OFFICE LEASE
SUN LIFE ASSURANCE COMPANY OF CANADA
"LANDLORD"
WITH
COST-U-LESS, INC.
"TENANT"
BUILDING: THE DELPHI BUILDING
SUITE 110
DATED: November 18, 2003
OFFICE LEASE
THIS OFFICE LEASE ("Lease") is made and entered into as of the 18 day of
November, 2003, by and between Sun Life Assurance Company of Canada, a Canada
corporation ("Landlord"), and Cost-U-Less, Inc., a Washington corporation
("Tenant"). In consideration of this Lease, Landlord and Tenant covenant and
agree as follows:
SECTION 1: BASIC PROVISIONS
This Section contains the basic lease provisions between Landlord and
Tenant.
A. BUILDING: The Delphi Building, 3633 - 136th Place SE,
Bellevue, Washington (the "Building"), located on
the real property legally described on Exhibit A
attached hereto (the "Property").
B. PREMISES: Suite 110 in the Building as outlined or
crosshatched on Exhibit B.
C. COMMENCEMENT DATE: April 1, 2004, or later subject to Section 3.
D. EXPIRATION DATE: Sixty (60) months from the Commencement Date
subject to Section 3.
E. RENTABLE AREA: The rentable area of the Premises shall
conclusively be deemed 9,305 square feet, and the
rentable area of the Building shall conclusively
be deemed 69,489 square feet, for purposes of
this Lease, subject to Section 31(M).
F. TENANT'S SHARE: 13.39%, subject to Section 4 and Section 31(M).
G. BASE RENT: From the Commencement Date through the Expiration
Date, as further described in Sections 3 and 4,
as follows:
MONTH(S) MONTHLY BASE RENT
-------- -----------------
Months One (1), Two (2) $0.00 per month (Gratis)
and Three (3)
Month Four (4) through $14,732.92 per month
Month Twelve (12)
Month Thirteen (13) through $15,508.33 per month
Month Twenty Four (24)
Month Twenty Five (25) $16,283.75 per month
through Month Thirty Six
(36)
Months Thirty Seven (37) $0.00 per month (Gratis)
and Thirty Eight (38)
MONTH(S) MONTHLY BASE RENT
-------- -----------------
Month Thirty Nine (39) $17,059.17 per month
through Month
Forty Eight (48)
Month Thirty Nine (49) $17,834.58 per month
through Month Forty Eight
(60)
H. ADDITIONAL RENT: Tenant shall pay Tenant's Share of Taxes and
Tenant's Share of Expenses in excess of such
amounts for the calendar year 2004 (the "Base
Year") as further described in Section 4.
I. PERMITTED USE: Offices, subject to Section 8.
J. DEPOSITS: Prepaid rent is $17,834.58 via check upon lease
execution to be applied towards the last month's
rent.
K. PARKING: Tenant shall be granted the right to use, in
common with other building tenants, free parking
for 33 spaces in the building's surface parking
lot. An additional 4 spaces shall be covered,
reserved and at no charge for the duration of the
initial term. Any additional reserved parking
required by tenant shall be on a first-come,
first serve basis and subject to then market
rates. All parking is subject to the Rules
(defined below).
L. BROKER (IF ANY): Broderick Group, who shall be paid by Landlord,
subject to Section 25.
M. GUARANTOR(S): None.
N. RIDERS/EXHIBITS: In addition to Exhibit A (Property), Exhibit B
(Premises), Exhibit C (Work Letter Agreement),
and Rider One (Rules), this Lease includes: Rider
Two (Option Addendum), Rider Three (Landlord's
Disclaimer & Waiver).
O. LANDLORD'S NOTICE ADDRESS (SUBJECT TO SECTION 24):
Sun Life Assurance Company of Canada
c/o UNICO Properties, Inc.
10900 NE 4th Street, Suite 800
Bellevue, WA 98004
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P. TENANT'S NOTICE ADDRESS (SUBJECT TO SECTION 24):
Until the Commencement Date:
Cost-U-less, Inc.
Preston, WA 98006
Attention: _______________________
On and After the Commencement Date:
Cost-U-Less, Inc.
3633 - 136th Place SE, Suite 110
Bellevue, WA 98004
Attention: Jeff Meder
Q. RENT PAYMENTS: Rent shall be paid to "Sun Life Assurance Company
of Canada c/o Unico Properties, Inc." at 10900 NE
4th Street, Suite 800, Bellevue, WA 98004 or such
other parties and addresses as to which Landlord
shall provide advance notice.
The foregoing provisions shall be interpreted and applied in accordance
with the other provisions of this Lease. The terms of this Section, and the
terms defined in Section 31 and other Sections, shall have the meanings
specified therefor when used as capitalized terms in other provisions of this
Lease or related documentation (except as expressly provided to the contrary
therein).
SECTION 2: PREMISES AND PREPARATION OF PREMISES
A. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises subject to the provisions herein contained. Tenant
has inspected the Premises (and portions of the Building providing access to or
serving the Premises) or has had an opportunity to do so, and agrees to accept
the same "as is" without any agreements, representations, understandings or
obligations on the part of Landlord to perform any alterations, repairs or
improvements unless expressly provided under this Lease and in the attached
Exhibit C. Tenant further acknowledges that Landlord has not made any
representation or warranty (express or implied) with respect to the condition or
suitability of the Premises, Building or Property for Tenant's purposes or any
particular purpose.
B. PREPARATION OF PREMISES. The obligations of Landlord and Tenant to
perform work and supply materials and labor to prepare the Premises for Tenant's
occupancy shall be as set forth in Exhibit C attached hereto and incorporated
herein. Landlord's obligation, if any, for completion of the Premises
("Landlord's Work") shall be defined and limited by said Exhibit C, and Landlord
shall not be required to furnish or install any item not indicated thereon;
provided, however, Landlord warrants to Tenant that all Landlord's Tenant
Improvement Work shall be performed in a workmanlike manner and conform to
applicable industry standards. Any
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additional alterations or improvements to the Premises beyond those set forth on
Exhibit C shall be at Tenant's sole cost and expense and subject to all
provisions of Section 10, including without limitation the prior approval of
Landlord. Taking possession of the Premises by Tenant shall be conclusive
evidence the Premises were, on that date, in good, clean and tenantable
condition and delivered in accordance with this Lease, unless set forth
otherwise in a mutually agreed upon written "punch list".
SECTION 3: TERM AND COMMENCE
A. TERM AND CONFIRMATION. The term ("Term") of this Lease shall commence
on the Commencement Date and end on the Expiration Date as specified in Section
1 above, unless sooner terminated as provided herein, subject to adjustment as
provided below and the other provisions hereof. Tenant shall execute a
confirmation of the Commencement Date, the Expiration Date and other matters in
such form as Landlord may reasonably request within twenty (20) days after
requested (but nothing herein shall require Landlord to so request); any failure
to respond within such time shall be deemed an acceptance of the matters as set
forth in Landlord's confirmation.
B. ADJUSTMENTS TO COMMENCEMENT AND EXPIRATION. It is acknowledged that
the Commencement Date specified in Section 1 is an estimated date. This Lease
shall commence on the Commencement Date specified in Section 1 if Landlord's
Tenant Improvement Work, if any, is "substantially completed" (as that term is
used in the construction industry) by such date but otherwise the Commencement
Date shall be adjusted to be the first to occur of the following events: (i) the
date Landlord provides Tenant notice that Landlord's Tenant Improvement Work is
substantially complete; (ii) the date on which Tenant takes possession or
commences beneficial occupancy of the Premises for the purpose of commencing
business operations; or (iii) if substantial completion of Landlord's Work is
delayed in whole or in part due to Tenant's unreasonable acts or omissions,
excluding force majeure, then the date determined by Landlord as the date upon
which Landlord's Tenant Improvement Work would have been substantially
completed, but for Tenant's acts or omissions. In no event shall Landlord have
any liability for loss or damage to Tenant resulting in any delay in the
Commencement Date, nor shall Tenant have any right to terminate this Lease, and
Tenant's sale recourse shall be the postponement of Rent and other obligations
until the Commencement Date is established as set forth above. The term of this
Lease is 60 months and if the Commencement Date is delayed pursuant to this
Section, the Expiration Date shall be the date which is the day prior to the
last day of the 60th month following the Commencement Date. Landlord shall use
commercially reasonable efforts to facilitate Tenant's Tenant Improvement Work
wherever possible.
C. EARLY ENTRY. On approximately March 1, 2004 following the existing
tenant's vacation of the Premise, Tenant shall be entitled to enter the Premises
for fixturing and move-in purposes provided (i) Tenant shall not interfere with
Landlord's completion of Landlord's Tenant Improvement Work, if any, and shall
coordinate its activities and comply with Landlord's directives, (ii) all
provisions of this Lease other than those relating to payment of Rent shall
apply to any such pre-commencement entry (including without limitation all
insurance, Indemnity and freedom from lien provisions), and (iii) if Tenant
beneficially occupies the Premises (or any part thereof) or commences business
operations from the Premises (or any part
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thereof) during such period, then the Commencement Date (and obligation to pay
Rent) shall be deemed advanced to the date Tenant so occupies the premises,
provided, the mere moving of furniture and equipment into the Premises shall not
be deemed commencement of business operations or other beneficial occupancy as
those terms are used in this Section 3(C).
D. EARLY TERMINATION. Notwithstanding anything in this Lease to the
contrary, and provided Tenant is not in material default of this Lease beyond
applicable cure periods at the time of its exercise and as of the date of the
early termination, Tenant shall have the right to terminate this Lease as of the
last day of the thirty-sixth (36th) month of the Lease Term by giving Landlord
irrevocable written notice of its intent to so terminate at least Twelve (12)
months prior to the early termination date. In the event Tenant exercises its
right to terminate the Lease early as set forth herein, Tenant shall pay to
Landlord, in addition to any other sums owing Landlord hereunder, the
unamortized portion of 1. improvements made to the Premises pursuant to Section
2(B) and Exhibit C, and 2. leasing commissions paid by Landlord on account of
this Lease. The cost of said improvements and leasing commissions shall be
equally amortized over sixty (60) months of the Lease on a straight-line basis
and said cost shall be provided to Tenant within a reasonable amount of time
following Commencement. Within ninety (90) days of Tenant's notice to Landlord
to terminate early, Landlord shall provide Tenant notice of the unamortized
amount that will be owing on account of the early termination. Tenant shall pay
such amount to Landlord, in full, on or before thirty (30) days prior to the
early termination date. Failure by Tenant to timely pay such amount, to timely
exercise its notice, or to timely satisfy all other conditions of this Section
3(D) shall invalidate Tenant's notice to terminate early and this Lease shall
continue in full force and effect for the entire Lease Term.
SECTION 4: BASE RENT AND ADDITIONAL RENT
A. BASE RENT. Subject to adjustment for expenses, taxes and required
capital expenditures as set forth in this Section 4, Tenant shall pay Landlord
the monthly Base Rent set forth in Section 1 in advance on or before the first
day of each calendar month during the Term; provided, Tenant shall pay Base Rent
for the first full calendar month for which Base Rent shall be due (and any
initial partial month) when Tenant executes this Lease.
B. TAXES AND EXPENSES. Tenant shall pay Landlord "Tenant's Share of
Taxes" and "Tenant's Share of Expenses" in the manner described below. All such
charges shall be deemed to constitute "Additional Rent" which shall be deemed to
accrue uniformly during the calendar year in which the payment is due.
(i) During each calendar year after the Base Year Identified in
Section 1(H) above, Tenant agrees to pay as "Additional Rent" for the Premises,
"Tenant's Share" (defined below) of all increases in Taxes and Expenses incurred
by Landlord in the operation of the Building and Property, over the amount of
the Property Taxes and Expenses Incurred by Landlord in the operation of the
Building and Property during the Base Year. For purposes of this Lease,
"Tenant's Share" shall mean the ratio between the rentable area of the Premises
and the rentable area of the Building. Tenant's Share, calculated based on the
initial square foot area of the Premises, is set forth in Section 1(F) above,
and is subject to adjustment as set forth in Section 31 (M).
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(ii) Prior to or promptly after the commencement of each calendar
year following the Base Year, Landlord shall give Tenant a written estimate of
the anticipated increases in Taxes and Expenses over the Base Year and Tenant's
Share of such increases. Tenant shall pay such estimated amount to Landlord in
equal monthly installments, in advance, without deduction or offset, on or
before the first day of each calendar month, with the monthly installment of
Base Rent payable Section 4(A) above. After the end of each calendar year,
Landlord shall furnish to Tenant a statement showing in reasonable detail the
actual increases over the Base Year in the Taxes and Expenses incurred by
Landlord during the applicable calendar year and Tenant's Share thereof. If the
statement shows Tenant's Share of the actual increases exceeds the amount of
Tenant's estimated payments, within thirty (30) days after receiving the
statement, Tenant shall pay the amount of the deficiency to Landlord. If the
statement shows Tenant has overpaid, the amount of the excess shall be credited
against installments next coming due under this Section 4; provided, however
upon the expiration or earlier termination of the Lease Term, if Tenant is not
then in default under this Lease, Landlord shall refund the excess to Tenant.
(iii) If at any time during any calendar year of the Lease Term (other
than the Base Year) the Taxes applicable to the Building and Property change
and/or any information used by Landlord to calculate the estimated Expenses
changes, Tenant's estimated share of such Taxes and/or Expenses, as applicable,
may be adjusted accordingly effective as of the month in which such changes
become effective, by written notice from Landlord to Tenant of the amount or
estimated amount of the change, the month in which effective, and Tenant's Share
thereof. Tenant shall pay such increase to Landlord as a part of Tenant's
monthly payments of estimated Taxes or Expenses as provided above, commencing
with the month following the month in which Tenant is notified of the
adjustment.
(iv) For purposes of this Lease, the term" Expenses" means all costs
of and expenses paid or incurred by Landlord for maintaining, operating,
repairing, replacing and administering the Building and Property, including all
common areas and facilities and Systems and Equipment, and shall include the
following costs by way of illustration but not limitation: water and sewer
charges; insurance premiums; license. permit, and inspection fees; heat; light;
power; steam; janitorial and security services; labor; salaries; air
conditioning; landscaping; maintenance and repair of driveways and surface
areas; supplies; materials; equipment; tools; the cost of capital replacements
(as opposed to capital improvements); the cost of any capital improvements or
modifications made to the Building by Landlord that are intended to reduce
Expenses, are required under any Laws not applicable to the Building or Property
or not in effect at the time the Building was constructed, or are made for the
general benefit and convenience of ail tenants of the Building; all property
management costs, including office rent for any property management office and
professional property management fees; legal and accounting expenses; and all
other expenses or charges which, in accordance with generally accepted
management practices would be considered an expense of maintaining, operating,
repairing, replacing or administering the Building or Property. Capital costs
included in Expenses shall be amortized over such reasonable period as Landlord
shall determine with a return on capital at the current market rate per annum on
the unamortized balance or at such higher rate as may have been paid by Landlord
on funds borrowed for the purpose of constructing such capital replacements or
improvements.
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(v) For purposes of this Lease, the term "Taxes" means all real
estate taxes or personal property taxes and other taxes, surcharges and
assessments, unforeseen as well as foreseen, which are levied with respect to
the Building and Property and any improvements, fixtures and equipment and other
property of Landlord, real or personal, located in the Building or on the
Property and used in connection with the operation of the Building or Property
and any tax, surcharge or assessment which shall be levied in addition to or in
lieu of real estate or personal property taxes, other than taxes covered in
Section 15. The term "Taxes" shall also include any rental, excise, sales,
transaction, privilege, or other tax or levy, however denominated, imposed upon
or measured by the rental reserved hereunder or on Landlord's business of
leasing the Premises, excepting only net income, inheritance, gift and franchise
taxes.
(vi) Notwithstanding anything to the contrary contained above, as to
each specific category of expense which one or more tenants of the Building, at
Landlord's sole discretion, either pays directly to third parties or
specifically reimburses to Landlord (e.g., separately metered utilities,
separately contracted janitorial service, property taxes directly reimbursed to
Landlord, etc.) such tenant(s) payments with respect thereto shall not be
included in Expenses for purposes of this Paragraph 3, but Tenant's Share of
each of such category of expense shall be adjusted by excluding from the
denominator thereof the rentable area of all such tenants paying such category
of expense directly to third parties or reimbursing the same directly to
Landlord. Tenant shall not enter into separate contracts to provide any specific
utility or service normally provided by the Building, without Landlord's prior
written consent in Landlord's sale discretion. Moreover, if Tenant pays or
directly reimburses Landlord for any such category of expense (which shall only
be Landlord's prior consent), such category of expense shall be excluded from
the determination of Expenses for Tenant to the extent such expense was incurred
with respect to space in the Building actually leased to or occupied by other
Tenants.
C. PRORATIONS. If the Term commences on a day other than the first day of
a calendar month or ends on a day other than the last day of a calendar month,
the Base Rent and any other amounts payable on a monthly basis shall be prorated
on a per diem basis for such partial calendar months. If the Base Rent is
scheduled to increase under Section 1 other than on the first day of a calendar
month, the amount for such month shall be prorated on a per diem basis to
reflect the number of days of such month at the then current and increased
rates, respectively. If the Term commences other than on January 1, or ends
other than on December 31, Tenant's obligations to pay amounts under this
Section 4 towards Taxes and Expenses for such first or final calendar years
shall be prorated on a per diem basis to reflect the portion of such years
Included in the Term.
