Exhibit 10.15


 


LEASE AMENDMENT NO. 1


 


This Lease Amendment No. 1 (this
“Amendment”) is made and entered into this 13th day of July 2004
by and between MSI 83 King L.L.C., a Washington limited liability company (“Landlord”)
and Sound Health Solutions, a Washington corporation (“Tenant”).


 


Recitals


 


A.                                   Landlord
and Tenant, entered into a written Lease dated March 31, 2004 (the “Lease”),
whereby Tenant leased from Landlord certain Premises (501 First Avenue South)
comprising approximately 5,124 rentable square feet of space in the building
commonly known as the 83 King Building, in the City of Seattle, County of King,
State of Washington, the street address of which is 83 South King Street.


 


B.                                     All
capitalized terms used in this Amendment, but not defined herein, shall have
the meanings ascribed to them in the Lease.


 


C.                                     The
Term of the Lease expires on June 30, 2009.


 


D.                                    Landlord
and Tenant desire to amend the Lease to revise the Commencement Date and
Expiration Date of the Lease, adjust the Minimum Rent to provide for Tenant’s
Additional Tenant Improvement Allowance and revise Exhibit C (“Work Letter”).


 


NOW THEREFORE, for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant agree to amend the Lease as follows:


 


1.                                       Section 1(f) of
the Lease is hereby deleted and replaced with the following:


 


(f)  “Commencement Date” means June 14,
2004.


 


2.                                       Section 1(g) of
the Lease is hereby deleted and replaced with the following:


 


(g)  “Expiration Date” means March 31, 2009.


 


3.                                       Section 1(i) of
the Lease is hereby deleted and replaced with the following:


 


(i)  “Minimum
Monthly Rent” means the following amounts as to the following periods during
the Term of this Lease:


 


	
  Period

  	
   

  	
  Monthly Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June 14, 2004

  	
   

  	
  to

  	
   

  	
  June 30, 2004

  	
   

  	
  $

  	
  0.00 per month

  	
   

  
	
  July 1, 2004

  	
   

  	
  to

  	
   

  	
  September 30, 2004

  	
   

  	
  $

  	
  637.41 per month

  	
   

  
	
  October 1, 2004

  	
   

  	
  to

  	
   

  	
  June 30, 2006

  	
   

  	
  $

  	
  8,323.41 per month

  	
   

  
	
  July 1, 2006

  	
   

  	
  to

  	
   

  	
  June 30, 2007

  	
   

  	
  $

  	
  8,750.41 per month

  	
   

  
	
  July 1, 2007

  	
   

  	
  to

  	
   

  	
  June 30, 2008

  	
   

  	
  $

  	
  9,177.41 per month

  	
   

  
	
  July 1, 2008

  	
   

  	
  to

  	
   

  	
  June 30, 2009

  	
   

  	
  $

  	
  9,604.41 per month

  	
   

  



 


4.                                       Additional
Tenant Improvement Allowance. Tenant has elected to utilize the Additional
Tenant Improvement Allowance of $30,000 per the terms of Section 3 of Exhibit C
(‘Work Letter”). Landlord shall provide said $30,000 to Tenant within five (5) business
days after execution of this Lease Amendment No. 1.


 


5.                                       Early
Payoff. Tenant shall have the option, at any time without penalty, to pay
the unamortized portion of this $30,000 Additional Tenant Improvement Allowance
to Landlord. In such event, upon receipt of the unamortized amount, Landlord
and Tenant shall execute another Lease Amendment which shall reduce the Minimum
Monthly Rent by $637.41 per month throughout the remaining lease term.


 


6.                                       Effectiveness
of Lease. Except as set forth in this Amendment, all the provisions of the
Lease shall remain unchanged and in full force and effect.


 

















 


 


Dated the date first above written.


 


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
  MSI 83 King L.L.C., a Washington limited liability
  company

  	
   

  	
  Sound Health
  Solutions, a Washington

  
	
   

  	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  H. Martin Smith, III

  	
   

  	
  By:

  	
  /s/ Teresa Girolami

  
	
   

  	
  Manager

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
        President SHC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
						



This Amendment has been prepared for submission to you and your
attorney. Martin Smith Inc is not authorized to give legal or tax advice. Neither
Landlord nor Martin Smith Inc makes any representations or recommendations as
to the legal sufficiency, legal effect or tax consequences of this document or
any transaction relating thereto. These are questions for your attorney with
whom you should consult before signing the document to determine whether your
legal rights are adequately protected.


 

















 


	
  MARTIN SMITH INC.

  	
   

  
	
  83 KING BUILDING

  	
  OFFICE LEASE - GROSS

  
	
  83 SOUTH KING STREET

  	
   

  
	
  SEATTLE, WA 98104

  	
  83 KING BUILDING

  
	
  TEL 682-3330 FAX 340-1283

  	
   

  



 


This Lease is made this 31st day of March 2004 by and
between MSI 83 King L.L.C., a Washington limited liability company (“Landlord”),
and Sound Health Solutions, a Washington corporation (“Tenant”), who agree as
follows:


 


1.                                       Fundamental Terms. As used in this Lease,
the following capitalized terms shall have the following meanings:


 


(a)                                  “Land”
means the land on which the Building is located, situated in the City of
Seattle, County of King, Slate of Washington, which is described on Exhibit A.


 


(b)                                 “Building”
means the building in which the Premises are located, commonly known as the 83
King Building, the street address of which is 83 South King Street. Seattle,
Washington, 98104.


