, Sunday or banking or federally recognized holiday, such
time period shall be deemed extended to the next following business day.
SECTION 41: EXHIBITS
A. Description of Real Property
B. Site Plan and Schernatic Design
C. Specifications
D. Construction Schedule
E. Permitted Exceptions
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IN WITNESS WHEREOF, the parties hereto have executed this Lease the
day and year first above written.
LESSEE:
EAGLE HARDWARE & GARDEN DISTRIBUTION SERVICES, INC.
/s/ Richard T. Takata
---------------------------------------------------
By: Richard T. Takata
Its: President
Date 11-17-97
LESSOR:
KENT CENTRAL, L.L.C.
/s/ Larry R. Benaroya
---------------------------------------------------
By: Larry R. Benaroya
Its: Manager
Date 12-01-97
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 17 day of November 1997, before me, a Notary Public in and
for the State of Washington, personally appeared Richard T. Takata,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument, on oath stated that
he was authorized to execute this instrument, and acknowledged it as the
President of EAGLE HARDWARE & GARDEN DISTRIBUTION SERVICES, INC. to be the
free and voluntary act and deed of said corporation for the uses and purposes
mentioned in this instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
the day and year first above written.
Sibyl Tice
---------------------------------------------------
NOTARY PUBLIC in and for the State of Washington,
residing at Auburn
My appointment expires 2-7-98
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 1 day of December, 1997, before me, a Notary Public in and
for the State of Washington, personally appeared Larry R. Benaroya,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed this instrument, on oath stated that
he was authorized to execute this instrument, and acknowledged it as the
Manager of KENT CENTRAL, L.L.C. to be the free and voluntary act and deed of
said corporation for the uses and purposes mentioned in this instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
the day and year first above written.
/s/ Debbie B. Jones
---------------------------------------------------
NOTARY PUBLIC in and for the State of Washington,
residing at (illegible)
My appointment expires 7-21-98
11
AMENDMENT NO. 1 TO
BUILD TO SUIT
WAREHOUSE AND DISTRIBUTION CENTER LEASE
THIS AMENDMENT NO. 1 TO BUILD TO SUIT WAREHOUSE AND DISTRIBUTION
LEASE (this "Amendment") is dated for reference purposes the 9th day of
February, 1998, and is by and between KENT CENTRAL, a Washington limited
liability company ("Lessor") and EAGLE HARDWARE & GARDEN DISTRIBUTION
SERVICES, INC., a Washington corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to that certain Build to Suite
Warehouse and Distribution Center Lease dated as of June 18, 1997, (the
"Lease").
B. Because Lessor has made, and will make, at the request of Lessee,
significant improvements to the Premises which are unique to Lessee's use of
the Premises and which improvements would need to be modified or replaced for
any other use of the Premises, Lessor and Lessee have agreed to amend the
Lease to provide for a significant Security Deposit to insure Lessee's
performance under the Lease and to insure Lessor that, in the event of a
default by Lessee under the Lease, Lessor will be compensated for changes
Lessor will be required to make to sell or lease the Premises to another
party.
Now, therefore, the parties agree that the Lease shall be amended to
provide as follows:
1. New Section. A new Section 6A shall be added to the Lease to
-----------
read as follows:
SECTION 6A: SECURITY DEPOSIT
Lessee has deposited with Chicago Title Insurance Company
("CTI") the sum of $3,325,000 (the "Deposit"), which Deposit is held
under CTI's Escrow Account No. 483716-SS in an interest bearing
account with interest accruing for the benefit of the party who
obtains the Deposit. The Deposit shall continue to be held by CTI
for the benefit of Lessor to ensure Lessee's performance under this
Lease and may be used by Lessor to compensate Lessor for any damages
suffered by
12
Lessor if Lessee defaults under the Lease. Upon Lessor certifying to
CTI that Lessor has suffered damages by reason of the default of
Lessee under the Lease, then CTI shall pay over the Deposit to
Lessor immediately without any further action necessary by either
Lessor or Lessee and Lessee hereby approves of said payment by CTI.
2. Ratification. Except as expressly set forth in this Amendment,
------------
the Lease shall remain in full force and effect and its terms and provisions
are hereby ratified.
In witness whereof, the parties have executed this Amendment as of
the date first written above.
LESSOR:
-------
KENT CENTRAL, L.L.C., a Washington
Limited Liability Company
By: Larry R. Benaroya
------------------------------------------------
Its Manager
LESSEE:
EAGLE HARDWARE & GARDEN DISTRIBUTION
SERVICES, INC., a Washington corporation
By: Richard D. Takata
------------------------------------------------
Its: President
2
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.
On this 5th day of March, 1998, before me personally appeared Larry
R. Benaroya, to me known to be a member of KENT CENTRAL, L.L.C., the limited
liability company what executed the within and foregoing instrument, and
acknowledged the said instrument to be the free and voluntary act and deed of
said limited liability company, for the uses and purposes therein mentioned,
and on oath stated that he was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year
first above written.
/s/ Debbie B. Jones
---------------------------------------------------
Notary Public in and for the State of Washington,
residing at Shoreline
My commission expires: 7-21-98
/s/ Debbit B. Jones
---------------------------------------------------
[Type or Print Notary Name]
(Use This Space for Notarial Seal Stamp)
3
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.
On this 23rd day of February, 1998, before me personally appeared
, to me known to be the of EAGLE HARDWARE & GARDEN
- ---------------- -----------
DISTRIBUTION SERVICES, INC., the corporation that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that he/she was authorized to
execute said instrument and that the seal affixed, if any, is the corporate
seal of said corporation.
WITNESS my hand and official seal hereto affixed the day and year first
above written.
-------------------
Notary Public in and for the State of Washington,
residing at ___________________
My commission expires:______________
-----------------------
[Type or Print Notary Name]
(Use This Space for Notarial Seal Stamp)
4