D. PAYMENTS AFTER LEASE TERM ENDS. Tenant's obligations to pay its share
of Taxes and Expenses (or any other amounts) as provided in this Lease accruing
during, or relating to, the period prior to expiration or earlier termination of
this Lease, shall survive such expiration or termination. Landlord may
reasonably estimate all or any of such obligations within a reasonable time
before, or anytime after, such expiration or termination. Tenant shall pay the
full amount of such estimate, and any additional amount due after the actual
amounts are determined, in each case within ten (10) days after Landlord sends a
statement therefor. If the actual amount is less than the amount Tenant pays as
an estimate, Landlord shall refund the difference within thirty (30) days after
such determination is made.
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E. LANDLORD'S ACCOUNTING PRACTICES AND RECORDS. Unless Tenant takes
exception by notice to Landlord within thirty (30) days after Landlord provides
any statement to Tenant for any item of Additional Rent, such statement shall be
considered final and binding on Tenant (except as to additional Expenses or
Taxes not then known or omitted by error). If Tenant takes exception by notice
within such time, Landlord may seek confirmation from Landlord's independent
certified public accountant as to the proper amount of Taxes and Expenses
determined in accordance with generally accepted accounting principles. In such
case: (i) such confirmation shall be considered final and binding on both
parties (except as to additional expenses or taxes not then known or omitted by
error), and (ii) Tenant shall pay Landlord for the cost of such confirmation,
unless it shows that Taxes and Expenses were overstated by at least five percent
(5%). Pending resolution of any such exceptions, Tenant shall pay all amounts
shown on such Landlord's statement, subject to credit, refund or additional
payment after any such exceptions are resolved.
F. GENERAL PAYMENT MATTERS. Base Rent, Additional Rent which Includes
without limitation Tenant's Share of Taxes, Tenant's Share of Expenses and any
other amounts which Tenant is or becomes obligated to pay Landlord under this
Lease or other agreement entered in connection herewith, are sometimes herein
referred to collectively as "Rent," and all remedies applicable to the
non-payment of Rent shall be applicable thereto. Rent shall be paid in good
funds and legal tender of the United States of America without prior demand,
deduction, recoupment, set-off or counterclaim, and without relief from any
valuation or appraisement laws. Rent obligations hereunder are independent
covenants, in addition to all other Landlord remedies (i) any Rent not paid by
Tenant when due shall accrue interest from the due date at the Default Rate
until payment is received by Landlord and (ii) in addition to such interest.
Tenant shall pay Landlord a service charge of two hundred fifty dollars
($250.00) or five percent (5%) of the delinquent amount, whichever is less, if
any portion of Rent is not received within five (5) days after the due date
except Landlord shall allow Tenant up to two (2) delays of not more than 10 days
to occur within the first year of tenancy with no penalty. No delay by Landlord
in providing any Rent statement to Tenant shall be deemed a default by Landlord
or a waiver of Landlord's right to require payment of Tenant's obligations
hereunder including those for actual or estimated taxes, expenses or capital
expenditures. In no event shall a decrease in Taxes or Expenses ever decrease
the monthly Base Rent or give rise to a credit in favor of Tenant. Landlord may
apply payments received from Tenant to any obligations of Tenant then accrued,
without regard to such obligations as may be designated by Tenant.
SECTION 5: QUIET ENJOYMENT
Landlord agrees that if Tenant timely pays the Rent and performs the terms
and provisions hereunder, Tenant shall hold the Premises during the Term, free
of lawful claims by any party acting by or through Landlord, subject to all
other terms and provisions of this Lease.
SECTION 6: UTILITIES AND SERVICES
A. STANDARD LANDLORD UTILITIES AND SERVICES. Provided Tenant is not in
default of this Lease, Landlord shall provide Tenant the following utilities and
services:
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(i) Elevator service during normal business hours of the Building
and the service of at least one elevator during all other hours.
(ii) Heating and cooling to maintain a temperature condition which in
Landlord's judgment provides for comfortable occupancy of the Premises under
normal business operations from 6 a.m. to 6 p.m. daily, except for Saturdays,
Sundays and those legal holidays generally observed in the State of Washington,
provided Tenant complies with Landlord's instructions regarding use of drapes
and thermostats and Tenant does not utilize heat generating machines or
equipment which affect the temperature otherwise maintained by the air cooling
system. Upon request Landlord shall make available at Tenant's expense after
hours heat or air-cooling. The minimum use of after hours heat or air cooling
and the cost thereof shall be determined by Landlord and confirmed in writing to
Tenant, as the same may change from time to time. Landlord's current rate as of
the date of this Lease for such after hours heat or air-cooling is Fifteen and
no/100 Dollars ($15.00) per hour.
(iii) Water for drinking, lavatory, and toilet purposes.
(iv) Electricity for building standard lighting and operation of low
power usage office machines in quantities usually furnished by Landlord to
tenants in the Building for general office use. Low power usage machines are
typewriters, desktop calculators, desk top computer terminals and similar
equipment with similar power requirements which operate on 110-volt circuits.
(v) Janitorial service. Janitorial service as customary for
comparable buildings within the Bellevue I-90 corridor market which includes
daily vacuum cleaning of carpets and cleaning of Building standard vinyl
composition tile, but no other services with respect to carpets or non-standard
floor coverings.
(vi) Maintain the windows, doors, floors and walls (exclusive of
coverings), ceilings, plumbing and plumbing fixtures, and electrical
distribution system and lighting fixtures in good condition and repair, except
for damage caused by Tenant, its employees, agents, invitees or visitors, except
that such service will not be provided as to any of the foregoing items that are
not standard for the Building.
(vii) Replacement of burned out fluorescent tubes in light fixtures
which are standard for the Building. Burned out bulbs, tubes or other light
sources in fixtures which are not standard for the Building will be replaced by
Landlord at Tenant's expense.
B. INTERRUPTIONS. Landlord shall use reasonable diligence to remedy an
interruption in the furnishing of such services and utilities. If, however, any
governmental authority imposes regulations, controls or other restrictions upon
Landlord or the Building which would require a change in the services provided
by Landlord under this Lease, Landlord may comply with such regulations,
controls or other restrictions, including without limitation, curtailment,
rationing or restrictions on the use of electricity or any other form of energy
serving the Premises. Tenant will cooperate and do such things as are reasonably
necessary to enable Landlord to comply with such regulations, controls or other
restrictions.
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C. NON-STANDARD USAGE. Whenever heat generating machines or equipment or
lighting other than building standard lights are used in the Premises by Tenant
which affect the temperature otherwise maintained by the air cooling system,
Landlord shall have the right to install supplementary air cooling units in the
Premises, and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Tenant to Landlord upon
billing by Landlord. Landlord may impose a reasonable charge for utilities and
services, including without limitation, air cooling, electric current and water,
required to be provided the Premises by reason of, (a) any substantial recurrent
use of the Premises at any time other than the hours of 7:00 a.m. to 6:00 p.m.,
Monday through Friday, (b) any use beyond what Landlord agrees to furnish as
described above, (c) electricity used by equipment designated by Landlord as
high power usage equipment or (d) the installation, maintenance, repair,
replacement or operation of supplementary air cooling equipment, additional
electrical systems or other equipment required by reason of special electrical,
heating, cooling or ventilating requirements of equipment used by Tenant at the
Premises. High power usage equipment includes without limitation, data
processing machines, punch card machines, computers and machines which operate
on 220-volt circuits. Tenant shall not install or operate high power usage
equipment on the Premises without Landlord's prior written consent, which may be
refused unless (i) Tenant confirms in writing its obligation to pay the
additional charges necessitated by such equipment and such equipment does not
adversely affect operation of the Building, and (ii) the Building electrical
capacity to the floor(s) containing the Premises will not be exceeded. At
Landlord's option, separate meters for such utilities and services may be
installed for the Premises and Tenant upon demand therefor, shall immediately
pay Landlord for the installation, maintenance, repair and replacement of such
meters.
D. LIMITATION. Landlord does not warrant that any of the services and
utilities referred to above will be free from interruption. Interruption of
services and utilities shall not be deemed an eviction or disturbance of
Tenant's use and possession of the Premises or any part thereof or render
Landlord liable to Tenant for damages or loss of any kind, or relieve Tenant
from performance of Tenant's obligations under this Lease.
E. UTILITY PROVIDERS. Notwithstanding anything to the contrary in this
Lease, Landlord shall have the sole, exclusive and absolute right to determine,
select and contract with utility company or companies that will provide
electricity and other basic utility service to the Building, Property and
Premises. If permitted by law, during the Term of this Lease, Landlord shall
have the right at any time, and from time to time, to either contract for
services from a different company or companies providing electricity or other
basic utility service (each such company hereinafter an "Alternate Service
Provider") or continue to contract for service from the service provider(s) that
is providing such utility service to the Building, Property or Premises at the
Commencement Date (each the "Existing Service Provider"). Tenant shall cooperate
with Landlord, the Existing Service Provider and any Alternate Service Provider
at all times and, as reasonably necessary, shall allow Landlord, the Existing
Service Provider and any Alternate Service Provider access to the Building's
utility lines, plumbing, feeders, risers, wiring, and any other machinery or
utility access ways within the Premises.
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SECTION 7: DEPOSITS
A. SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit a
security deposit (if any) in the amount set forth in Section 1 with Landlord. If
Tenant is in default, Landlord can use the security deposit or any portion of it
to cure the default or to compensate Landlord for any damages sustained by
Landlord resulting from Tenant's default. Upon demand, Tenant shall immediately
pay to Landlord the sum equal to the portion of the security deposit expended or
applied by Landlord to restore the security deposit to its full amount. In no
event will Tenant have the right to apply any part of the security deposit to
any Rent or other sums due under this Lease. If Tenant is not in default at the
expiration or termination of this lease, Landlord shall return the security
deposit to Tenant within fifteen days after such expiration or termination date.
Landlord's obligations with respect to the deposit are those of a debtor and not
of a trustee, and Landlord can commingle the security deposit with Landlord's
general funds. Landlord shall not be required to pay Tenant interest on the
deposit. Landlord shall be entitled to immediately endorse and cash Tenant's
prepaid deposit; however, such endorsement and cashing shall not constitute
Landlord's acceptance of this Lease. In the event Landlord does not accept this
Lease, Landlord shall return said prepaid deposit immediately.
SECTION 8: USE, COMPLIANCE WITH LAWS AND RULES
A. USE OF PREMISES AND COMPLIANCE WITH LAWS. Tenant shall use the
Premises solely for the purposes set forth in Section 1 and for no other purpose
without obtaining the prior written consent of Landlord, which shall not be
unreasonably withheld for uses consistent with Landlord's then existing use
criteria for the Building. Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty with respect to the
Premises or with respect to the suitability of the Premises or the Building for
the conduct of Tenant's business, nor has Landlord agreed to undertake any
modification, alteration or improvement to the Premises or the Building, except
as provided in writing in this Lease. Tenant acknowledges that Landlord may from
time to time, at its sole discretion, make such modifications, alterations,
repairs, deletions or improvements to the Building or Property as Landlord may
deem necessary or desirable, without compensation or notice to Tenant, provided
that such alterations, repairs, deletions or improvements shall not materially
adversely affect Tenant's use of the Premises during normal daytime business
hours and in no event shall Landlord be liable for any consequential damages.
Tenant shall promptly comply with all Laws affecting the Premises and the
Building, as well as the Rules (defined below), and to any reasonable
modifications to the Rules as Landlord may adopt from time to time that do not
materially affect Tenant's originally intended use of the Premises. Tenant
acknowledges that, except for Landlord's obligations pursuant to Sections 9 and
3D, Tenant is solely responsible for ensuring that the Premises comply with any
and all Laws applicable to Tenant's use of and conduct of business on the
Premises, and that Tenant is solely responsible for any alterations or
improvements to the Premises that may be required by such Laws, now existing or
hereafter adopted. Tenant shall not do or permit anything to be done in or about
the Premises or bring or keep anything in the Premises that will in any way
increase the premiums paid by Landlord on its insurance related to the Building
or which will in any way increase the premiums for fire or casualty insurance
carried by other tenants in the Building. Tenant will not perform any act or
carry on any practices that may injure the Premises or the Building that may be
a nuisance or
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menace to other tenants in the Building or that shall in any way interfere with
the quiet enjoyment of such other tenants. Tenant shall not do anything on the
Premises which will overload any existing parking or service to the Premises.
B. RULES. Tenant shall comply with the Rules set forth in Rider One
attached hereto (the "Rules") in addition to all other terms of this Lease.
Landlord shall have the right, by notice to Tenant or by posting at the
Building, to reasonably amend such Rules and supplement the same with other
reasonable Rules relating to the Building or Property, or the promotion of
safety, care, efficiency, cleanliness or good order therein. Nothing herein
shall be construed to give Tenant or any other Person any claim, demand or cause
of action against Landlord arising out of the violation of such Rules by any
other tenant or visitor of the Building or Property, or out of the enforcement,
modification or waiver of the Rules by Landlord in any particular instance.
SECTION 9: MAINTENANCE AND REPAIRS
Unless expressly provided otherwise in this lease, and in addition to the
provisions of Section 6(A)(vi), Landlord shall maintain, in good condition, the
common areas of the Building, the structural parts of the Building which shall
include only the foundations, bearing and exterior walls, subflooring, gutters,
downspouts, and the roof of the Building and the Building Systems and Equipment;
provided, in the event any such replacements, repairs or maintenance are caused
by or result from Tenant's excessive or improper use or occupation thereof or
which are caused by or result from the negligence or improper conduct of Tenant,
its agents, employees or invitees, the cost of such repairs shall be paid solely
by Tenant and Tenant shall pay the cost thereof within ten (10) days of notice
from Landlord. Except as provided above, and subject to Section 10 of this Lease
and Landlord's obligation to provide utilities and services described herein,
Tenant shall maintain and repair the Premises in neat, clean, sanitary and good
condition, including, without limitation, maintaining and repairing all
storefronts, Interior surfaces of the premises, fixtures, Premises' specific
systems and equipment, and interior plumbing serving the Premises as well as any
damage to the Building, Property or Premises caused by Tenant, its agents,
employees or invitees. If Tenant shall fail to keep and preserve the Premises in
said condition and state or repair, Landlord may, at its option (but with no
obligation) put or cause the same to be put into the condition and state of
repair agreed upon, and in such case Tenant, on demand, shall pay the cost
thereof.
SECTION 10: ALTERATIONS AND LIENS
A. ALTERATIONS. Subsequent to the completion of any Landlord's Work
pursuant to Section 2, Tenant shall not attach any fixtures, equipment or other
items to the Premises, or paint or make any other additions, changes,
alterations, repairs or improvements (collectively hereinafter "alterations") to
the Premises, Building or Property without Landlord's prior written consent,
which with respect to alterations to the Premises will not be unreasonably
withheld so long as Tenant is not then, nor has been, in default of this Lease
(beyond any applicable cure period). If Landlord consents to any alteration,
Landlord may post notices of nonresponsibility in accordance with law. Any
alterations so made shall remain on and be surrendered with the Premises upon
expiration or earlier termination of this Lease, except that Landlord may,
within
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thirty (30) days before or thirty (30) days after expiration or earlier
termination hereof elect to require Tenant to remove any or all alterations at
Tenant's sole costs and expense. Tenant shall not have any obligation to remove
any of Landlord's Tenant Improvement Work. At the time Tenant submits plans for
requested alterations to Landlord for Landlord's approval, Tenant may request
Landlord to identify which alterations Landlord may require Tenant to remove at
the termination of or expiration of this Lease, and Landlord shall make such
Identification simultaneous with its approval (if any) of the alterations. If
Landlord elects to require removal of alterations as part of its approval, then
at its own and sole cost Tenant shall restore the Premises to the condition
designated by Landlord in its election, before the last day of the term or
within thirty (30) days after notice of its election is given, whichever is
later.
B. PERFORMANCE. In the event Landlord consents in writing to Tenant's
requested alteration of the Premises, Tenant shall only contract with a
contractor approved by Landlord for the construction of such alterations, which
approval shall not be unreasonably withheld, shall secure all appropriate
governmental approvals and permits and shall complete such alterations with due
diligence, in a neat, clean, good and workmanlike manner and in strict
compliance with the plans and specifications approved by Landlord. All such
construction shall be performed in a manner which shall not unreasonably
interfere with the occupancy of the other tenants of the Building. All cost,
expenses and fees related to or arising from construction of any alteration
shall be paid by Tenant prior to delinquency. There shall also be included
within the cost of any such alteration work (whether for initial tenant
improvements or for any subsequent alteration) a fee to Landlord for Tenant's
use of Landlord's personnel involved in the supervision, coordination,
inspection and the like pertaining to such work. Said fee shall be ten percent
(6%) of the total cost of the alteration work (including costs of plans and
permits), plus Landlord's out-of pocket costs (if any), which shall be paid by
Tenant within ten (10) days after presentment by Landlord of an invoice.
Landlord may impose additional reasonable conditions and rules respecting the
manner and times in which such alteration work may be performed.