 


(c)                                  “Premises”
means that certain space crosshatched on Exhibit B, located on the
first floor of the Building designated as 501 First Avenue South.


 


(d)                                 “Agreed
Areas” means the agreed amount of rentable square feet of space in the Building
and the Premises. Landlord and Tenant stipulate and agree for all purposes
under this Lease that the Building contains approximately 204,504 rentable
square feet of space (the “Building Area”) and that the Premises contain
approximately 5.124 rentable square feet of space (the “Premises Area”). Landlord
and Tenant further agree that the Building Area may exclude portions of
the Building which are used for other than office purposes, such as areas used
for retail purposes or for storage purposes.


 


(e)                                  “Tenant’s
Share” means the Premises Area divided by the Building Area, expressed as a
percentage, which is two and fifty-one/100ths percent (2.51%). Notwithstanding
the foregoing, if one or more of the facilities, services and utilities the
costs of which are included within the definition of Operating Costs is not
furnished to one or more spaces or to particular types of spaces, then in
connection with the calculation of Tenant’s Share of each of such costs the
Building Area shall be reduced by the number of rentable square feet contained
in such space and Tenant’s Share shall be separately computed as to each of
such costs. If the Building shall contain non-office uses during any period,
Landlord shall have the right to determine, in accordance with sound accounting
and management principles, Tenant’s Share of Real Property Taxes and Operating
Costs for only the office portion of the Building; in such event, Tenant’s
Share shall be based on the ratio of the rentable area of the Premises to the
rentable area of such office portion for such period.


 


If a portion of the Building is damaged or condemned,
or any other event occurs which alters the number of rentable square feet of
space in the Premises or the Building, then Landlord shall adjust Tenant’s
Share to equal the number of rentable square feet of space then existing in the
Premises (as altered by such event) divided by the number of rentable square
feet of space then existing in the Building (as altered by such event).


 


(f)                                    “Commencement
Date” means April 1, 2004, or such earlier or later date as provided to Section 4
hereof.


 


(g)                                 “Expiration
Date” means March 31, 2009.


 


(h)                                 “Term”
means the period of time commencing on the Commencement Date and ending on the
Expiration Date, unless sooner terminated pursuant to this Lease.


 


(i)                                     “Minimum
Monthly Rent” means the following amounts as to the following periods during
the Term of this Lease:


 


	
  Period

  	
   

  	
  Monthly Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1, 2004

  	
   

  	
  To

  	
   

  	
  June 30, 2004

  	
   

  	
  $

  	
  0.00 per month

  	
   

  
	
  July 1, 2004

  	
   

  	
  To

  	
   

  	
  March 31, 2006

  	
   

  	
  $

  	
  7,686.00 per month

  	
   

  
	
  April 1, 2006

  	
   

  	
  To

  	
   

  	
  March 31, 2007

  	
   

  	
  $

  	
  8,113.00 per month

  	
   

  
	
  April 1, 2007

  	
   

  	
  To

  	
   

  	
  March 31, 2008

  	
   

  	
  $

  	
  8,540.00 per month

  	
   

  
	
  April 1, 2008

  	
   

  	
  To

  	
   

  	
  March 31, 2009

  	
   

  	
  $

  	
  8,967.00 per month

  	
   

  



 


(j)                                     “Permitted
Use” means office and health care management purposes, clinic that treats
individuals suffering from obesity and its related illnesses, and related uses.


 


(k)                                  “Base
Year” means the calendar year 2004.


 


(l)                                     “Prepaid
Rent” means Seven Thousand Six Hundred Eighty Six and No/100lhs Dollars
($7.686.00).


 

















 


(m)                               “Security
Deposit” means Seventeen Thousand Nine Hundred Thirty Four and No/100ths
Dollars ($17,934.00).


 


(n)                                 “Landlord’s
Address for Notice” means MSI 83 King L.L.C., c/o Martin Smith Inc, Attn: H.
Martin Smith, III, 83 South King Street, Suite 606, Seattle, WA
98104.


 


(o)                                 “Landlord’s
Address for Payment of Rent” means MSI 63 King L.L.C., c/o Martin Smith Inc. P.O. Box
94685. Seattle. WA 98124-6985.


 


(p)                                 “Tenant’s
Address for Notice” means Sound Health Solutions, 15446 Bel-Red Road, Suite B-15,
Redmond, WA 98052 before the Commencement Date or 501 First Avenue South,
Seattle, WA 98104 on and after the Commencement Date.


 


(q)                                 “Landlord’s
Agent” means Martin Smith Inc or such other agent as Landlord may appoint
from time to time.


 


(r)                                    “Broker(s)”
means Martin Smith Inc representing the Landlord and Rex Noffsinger of Colliers
International representing the Tenant


 


(s)                                  “Exhibits”
means the following Exhibits to this Lease:


 


Exhibit A - Legal Description or the Property


Exhibit B - Outline Drawing of the Premises


Exhibit C - Work Letter


Exhibit D - Rules arid Regulations


Exhibit E - Janitorial Specifications


 


(t)                                    “Rider”
means the following Rider which is attached hereto: Rider dated March 31,
2004 by and between MSI 83 King L.L.C., a Washington limited liability company
(“Landlord’), and Sound Health Solutions, a Washington corporation (“Tenant”).


 


(u)                                 “Definitions”
means the words and phrases defined in Section 41 captioned “Definitions”.


 


2.                                       Consent and Notices. Whenever the consent
of either Landlord or Tenant is required under this Lease, such consent shall
not be effective unless given in writing and shall not be unreasonably withheld
or delayed, provided, however, that such consent may be conditioned as
provided in this Lease. All notices or requests required or permitted under
this Lease shall be in writing as provided in Section 42(g).


 


3.                                       Premises and Appurtenances. Landlord leases
to Tenant and Tenant leases from Landlord the Premises for the Term. Tenant,
and its authorized representatives, shall have the right to use, in common with
others and subject to the Rules and Regulations, the Common Areas of the
Building. Landlord shall have the right, in Landlord’s sole discretion, from
time to time to (i) make changes to the Building interior and exterior and
Common Areas, including without limitation, changes in the location, size,
shape, number and appearance thereof, (ii) to close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available, and (iii) to use the Common Areas while
engaged in making additional improvements, repairs or alterations to the
Building. All of the windows and exterior walls of the Premises and any space
in the Premises used for shafts, stacks, pipes, conduits, ducts, electrical
equipment or other utilities or Building facilities are reserved solely to
Landlord and Landlord shall have rights of access through the Premises for the
purpose of operating, maintaining and repairing the same, provided, however,
that such changes shall not materially affect Tenant’s access to, or use and
occupancy of, the Premises.


 


4.                                       Term.


 


(a)                                  Commencement Date. The Term shall commence
on the Commencement Date and expire on the Expiration Date, unless sooner
terminated pursuant to this Lease. The Commencement Date shall be:


 


(i)                                     The
date specified in Section 1, unless notice is delivered pursuant to Subsection 4(a)(ii),
in which case the Commencement Date shall be such later date, or Tenant
occupies the Premises earlier pursuant to Subsection 4(a)(iii), in which
case the Commencement Date shall be such earlier date;


 


(ii)                                  Such
later date on which the Tenant Improvements to be made to the Premises by
Landlord, if any, are substantially complete, provided, however, that Landlord
shall give notice of substantial completion to Tenant at least five (5) days
before such date.


 


(iii)                               If Tenant shall occupy
the Premises for the Permitted Use prior to the Commencement Date specified in Section 1
or the date specified in the notice provided for pursuant to Subsection 4(a)(ii),
then the date of such early occupancy.


 


(b)                                 Tenant Obligations. If the Tenant
Improvements, If any, are not substantially completed on the Commencement Date
specified in Section 1 primarily due to Tenant’s failure to promptly
review and approve the plans


 


2

















 


and specifications for the Tenant Improvements or change orders with
respect to the Tenant Improvements or to Tenant’s failure to fulfill any other
obligation under this Lease, then the Term shall be deemed to have commenced on
the Commencement Date specified in Section 1.


 


(c)                                  Tenant Termination Rights. If Landlord is
unable to deliver possession of the Premises with the Tenant improvements, if
any, substantially completed to Tenant on the Commencement Date as a result of
causes beyond its reasonable control, Landlord shall not be liable for any
damage caused by failing to deliver possession and this Lease shall not be void
or voidable. Tenant shall not be liable for Rent until Landlord delivers
possession of the Premises to Tenant. No delay in delivery of possession of the
Premises to Tenant shall change the Expiration Date or operate to extend the
Term. If Landlord does not deliver possession of the Premises to Tenant within
three (3) months of the Commencement Date, then Tenant may elect to
terminate this Lease by giving notice to Landlord within ten (10) days
following the end of such six (6) month period.


 


(d)                                 Confirmation of Commencement Date. When the
Commencement Date as provided in Subsection 4(a)(ii) or Subsection 4(a)(iii) has
been established as an earlier or later date than the Commencement Date
specified in Section 1, Landlord shall confirm the Commencement Date by
notice to Tenant.


 


5.                                       Minimum Monthly Rent; Late Charge.


 


(a)                                  Minimum Monthly Rent. Tenant shall pay to
Landlord the Minimum Monthly Rent without deduction, offset, prior notice or
demand, in advance on the first day of each month during the Term. Minimum
Monthly Rent for any partial month shall be prorated at the rate of 1/30th of
the Minimum Monthly Rent per day. Minimum Monthly Rent is exclusive of any
sales, franchise, business or occupation or other tax based on rents (other
than Landlord’s general income taxes) and should such taxes apply during the
Term, the Minimum Monthly Rent shall be increased by the amount of such taxes. All
Rent shall be paid to Landlord at Landlord’s Address for Payment of Rent or at
such other address as Landlord may specify by notice to Tenant.


 


(b)                                 Late Charge. Tenant acknowledges that the
late payment by Tenant of any Rent will cause Landlord to incur administrative,
collection, processing and accounting costs and expenses not contemplated under
this Lease, the exact amount of which are extremely difficult or impracticable
to fix. Therefore, if any Rent is not received by Landlord from Tenant by the
fifth (5th) calendar day after such Rent is due, Tenant shall immediately pay
to Landlord a late charge equal to five percent (5%) of the amount of such Rent
or Seventy-five and No/100th Dollars ($75.00), whichever is greater. Landlord
and Tenant agree that this late charge represents a reasonable estimate of such
costs and expenses and is fair compensation to Landlord for its loss caused by
Tenant’s nonpayment. Should Tenant pay said late charge but fail to pay
contemporaneously therewith all unpaid amounts of Rent, Landlord’s acceptance
of this late charge shall not constitute a waiver of Tenant’s default with
respect to Tenant’s nonpayment nor prevent Landlord from exercising all other
rights and remedies available to Landlord under this Lease or under law.