C. LIENS. Tenant shall pay all costs for alterations that it authorizes
and for which it or Landlord contracts ("Tenant Work") when due. Tenant shall
keep the Property, Building, Premises and this Lease free from any mechanic's,
materialman's, architect's, engineer's or similar liens or encumbrances, and any
claims therefor, or stop or violation notices, in connection with any Tenant
Work. Tenant shall remove any such claim, lien or encumbrance, or stop or
violation notices of record due to Tenant Work, by bond or otherwise within ten
(10) days after notice by Landlord. If Tenant falls to do so, such failure shall
constitute a default by Tenant, and Landlord may, in addition to any other
remedy, pay the amount (or any portion thereof) or take such other action as
Landlord deems necessary to remove such claim, lien or encumbrance, or stop or
violation notices, without being responsible for investigating the validity
thereof. The amount so paid and costs incurred by Landlord shall be deemed
additional Rent under this Lease payable upon demand, without limitation as to
other remedies available to Landlord. Nothing contained in this Lease shall
authorize Tenant to do any act which shall subject Landlord's title to, or any
Lender's interest in, the Building, Property or Premises to any such claims,
liens or encumbrances, or stop or violation notices, whether claimed pursuant to
statute or other Law or express or implied contract.
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SECTION 11: INSURANCE AND WAIVER OF SUBROGATION
A. INSURANCE. During the term of this Lease, Tenant at its sole cost and
expense shall continuously maintain the following types of insurance coverages:
(i) Property Damage Insurance for the protection of Tenant and Landlord, as
their interests may appear, covering all of Tenant's improvements and
alterations to the premises, Tenant's personal property, business records,
fixtures and equipment, and other insurable risks in an amount not less than the
full insurance replacement cost of such property and the full insurable value of
such other interests of Tenant, with coverages that also include "Building and
Personal Property," and "Business Income Coverage" covering at least one year of
anticipated income; and (ii) Worker's Compensation Insurance (if applicable) in
the amounts required by statute together with Employer Liability Insurance with
bodily injury by each accident with limits of at least $1,000,000, bodily injury
by disease with limits of at least $1,0000,000, and an aggregate bodily injury
limit of at least $1,000,000; and (iii) "all risk" Commercial General Liability
Insurance with limits of $2,000,000 each occurrence, and in the aggregate, with
coverage for death and bodily injury, property damage or destruction (including
loss of use), product liability and completed operations, and personal or
advertising Injury. All insurance required to be carried by Tenant hereunder
shall name Landlord and Landlord's Lender (if any) as additional insureds. All
insurance required to be provided by Tenant under this Lease shall release
Landlord and its Lender (if any) from any claims for damage to business or to
any person or the Premises, the Building and the Property and to Tenant's
fixtures, personal property, improvements and alterations in or on the Premises,
caused by or resulting from risks insured against under any insurance policy
carried by Tenant in force at the time of such damage. Additionally, all
insurance required to be provided by Tenant under this Lease: shall be issued by
insurance companies authorized to do business in the State of Washington with a
financial rating of at least an "A-" status as rated in the most recent edition
of Best's Key Rating Guide; shall be issued as a primary policy; shall be on an
occurrence basis; and shall contain an endorsement requiring at least thirty
(30) days prior written notice of cancellation to Landlord and Landlord's Lender
(if any), before cancellation or change in coverage, scope or amount of any
policy. Tenant shall deliver a certificate or copy of such policy together with
evidence of payment of all current premiums to Landlord within thirty (30) days
of execution of this Lease. Any certificate of insurance shall designate Tenant
as the insured, specify the Premises location, list Landlord (and its Lender, if
any) as additional insureds, and list Landlord with Landlord's current address
as "Certificate Holder." Tenant shall take all necessary steps to renew all
Insurance at least thirty (30) days prior to such insurance expiration dates and
shall provide Landlord a copy of the renewed policy or a certificate thereof,
prior to said policy's expiration date. If Tenant fails at any time to maintain
the insurance required by this Lease, and fails to cure such default within five
(5) business days of written notice from Landlord then, in addition to all other
remedies available under this Lease and applicable law, Landlord may purchase
such insurance on Tenant's behalf and the cost of such insurance shall be
Additional Rent due within ten (10) days of written invoice from Landlord to
Tenant.
B. WAIVER OF SUBROGATION. Landlord and Tenant release and relieve the
other, and waive the entire right of recovery for loss or damage to property
located within or constituting a part or all of the Premises, the Building or
the Property to the extent that the loss or damage is actually covered (and
claim amount recovered) by insurance carried by either party and in force
14
at the time of such loss or damage. This waiver applies whether or not the loss
is due to the negligent acts or omissions of Landlord or Tenant, or their
respective officers, directors, employees, agents, contractors, or invitees.
Each of Landlord and Tenant shall have their respective property insurers
endorse the applicable insurance policies to reflect the foregoing waiver of
claims, provided, however, that the endorsement shall not be required if the
applicable policy of insurance permits the named insured to waive rights of
subrogation on a blanket basis, in which case the blanket waiver shall be
acceptable.
SECTION 12: CASUALTY DAMAGE
In the event the Building or Premises shall be destroyed or rendered
untenantable, either wholly or in part, by fire or other casualty, Landlord may,
at its option, restore the Building or Premises to as near their previous
condition as is reasonably possible and in the meantime the Rent shall be abated
in the same proportion as the untenantable portion of the Premises bears to the
whole thereof, provided, such abatement (i) shall apply only to the extent the
Premises are untenantable for the purposes permitted under this Lease and not
used by Tenant as a result thereof, and (ii) shall not apply if Tenant or any
other occupant of the Premises or any of their agents, employees, invitees,
transferees or contractors caused the damage. Unless Landlord, within sixty (60)
days after the happening of any such casualty, shall notify Tenant of its
election to so restore, this Lease shall thereupon terminate and end, provided,
if in Landlord's estimation the Premises cannot be restored within one hundred
twenty (120) days following such destruction, Landlord shall notify Tenant and
Tenant may terminate this Lease (regardless of Landlord's intent to restore) by
delivery of notice to Landlord within thirty (30) days of Landlord's notice.
Such restoration by Landlord shall not include replacement of furniture,
equipment or other items that do not become part of the Building or any
improvements to the Premises in excess of those provided for in the allowance
for building standard Items. Tenant agrees that the abatement of Rent as
provided above shall be Tenant's sole and exclusive recourse in the event of
such damage, and Tenant waives any other rights Tenant may have under applicable
Law to perform repairs or. terminate the Lease by reason of damage to the
Building or Premises.
SECTION 13: CONDEMNATION
If at least fifty percent (50%) of the rentable area of the Premises shall
be taken by power of eminent domain or condemned by a competent authority or by
conveyance in lieu thereof for public or quasi-public use ("Condemnation"),
including any temporary taking for a period of one year or longer, this Lease
shall terminate on the date possession for such use is so taken. If: (i) less
than fifty percent (50%) of the Premises is taken, but the taking includes or
affects a material portion of the Building or Property, or the economical
operation thereof, (ii) less than fifty percent (50%) of the Premises are taken
and in the reasonable judgment of Landlord the remaining Premises are not usable
for the business of Tenant, or (iii) the taking is temporary but will be in
effect for more than thirty (30) days, then in either such event, Landlord may
elect to terminate this Lease upon at least thirty (30) days' prior notice to
Tenant. The parties further agree that: (a) if this Lease is terminated, all
Rent shall be apportioned as of the date of such termination or the date of such
taking, whichever shall first occur, (b) if the taking is temporary,
15
Rent shall not be abated for the period of the taking, but Tenant may seek a
condemnation award therefor (and the Term shall not be extended thereby), and
(c) if this Lease is not terminated but any part of the Premises is permanently
taken, the Rent shall be proportionately abated based on the square footage of
the Premises so taken. Landlord shall be entitled to receive the entire award or
payment in connection with such Condemnation and Tenant hereby assigns to
Landlord any interest therein for the value of Tenant's unexpired leasehold
estate or any other claim and waives any right to participate therein, and
Tenant shall make no claim against Landlord for termination of the leasehold
interest or interference with Tenant's business. Tenant, however, shall have the
right to claim damages from the condemning authority for a temporary taking of
the leasehold as described above, for moving expenses and any taking of Tenant's
personal property and for the interruption to Tenant's business, but only if
such damages are awarded separately in the eminent domain proceeding and not as
part of the damages recovered by Landlord.
SECTION 14: ASSIGNMENT AND SUBLETTING
A. CONSENT REQUIRED. Tenant shall not, without the prior written consent
of Landlord, assign this Lease or any interest therein, or sublet the Premises
or any part thereof, or permit the use of the Premises by any party other than
Tenant or otherwise transfer this Lease (collectively "transfer"). Such consent
shall be entirely discretionary with Landlord, except as otherwise provided in
this Section 14. Consent to one such transfer shall not destroy or waive this
provision, and all subsequent transfers shall likewise be made only upon
obtaining prior written consent of Landlord. Subtenants or assignees shall
become directly liable to Landlord for all obligations of Tenant hereunder,
without relieving Tenant of any liability.
B. TRANSFERS. If Tenant is a corporation, then any transfer of this Lease
by merger, consolidation or liquidation, or any change in the ownership of, or
power to vote, the majority of its outstanding voting stock, shall constitute an
assignment for the purpose of this Section 14. If Tenant is a partnership, any
transfer of this Lease by merger, consolidation, liquidation or dissolution, or
any change in the ownership of a majority of the partnership interests, shall
constitute an assignment for the purposes of this Section 14. An assignment
forbidden within the meaning of this Section includes without limitation one or
more sales or transfers, by operation of law or otherwise, or creation of new
stock, by which an aggregate of more than fifty percent (50%) of Tenant's stock
shall be vested in a party or parties who are nonstockholders as of the date
hereof. This Section 14(B) shall not apply if Tenant's stock is listed on a
recognized security exchange or if at least eighty percent (80%) of its stock is
owned by a corporation whose stock is listed on a recognized security exchange.
C. RECAPTURE. If Tenant at any time desires to sublease this lease in its
entirety, it shall first notify Landlord in writing of its desire to do so, and
offer Landlord the right to recapture, at the per square foot rental for the
space then applicable pursuant to this Lease or the rental which Tenant proposed
to obtain whichever is lower, for all or any part of the Premises which Tenant
desires to sublet. Tenant's notice to Landlord shall specify (i) the name and
business of the proposed sublessee, (ii) the proposed effective date and
duration of the subletting, and (iii) the proposed rental to be paid to Tenant
by such sublessee. Landlord, upon receipt of such notice, shall have the option,
to be exercised within sixty (60) days from the date of the
16
receipt of such notice, to require Tenant to execute a sublease to Landlord of
the Premises or such portion thereof as Tenant desires to sublet with the right
of Landlord to sublease to others, or anyone designated by Landlord. If Landlord
exercises such option and such sublease is at the rental specified in this
lease, Tenant shall be released of all further liability hereunder, from and
after the effective date of such sublease, with respect to that portion of the
Premises included therein. If Landlord does not exercise such option within such
time, Tenant may thereafter sublet the premises involved, provided Landlord
consents thereto, but at a rental not less than offered to Landlord in the
notice and not later than ninety (90) days after delivery of the aforesaid
notice unless a further notice is given. In the event Landlord does not exercise
its right to terminate this lease or to sublet a portion of the Premises from
Tenant and Landlord has granted its written consent, Tenant may sublet all of
the Premises in accordance with Landlord's consent. Any Rent accruing to Tenant
as a result of such assignment or sublease which is in excess or the Rent then
being paid by Tenant, or in excess of the pro rata share of Rent then being paid
by Tenant for the portion of the Premises being sublet, shall be paid by Tenant
to Landlord monthly as additional rent.
D. COSTS. Whether or not Landlord consents to a proposed transfer (or
exercises its right to recapture), Tenant shall reimburse Landlord on demand for
any and all actual and documented costs that are incurred by Landlord in
connection with any proposed transfer including, without limitation, the cost of
investigating the acceptability of the proposed transferee and Landlord's
reasonable attorneys' fees incurred in connection with each proposed transfer.
E. NOTICE. Any notice or request to Landlord with respect to a proposed
assignment or sublease shall contain the name of the proposed assignee or
subtenant (collectively "transferee"), the nature of the proposed transferee's
business to be conducted at the Premises, and the terms and provisions of the
proposed transfer. Tenant shall also provide Landlord with a copy of the
proposed transfer documents when available, and such financial and other
information with respect to the proposed transferee and transfer that Landlord
may reasonably require.
F. CONSENT. Notwithstanding the foregoing, in the event of a proposed
transfer, if Landlord does not exercise its option under Section 14(C), then
Landlord will not unreasonably withhold its consent thereto if (a) Tenant is not
then, nor has been, in default of this lease (beyond any applicable cure
period), (b) the proposed transferee will continuously occupy and use the
Premises for the term of the transfer, (c) the use by the proposed transferee
will be the same as Tenant's use of the Premises, (d) the proposed transferee is
reputable and of sound financial condition, (e) the transfer will not directly
or indirectly cause Landlord to be in breach of any contractual obligation, and
(f) the proposed transferee is not an existing tenant or subtenant of any other
premises located on the Property. In all other cases, Landlord may withhold
consent in it sole discretion.
G. TERMS. Any option(s) granted to Tenant in this lease or any option(s)
granted to Tenant in any amendments to this Lease, to the extent that said
option(s) have not been exercised, shall terminate and be voided in the event
this Lease is assigned, or any part of the Premises are sublet, or Tenant's
interest in the Premises are otherwise transferred, unless otherwise agreed to
by Landlord.
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SECTION 15: PERSONAL PROPERTY, RENT AND OTHER TAXES
Tenant shall pay prior to delinquency all taxes, charges or other
governmental impositions assessed against, levied upon or otherwise imposed upon
or with respect to all fixtures, furnishings, personal property, systems and
equipment located in or exclusively serving the Premises, and any improvements
made to the Premises under or pursuant to the provisions of this Lease. Whenever
possible, Tenant shall cause all such items to be assessed and billed separately
from the other property of Landlord. In the event any such items shall be
assessed and billed with the other property of Landlord, Tenant shall pay
Landlord its share of such taxes, charges or other governmental impositions
within ten (10) days after Landlord delivers a statement and a copy of the
assessment or other documentation showing the amount of impositions applicable
to Tenant's property. Tenant shall pay any rent tax, sales tax, service tax,
transfer tax, value added tax, or any other applicable tax on the Rent,
utilities or services herein, the privilege of renting, using or occupying the
Premises, or collecting Rent therefrom, or otherwise respecting this Lease or
any other document entered in connection herewith.
SECTION 16: LANDLORD'S REMEDIES
A. DEFAULT. The occurrence of anyone or more of the following events
shall constitute a "Default" by Tenant and shall give rise to Landlord's
remedies set forth in Section 16(B) below: (i) failure to make when due any
payment of Rent, unless such failure is cured within five (5) business days
after notice from Landlord; (ii) failure to observe or perform any term or
condition of this lease other than the payment of Rent (or the other matters
expressly described herein), unless such failure is cured within any period of
time following notice expressly provided with respect thereto in other Sections
hereof, or otherwise within a reasonable time, but in no event more than thirty
(30) days following notice from Landlord (provided, if the nature of Tenant's
failure is such that more time is reasonably required in order to cure, Tenant
shall not be in Default if Tenant commences to cure promptly within such period
and thereafter diligently pursues its completion); (iii) failure to cure
immediately upon notice thereof any condition of the Premises which is
hazardous, interferes with another tenant or the operation or leasing of the
Property, or may cause the imposition of a fine, penalty or other remedy on
Landlord or its agents or affiliates and such condition is Tenant's
responsibility under this Lease; (iv) abandonment and vacation of the Premises
(failure to occupy and operate the Premises for ten (10) consecutive days while
in monetary default under this Lease shall conclusively be deemed an abandonment
and vacation); or (v) Tenant, or any guarantor of this Lease ("Guarantor"),
filing by or for reorganization or arrangement under any Law relating to
bankruptcy or insolvency (unless, in the case of a petition filed against Tenant
or such Guarantor, the same is dismissed within thirty (30) days); (b) Tenant's
or any Guarantor's insolvency or failure, or admission of an inability, to pay
debts as they mature, or (c) a violation by Tenant or any affiliate of Tenant
under any other lease or agreement with Landlord or any affiliate thereof which
is not cured within the time permitted for cure thereunder. Additionally, if
Tenant violates the same term or condition of this lease on two (2) occasions
during any twelve (12) month period, Landlord shall have the right to exercise
all remedies for any violations of the same term or condition during the next
twelve (12) months without providing further notice or an opportunity to cure.
The notice and cure periods provided herein are intended to satisfy any and
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all notice requirements imposed by Law on Landlord and are in lieu of, and not
in addition to, any notice and cure periods provided by Law; provided, Landlord
may elect to comply with such notice and cure periods provided by Law.
B. REMEDIES. If a Default occurs, Landlord shall have the rights and
remedies hereinafter set forth to the extent permitted by Law, which shall be
distinct, separate and cumulative with and in addition to any other right or
remedy allowed under any Law or other provision of this Lease:
1. Landlord may terminate Tenant's right to possession without
termination of this lease, or Landlord may terminate this Lease and Tenant's
right to possession, at any time following a Default; provided, no act of
Landlord other than giving notice to Tenant with express statement of
termination shall terminate this Lease or Tenant's right to possession. Acts of
maintenance, efforts to relet the premises or the appointment of a receiver on
Landlord's initiative to protect Landlord's interest under this Lease shall not
constitute a termination of Tenant's right to possession. Upon termination of
Tenant's right to possession, Landlord shall have the right to reenter the
Premises and recover from Tenant in addition to any other monies provided herein
or at law; (a) the Worth of the unpaid Rent that had been earned by Landlord at
the time of termination of Tenant's right to possession; (b) the Worth of the
amount of the unpaid Rent that would have been earned after the date of
termination of Tenant's right to possession through the expiration of the Lease
Term; and (c) all other expenses incurred by Landlord on account of Tenant's
Default, including without limitation any Costs of Reletting (defined below) and
Landlord's attorney fees and collection costs. The "Worth" as used for item (a)
above is to be computed by allowing interest at the rate of eighteen percent
(18%) to accrue on all such unpaid Rent (or such lesser rate required by Law, if
any). The Worth as used for Item (b) above is to be computed by discounting the
amount of Rent at the discount rate of the Federal Reserve Bank of San Francisco
at the time of termination of Tenant's right of possession.
2. In the event Landlord has made improvements to the Premises for
the use and occupancy of Tenant, in addition to all other damages and rents to
which Landlord shall be entitled on account of Tenant's Default, Landlord shall
also be entitled to recover from Tenant a sum equal to: (a) the unamoritized
cost to Landlord of the basic building standard Tenant improvement costs, said
sum being computed by applying the percentage which the unexpired portion of the
Lease Term bears to the total scheduled Lease Term with interest at ten percent
(10%) per annum, plus (b) all costs to Landlord of non-building standard, custom
or special Tenant improvements (above basic building standard improvements) with
no adjustment for the unexpired portion of the scheduled Lease Term.
3. In the event of any such reentry by Landlord, Landlord may, at
Landlord's option, require Tenant to remove from the Premises any of Tenant's
property located thereon. If Tenant fails to do so, Landlord shall not be
responsible for the care or safekeeping thereof and may remove any of the same
from the Premises and place the same elsewhere in the Building or in storage in
a public warehouse at the cost, expense and risk of Tenant with authority to the
warehouseman to sell the same in the event that Tenant shall fail to pay the
cost of transportation and storage, all in accordance with the rules and
regulations applicable to the operation of a public warehouseman's business. In
any and all such cases of reentry Landlord may make any repairs In, to or upon
the Premises which may be necessary, desirable or convenient, and Tenant
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hereby waives any and all claims for damages which may be caused or occasioned
by such reentry or to any property in or about the Premises or any part thereof.
4. Landlord may bring suits for amounts owed by Tenant hereunder or
any portions thereof, as the same accrue or after the same have accrued, and no
suit or recovery of any portion due hereunder shall be deemed a waiver of
Landlord's right to collect all amounts to which Landlord is entitled hereunder,
nor shall the same serve as any defense to any subsequent suit brought for any
amount not therefor reduced to judgment. Landlord may pursue one or more
remedies against Tenant and need not make an election of remedies. All rent and
other consideration paid by any replacement tenants shall be applied at
Landlord's option: (i) first, to the Costs of Reletting (defined below), (ii)
second, to the payment of all costs and attorney fees of enforcing this lease
against Tenant or any Guarantor, (iii) third, to the payment of all interest and
service charges accruing hereunder, (iv) fourth, to the payment of Rent
theretofore accrued, and (v) with the residue, if any, to be held by Landlord
and applied to the payment of Rent and other obligations of Tenant as the same
become due (and with any remaining residue to be retained by Landlord). "Costs
of Reletting" shall include without limitation, all costs and expenses incurred
by Landlord for any repairs, improvements or other matters necessary to prepare
the Premises for another tenant, brokerage commissions, advertising costs,
attorneys' fees, any economic incentives given to enter leases with replacement
tenants. With respect to reletting the Premises, Landlord shall only be required
to use reasonable efforts that do not exceed such efforts Landlord generally
uses to lease other space in the Building, Landlord may continue to lease other
portions of the Building or other projects owned or managed by Landlord in the
same vicinity before reletting all or a portion of the Premises, and Landlord
shall not be required to relet at rental rates less than Landlord's
then-existing rates for new leases or terms less favorable to Landlord than
those contained herein. Reletting shall be done in accordance with applicable
Law relating to the mitigation of Landlord's damages. The times set forth herein
for the curing of Defaults by Tenant are of the essence of this Lease.
SECTION 17: SUBORDINATION, ATTORNMENT AND LENDER PROTECTION
This Lease is subject and subordinate to all Mortgages now or hereafter
placed upon the Property, Building, Premises or any interest of Landlord
therein, and all other encumbrances, and matters of public record applicable to
the Property, Building or Premises. Whether before or after any foreclosure or
power of sale proceedings are initiated or completed by any Lender or a deed in
lieu is granted (or any ground lease is terminated), Tenant agrees upon written
request of any such Lender or any purchaser at such sale, to attorn and pay Rent
to such party, and recognize such party as Landlord (provided such Lender or
purchaser shall agree not to disturb Tenant's occupancy so long as Tenant does
not Default hereunder, on a form customarily used by, or otherwise reasonably
acceptable to, such party). However, in the event of attornment, no Lender shall
be: (i) liable for any act or omission of Landlord, or subject to any offsets or
defenses which Tenant might have against Landlord (arising prior to such Lender
becoming Landlord under such attornment), (ii) liable for any security deposit
or bound by any prepaid Rent not actually received by such lender, or (iii)
bound by any modification of this Lease not consented to by such Lender. Any
Lender may elect to make this Lease prior to the lien of its Mortgage by written
notice to Tenant, and if the lender of any prior Mortgage shall require, this
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Lease shall be prior to any subordinate Mortgage; such elections shall be
effective upon written notice to Tenant, or shall be effective as of such
earlier or later date set forth in such notice. Tenant agrees to give any Lender
by certified mall, return receipt requested, a copy of any notice of default
served by Tenant upon Landlord, provided that prior to such notice Tenant has
been notified in writing (by way of service on Tenant of a copy of an assignment
of leases, or otherwise) of the address of such Lender. Tenant further agrees
that if Landlord shall have failed to cure such default within the time
permitted Landlord for cure under this Lease, any such Lender whose address has
been provided to Tenant shall have an additional period of thirty (30) days in
which to cure (or such additional time as may be required due to causes beyond
such Lender's control, including time to obtain possession of the Property by
appointment of receiver, power of sale or judicial action). Should any current
or prospective Lender require a modification or modifications to this Lease
which will not cause an increased cost or otherwise materially and adversely
change the rights and obligations of Tenant hereunder, Tenant agrees that this
Lease shall be so modified. Except as expressly provided to the contrary herein,
the provisions of this Section shall be self-operative; however Tenant shall
execute and deliver, within ten (10) days after requested, such documentation as
Landlord or any Lender may request from time to time, whether prior to or after
a foreclosure or power of sale proceeding is initiated or completed, a deed in
lieu is delivered, or a ground lease is terminated, in order to further confirm
or effectuate the matters set forth in this Section in recordable form (and
Tenant hereby authorizes Landlord acting in good faith to execute any such
documentation as Tenant's agent and attorney-in-fact). Tenant hereby waives the
provisions of any Law (now or hereafter adopted) which may give or purport to
give Tenant any right or election to terminate or otherwise adversely affect
this Lease or Tenant's obligations hereunder if foreclosure or power of sale
proceedings are initiated, prosecuted or completed.
SECTION 18: ESTOPPEL CERTIFICATES
Tenant shall from time to time, within fifteen (15) days after written
request from Landlord, execute, acknowledge and deliver a statement certifying:
(i) that this Lease is unmodified and in full force and effect or, if modified,
stating the nature of such modification and certifying that this lease as so
modified, is in full force and effect (or specifying the ground for claiming
that this Lease is not in force and effect), (ii) the dates to which the Rent
has been paid, and the amount of any Security Deposit, (iii) that Tenant is in
possession of the Premises. and paying Rent on a current basis with no offsets,
defenses or claims, or specifying the same if any are claimed, (iv) that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord or
Tenant which are pertinent to the request, or specifying the same if any are
claimed, and (v) certifying such other matters, and including such current
financial statements, as Landlord may reasonably request, or as may be requested
by Landlord's current or prospective Lenders, insurance carriers, auditors, and
prospective purchasers (and including a comparable certification statement from
any subtenant respecting its sublease). Any such statement may be relied upon by
any such parties.
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SECTION 19: RIGHTS RESERVED BY LANDLORD
Except to the extent expressly limited herein, Landlord reserves full
rights to control the Property (which rights may be exercised without subjecting
Landlord to claims for constructive eviction, abatement of Rent, damages or
other claims of any kind), including more particularly, but without limitation,
the following rights:
A. GENERAL MATTERS. To: (i) change the name or street address of the
Building or Property or designation of the Premises, (ii) install and maintain
signs on the exterior and interior of the Building or Property, and grant any
other person the right to do so, (iii) retain at all times, and use in
appropriate instances, keys to all doors within and into the Premises, (iv)
grant to any person the right to conduct any business or render any service at
the Property, whether or not the same are similar to the use permitted Tenant by
this Lease, (v) grant any person the right to use separate security personnel
and systems respecting access to their premises, (vi) have access for Landlord
and other tenants of the Building to any mail chutes located on the Premises
according to the rules of the United States Postal Service (and to install or
remove such chutes), and (vii) in case of fire, invasion, insurrection, riot,
civil disorder, emergency or other dangerous condition, or threat thereof: (a)
limit or prevent access to the Building or Property or Premises, (b) shut down
elevator service, (c) activate elevator emergency controls, and (d) otherwise
take such action or preventative measures deemed necessary by Landlord for the
safety of tenants of the Building or Property or the protection of the Building
or Property and other property located thereon or therein (but this provision
shall impose no duty on Landlord to take such actions, and no liability for
actions taken in good faith).
B. ACCESS TO PREMISES. To enter the Premises in order to: (i) inspect,
(ii) supply cleaning service or other services to be provided Tenant hereunder,
(iii) show the Premises to current and prospective Lenders, insurers,
purchasers, tenants, brokers and governmental authorities, (iv) decorate,
remodel or alter the Premises if Tenant shall abandon the Premises at any time,
or shall vacate the same during the last one hundred twenty (120) days of the
Term (without thereby terminating this Lease), and (v) perform any work or take
any other actions under Section 19(C) below, or exercise other rights of
Landlord under this Lease or applicable Laws. However, Landlord shall: (a)
provide reasonable advance written or oral notice to Tenant's on-site manager or
other appropriate person (except in emergencies), (b) take reasonable steps to
minimize any significant disruption to Tenant's business, and following
completion of any work, return Tenant's leasehold improvements, fixtures,
property and equipment to the original locations and condition to the fullest
extent reasonably possible, and (c) take reasonable steps to avoid materially
changing the configuration or reducing the square footage of the Premises,
unless required by Laws or other causes beyond Landlord's reasonable control
(and in the event of any permanent material reduction, the Rent and other rights
and obligations of the parties based on the square footage of the Premises shall
be proportionately reduced). Tenant shall not place partitions, furniture or
other obstructions in the Premises which may prevent or impair Landlord's access
to the Systems and Equipment for the Property or the systems and equipment for
the Premises. If Tenant requests that any such access occur before or after
Landlord's regular business hours and Landlord approves, Tenant shall pay all
overtime and other additional costs in connection therewith.
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C. CHANGES TO THE PROPERTY. To: (i) paint and decorate, (ii) perform
repairs or maintenance, and (iii) make replacements, restorations, renovations,
alterations, additions and improvements, structural or otherwise (including
freon retrofit work), in and to the Building or Property or any part thereof,
including any adjacent building, structure, facility, land, street or alley, or
change the uses thereof (including changes, reductions or additions of
corridors, entrances, doors, lobbies, parking facilities and other areas,
structural support columns and shear walls, elevators, stairs, escalators,
mezzanines, solar tint windows or film, kiosks, planters, sculptures, displays,
and other amenities and features therein, and changes relating to the connection
with or entrance into or use of the Building or Property or any other adjoining
or adjacent building or buildings, now existing or hereafter constructed). In
connection with such matters, Landlord may among other things erect scaffolding,
barricades and other structures, open ceilings, close entry ways, restrooms,
elevators, stairways, corridors, parking and other areas and facilities, and
take such other actions as Landlord deems appropriate. However, Landlord shall:
(a) take reasonable steps to minimize or avoid any denial of access to the
Premises except when necessary on a temporary basis, and (b) in connection with
entering the Premises shall comply with Section 19(B) above.
D. NEW PREMISES. To substitute for the Premises other premises (herein
referred to as the "new premises") in the Building, provided: (i) the new
premises shall be similar to the Premises in size (up to 10% larger or smaller
with the Rent and any other rights and obligations of the parties based on the
square footage of the Premises adjusted proportionately to reflect any
decrease), (ii) Landlord shall provide the new premises in a condition
substantially comparable to the Premises at the time of the substitution (and
Tenant shall diligently cooperate in the preparation or approval of any plans or
specifications for the new premises as requested by Landlord or Landlord's
representatives), (iii) the parties shall execute an appropriate amendment to
the Lease confirming the change within thirty (30) days after Landlord requests,
and (iv) if Tenant shall already have taken possession of the Premises: (a)
Landlord shall pay the direct, out-of-pocket, reasonable expenses of Tenant in
moving from the Premises to the new premises, and (b) Landlord shall give Tenant
at least thirty (30) days' notice before making such change, and such move shall
be made during evenings, weekends, or otherwise so as to incur the least
inconvenience to Tenant. Tenant shall surrender and vacate the Premises on the
date required in Landlord's notice of substitution, in the condition and as
required under Section 22, and any failure to do so shall be subject to Section
23.
E. REDEVELOPMENT. To cancel this Lease at any time by giving Tenant at
least twelve (12) months' prior written notice from the first day of any
calendar month but only in the event Landlord intends to demolish the Building
or intends to permit a major alteration to the Building, which in the judgment
of Landlord requires vacancy of the Building.
SECTION 20: LANDLORD'S RIGHT TO CURE
If Landlord shall fall to perform any obligation under this Lease required
to be performed by Landlord, Landlord shall not be deemed to be in default
hereunder nor subject to any claims for damages of any kind, unless such failure
shall have continued for a period of thirty (30) days after notice thereof by
Tenant (provided, if the nature of Landlord's failure is such that more time is
reasonably required in order to cure, Landlord shall not be in default if
Landlord
23
commences to cure within such period and thereafter diligently seeks to cure
such failure to completion). If Landlord shall default and failure to cure as
provided herein, Tenant shall have such rights and remedies as may be available
to Tenant under applicable Laws, subject to the other provisions of this Lease;
provided, Tenant shall have no right of selfhelp to perform repairs or any other
obligation of Landlord, and shall have no right to withhold, set-off, or abate
Rent, or terminate this Lease, and Tenant hereby expressly waives the benefit of
any Law to the contrary.
SECTION 21: RELEASE AND INDEMNITY
A. INDEMNITY. Tenant shall indemnify, defend (using legal counsel
reasonably acceptable to Landlord) and save Landlord and its property manager
(if any) harmless from all claims, suits, losses, damages, fines, penalties,
liabilities and expenses (including Landlord's personnel and overhead costs and
reasonable attorneys fees and other costs incurred in connection with claims,
regardless of whether such claims involve litigation) resulting from any actual
or alleged injury (including death) of any person or from any actual or alleged
loss of or damage to any property arising out of or in connection with (i)
Tenant's negligence or willful misconduct in connection with Tenant's
occupation, use or improvement of the Premises, or that of its employees, agents
or contractors, (ii) Tenant's breach of its express obligations under this Lease
which Tenant has not cured within a reasonable time after receipt of written
notice of such breach from Landlord or (iii) any negligence or willful
misconduct of Tenant or any subtenant, licensee, assignee or concessionaire of
Tenant, or of any officer, agent, employee, guest or invitee of Tenant, or of
any such entity in or about the Premises. This indemnity with respect to acts or
omissions during the term of this Lease shall survive termination or expiration
of this Lease. The foregoing indemnity covers actions brought by Tenant's own
employees and it is specifically and expressly intended to constitute a waiver
of Tenant's immunity under Washington's Industrial Insurance Act, RCW Title 51,
to the extent necessary to provide Landlord with a full and complete indemnity
from claims made by Tenant and its employees, to the extend provided herein.
Tenant shall promptly notify Landlord of casualties or accidents occurring in or
about the Premises.
Landlord shall indemnify, defend (using legal counsel reasonably acceptable to
Tenant) and save Tenant harmless from all claims, suits, losses, damages, fines,
penalties, liabilities and expenses (including Tenant's personnel and overhead
costs and reasonable attorneys fees and other costs incurred in connection with
claims, regardless of whether such claims involve litigation) resulting from any
actual or alleged injury (including death) of any person or from any actual or
alleged loss of or damage to any property arising out of or in connection with
(i) Landlord's gross negligence or willful misconduct in connection with
Landlord's occupation, use or improvement of the Premises, or that of its
employees, agents or contractors, (ii) Landlord's breach of its express
obligations under this Lease which Landlord has not cured within a reasonable
time after receipt of written notice of such breach from Tenant or (iii) any
negligence or willful misconduct of Landlord or any licensee, assignee or
concessionaire of Landlord, or of any officer, agent, employee, guest or invitee
of Landlord, or of any such entity in or about the Premises. This indemnity with
respect to acts or omissions during the term of this Lease shall survive
termination or expiration of this Lease. The foregoing indemnity covers actions
brought by Landlord's own employees and it is specifically and expressly
intended to constitute a waiver of Landlord's immunity under Washington's
Industrial Insurance Act, RCW Title 51, to the
24
extent necessary to provide Tenant with a full and complete indemnity from
claims made by Landlord and its employees, to the extend provided herein.
Landlord shall promptly notify Tenant of casualties or accidents occurring in or
about the Premises.