 


6.                                       Prepaid Rent and Security Deposit. As
partial consideration for Landlord’s execution of this Lease, on execution of
this Lease, Tenant shall deposit with Landlord the Prepaid Rent, as monthly
rent for the first full month of the Term for which Rent is payable, and the
Security Deposit, as a Security Deposit for the performance by Tenant of the
provisions of this Lease. If Tenant is in default, Landlord may use the
Security Deposit, or any portion of it, to cure the default, including without
limitation, paying for the cost of any work necessary to restore the Premises,
the Tenant improvements and any alterations to good condition or to compensate
Landlord for all damage sustained by Landlord resulting from Tenant’s default. Tenant
shall within five (5) days of demand pay to Landlord a sum equal to the
portion of the Security Deposit expended or applied by Landlord as provided in
this Section so as to maintain the Security Deposit in the sum initially
deposited with Landlord. If Tenant has not been and is not then in default as
of the thirtieth (30th) month of the Term including without
limitation, in default in payment of the Rent for the thirtieth (30th)
month of the Term, then Landlord shall return one half of the Security Deposit,
without Interest, to Tenant. If Tenant is not in default as of the expiration
or termination of the Term, including without limitation, in default in payment
of the Rent for the last month of the Term, then Landlord shall return the
balance of the Security Deposit, without interest, to Tenant within a
reasonable period of time not to exceed thirty (30) days after the expiration
or termination of the Term. Landlord’s obligations with respect to the Security
Deposit are those of a debtor and not a trustee. Landlord may commingle
the Security Deposit with Landlord’s general and other funds.


 


7.                                       Real
Property Taxes.


 


(a)                                  Payment of Tenant’s Share of Increases in Real
Property Taxes. Tenant shall pay to Landlord, as Additional Rent,
monthly, in advance on the first day of each month during the Term, an amount
equal to one-twelfth (1/12th) of Tenant’s Share of all increases in Real
Property Taxes that are or will be levied or assessed against the Property
during each calendar year during the Term over and above the Real Property
Taxes that are levied or assessed against the Property during the Base Year as
reasonably estimated by Landlord. Such Additional Rent is exclusive of any
sales, franchise, business or occupation or other tax based on rents and should
such taxes apply during the Term, such Additional Rent shall be increased by
the amount of such taxes. Within one hundred twenty (120) days after the end of
each calendar year during the Term or within such longer period of time as may be
reasonably necessary, Landlord shall furnish to Tenant a statement of the Reel
Property Taxes for the preceding calendar year and Tenant’s Share of the
increase in Real Property Taxes. If Tenant’s Share of the increase in such Real
Property Taxes for that calendar year over such Real Property Taxes for the
Base Year exceeds the monthly payments made by Tenant, then Tenant shall pay
Landlord the deficiency within thirty (30) days after receipt of the statement.
If Tenant’s


 


3

















 


payments made during that calendar year exceed Tenant’s Share of the
increase in such Real Property Taxes for that calendar year over such Real
Property Taxes for the Base Year, then, at Landlord’s option, either Landlord
shall pay Tenant the excess at the time Landlord furnishes the statement to
Tenant, or Tenant shall be entitled to offset the excess against the next
installment(s) of Minimum Monthly Rent and Additional Rent, provided, however,
that at the end of the Term Landlord shall pay Tenant the excess at the time
Landlord furnishes the statement to Tenant.


 


(b)                                 General and Special Assessments. With
respect to any general or special assessments which may be levied against
or upon the Property, or which under the laws then in tome may be
evidenced by improvement or other bonds or may be paid in annual
installments, only the amount of such annual installment, and interest due
thereon, shall be included in the computation of Real Property Taxes.


 


(c)                                  Proration. Tenant’s Share of Real Property
Taxes shall be prorated on the basis of a 360-day year to account for any
fractional portion of a tax year included in the Term at its commencement and
expiration.


 


(d)                                 No Effect on Minimum Monthly Rent. Notwithstanding
anything to the contrary in this Section, the Minimum Monthly Rent payable by
Tenant shall in no event be less than the Minimum Monthly Rent specified in Section 1.


 


a.                                       Personal Property Taxes. Tenant shall pay
prior to delinquency all personal property taxes assessed against and levied
upon trade fixtures, furnishings, equipment and all other personal property of
Tenant contained in the Premises or elsewhere. If possible, Tenant shall cause
such trade fixtures, furnishings, equipment and all other personal property of
Tenant to be assessed and billed separately from the Property.


 


9.                                       Operating Costs.


 