LANDLORD AND TENANT ACKNOWLEDGE THAT THE INDEMNIFICATION PROVISIONS OF SECTION
29 AND THIS SECTION 21 WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.
B. RELEASE. Tenant hereby fully and completely waives and releases all
claims against Landlord for any losses or other damages sustained by Tenant or
any person claiming through Tenant resulting from any accident or occurrence in
or upon the Premises, including but not limited to: any defect in or failure of
Building equipment; any failure to make repairs; any defect, failure, surge in,
or interruption of project facilities or services; any defect in or failure of
Common Areas; broken glass; water leakage; the collapse of any Building
component; any claim or damage resulting from Landlord's repair, maintenance or
improvements to any portion of the Building or Property; or any act, omission or
negligence of co-tenants, licensees or any other persons or occupants of the
Building; provided only, that the release contained in this Section 21(B) shall
not apply to claims for actual damage to persons or property (excluding
consequential damages such as lost profits) resulting directly and solely from
Landlord's gross negligence or willful misconduct or from Landlord's breach of
its express obligations under this Lease which Landlord has not cured within a
reasonable time after receipt of written notice of such breach from Tenant.
C. LIMITATION ON INDEMNITY. In compliance with RCW 4.24.115 as in effect
on the date of this Lease, all provisions of this Lease pursuant to which
Landlord or Tenant (the "Indemnitor") agrees to indemnify the other (the
"Indemnitee") against liability for damages arising out of bodily injury to
persons or damage to property relative to the construction, alteration, repair,
addition to, subtraction from, improvement to, or maintenance of, any building,
road, or other structure, project, development, or improvement attached to real
estate, including the Premises, (i) shall not apply to damages caused by or
resulting from the sole negligence of the Indemnitee, its agents or employees,
and (ii) to the extent caused by or resulting from the concurrent negligence of
(a) the Indemnitee or the Indemnitee's agents or employees, and (b) the
Indemnitor or the Indemnitor's agents or employees shall apply only to the
extent of the Indemnitor's negligence; provided, however, the limitations on
indemnity set forth in this Section 21 shall automatically and without further
act by either Landlord or Tenant be deemed amended so as to remove any of the
restrictions contained in this Section 21 no longer required by then-applicable
Law.
D. DEFINITIONS. As used in any Section of this Lease establishing
indemnity or release of Landlord, "Landlord" shall include Landlord, its
partners, officers, agents, employees and contractors, and "Tenant" shall
include Tenant and any person or entity claiming through Tenant.
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SECTION 22: RETURN OF POSSESSION
At the expiration or earlier termination of this Lease or Tenant's right of
possession, Tenant shall vacate and surrender possession of the entire Premises
in good, neat and clean order and well-maintained condition, ordinary wear and
tear excepted, shall surrender all keys and key cards, and any parking
transmitters, stickers or cards, to Landlord, and shall remove all personal
property and office trade fixtures that may be readily removed without damage to
the Premises or Property. All improvements, fixtures and other items installed
by Tenant or Landlord under or with respect to this Lease, shall be the property
of Tenant during the Term of this Lease, but at the expiration or earlier
termination of this Lease all such improvements, fixtures and other items shall
become Landlord's property, and shall remain upon the Premises (unless Landlord
elects otherwise), all without compensation, allowance or credit to Tenant. If
prior to such termination or within three (3) months thereafter Landlord so
directs by notice, and subject to the terms of Section 10(A) of this Lease,
Tenant shall promptly remove such of the foregoing items as are designated in
such notice and restore the Premises to the condition prior to the installation
of such items in a good and workmanlike manner. If Tenant shall fail to perform
any repairs or restoration, or fail to remove any items from the Premises
required hereunder, Landlord may do so and Tenant shall pay Landlord's charges
therefor upon demand. All property removed from the Premises by Landlord
pursuant to any provisions of this Lease or any Law may be handled or stored by
Landlord at Tenant's expense, and Landlord shall in no event be responsible for
the value, preservation or safekeeping thereof. All property not removed from
the Premises or retaken from storage by Tenant within thirty (30) days after
expiration or earlier termination of this Lease or Tenant's right to possession,
shall at Landlord's option be conclusively deemed to have been conveyed by
Tenant to Landlord as if by bill of sale without payment by Landlord. Unless
prohibited by applicable Law, Landlord shall have a lien against such property
for the costs incurred in removing and storing the same. Tenant hereby waives
any statutory notices to vacate or quit the Premises upon expiration of this
Lease.
SECTION 23: HOLDING OVER
Unless Landlord expressly agrees otherwise in writing, Tenant shall pay
Landlord one hundred fifty percent (150%) of the amount of Rent then applicable
prorated on a per diem basis for each day Tenant shall fall to vacate or
surrender possession of the Premises or any part thereof after expiration or
earlier termination of this Lease, together with all damages sustained by
Landlord on account thereof. Tenant shall pay such amounts on demand, and, in
the absence of demand, monthly in advance. The foregoing provisions, and
Landlord's acceptance of any such amounts, shall not serve as permission for
Tenant to hold-over, nor serve to extend the Term (although Tenant shall remain
a tenant-at-sufferance bound to comply with all provisions of this Lease).
Landlord shall have the right at any time after expiration or earlier
termination of this Lease, or Tenant's right to possession, to reenter and
possess the Premises and remove all property and persons therefrom, and Landlord
shall have such other remedies for holdover as may be available to Landlord
under other provisions of this Lease or applicable Laws.
26
SECTION 24: NOTICES
Except as expressly provided to the contrary in this Lease, every notice or
other communication to be given by either party to the other with respect hereto
or to the Premises, Building or Property, shall be in writing and shall not be
effective for any purpose unless the same shall be served personally, or by
national air courier service, or United States certified mail, return receipt
requested, postage prepaid, to the parties at the addresses set forth in Section
1, or such other address or addresses as Tenant or Landlord may from time to
time designate by notice given as above provided. Every notice or other
communication hereunder shall be deemed to have been given as of the third
business day following the date of such mailing (or as of any earlier date
evidenced by a receipt from such national air courier service or the United
States Postal Service) or immediately if personally delivered. Notices not sent
in accordance with the foregoing shall be of no force or effect until received
by the foregoing parties at such addresses required herein.
SECTION 25: REAL ESTATE BROKERS
Tenant represents that Tenant has dealt only with the broker, if any,
designated in Section 1 (whose commission, if any, shall be paid by Landlord
pursuant to separate agreement) as broker, agent or finder in connection with
this Lease, and agrees to indemnify and hold Landlord harmless from all damages,
judgments, liabilities and expenses (including reasonable attorneys' fees)
arising from any claims or demands of any other broker, agent or finder with
whom Tenant has dealt for any commission or fee alleged to be due in connection
with its participation in the procurement of Tenant or the negotiation with
Tenant of this Lease. Landlord and Tenant recognize that it is possible that
they may hereafter make additional agreements regarding further extension or
renewal of this Lease or a new lease or leases for all or one or more parts of
the Premises or other space in the Building (or other portions of the Property
or other buildings managed by Landlord) for a term or terms commencing after the
Commencement Date of this Lease. It is also possible that Landlord and Tenant
may hereafter modify this Lease to add additional space or to substitute other
space for all or a portion of the Premises. in the event any such additional
agreements, modifications to this Lease, or new leases are made, Landlord shall
have no obligation to pay any commission or other compensation to any broker or
other party engaged by Tenant (including the brokers designated in Section 1)
with respect to negotiating or representing Tenant in such matters, regardless
of whether under the circumstances such person is or is not regarded by law as
an agent of Landlord, and Tenant shall indemnify and hold Landlord harmless from
any claim for such compensation. Nothing in this Section 25 shall be construed
to require or otherwise obligate Landlord to consider or make any of the
above-described additional agreements, modifications to this Lease, or new
lease.
SECTION 26: NO WAIVER
No provision of this lease will be deemed waived by either party unless
expressly waived in writing and signed by the waiving party. No waiver shall be
implied by delay or any other act or omission of either party. No waiver by
either party of any provision of this lease shall be deemed a waiver of such
provision with respect to any subsequent matter relating to such provision, and
Landlord's consent or approval respecting any action by Tenant shall not
27
constitute a waiver of the requirement for obtaining Landlord's consent or
approval respecting any subsequent action. Acceptance of Rent by Landlord
directly or through any agent or lock-box arrangement shall not constitute a
waiver of any breach by Tenant of any term or provision of this Lease (and
Landlord reserves the right to return or refund any untimely payments if
necessary to preserve Landlord's remedies). No acceptance of a lesser amount of
Rent shall be deemed a waiver of Landlord's right to receive the full amount
due, nor shall any endorsement or statement on any check or payment or any
letter accompanying such check or payment be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the full amount due. The acceptance of Rent or of the
performance of any other term or provision from, or providing directory listings
or services for, any person or entity other than Tenant shall not constitute a
waiver of Landlord's right to approve any Transfer. No delivery to, or
acceptance by, Landlord or its agents or employees of keys, nor any other act or
omission of Tenant or Landlord or their agents or employees, shall be deemed a
surrender, or acceptance of a surrender, of the Premises or a termination of
this Lease, unless stated expressly in writing by Landlord.
SECTION 27: SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS
The parties acknowledge that safety and security devices, services and
programs provided by Landlord, if any, while intended to deter crime and ensure
safety, may not in given instances prevent theft or other criminal acts, or
ensure safety of persons or property. The risk that any safety or security
device, service or program may not be effective, or may malfunction, or be
circumvented by a criminal, is assumed by Tenant with respect to Tenant's
property and interests, and Tenant shall obtain insurance coverage to the extent
Tenant desires protection against such criminal acts and other losses. Tenant
agrees to cooperate in any reasonable safety or security program developed by
Landlord or required by Law.
SECTION 28: TELECOMMUNICATION LINES
A. TELECOMMUNICATION LINES. No telecommunication or computer lines shall
be installed within or without the Premises without Landlord's prior consent in
accordance with Section 10. Landlord disclaims any representations, warranties
or understandings concerning Landlord's Building computer systems, or the
capacity, design or suitability of Landlord's riser lines, Landlord's main
distribution frame ("MDF") or related equipment. If there is, or will be, more
than one tenant on any floor, at any time, Landlord may allocate, and
periodically reallocate, connections to the terminal block based on the
proportion of square feet each tenant occupies on such floor, or the type of
business operations or requirements of such tenants, in Landlord's reasonable
discretion. Landlord may arrange for an independent contractor to review
Tenant's requests for approval to install any telecommunication or computer
lines, monitor or supervise Tenant's installation, connection and disconnection
of any such lines, and provide other such services, or Landlord may provide the
same. In each case, all such work shall be performed in accordance with Section
10. At the expiration or earlier termination of this Lease, and at Landlord's
request, Tenant at its cost shall remove all wires, cable or other computer or
telecommunication lines or systems installed by or for Tenant and Tenant shall
restore the
28
Premises and Building to the condition existing prior to Tenant's
installation, provided, however, Tenant shall not have any obligation to remove
any portion of the same that is part of the Landlord's Tenant Improvement Work.
B. LIMITATION OF LIABILITY. Unless due solely to Landlord's intentional
misconduct or grossly negligent acts, Landlord shall have no liability for
damages arising, and Landlord does not warrant that the Tenant's use of any
telecommunication or computer lines or systems ("Lines") will be free, from the
following (collectively called "Line Problems"): (i) any eavesdropping,
wire-tapping or theft of long distance access codes by unauthorized parties,
(ii) any failure of the Lines to satisfy Tenant's requirements, or (iii) any
capacitance, attenuation, cross-talk or other problems with the Lines, any
misdesignation of the Lines in the MDF room or wire closets, or any shortages,
failures, variations, interruptions, disconnections, loss or damage caused by or
in connection with the installation, maintenance, replacement, use or removal of
any other Lines or equipment at the Building or Property by or for other tenants
at the Property or Building, by any failure of the environmental conditions at
or the power supply for the Building to conform to any requirements of the Lines
or any other problems associated with any Lines or by any other cause. Under no
circumstances shall any Line Problems be deemed an actual or constructive
eviction of Tenant, render Landlord liable to Tenant for abatement of any Rent
or other charges under the Lease, or relieve Tenant from performance of Tenant's
obligations under the Lease as amended herein. Landlord in no event shall be
liable for any loss of profits, business interruption or other consequential
damage arising from any Line Problems.
SECTION 29: SUBSTANCES; DISRUPTIVE ACTIVITIES
A. HAZARDOUS SUBSTANCES.
1. PRESENCE AND USE OF HAZARDOUS SUBSTANCES. Except for nominal
amounts that are used consistent with Tenant's use of the Premises for office
purposes, Tenant shall not, without Landlord's prior written consent of
Landlord's sole discretion, keep on or around the Premises, Building or
Property, for use, disposal, treatment, generation, storage or sale, any
substances designed as, or containing components designated as, a "hazardous
substance," "hazardous material," "hazardous waste," "regulated substance" or
"toxic substance" (collectively referred to as "Hazardous Substances"). With
respect to any such Hazardous Substances, Tenant shall: (i) comply promptly,
timely and completely with all Laws for reporting, keeping and submitting
manifests, and obtaining and keeping current identification numbers; (ii) submit
to Landlord true and correct copies of all reports, manifests and identification
numbers at the same time as they are required to be and/or are submitted to the
appropriate governmental authorities; (iii) within five (5) days of Landlord's
request, submit written reports to Landlord regarding Tenant's use, storage,
treatment, transportation, generation, disposal or sale of Hazardous Substances
and provide evidence satisfactory to Landlord of Tenant's compliance with all
applicable Laws; (iv) allow Landlord or Landlord's agent or representative to
come on the Premises at all times to check Tenant's compliance with all
applicable Laws; (v) comply with minimum levels, standards or other performance
standards or requirements which may be set forth or established for certain
Hazardous Substances (if minimum standards or levels are applicable to Hazardous
Substances present on the Premises, such levels or standards shall be
established by an on-site inspection by the appropriate
29
governmental authorities and shall be set forth in an addendum to this Lease);
and (vi) comply with all applicable Laws regarding the proper and lawful use,
sale, transportation, generation, treatment and disposal of Hazardous
Substances.
2. MONITORING COSTS. Any and all costs incurred by Landlord and
associated with Landlord's monitoring of Tenant's compliance with this Section
29, including Landlord's attorneys' fees and costs, shall be additional Rent and
shall be due and payable to Landlord immediately upon demand by Landlord.
B. CLEANUP COSTS, DEFAULT AND INDEMNIFICATION.
1. Tenant shall be fully and completely liable to Landlord for any
and all cleanup costs, and any and all other charges, fees, penalties (civil and
criminal) imposed by any governmental authority with respect to Tenant's use,
disposal, transportation, generation and/or sale of Hazardous Substances, in or
about the Premises, Building or Property.
2. Tenant shall fully indemnify, defend and save Landlord and
Landlord's Lender, if any, harmless from any and all of the costs, fees,
penalties and charges assessed against or imposed upon Landlord (as well as
Landlord's and Landlord's Lender's attorneys' fees and costs) as a result of
Tenant's use, disposal, transportation, generation and/or sale of Hazardous
Substances.
3. Upon Tenant's default under this Section 29, in addition to the
rights and remedies set forth elsewhere in this Lease, Landlord shall be
entitled to the following rights and remedies: (i) at Landlord's option, to
terminate this lease immediately; and/or (ii) to recover any and all damages
associated with the default, including, but not limited to cleanup costs and
charges, civil and criminal penalties and fees, loss of business and sales by
Landlord and other tenants of the Building or Property, any and all damages and
claims asserted by third parties and Landlord's attorney's fees and costs.
C. DISRUPTIVE ACTIVITIES. Tenant shall not: (1) produce, or permit to be
produced, any intense glare, light or heat except within an enclosed or screened
area and then only in such manner that the glare, light or heat shall not,
outside the Premises, be materially different than the light or heat from other
sources outside the Premises; (2) create, or permit to be created, any sound
pressure level which will interfere with the quiet enjoyment of any real
property outside the Premises, or which will create a nuisance or violate any
governmental law, rule, regulation or requirement; (3) create, or permit to be
created, any floor or ground vibration that is materially discernable outside
the Premises; (4) transmit, receive, or permit to be transmitted or received,
any electromagnetic, microwave or other radiation which is harmful or hazardous
to any person or property in or about the Premises, Building or Property; or (5)
create, or permit to be created, any noxious odor that is disruptive to the
business operations of any other tenant in the Building or Property.
SECTION 30: DISABILITIES ACTS
The parties acknowledge that the Americans With Disabilities Act of 1990
(42 U.S.C. Section 12101 et seq.) and regulations and guidelines promulgated
thereunder ("ADA"), and any
30
similarly motivated state and local Laws, as the same may be amended and
supplemented from time to time (collectively referred to herein as the
"Disabilities Acts") establish requirements for business operations,
accessibility and barrier removal, and that such requirements mayor may not
apply to the Premises, Building and Property depending on, among other things:
(i) whether Tenant's business is deemed a "public accommodation" or "commercial
facility", (ii) whether such requirements are "readily achievable", and (iii)
whether a given alteration affects a "primary function area" or triggers "path
of travel" requirements. The parties hereby agree that: (a) Landlord shall
perform any required Disabilities Acts compliance in the common areas, except as
provided below, (b) Tenant shall perform any required Disabilities Acts
compliance in the Premises, and (c) Landlord may perform, or require that Tenant
perform, and Tenant shall be responsible for the cost of, Disabilities Acts
"path of travel" and other requirements triggered by any public accommodation or
other use of, or alterations in, the Premises by Tenant. Tenant shall be
responsible for Disabilities Acts requirements relating to Tenant's employees
and Landlord shall be responsible for Disabilities Acts requirements relating to
Landlord's employees.