(a)                                  Payment of Tenant’s Share of Increases in Operating
Costs. Tenant shall pay to Landlord, as Additional Rent, monthly, in
advance on the first day of each month during the Term, an amount equal to
one-twelfth (1/12th) of Tenant’s Share of the increase in the Operating Costs
of the Property for each calendar year during the Term over the Operating Costs
for the Base Year as reasonably estimated by Landlord. Landlord may, in
accordance with sound accounting and management principles, both reasonably
estimate, and finally determine, the Operating Costs for the Base Year and for
each calendar year during the Term based on the Operating Costs that would have
been incurred if the Building had been 95% occupied during the Base Year or
each such calendar year, as the case may be, taking into account
historical operating costs for the Building. Such Additional Rent is exclusive
of any sales, franchise, business or occupation or other tax based on rents and
should such taxes apply during the Term, such Additional Rent shall be increased
by the amount of such taxes. Within one hundred twenty (120) days after the end
of each calendar year during the Term or within such longer period of time as may be
reasonably necessary, Landlord shall furnish to Tenant a statement of the
Operating Costs for the preceding calendar year and Tenant’s Share of the
increase in the Operating Costs. If Tenant’s Share of the increase in the
Operating Costs for that calendar year over the Operating Costs for the Base
Year exceeds the monthly payments made by Tenant, then Tenant shall pay
Landlord the deficiency within thirty (30) days after receipt of the statement.
If Tenant’s payments made during that calendar year exceed Tenant’s Share of
the increase in the Operating Costs for that calendar year over the Operating
Costs for the Base Year, then, at Landlord’s option, either Landlord shall pay
Tenant the excess at the time Landlord furnishes the statement to Tenant, or
Tenant shall be entitled to offset the excess against the next Installment(s)
of Minimum Monthly Rent and Additional Rent, provided, however, that at the end
of the Term Landlord shall pay Tenant the excess at the time Landlord furnishes
the statement to Tenant.


 


(b)                                 Proration. Tenant’s Share of Operating
Costs shall be prorated on the basis of a 360-day year to account for any
fractional portion of a year included in the Term at its commencement and
expiration.


 


(c)                                  No Effect on Minimum Monthly Rent. Notwithstanding
anything to the contrary in this Section, the Minimum Monthly Rent payable by
Tenant shall in no event be less than the Minimum Monthly Rent specified in Section 1.


 


(d)                                 Right to Examine Landlord’s Books and Records. Tenant,
or its authorized representative, shall have the right to examine Landlord’s
books and records relating to Operating Costs of the Property upon reasonable
prior notice specifying such records Tenant desires to examine, during normal
business hours at the place or places where such records are normally kept by
sending such notice no later than six (6) months following the furnishing
of the Landlord’s statement of the Operating Costs for the preceding calendar
year and Tenant’s Share of the increase in the Operating Costs. Tenant’s
authorized representative shall be compensated on an hourly or project basis
and not on (i) a contingent basis, (ii) the basis of a percentage of
any savings or refund resulting from the audit, or (iii) in any other
manner that makes such representative’s compensation for such audit in any way
dependent on the results of the audit. Tenant may take exception to
matters included in Operating Costs, or Landlord’s computation of Tenant’s
Share, by sending notice specifying such exception end the reasons therefor to
Landlord no later than thirty (30) days after Landlord makes such records
available for examination. Landlord’s statement of the Operating Costs for the
preceding calendar year and Tenant’s Share of the increase in the Operating Costs
shall be considered final, except as to matters to which exception is taken
after examination or Landlord’s books and records relating to Operating Costs
of the Property in the foregoing manner and within the foregoing times. Tenant
acknowledges that Landlord’s ability to budget and incur expenses depends on
the finality of such statement, and accordingly agrees that time is of the
essence of this


 


4

















 


Section. If Tenant takes exception to any matter contained in such
statement as provided herein, Landlord shall refer the matter to an independent
certified public accountant, whose certification as to the proper amount shall
be final and conclusive as between Landlord and Tenant. Tenant shall promptly
pay the cost of such certification unless such certification determines that
Landlord’s statement of the Operating Costs overstated the Operating Costs by
more than five percent (5%). Pending resolution of any such exceptions in the
foregoing manner, Tenant shall continue paying Tenant’s Share of Operating
Costs in the amounts determined by Landlord, subject to adjustment after any
such exceptions are so resolved. If such certification determines that Landlord’s
statement of the Operating Costs overstated the Operating Costs, then Tenant
shall receive a credit for Tenant’s Share of the amount of such overstatement
against the next installment(s) of Minimum Monthly Rent and Additional Rent,
provided, however, that at the end of the Term Landlord shall pay Tenant the excess
at the time Landlord furnishes the statement to Tenant.


 


10.                                 Use. Tenant shall use the Premises for the
Permitted Use and for no other use without Landlord’s prior consent. Tenant
agrees that it has determined to its satisfaction that the Premises can be used
for the Permitted Use. Tenant waives any right to terminate this Lease if the
Premises cannot be used for the Permitted Use during the Term unless the
prohibition on use is the result of actions taken by Landlord. Tenant’s use of
the Premises shall be in accordance with the following,


 


(a)                                  Insurance. Tenant shall not do, bring, or
keep anything in or about the Premises or the Property that will cause a
cancellation of any insurance covering the Property. If the rate of any
insurance carried by Landlord on the Property as published by the Washington
Survey and Rating Bureau, or any successor rating bureau or agency, is
Increased as a result of Tenant’s use, then Tenant shall pay to Landlord not
less than ten (10) days before the date Landlord is obligated to pay a
premium on the insurance, a sum equal to the difference between the original
premium and the increased premium.


 


(b)                                 Compliance with Laws. Tenant shall comply
with all laws concerning the Premises and Tenant’s use of the Premises.


 


(c)                                  Waste, Nuisance and Improper Use. Tenant
shall not use the Premises in any manner that will constitute waste, nuisance
or unreasonable annoyance to other tenants in the Building, including without
limitation, (i) the use of loudspeakers or sound or light apparatus that
can be heard or seen outside the Premises, (ii) for cooking or other
activities that cause odors that can be detected outside the Premises, or (iii) for
lodging or sleeping rooms.


 


(d)                                 Damage to Property. Tenant shall not do
anything in, on or about the Premises that will cause damage to the Property.