SECTION 31: DEFINITIONS
A. "Building" shall mean the structure (or the portion thereof operated
by Landlord) identified in Section 1 within which the Premises are located.
B. "Default Rate" shall mean eighteen percent (18%) per annum, or the
highest rate permitted by applicable Law, whichever shall be less.
C. "Holidays" shall mean all federal holidays, and holidays observed by
the State of Washington, including New Year's Day, President's Day, Memorial
Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving Day, Christmas
Day, and to the extent of utilities or services provided by union members
engaged at the Property, such other holidays observed by such unions.
D. "Landlord" shall mean only the Landlord from time to time, except for
purposes of any provisions defending, indemnifying and holding Landlord harmless
hereunder, "Landlord" shall include past, present and future landlords and their
respective partners, beneficiaries, trustees, officers, directors, employees,
shareholders, principals, agents, affiliates, successors and assigns.
E. "Law" or "Laws" shall mean all federal, state, county and local
governmental and municipal laws (including without limitation Disabilities
Acts), statutes, ordinances, rules, regulations, codes, decrees, orders and
other such requirements, applicable equitable remedies and decisions by courts
in cases where such decisions are considered binding precedents in the State of
Washington, and decisions of federal courts applying the Laws of such State, at
the time in question. This Lease shall be interpreted and governed by the Laws
of the State of Washington.
F. "Lender" shall mean the holder of any Mortgage at the time in
question, and where such Mortgage is a ground lease, such term shall refer to
the ground Landlord (and the
31
term "ground lease" although not separately capitalized is intended through out
this Lease to include any superior or master lease).
G. "Mortgage" shall mean all mortgages, deeds of trust, ground leases and
other such encumbrances now or hereafter placed upon the Property, Building or
Premises, or any part thereof or interest therein, and all renewals,
modifications, consolidations, replacements or extensions thereof, and all
indebtedness now or hereafter secured thereby and all interest thereon.
H. "Premises' shall mean the area within the Building identified in
Section 1 and Exhibit B. Possession of areas necessary for utilities, services,
safety and operation of the Building, including the Systems and Equipment, fire
stairways, perimeter walls, space between the finished ceiling of the Premises
and the slab of the floor or roof of the Building thereabove, and the use
thereof together with the right to install, maintain, operate, repair and
replace the Systems and Equipment, including any of the same in, through, under
or above the Premises in locations that will not materially interfere with
Tenant's use of the Premises, are hereby excepted and reserved by Landlord, and
not demised to Tenant.
I. "Property" shall mean the real property legally described in Exhibit A
of this Lease together with all landscaping, improvements and personal property
located thereon and related to the Building or its operation or maintenance.
J. "Rent" shall have the meaning specified therefor in Section 4.
K. "Systems and Equipment" shall mean any plant, machinery, transformers,
duct work, cable, wires, and other equipment, facilities, and systems designed
to supply light, heat, ventilation, air conditioning and humidity, or any other
services or utilities, or comprising or serving as any component or portion of
the electrical, gas, steam, plumbing, sprinkler, communications, alarm,
security, or fire/life/safety systems or equipment, or any elevators, escalators
or other mechanical, electrical, electronic, computer or other systems or
equipment for the Building, except to the extent that any of the same serves
particular tenants exclusively (and "systems and equipment" without
capitalization shall refer to such of the foregoing items serving particular
tenants exclusively).
L. "Tenant" shall be applicable to one or more persons or entities as the
case may be, the singular shall include the plural, and if there be more than
one Tenant, the obligations thereof shall be joint and several. When used in the
lower case, "tenant" shall mean any other tenant, subtenant or occupant of the
Building or Property.
M. "Tenant's Share" of Expenses and Taxes pursuant to Section 4 shall be
the percentage set forth in Section 1, but if the rentable area of the Premises
or Building shall change, Tenant's Share shall thereupon become the rentable
area of the Premises divided by the rentable area of the Building, excluding any
parking facilities, subject at all times to adjustment under Section 4. Tenant
acknowledges that the "rentable area of the Premises" under this Lease includes
the usable area, without deduction for columns or projections, multiplied by a
load or conversion factor, to reflect a share of certain areas, which may
include lobbies, corridors, mechanical, utility, janitorial, boiler and service
rooms and closets, restrooms, and other public, common and service areas, all as
reasonably determined by Landlord. Except as provided
32
expressly to the contrary herein, the "rentable area of the Building" shall
include all rentable area of all space leased or available for lease at the
Building, which Landlord may reasonably re-determine from time to time, to
reflect configurations, additions or modifications to the Building.
SECTION 32: OFFER
The submission and negotiation of this Lease shall not be deemed an offer
to enter the same by Landlord (nor an option or reservation for the Premises),
but the solicitation of such an offer by Tenant. Tenant agrees that its
execution of this Lease constitutes a firm offer to enter the same which may not
be withdrawn for a period of thirty (30) days after delivery to Landlord. During
such period and in reliance on the foregoing, Landlord may, at Landlord's
option, deposit any Security Deposit and Rent, proceed with any plans,
specifications, alterations or improvements, and permit Tenant to enter the
Premises, but such acts shall not be deemed an acceptance of Tenant's offer to
enter this Lease, and such acceptance shall be evidenced only by Landlord
signing and delivering this Lease to Tenant.
SECTION 33: MISCELLANEOUS
A. CAPTIONS AND INTERPRETATION. The captions of the Sections and
Paragraphs of this Lease are for convenience of reference only and shall not be
considered or referred to in resolving questions of interpretation. Tenant
acknowledges that it has read this Lease and that it has had the opportunity to
confer with counsel in negotiating this Lease; accordingly, this Lease shall be
construed neither for nor against Landlord or Tenant, but shall be given a fair
and reasonable interpretation in accordance with the meaning of its terms. The
neuter shall Include the masculine and feminine, and the singular shall include
the plural. The term "including" shall be interpreted to mean "including, but
not limited to."
B. SURVIVAL OF PROVISIONS. All obligations (including indemnity, Rent and
other payment obligations) or rights of either party arising during or
attributable to the period prior to expiration or earlier termination of this
Lease shall survive such expiration or earlier termination.
C. SEVERABILITY. If any term or provision of this Lease or portion
thereof shall be found invalid, void, illegal, or unenforceable generally or
with respect to any particular party, by a court of competent jurisdiction, it
shall not affect, impair or Invalidate any other terms or provisions or the
remaining portion thereof, or its enforceability with respect to any other
party.
D. SHORT FORM LEASE. Neither this Lease nor any memorandum of lease or
short form lease shall be recorded by Tenant, but Landlord or A to record a
short form of this Lease, in which case Tenant shall promptly execute,
acknowledge and deliver the same on a form prepared by Landlord or such Lender.
E. LIGHT, AIR AND OTHER INTERESTS. This Lease does not grant any legal
rights to "light and air" outside the Premises nor any particular view visible
from the Premises, nor any easements, licenses or other interests unless
expressly contained in this Lease.
F. AUTHORITY. If Tenant is any form of corporation, partnership, limited
liability company or partnership, association or other organization, Tenant and
all persons signing for
33
Tenant below hereby represent that this Lease has been fully authorized and no
further approvals are required, and Tenant is duly organized, in good standing
and legally qualified to do business in the Premises (and has any required
certificates, licenses, permits and other such items).
G. PARTNERSHIP TENANT. If Tenant is a partnership, all current and new
general partners shall be jointly and severally liable for all obligations of
Tenant hereunder and as this Lease may hereafter be modified, whether such
obligations accrue before or after admission of future partners or after any
partners die or leave the partnership. Tenant shall cause each new partner to
sign and deliver to Landlord written confirmation of such liability, in form and
content satisfactory to Landlord, but failure to do so shall not avoid such
liability.
H. FINANCIAL STATEMENTS. Tenant shall, within ten (10) days after
requested from time to time, deliver to Landlord financial statements (including
balance sheets and income/expense statements) for Tenant's then most recent full
and partial fiscal year preceding such request, certified by an independent
certified public accountant or Tenant's chief financial officer, in form
reasonably satisfactory to Landlord.
I. SUCCESSORS AND ASSIGNS; TRANSFER OF PROPERTY AND SECURITY DEPOSIT.
Each of the terms and provisions of this Lease shall be binding upon and inure
to the benefit of the parties' respective heirs, executors, administrators,
guardians, custodians, successors and assigns, subject to Section 14 respecting
Transfers and Section 17 respecting rights of Lenders. Subject to Section 17, if
Landlord shall conveyor transfer the Property or any portion thereof in which
the Premises are contained to another party, such party shall thereupon be and
become Landlord hereunder and shall be deemed to have fully assumed all of
Landlord's obligations under this Lease accruing during such party's ownership,
including the return of any Security Deposit (provided Landlord shall have
turned over such Security Deposit to such party), and Landlord shall be free of
all such obligations accruing from and after the date of conveyance or transfer.
J. RENT AND TAXES. In addition to the provisions of Section 15, all Rent
due Landlord herein is exclusive of any sales, business and occupational gross
receipts or tax based on rents or tax upon this Lease or tax measured by the
number of employees of Tenant or the area of the Premises or any similar tax or
charge. If any such tax or charge be hereafter enacted, Tenant shall reimburse
to Landlord the amount thereof with each monthly Base Rent payment. If it shall
not be lawful for Tenant to so reimburse Landlord, the monthly Base Rent payable
to Landlord under this lease shall be revised to net Landlord the same net
rental after imposition of any such tax or charge upon Landlord as would have
been payable to Landlord prior to the imposition of such tax or charge. Tenant
shall not be liable to reimburse Landlord any federal income tax or other income
tax of a general nature applicable to Landlord's income.
K. LIMITATION OF LANDLORD'S LIABILITY. Tenant agrees to look solely to
Landlord's interest in the Building for the enforcement of any judgment, award,
order or other remedy under or in connection with this lease or any related
agreement, instrument or document or for any other matter whatsoever relating
thereto or to the Building or Premises. Under no circumstances shall any present
or future, direct or indirect, principals or investors, general or limited
partners, officers, directors, shareholders, trustees, beneficiaries,
participants, advisors, managers, employees, agents or affiliates of Landlord,
or of any of the other foregoing parties, or any of their heirs, successors or
assigns have any liability for any of the foregoing matters.
34
L. SIGNAGE. Landlord agrees to provide Tenant, at Landlord's sale cost,
Building standard signage in a manner consistent with other tenants in the
Building.
M. CONFIDENTIALITY. Tenant shall keep the content and all copies of this
Lease, related documents or amendments now or hereafter entered, and all
proposals, materials, information and matters relating thereto strictly
confidential, and shall not disclose, disseminate or distribute any of the same,
or permit the same to occur, except to the extent reasonably required for proper
business purposes by Tenant's employees, attorneys, insurers, auditors, lenders
and Transferees (and Tenant shall obligate any such parties to whom disclosure
is permitted to honor the confidentiality provisions hereof), and except as may
be required by Law or court proceedings.
SECTION 34: ENTIRE AGREEMENT
This Lease, together with the Riders, Exhibits and other documents listed
in Section 1 (which collectively are hereby incorporated where referred to
herein and made a part hereof as though fully set forth), contains all the terms
and provisions between Landlord and Tenant relating to the matters set forth
herein and no prior or contemporaneous agreement or understanding pertaining to
the same shall be of any force or effect, except any such contemporaneous
agreement specifically referring to and modifying this Lease, signed by both
parties. Neither this lease, nor any Riders or Exhibits referred to above may be
modified, except in writing signed by both parties.
35
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first set forth above.
LANDLORD:
SUN LIFE ASSURANCE COMPANY OF
CANADA, a Canada corporation
/s/ John G. Mulvihill By: /s/ Charles S. Andes
- ----------------------------------- -------------------------------------
Senior Property Investments Officer
Title: Investment Officer
----------------------------------
TENANT:
COST-U-LESS, a Washington corporation
By: /s/ J. Jeffrey Meder
-------------------------------------
Name Typed: J. Jeffrey Meder
-----------------------------
Title: President & CEO
----------------------------------
36
Commonwealth of Massachusetts
County of Norfolk
On this 18th day of November, 2003 before me appeared John G. Mulvihill and
Charles S. Andes, both to me known to be acting for the Sr. Investment Officer
and Investment Officer respectively of the Sun Life Assurance Company of Canada,
the corporation that executed the annexed 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 they were
authorized to execute this instrument, and that the seal affixed is the
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year first above written.
/s/ Alena Luban
- ----------------------------
Notary Public
My Commission Expires: August 23, 2007
[SEAL]
On this the 17th day of November, 2003, before me a Notary Public duly
authorized in and for the said County in the State aforesaid to take
acknowledgments personally appeared J. Jeffrey Meder known to me to be the
President of Cost-U-Less, Inc., one the corporations described in the foregoing
instrument, and acknowledged that as such officer, being authorized so to do,
(s)he executed the foregoing instrument on behalf of said corporation by
subscribing the name of such corporation by himself/herself as such officer and
caused the corporate seal of said corporation to be affixed thereto, as his free
and voluntary act, and as the free and voluntary act of said corporation, for
the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Sherry Turner
-----------------------------------------
Notary Public
Sherry Turner
-----------------------------------------
[Printed Name]
Residing at Bellevue, WA
-----------------------------
My Commission Expires: 3-9-03
-------------------
EXHIBIT A
(LEGAL DESCRIPTION OF PROPERTY)
That portion of the northeast quarter of the southwest quarter of Section 10,
Township 24 North, Range 5 East, W.M., in King County, Washington, lying
southerly of the south line of the frontage road right-of-way known as S.E. 36th
Street on the south side of primary State Highway No. 2 as shown on State of
Washington, Department of Highways Map, SR 90, MP 7.71 to MP 11.72, Richards
Road to Lake Sammamish, sheet 3 of 35, latest revision date March 31, 1977, on
file at the office of the Department of Transportation, Olympia, Washington,
except that portion lying westerly of the west line of an electric transmission
easement, granted to Puget Sound Power & Light Company by instrument recorded
under Auditor's File No. 2545297, also subject to an easement for a petroleum
pipeline, as recorded under Auditor's File No. 5765336, and also subject to a
perpetual slope easement, as acquired under Superior Court Cause No. 7733237.
EXHIBIT B
(Floor Plate Showing Premises Outlined)
EXHIBIT C
SUN LIFE ASSURANCE COMPANY OF CANADA
C/O UNICO PROPERTIES
10900 NE 4th Street, Suite 800
Bellevue, Washington 98004
November, 2003
Cost-U-Less, Inc.
Delphi Building
3633 - 136th Place Southeast
Bellevue, Washington 98006
"TENANT"
REFERENCE: Work Letter Agreement
In accordance with the provisions of Section 2 of your Lease dated
November 18, 2003 (the "Lease"), with the undersigned Landlord, the "Tenant
Improvement Work" (as hereinafter defined) to the Premises shall be completed
substantially in accordance with the following:
1. GENERAL INTENT AND PROCEDURE
1.1 It is the intent of this Work Letter Agreement that Tenant shall be
permitted reasonable freedom in the interior design and layout of Tenant's
Premises so long as the same is consistent with Landlord's policies, Building
standards and structural requirements, all applicable Laws (as defined in the
Lease) including applicable City of Bellevue building codes and other
governmental rules, regulations and policies, and with sound architectural and
construction practice, and provided further that no interference is caused to
the operation of the Building's mechanical, heating, cooling, electrical systems
or structure or other Building operations or functions, and that no increase in
maintenance, insurance premiums, taxes, fees or utility charges will be incurred
by Landlord as a result thereof. Capitalized terms used herein, and not
otherwise defined herein, shall have the meaning defined in the Lease which
definitions are incorporated herein by reference.
1.2 All improvements and alterations (including without limitation all
finishes) proposed to be made to the Premises, and all contractors and
subcontractors proposed to be used with respect to such improvements or
alterations, are based on the plan attached hereto and dated 8/22/03 from
Burgess Weaver Design Group and the associated preliminary bid dated 9/2/03 from
Millennium Building Company, also attached hereto and made part of the Lease,
must be approved in advance by Landlord. All improvements and alterations so
approved by Landlord are referred to as the "Tenant Improvement Work." Except as
expressly provided otherwise herein (or in the Lease), all provisions of the
Lease respecting alterations or improvements to the Premises shall apply to the
Tenant Improvement Work and are incorporated herein by reference.
2. COST OF TENANT IMPROVEMENT WORK
2.1 Landlord shall provide an allowance to construct the Tenant
Improvement Work in an amount not to exceed twelve and 00/100 Dollars ($12.00)
per rentable square foot of Premises (which premises are 9,305 rentable square
feet) ("Landlord's Tenant Improvement Allowance") PROVIDED, if Tenant does not
use the entire allowance for construction of direct improvements to the
Premises, Tenant may elect to use up to $3.00 per rentable foot of the balance
remaining toward moving expenses PROVIDED FURTHER, in the event any portion of
the Allowance is not used by Tenant for the purposes set forth herein within
twelve (12) months of the Lease Commencement Date, Tenant's right to any such
remaining Allowance shall be forfeited for all purposes and Landlord shall have
no further obligation to provide any further Allowance amount hereunder. Any and
all costs (without exception) of the Tenant Improvement Work that exceed the
Landlord's Tenant Improvement Allowance shall be paid by Tenant within ten (10)
days after receipt of an invoice therefor from Landlord. Costs of the Tenant
Improvement Work shall include all design, administration and construction costs
incurred in approving and constructing the Tenant Improvement Work including
without limitation the following: the actual construction cost of the work; any
and all costs of space planning and design and Landlord review and approval
thereof (including any architectural and engineering fees incurred by Landlord);
any and all operation, insurance premium, maintenance, tax, utility or other
fees and costs arising from the work; any costs resulting from modifications
required by governmental agencies to meet building or environmental codes; and
any costs resulting from modifications to Building Systems and Equipment
resulting from the Tenant Improvement Work. To compensate Landlord for its
supervision, servicing and overhead, the cost of the Tenant Improvement Work
shall also include a fee to Landlord (the "Management Fee") equal to six percent
(6%) of the actual work cost (including any engineering or architectural fees
and costs). The Management Fee shall be a charge against any Landlord Tenant
Improvement Allowance.
2.2 In addition to the above, Landlord shall do the following:
2.2.1 Landlord's architect, at Landlord's cost (up to $0.20/rsf), shall
prepare a preliminary space plan of the Premises for Tenant which space planning
work shall include one round of revisions. Any other space planning shall be at
Tenant's expense and shall be paid from the Allowance. All space plans shall be
subject to Landlord's approval.
3. COMPLETION, TERM AND RENTAL COMMENCEMENT DATE
Subject to the provisions of Section 3 of the lease, the Term and Tenant's
obligation for the payment of rent under the Lease commences on the Commencement
Date set forth in Section 1 of the Lease.
4. CONSTRUCTION BY LANDLORD'S APPROVED CONTRACTOR
4.1 Tenant agrees that, unless otherwise set forth in this Work Letter
Agreement, all construction work in the Premises shall be performed by a Tenant
Improvement Contractor ("TI Contractor") approved in advance by Landlord. The TI
Contractor shall perform such work in a good and workmanlike manner and shall
construct the improvements in the Premises
2
substantially in accordance with the applicable code requirements and Landlord
approved construction drawings or plans.
4.2 Notwithstanding Section 4.1 above, Landlord agrees to competitively
bid the approved Tenant Improvement Work with a minimum of three (3)
contractors, including Millennium Building Company, Unimark, and one other to be
selected by Landlord.
5. ADMINISTRATION BY LANDLORD'S ARCHITECT
Tenant agrees that all plans, specifications or design criteria shall be
approved in advance by Landlord's designated architect. Tenant may utilize an
alternative architect for Tenant's design purposes, provided that all designs
and plans are reviewed and approved by Landlord's designated architect, and
Tenant provides Landlord's architect with all drawings and specifications in a
format designated by Landlord's architect.
6. TENANT COORDINATOR
Landlord has designated a "Project Manager" who shall be responsible for
the implementation of all Tenant Improvement Work to be performed by Landlord in
the Premises. With regard to all matters involving such Tenant Improvement Work,
Tenant shall communicate with the Project Manager rather than with the TI
Contractor or any subcontractor. Landlord shall not be responsible for any
statement, representation or agreement made between Tenant and the TI Contractor
or any subcontractor. It is hereby expressly acknowledged by Tenant that such TI
Contractor is not Landlord's agent and has no authority whatsoever to enter into
agreements on Landlord's behalf or otherwise bind Landlord. The Project Manager
will furnish Tenant with notices of substantial completion, cost estimates for
Tenant Improvement Work, Landlord's approvals or disapprovals of all plans and
drawings and changes thereto.
7. NOTICES; DEFAULT
7.1 Any notice, statement, advice, approval, consent or other
communication required or permitted to be given by either party to the other
pursuant to this Work Letter Agreement shall be given in the manner set forth in
Sections 1 and 24 of the lease. A default by Tenant of any obligation hereunder
shall constitute a default by Tenant under the lease, and upon default of Tenant
in payment of any sum to be paid by Tenant pursuant to this Work letter
Agreement, Landlord shall (in addition to all other remedies) have all the
rights as in the case of default by Tenant in payment of Rent under the lease.
3
The foregoing Work Letter Agreement correctly sets forth our understanding
as of the date first hereinabove set forth.
SUN LIFE ASSURANCE COMPANY OF COST-U-LESS, INC.,
CANADA, a Canada corporation a Washington corporation
By: /s/ John G. Mulvihill By: /s/ J. Jeffrey Meder
------------------------------------ ---------------------------
Its: Senior Property Investments Officer Its: President & CEO
----------------------------------- --------------------------
"LANDLORD" "TENANT"
/s/ Charles S. Andes
- ----------------------------------------
Investment Officer
4
RIDER ONE
RULES
(1) ACCESS TO PROPERTY. On Saturdays, Sundays and Holidays, and on other
days between the hours of 6:00 P.M. and 7:00 A.M. the following day, or such
other hours as Landlord shall determine from time to time, access to and within
the Property and/or to the passageways, lobbies, entrances, exits, loading
areas, corridors, elevators or stairways and other areas in the Property may be
restricted and access gained by use of a key to the outside doors of the
Property, or pursuant to such security procedures Landlord may from time to time
impose. Landlord shall in all cases retain the right to control and prevent
access to such areas by Persons engaged in activities which are illegal or
violate these Rules, or whose presence in the judgment of Landlord shall be
prejudicial to the safety, character, reputation and interests of the Property
and 115 tenants (and Landlord shall have no liability in damages for such
actions taken in good faith). No Tenant and no employee or invitee of Tenant
shall enter areas reserved for the exclusive use of Landlord, its employees or
invitees or other Persons. Tenant shall keep doors to corridors and lobbies
closed except when persons are entering or leaving.
(2) SIGNS. Tenant shall not paint, display, inscribe, maintain or affix
any sign, placard, picture, advertisement, name, notice, lettering or direction
on any part of the outside or inside of the Property, or on any part of the
inside of the Premises which can be seen from the outside of the Premises
without the prior consent of Landlord, and then only such name or names or
matter and in such color, size, style, character and material, and with
professional designers, fabricators and installers as may be first approved or
designated by Landlord in writing. Landlord shall prescribe the suite number and
identification sign for the Premises (which shall be prepared and installed by
Landlord at Tenant's expense). Landlord reserves the right to remove at Tenant's
expense all matter not so installed or approved without notice to Tenant.
(3) WINDOW AND DOOR TREATMENTS. Tenant shall not place anything or allow
anything to be placed in the Premises near the glass of any door, partition,
wall or window which may be unsightly from outside the Premises, and Tenant
shall not place or permit to be placed any Section of any kind on any window
ledge or on the exterior walls. Blinds, shades, awnings or other forms of inside
or outside window ventilators or similar devices, shall not be placed in or
about the outside windows or doors in the Premises except to the extent, if any,
that the design, character, shape, color, material and make thereof is first
approved or designated by the Landlord. Tenant shall not install or remove any
solar tint film from the windows.
(4) LIGHTING AND GENERAL APPEARANCE OF PREMISES. Landlord reserves the
right to designate and/or approve in writing all internal lighting that may be
visible from the public, common or exterior areas. The design, arrangement,
style, color, character, quality and general appearance of the portion of the
Premises visible from public, common and exterior areas, and contents of such
portion of the Premises, including furniture, fixtures, signs, art work, wall
coverings, carpet and decorations, and all changes, additions and replacements
thereto shall at all times have a neat, professional, attractive, first class
office appearance.
(5) PROPERTY TRADENAME, LIKENESS, TRADEMARKS. Tenant shall not in any
manner use the name of the Property for any purpose, or use any tradenames or
trademarks used by
Landlord, any other tenant, or its affiliates, or any picture or likeness of the
Property for any purpose other than that of the business address of Tenant, in
any letterheads, envelopes, circulars, notices, advertisements, containers,
wrapping or other material.
(6) DELIVERIES AND REMOVALS. Furniture, freight and other large or heavy
Sections, and all other deliveries may be brought Into the Property only at
times and in the manner designated by Landlord, and always at the Tenant's sole
responsibility and risk. Landlord may inspect items brought into the Property or
Premises with respect to weight or dangerous nature or compliance with this
Lease or Laws. Landlord may (but shall have no obligation to) require that all
furniture, equipment, cartons and other Sections removed from the Premises or
the Property be listed and a removal permit therefor first be obtained from
Landlord. Tenant shall not take or permit to be taken in or out of other
entrances or elevators of the Property, any item normally taken, or which
Landlord otherwise reasonably requires to be taken, in or out through service
doors or on freight elevators. Landlord may impose reasonable charges and
requirements for the use of freight elevators and loading areas, and reserves
the right to alter schedules without notice. Any hand-carts used at the Property
shall have rubber wheels and sideguards, and no other material handling
equipment may be brought upon the Property without Landlord's prior written
approval.
(7) OUTSIDE VENDORS. Tenant shall not obtain for use upon the Premises
ice, drinking water, vending machine, towel, janitor and other services, except
from Persons designated or approved by Landlord. Any Person engaged by Tenant to
provide any other services shall be subject to scheduling and direction by the
manager or security personnel of the Property. Vendors must use freight
elevators and service entrances.
(8) OVERLOADING FLOORS; VAULTS. Tenant shall not overload any floor or
part thereof in the Premises, or Property, including any public corridors or
elevators therein bringing in or removing any large or heavy Sections, and
Landlord may prohibit, or direct and control the location and size of, safes and
all other heavy Sections and require at Tenant's expense supplementary supports
of such material and dimensions as Landlord may deem necessary to properly
distribute the weight.
(9) LOCKS AND KEYS. Tenant shall use such standard key system designated
by Landlord on all keyed doors to and within the Premises, excluding any
permitted vaults or safes (but Landlord's designation shall not be deemed a
representation of adequacy to prevent unlawful entry or criminal acts, and
Tenant shall maintain such additional Insurance as Tenant deems advisable for
such events). Tenant shall not attach or permit to be attached additional locks
or similar devices to any door or window, change existing locks or the mechanism
thereof, or make or permit to be made any keys for any door other than those
provided by Landlord. If more than two keys for one lock are desired, Landlord
will provide them upon payment of Landlord's charges. In the event of loss of
any keys furnished by Landlord, Tenant shall pay Landlord's reasonable charges
therefor. The term "key" shall include mechanical, electronic or other keys,
cards and passes. Landlord shall not be liable for the consequences of admitting
by pass key or refusing to admit to the Premises the Tenant, Tenant's agent or
employees or other persons claiming the right of admittance.
2
(10) UTILITY CLOSETS AND CONNECTIONS. Landlord reserves the right to
control access to and use of, and monitor and supervise any work in or
affecting, the "wire" or telephone, electrical, plumbing or other utility
closets, the Systems and Equipment, and any changes, connections, new
installations, and wiring work relating thereto (or Landlord may engage or
designate an independent contractor to provide such services). Tenant shall
obtain Landlord's prior written consent for any such access, use and work in
each instance, and shall comply with such requirements as Landlord may impose,
and the other provisions of the Lease respecting electric installations and
connections, telephone Lines and connections, and alterations generally. Tenant
shall have no right to use any broom closets, storage closets, janitorial
closets, or other such closets, rooms and areas whatsoever. Tenant shall not
install in or for the Premises any equipment which requires more electric
current than Landlord is required to provide under this Lease, without
Landlord's prior written approval, and Tenant shall ascertain from Landlord the
maximum amount of load or demand for or use of electrical current which can
safely be permitted in and for the Premises, taking into account the capacity of
electric wiring in the Property and the Premises and the needs of tenants of the
Property, and shall not in any event connect a greater load than such safe
capacity.
(11) PLUMBING EQUIPMENT. The toilet rooms, urinals, wash bowls, drains,
sewers and other plumbing fixtures, equipment and lines shall not be misused or
used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.
(12) TRASH. All garbage, refuse, trash and other waste shall be kept in the
kind of container, placed in the areas, and prepared for collection in the
manner and at the times and places specified by Landlord, subject to Lease
provisions respecting Hazardous Materials. Landlord reserves the right to
require that Tenant participate in any recycling program designated by Landlord.
(13) ALCOHOL, DRUGS, FOOD AND SMOKING. Landlord reserves the right to
exclude or expel from the Property any person who, in the judgment of Landlord,
is intoxicated or under the influence of liquor or drugs, or who shall in any
manner do any act in violation of any of these Rules. Tenant shall not at any
time manufacture or sell any spirituous, fermented, intoxicating or alcoholic
liquors on the Premises, nor permit the same to occur. Tenant shall not at any
time cook, sell, purchase or give away, food in any form by or to any of
Tenant's agents or employees or any other parties on the Premises, nor permit
any of the same to occur (other than in microwave ovens and coffee makers
properly maintained in good and safe working order and repair in lunch rooms or
kitchens for employees as may be permitted or installed by Landlord, which does
not violate any Laws or bother or annoy any other tenant). Tenant and its
employees shall not smoke tobacco on any part of the Property (including
exterior areas) except those areas, if any, that are designated or approved as
smoking areas by Landlord.
(14) USE OF COMMON AREAS; NO SOLICITING. Tenant shall not use the common
areas, including areas adjacent to the Premises, for any purpose other than
ingress and egress, and any such use thereof shall be subject to the other
provisions of this Lease, including these Rules. Without limiting the generality
of the foregoing, Tenant shall not allow anything to remain in any passageway,
sidewalk, court, corridor, stairway, entrance, exit, elevator, parking or
shipping area, or other area outside the Premises. Tenant shall not use the
common areas to canvass,
3
solicit business or information from, or distribute any Section or material to,
other tenants or Invitees of the Property. Tenant shall not make any
room-to-room canvass to solicit business or information or to distribute any
Section or material to or from other tenants of the Property and shall not
exhibit, sell or offer to sell, use, rent or exchange any products or services
in or from the Premise unless ordinarily embraced within the Tenant's use of the
Premises expressly permitted in the Lease.
(15) ENERGY AND UTILITY CONSERVATION. Tenant shall not waste electricity,
water, heat or air conditioning or other utilities or services, and agrees to
cooperate fully with Landlord to assure the most effective and energy efficient
operation of the Property and shall not allow the adjustment (except by
Landlord's authorized Property personnel) of any controls. Tenant shall not
obstruct, alter or impair the efficient operation of the Systems and Equipment,
and shall not place any Item so as to interfere with airflow. Tenant shall keep
corridor doors closed and shall not open any windows, except that if the air
circulation shall not be in operation, windows which are openable may be opened
with Landlord's consent, if reasonably requested by Landlord (and as a condition
to claiming any deficiency in the air conditioning or ventilation services
provided by Landlord), Tenant shall close any blinds or drapes in the Premises
to prevent or minimize direct sunlight.
(16) UNATTENDED PREMISES. Before leaving the Premises unattended, Tenant
shall close and securely lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises (except heat to the
extent necessary to prevent the freezing or bursting of pipes).
(17) GOING-OUT-OF-BUSINESS SALES AND AUCTIONS. Tenant shall not use, or
permit any other party to use, the Premises for any distress, fire, bankruptcy,
close-out, "lost our lease" or going-out-of-business sale or auction. Tenant
shall not display any signs advertising the foregoing anywhere in or about the
Premises. This prohibition shall also apply to Tenant's creditors.
(18) LABOR HARMONY. Tenant shall not use (and upon notice from Landlord
shall cease using) contractors, services, workmen, labor, materials or
equipment, or labor and employment practices that, in Landlord's good faith
judgment, may cause strikes, picketing or boycotts or disturb labor harmony with
the workforce or trades engaged in performing other work, labor or services in
or about the Property.
(19) PROHIBITED ACTIVITIES. Tenant shall not: (i) use strobe or flashing
lights in or on the Premises, (ii) install or operate any internal combustion
engine, boiler, machinery, refrigerating, heating or air conditioning equipment
in or about the Premises, (iii) use the Premises for housing, lodging or
sleeping purposes or for the washing of clothes, (iv) place any radio or
television antennae other than inside of the Premises, (v) operate or permit to
be operated any musical or sound producing instrument or device which may be
heard outside the Premises, (vi) use any source of power other than electricity,
(vii) operate any electrical or other device from which may emanate electrical,
electromagnetic, energy, microwave, radiation or other waves or fields which may
interfere with or impair radio, television, microwave, or other broadcasting or
reception from or in the Property or elsewhere, or impair or interfere with
computers, faxes or telecommunication lines or equipment at the Property or
elsewhere, or create
4
a health hazard, (viii) bring or permit any bicycle or other vehicle, or dog
(except in the company of a blind person or except where specifically permitted)
or other animal or bird in the Premises or Building, (ix) make or permit
objectionable noise, vibration or odor to emanate from the Premises, (x) do
anything in or about the Premises or Property that is illegal, immoral, obscene,
pornographic, or anything that may in Landlord's good faith opinion create or
maintain a nuisance, cause physical damage to the Premises or Property,
interfere with the normal operation of the Systems and Equipment, impair the
appearance, character or reputation of the Premises or Property, create waste to
the Premises or Property, cause demonstrations, protests, loitering, bomb
threats or other events that may require evacuation of the Building, (xi)
advertise or engage in any activities which violate any code of ethics or
licensing requirements of any professional or business organization, (xii) throw
or permit to be thrown or dropped any item from any window or other opening in
the Property, (xiii) use the Premises for any purpose, or permit upon the
Premises or Property anything, that may be dangerous to persons or property
(including firearms or other weapons (whether or not licensed or used by
security guards) or any explosive or combustible Sections or materials), (xiv)
place vending or game machines in the Premises, except vending machines for
employees which shall be at Tenant's sole cost and expense and only upon prior
notice to and consent of Landlord, (xv) adversely affect the indoor air quality
of the Premises or Property, (xvi) use the Premises for cooking or food
preparation other than preparation of coffee, tea and similar beverages, or
customary microwave use, for Tenant and its employees, or (xvii) do or permit
anything to be done upon the Premises or Property in any way tending to disturb,
bother, annoy or interfere with Landlord or any other tenant at the Property or
the tenants of neighboring property, or otherwise disrupt orderly and quiet use
and occupancy of the Property.