 


(e)                                  Rules and Regulations. Tenant and its
authorized representatives shall comply with the Rules and Regulations set
forth on Exhibit D attached hereto. Landlord shall have the right
to reasonably amend the Rules and Regulations from time to time. In the
event of a conflict between this Lease and the Rules and Regulations, as
amended, this Lease shall control. Landlord shall have the right to enforce the
Rules and Regulations. Landlord shall have no liability or responsibility
whatsoever with respect to the noncompliance by other tenants or their
authorized representatives with any of such Rules and Regulations.


 


11.                                 Hazardous Substances. Tenant shall not
dispose of or otherwise allow the release of any Hazardous Substances in, on or
under the Premises, or the Property, or in any tenant improvements or
alterations placed on the Premises by Tenant. Tenant represents and warrants to
Landlord that Tenant’s intended use of the Premises does not involve the use,
production, disposal or bringing on to the Premises of any Hazardous
Substances, except for products normally used in general business offices which
constitute Hazardous Substances, provided that such products are used, stored
and disposed of in accordance with applicable laws and manufacturer’s and
supplier’s guidelines. Tenant shall promptly comply with all laws and with all
orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of Hazardous Substances, on or under the Premises
or the Property, or incorporated in any tenant improvements or alterations, at
Tenant’s expense.


 


(a)                                  Compliance; Notification. After notice to
Tenant and a reasonable opportunity for Tenant to effect such compliance,
Landlord may, but is not obligated to, enter upon the Premises and take such
actions and incur such costs and expenses to effect such compliance as it deems
advisable to protect its interest in the Premises and the Property, provided,
however that Landlord shall not be obligated to give Tenant notice and an
opportunity to effect such compliance if (i) such delay might result in
material adverse harm to the Premises, or the Property, or (it) an emergency
exists. Tenant shall reimburse Landlord for the full amount of all costs and
expenses incurred by Landlord in connection with such compliance activities,
and such obligation shall continue even after expiration or termination of the
Term. Tenant shall notify Landlord immediately of any release of any Hazardous
Substances on the Premises or the Property.


 


(b)                                 Indemnity by Tenant. Tenant agrees to hold
Landlord harmless from and against any and all damages, charges, cleanup costs,
remedial actions, costs and expenses, which may be imposed on, incurred or
paid by, or asserted against Landlord, the Premises or the Property by reason
of, or in connection with the acts or omissions of Tenant, its authorized
representatives, or any subtenant or other person for whom Tenant would
otherwise be liable, resulting in the release of any Hazardous Substances on
the Premises or the Property.


 


5

















 


(c)                                  Indemnity by Landlord. Landlord agrees to
hold Tenant harmless from and against any and all damages, charges, cleanup
costs, remedial actions, costs and expenses, which may be imposed on,
incurred or paid by, or asserted against Tenant, the Premises or the Property
by reason of, or in connection with the acts or omissions of Landlord, or its
employees, resulting in the release of any Hazardous Substances on the Premises
or the Property.


 


(d)                                 Acknowledgment as to Hazardous Substances. Tenant
acknowledges that the Premises may contain Hazardous Substances, and
Tenant accepts the Premises and the Building notwithstanding such Hazardous
Substances. If Landlord is required by any law to take any action to remove or
abate any Hazardous Substances, or if Landlord deems it necessary to conduct
special maintenance or testing procedures with regard to any Hazardous
Substances, or to remove or abate any Hazardous Substances, Landlord may take
such action or conduct such procedures at times and in a manner that Landlord
deems appropriate under the circumstances, and Tenant shall permit the same.


 


(e)                                  Survival. The provisions of this Section shall
survive the expiration or sooner termination of the Term. No subsequent
modification or termination of this Lease by agreement of the parties or
otherwise shall be construed to waive or to modify any provisions of this Section unless
the termination or modification agreement or other document expressly so states
in writing.


 


12.                                 Landlord’s Maintenance; Inclusion in Operating Costs.


 


(a)                                  Landlord’s Maintenance. Except as provided
in Section 13 captioned “Tenant’s Maintenance; Remedies”, Section 23
captioned “Destruction” and Section 24 captioned “Condemnation” and except
for damage caused by any negligent or intentional act or omission of Tenant or
its authorized representatives, Landlord shall maintain in good condition and
repair the following:  (i) the
structural parts of the Building, which structural parts include only the
foundations, bearing and exterior walls, subflooring and roof, (ii) the
building standard lighting fixtures, window coverings and ceiling tiles and the
unexposed electrical, plumbing and sewage systems, including without
limitation, those portions lying outside the Premises, (iii) the heating,
ventilating and air-conditioning system, if any, servicing the Building, (iv) the
lobbies, corridors, elevators, public or common restrooms and other common
areas of the Building, and (v) the sidewalks, grounds, landscaping,
parking and loading areas, if any, and other common areas of the Property.


 


(b)                                 Inclusion in Operating Costs. The cost of
maintaining, repairing, replacing or servicing the portions of the Building
that Landlord is required to maintain pursuant to this Section shall be
included in Operating Costs to the extent provided in Section 9 captioned “Operating
Costs”.


 


13.                                 Tenant’s Maintenance; Remedies.


 


(a)                                  Tenant’s Maintenance. Except as provided in
Section 12 captioned “Landlord’s Maintenance; Inclusion in Operating Costs”,
Section 23 captioned “Destruction” and Section 24 captioned “Condemnation”
and except for damage caused by any grossly negligent or intentional act or
omission of Landlord or his authorized representatives, Tenant, at its cost,
shall maintain to good condition and repair the Premises, including without
limitation, all of the Tenant Improvements, Tenant’s alterations, Tenant’s
trade fixtures, Tenant’s personal property, signs, walls, interior partitions,
wall coverings, windows, non-building standard window coverings, glass within
the Premises, doors, carpeting and resilient flooring, non-building standard
ceiling tiles, plumbing fixtures and non-building standard lighting fixtures. Tenant
shall be liable for any damage to the Premises and the Building resulting from
the acts or omissions of Tenant or its authorized representatives.


 


(b)                                 Landlord’s Remedies. If Tenant fails to
maintain the Premises in good condition and repair (reasonable wear and tear
accepted) as required by Subsection 13(a) and if such failure is not
cured within thirty (30) days after notice of such failure is given by Landlord
to Tenant, then Landlord may, at its option, cause the Premises to be
maintained in good condition and repair and Tenant shall promptly reimburse
Landlord for all reasonable costs incurred by Landlord in performance of Tenant’s
obligation to maintain the Premises.


 


14.                                 Tenant Improvements; Alterations and Trade Fixtures.


 


(a)                                  Tenant Improvements. Tenant accepts the
Premises in their “AS IS” condition without any agreements, representations,
understandings or obligations on the part of Landlord to perform any
alterations, repairs or improvements or to provide any allowances unless
otherwise expressly provided in this Lease or in the Work Letter, if any,
attached hereto as Exhibit C. Tenant shall not make any
improvements or alterations to the Premises without Landlord’s prior consent.


 


(b)                                 Alterations. Any improvements and
alterations made by either party shall remain on and be surrendered with the
Premises on expiration or termination of the Term, except that Landlord can
elect by giving notice to Tenant within thirty (30) days before the expiration
of the Term, or within thirty (30) days after termination of the Term, to
require Tenant to remove any improvements and alterations that Tenant has made
to the Premises. If Landlord so elects, Tenant, at its cost, shall restore the
Premises to the condition designated by Landlord in its election (reasonable
wear and tear accepted), before the last day of the Term, or within thirty (30)
days after notice of election is given, whichever is later. Any improvements
and alterations that remain on the Premises on expiration or termination of the
Term shall automatically become the property of Landlord and title to such
improvements and alterations shall


 


6

















 


automatically pass to Landlord at such time without any payment
therefor by Landlord to Tenant. If Tenant or its authorized representatives
make any improvements or alterations to the Premises as provided in this
Section, then such improvements and alterations (i) shall be made in a
first class manner in conformity with then building standard improvements,
(ii) shall be made utilizing then building standard materials, (iii) shall
be made in compliance with the Rules and Regulations and the reasonable
directions of Landlord, (iv) shall be made pursuant to a valid building
permit to be obtained by Tenant, at its cost, and (v) shall be made In
conformity with then applicable laws, including without limitation, building
codes.


 


(c)                                  Trade Fixtures. Tenant shall not install
any trade fixtures in or on the Premises without Landlord’s prior consent.


 


15.                                 Mechanics’ Liens. Tenant shall pay, or
cause to be paid, all costs of labor, services and/or materials supplied in
connection with any Work. Tenant shall keep the Property free and clear of all
mechanics’ liens and other liens resulting from any Work. Prior to the
commencement of any Work costing more than an amount equal to $25,000.00, or
the supply or furnishing of any labor, services and/or materials in connection
with any such Work, Tenant shall provide Landlord with a labor and material
payment bond, a letter of credit or other security satisfactory to Landlord in
an amount equal to one hundred percent (100%) of the aggregate price of all
contracts therefor, with release of the bond conditioned on Tenant’s payment in
full of all claims of lien claimants for such labor, services and/or materials
supplied in the prosecution of the Work. Said payment bond shall name Landlord
as a primary obligee, shall be given by a surety which is satisfactory to
Landlord, and shall be in such form as Landlord shall approve in its sole
discretion. Tenant shall have the right to contest the correctness or validity
of any such lien if, immediately on demand by Landlord, it procures and records
a lien release bond issued by a responsible corporate surety in an amount
sufficient to satisfy statutory requirements therefor in the State of
Washington. Tenant shall promptly pay or cause to be paid all sums awarded to
the claimant on its suit, and, in any event, before any execution is issued
with respect to any judgment obtained by the claimant in its suit or before
such judgment becomes a lien on the Premises, whichever is earlier. If Tenant
shall be in default under this Section, by failing to provide security for or satisfaction
of any mechanic’s or other liens, then Landlord may (but shall not be
obligated to), in addition to any other rights or remedies it may have,
discharge said lien by (i) paying the claimant an amount sufficient to
settle and discharge the claim, (ii) procuring and recording a lien
release bond, or (iii) taking such other action as Landlord shall deem
necessary or advisable, and, in any such event, Tenant shall pay as Additional
Rent, on Landlord’s demand, all reasonable costs (including reasonable attorney
fees) incurred by Landlord in settling and discharging such lien together with
interest thereon in accordance with Section 39 captioned “Interest on
Unpaid Rent” from the date of Landlord’s payment of said costs. Landlord’s
payment of such costs shall not waive any default of Tenant under this Section.