(20) TRANSPORTATION MANAGEMENT. Tenant shall comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Property, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.
(21) PARKING. Subject to any contrary provisions of this Lease, if the
Property now or hereafter contains, or Landlord has obtained the right to use
for the Property, a parking garage, structure, facility or area, the following
Rules shall apply therein:
(i) Parking shall be available in areas designated by Landlord from
time to time, and for such daily or monthly charges as Landlord may establish
from time to time. Parking for Tenant and its employees and visitors shall be on
a "first come, first served," unassigned basis, in common with Landlord and
other tenants at the Property, and their employees and visitors, and other
Persons to whom Landlord shall grant the right or who shall otherwise have the
right to use the same. However, in no event shall Tenant and Tenant's employees
and visitors use more spaces than the number derived by applying Tenant's Pro
Rata Share (as defined in the Lease) to the total number of unassigned spaces in
the area or areas designated by Landlord from time to time to serve the
Premises. In addition, Landlord reserves the right to: (x) adopt additional
requirements or procedures pertaining to parking, including systems with charges
favoring carpooling, and validation systems, (y) assign specific spaces, and
5
reserve spaces for small and other size cars, disabled persons, and other
tenants, customers of tenants or other parties, and (z) restrict or prohibit
full size vans and other large vehicles.
(ii) Monthly fees shall be paid in advance prior to the first of each
month. Failure to do so will automatically cancel parking privileges, and incur
a charge at the posted daily parking rate. No deductions from the monthly rate
will be made for days on which the Garage is not used by Tenant or its
designees. In case of any violation of these rules, Landlord may also refuse to
permit the violator to park, and may remove the vehicle owned or driven by the
violator from the Property without liability whatsoever, at such violator's risk
and expense. Landlord reserves the right to close all or a portion of the
parking areas or facilities in order to make repairs or perform maintenance
services, or to alter, modify, restripe or renovate the same, or if required by
casualty, strike, condemnation, act of God, Law or governmental requirement or
guideline, termination or modification of any lease or other agreement by which
Landlord obtained parking rights, or any other reason beyond Landlord's
reasonable control. In the event access is denied for any reason, any monthly
parking charges shall be abated to the extent access is denied, as Tenant's sole
recourse.
(iii) Hours shall be reasonably established by Landlord or its parking
operator from time to time; cars must be parked entirely within the stall lines,
and only small or other qualifying cars may be parked in areas reserved for such
cars; all directional signs, arrows and speed limits must be observed; spaces
reserved for disabled persons must be used only by vehicles properly designated;
washing, waxing, cleaning or servicing of any vehicle is prohibited; every
parker is required to park and lock his own car, except to the extent that
Landlord adopts a valet parking system; parking is prohibited in areas: (a) not
striped or designated for parking, (b) aisles, (c) where "no parking" signs are
posted, (d) on ramps, and (e) loading areas and other specially designated
areas. Delivery trucks and vehicles shall use only those areas designated
therefor.
(iv) Parking stickers, key cards or any other devices or forms of
identification or entry shall remain the property of Landlord. Such devices must
be displayed as requested and may not be mutilated in any manner. The serial
number of the parking identification device may not be obliterated. Devices are
not transferable and any device in the possession of an unauthorized holder will
be void, loss or theft of parking identification, key cards or other such
devices must be reported to Landlord or any garage manager immediately. Any
parking devices reported lost or stolen which are found on any unauthorized car
will be confiscated and the illegal holder will be subject to prosecution, lost
or stolen devices found by Tenant or its employees must be reported to Landlord
or the office of the garage immediately.
(21) RESPONSIBILITY FOR COMPLIANCE. Tenant shall be responsible for
ensuring compliance with these Rules, as they may be amended, by Tenant's
employees and as applicable, by Tenant's agents, invitees, contractors,
subcontractors, and suppliers. Tenant shall cooperate with any reasonable
program or requests by Landlord to monitor and enforce the Rules, including
providing vehicle numbers and taking appropriate action against such of the
foregoing parties who violate these provisions.
6
RIDER 2
DELPHI BUILDING OFFICE LEASE
TENANT: COST-U-LESS, INC.
OPTION ADDENDUM
This Option Addendum ("Addendum") is made of even date with, and as a part of,
that certain Delphi Building Office Lease Agreement dated November 18, 2003,
between SUN LIFE ASSURANCE COMPANY OF CANADA, a Canada corporation ("Landlord"),
and Cost-U-Less, Inc., a Washington corporation, ("Tenant").
1. OPTION TO EXTEND TERM. Tenant shall have the right to extend the Term
of the Lease for two (2) consecutive five (5) year periods (the "Extension
Periods") on the same terms and conditions of the Lease except (a) monthly Base
Rent shall be equal to the Market Rate as determined pursuant to Section 2 of
this Addendum, and (b) the "base year" date for taxes Tenant's share of Taxes
and Tenant's Share of Expenses set forth in Section 1 of the Lease shall be
adjusted to the calendar year immediately preceding the year the Extension
Periods are to commence; provided, however, that such option to extend may not
be exercised at any time that an event of default under the Lease is in effect.
In order to properly exercise this option to extend, Tenant shall deliver to
Landlord an irrevocable written notice of Tenant's exercise of its option to
extend hereunder not less than one hundred eighty (180) days prior to the
expiration of the initial Term or the Extension Period then in effect.
2. MARKET RENT DETERMINATION. The term "Market Rent" shall mean the
greater of (a) monthly Base Rent during the final twelve (12) months of the then
expiring Lease Term, or (b) rent obtained for comparable space in comparable
buildings in the I-90 Corridor Market ("Corridor") as of the date such
determination is made, and comparable space shall mean similar sized space
located upon floors approximately the same height from the ground level as the
Premises, with similar Tenant improvements installed and with suitable
adjustments for (i) length of lease terms. (ii) credit quality of tenants, and
(iii) other relevant factors affecting comparability of various rental rates.
For purposes of determining Market Rent, the total rentable square footage of
the Premises shall be used. Landlord and Tenant shall use their best efforts to
negotiate Market Rent within thirty (30) days after exercise by Tenant of its
option to extend. If Landlord and Tenant cannot agree on the Market Rent, the
parties shall submit the determination of Market Rent to be resolved by
arbitration ("Arbitration"), in accordance with the following procedure.
Landlord and Tenant shall mutually agree to appoint one (1) arbitrator, who
shall be appointed within sixty (60) days after exercise by Tenant of its option
to extend. Following such agreement, either Landlord or Tenant shall have the
right to petition for the appointment of the arbitrator by the Presiding Judge
of the Superior Court of King County. Any arbitrator so appointed shall be
either a licensed real estate broker, or "MAI" appraiser, with at least ten (10)
current years' working experience in office leasing in the Corridor. Within
thirty (30) days after the appointment of the arbitrator, Tenant and Landlord
shall each submit to the arbitrator (and one another) their written opinion
regarding Market Rent, as defined above, which opinion may include such
supporting written data or documentation each party deems appropriate. In the
event a party fails to submit its written opinion to the arbitrator (and other
party) within said thirty (30) day period, such party shall have waived its
right to submit an opinion and the arbitrator shall select the single submitted
opinion as its determination of Market Rent. Within ten (10) days after the
arbitrator's timely receipt of the last such opinion, the arbitrator shall
decide which of the two opinions most accurately reflects Market Rent. There
shall be no hearing or other oral presentation to the arbitrator. Such selected
opinion shall be the Market Rent for purposes of this Section 2 and the
selection by the arbitrator shall be final and binding upon the parties. The
arbitrator must select one of the two alternative opinions and may not select
any other alternatives. The cost of the arbitrator shall be split equally
between Landlord and Tenant. If for any reason the determination of Market Rent
has not been completed prior to the commencement of the applicable Extension
Period, Tenant shall pay as monthly Base Rent the Landlord's opinion of Market
Rent, and if such Market Rent is thereafter fixed or readjusted in a different
amount by the arbitrator or agreement of the parties as provided above, such new
Market Rent shall take effect retroactively back to the commencement of the
applicable Extension Period, and Tenant and Landlord as the case may be, shall
immediately pay to the other that sum which is accrued and underpaid or overpaid
as a result of such retroactive application.
All of the provisions set forth in this Addendum are intended to and shall
become a part of the Lease. All capitalized Terms not otherwise defined herein
shall have the meaning set forth in the Lease.
EXECUTED as of the date first above written.
LANDLORD:
SUN LIFE ASSURANCE COMPANY OF
CANADA, a Canada corporation
/s/ John G. Mulvihill By: /s/ Charles S. Andes
- ----------------------------------- -------------------------------------
Senior Property Investments Officer
Its: Investment Officer
------------------------------------
TENANT:
COST-U-LESS, a Washington corporation
By: /s/ J. Jeffrey Meder
-------------------------------------
Its: President & CEO
-------------------------------------
2
RIDER 3
LANDLORD'S DISCLAIMER AND CONSENT
Dated: _____________________
To induce Wells Fargo Business Credit, Inc., a Minnesota corporation (the
"Lender"), to extend credit to or for the benefit of Cost-U-Less, Inc., a
Washington corporation (the "Borrower"), secured by the Borrower's property
including accounts, chattel paper, commercial tort claims, documents, equipment,
farm products, general intangibles, instruments, inventory, collectively,
"Collateral"), and for other good and valuable consideration, BDC Preston
Properties One Limited Partnership, a Washington limited partnership (the
"Landlord"), hereby certifies and agrees for the benefit of the Lender, its
participants, successors and assigns, as follows:
1. PREMISES; LEASE. The Landlord owns certain premises located in King
County, Washington, described in Exhibit A attached hereto (the "Premises") and
has leased the Premises to the Borrower pursuant to a lease (the "Lease"), a
true, correct and complete copy of which is attached hereto as Exhibit B. The
Lease is in full force and effect and the Borrower is not in default of any
provision of the Lease. The Landlord acknowledges agrees that the Borrower is
the Tenant as defined in the Lease.
2. DISCLAIMER. The Landlord does not own, and hereby releases and
disclaims, any interest, including any statutory or common law lien, in any
Collateral. Notwithstanding the preceding sentence, the Landlord does not hereby
disclaim any interest in fixtures and tenant improvements which are necessary
for the operation of the Premises as opposed to the operation of the Borrower's
business.
3. LENDER NOT LIABLE FOR BORROWER'S OBLIGATIONS. The Landlord
acknowledges that except as set forth in Paragraph 6 hereof, the Lender shall
have no duty, obligation or liability whatsoever for rent or otherwise with
respect to the possession, occupancy or use of the Premises.
4. LENDER'S RIGHT TO OCCUPY PREMISES. The Landlord consents to any right
of possession of the Premises that the Borrower may now or hereafter grant to
the Lender. In addition, notwithstanding any cancellation or termination of the
Lease, action to evict the Borrower, or repossession of the Premises, the
Landlord grants the Lender the right to possess, occupy and use the Premises for
purposes of holding, processing, manufacturing, selling, using, storing,
liquidating, realizing upon or otherwise disposing of the Collateral, and for
related and incidental purposes, for up to 105 days from the date of notice
given to the Lender pursuant to Paragraph 7(b) or (c) hereof.
5. RIGHT TO CANCEL LEASE. Subject to Paragraph 7 hereof, the Landlord
reserves in all respects the right to cancel or terminate the Lease, for
nonpayment of rent or otherwise, whether or not the Lender is in possession of
the Premises.
6. LENDER'S OBLIGATIONS. If the Lender takes possession of or occupies
the Premises at any time, the Lender shall pay the Landlord Rent for the period
during which the Lender has possession of or occupies the Premises. In no event,
however, shall the Lender be obligated to pay Rent for any period to the extent
the Borrower has paid Rent for such period. For the purposes of this Paragraph
6, "Rent" means the amount of all monetary obligations of the Borrower to the
Landlord under the Lease, prorated for the period the Lender occupies the
Premises. The Lender shall repair any damage to the Premises that occurs during
its occupancy or possession of the Premises and shall indemnify and hold the
Landlord harmless from any claims, loss or damage, including reasonable
attorneys' fees, resulting from such possession or occupancy.
7. NOTICE TO LENDER. The Landlord agrees to give the Lender notice (a) of
any breach of the Lease by the Borrower, at the same time as the Landlord shall
give notice of such breach to the Borrower; (b) of any legal action which the
Landlord may commence to evict the Borrower from the Premises or to terminate or
limit the Borrower's right to use, possess or lease the Premises, promptly upon
the commencement of any such action; and (c) of any cancellation or termination
of the Lease, at least 15 days before such cancellation, stating the grounds for
cancellation or termination; and (d) of any change in the ownership of the
Premises and the name and address of each new owner of the Premises, at least 15
days before any such change in ownership. All notices to the Lender shall be
deemed given when received by the Lender at:
Wells Fargo Business Credit, Inc.
MAC P6101-144
1300 SW Fifth Avenue
Portland, Oregon 97201
Attention: Robb Jacobs
8. MISCELLANEOUS. This Disclaimer and Consent shall be governed by and
construed in accordance with the substantive laws (other than conflict laws) of
the State of Washington. This Disclaimer and Consent may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. No failure on the part of the Lender
to exercise, and no delay in exercising any right, power or remedy hereunder
shall operate as a waiver of such right, power or remedy; nor shall any single
or partial exercise of any right, power or remedy hereunder preclude any other
or further exercise of such right, power or remedy or the exercise of any other
right, power or remedy. This Disclaimer and Consent expresses completely,
exclusively and finally all the agreements, conditions and covenants of the
parties and does not need evidence (written or oral) of prior, contemporaneous
or subsequent statements or representations (express or implied) to reflect the
intentions of the parties. This Disclaimer and Consent may not be supplemented
or modified except in writing. This Disclaimer and Consent inures to the benefit
of the Lender and binds the Landlord, and their respective successors and
assigns. The Landlord will notify any successor or assign of the terms of this
Disclaimer and Consent. This Disclaimer and Consent does not imply a commitment
to lend and shall be binding as long as any credit facility remains outstanding,
or any obligations of the Borrower to the Lender remain outstanding or are
subject to being set aside, recovered, rescinded or required to be returned for
any reason. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR PERTAINING TO THIS DISCLAIMER AND CONSENT.
2
"Landlord"
By
By: /s/ John G. Mulvihill
--------------------------------------
Name: John G. Mulvihill
------------------------------------
Title: Senior Property Investments Officer
-----------------------------------
This instrument was drafted by:
Linda M. Zimmermann, Esq.
Dorsey & Whitney LLP
Wells Fargo Plaza, Suite 900
170 South Main Street
Salt Lake City, Utah 84101
Commonwealth of Massachusetts
County of Norfolk
On this 18th day of November, 2003 before me appeared John G. Mulvihill and
Charles S. Andes, both to me known to be acting for the Sr. Investment Officer
and Investment Officer respectively of the Sun Life Assurance Company of Canada,
the corporation that executed the annexed 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 they were
authorized to execute this instrument, and that the seal affixed is the
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year first above written.
/s/ Alena Luban
- ---------------------------------------
Notary Public
My Commission Expires: August 23, 2007
[SEAL]
3
EXHIBIT A
TO
LANDLORD'S DISCLAIMER AND CONSENT
The Premises described in the referenced document are located in King
County, Washington and are described as follows:
REAL PROPERTY
TABLE OF CONTENTS
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SECTION 1: BASIC PROVISIONS 1
SECTION 2: PREMISES AND PREPARATION OF PREMISES 3
SECTION 3: TERM AND COMMENCE 4
SECTION 4: BASE RENT AND ADDITIONAL RENT 5
SECTION 5: QUIET ENJOYMENT 8
SECTION 6: UTILITIES AND SERVICES 8
SECTION 7: DEPOSITS 11
SECTION 8: USE, COMPLIANCE WITH LAWS AND RULES 11
SECTION 9: MAINTENANCE AND REPAIRS 12
SECTION 10: ALTERATIONS AND LIENS 12
SECTION 11: INSURANCE AND WAIVER OF SUBROGATION 13
SECTION 12: CASUALTY DAMAGE 15
SECTION 13: CONDEMNATION 15
SECTION 14: ASSIGNMENT AND SUBLETTING 16
SECTION 15: PERSONAL PROPERTY, RENT AND OTHER TAXES 17
SECTION 16: LANDLORD'S REMEDIES 18
SECTION 17: SUBORDINATION, ATTORNMENT AND LENDER PROTECTION 20
SECTION 18: ESTOPPEL CERTIFICATES 21
SECTION 19: RIGHTS RESERVED BY LANDLORD 21
SECTION 20: LANDLORD'S RIGHT TO CURE 23
SECTION 21: RELEASE AND INDEMNITY 23
SECTION 22: RETURN OF POSSESSION 25
SECTION 23: HOLDING OVER 26
SECTION 24: NOTICES 26
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TABLE OF CONTENTS
(Continued)
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SECTION 25: REAL ESTATE BROKERS 26
SECTION 26: NO WAIVER 27
SECTION 27: SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS 27
SECTION 28: TELECOMMUNICATION LINES 28
SECTION 29: SUBSTANCES; DISRUPTIVE ACTIVITIES 28
SECTION 30: DISABILITIES ACTS 30
SECTION 31: DEFINITIONS 30
SECTION 32: OFFER 32
SECTION 33: MISCELLANEOUS 32
SECTION 34: ENTIRE AGREEMENT 34
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