 


16.                                 Utilities and Services.


 


(a)                                  Utilities and Services Furnished by Landlord. Landlord
shall furnish the Premises with:


 


(i)                                     Electricity
for lighting and power suitable for the use of the Premises for ordinary
general office and medical/workout purposes; provided, however, that Tenant
shall not at any time have a connected electrical load for lighting purposes in
excess of the wattage per square foot of Premises Area required for building
standard amounts of lighting, or a connected load for all other power
requirements in excess of four (4) watts per square foot of Premises Area
as determined by Landlord, and the electricity so provided for lighting and
power shall not exceed such limits, subject to any lower limits set by any
governmental authority with respect thereto;


 


(ii)                                  Subject
to the reasonable limitations of the existing building systems, heating,
ventilating and air-conditioning, if the Building has an air-conditioning
system, to maintain a temperature range in the Premises which is customary for
similar office space in the Seattle, Washington area (but in compliance with
any applicable governmental regulations with respect thereto). Tenant agrees to
keep closed, when necessary, blinds, draperies and windows which must be closed
to provide for the efficient operation of the heating and air-conditioning
systems, if any, and Tenant agrees to cooperate with Landlord and to abide by
the regulations and requirements which Landlord may prescribe for the
proper functioning and protection of the heating, ventilating and
air-conditioning system, if any. If Tenant requires heating, ventilating and
air conditioning to the Premises other than during normal business hours from
6:00 A.M. to 8:30 P.M. Monday through Friday and 6..00 A.M. to
3:00 P.M. Saturday, except Sundays and those legal holidays generally
observed to the State of Washington, Landlord shall, upon Tenant’s request made
not less than 24 hours before the time Tenant requires the after hour service,
and not later than Noon on the Friday before any Saturday or Sunday on which
Tenant requires such service, and not later than Noon of the day before any
holiday on which Tenant requires such service (except as otherwise provided in
the Rules and Regulations), furnish such heating, ventilating and air
conditioning. If Tenant receives such services, then Tenant shall pay, upon
demand, an amount equal to Tenant’s proportionate share of the actual direct
cost to Landlord in providing the heating, ventilating and air conditioning
outside of normal business hours;


 


(ii)                                  Water
for restroom and drinking purposes and access to restroom facilities;


 


(iv)                              Elevator
service for general office pedestrian usage if the Building is serviced by
elevators;


 


(v)                                 Relamping
of building-standard light fixtures;


 


7

















 


(vi)                              Washing
of interior end exterior surfaces of exterior windows with reasonable
frequency; and


 


(vii)                           Janitorial service five (5) times
per week, except holidays. Janitorial specifications are attached hereto as Exhibit E.
Tenant acknowledges that the standard janitorial service provided by Landlord may not
be adequate to meet Tenant’s specific cleaning requirements. Any janitorial and
cleaning services required by Tenant over and above the standard service
provided by Landlord shall be provided by Tenant at Tenant’s sole cost and
expense. Tenant may provide access to the Premises after Tenant’s business
hours for its contractors providing such additional janitorial services


 


(b)                                 Payment for Excess Utilities and Services. All
services and utilities for the Premises not required to be furnished by
Landlord pursuant to Section 16(a) shall be paid for by Tenant. If
Tenant requires, on a regular basis, water, heat, air conditioning, electric
current, elevator or janitorial service in excess of that provided for In Section 16(a),
then Tenant shall first obtain the consent of Landlord which consent may be
withheld in Landlord’s sole discretion. If Landlord consents to such excess
use, Landlord may install an electric current or water meter (including,
without limitation, any additional wiring, conduit or panel required therefor)
to measure the excess electric current or water consumed by Tenant or may cause
the excess usage to be measured by other reasonable methods (e.g. by temporary “check”
meters or by survey). Tenant shall pay to Landlord upon demand (i) the
cost of any and all water, heat, air conditioning, electric current,
janitorial, elevator or other services or utilities required to be furnished to
Tenant in excess of the services and utilities required to be furnished by
Landlord as provided in Section 16(a); (ii) the cost of installation,
maintenance and repair of any meter installed in the Premises; (iii) the
cost of all electricity and water consumed by Tenant in connection with any
dedicated heating, ventilating and/or air conditioning, computer power and/or
air conditioning, telecommunications or other special systems of Tenant, including
any power usage other than through existing standard 110-volt and 220-volt AC
outlets; and (v) any reasonable cost incurred by Landlord in keeping
account of or determining such excess utilities or services furnished to Tenant.
Landlord’s failure to bill Tenant for any such excess utilities or services
shall not waive Landlord’s right to bill Tenant for the excess at a later time.


 


(c)                                  Temperature Balance. Landlord makes no
representation to Tenant regarding the adequacy or fitness of the heating,
ventilating and air-conditioning systems in the Building to maintain
temperatures that may be required for, or because of, any of Tenant’s
equipment other than normal office equipment, such as personal computers, laser
printers, copiers, dictating machines and other small equipment normally used
in business offices, and workout equipment such as treadmills. elliptical
trainers, bicycles and stacked weights, and Landlord shall have no liability
for loss or damage suffered by Tenant or others in connection therewith. Landlord’s
obligations are limited to maintaining the HVAC in good working order and that
Landlord does not warrant that the HVAC is adequate to cool the Premises if
excess heat is generated from the exercise equipment (or the bodies on them). If
the temperature otherwise maintained in any portion of the Premises by the
heating, air conditioning or ventilation system is affected as a result of (i) any
lights, machines or equipment (including without limitation electronic data
processing machines) used by Tenant in the Premises or the use of more than one
personal computer per person, (ii) the occupancy of the Premises by more
than one person per two hundred (200) square feet of rentable area therein, (iii) an
electrical load for lighting or power in excess of the limits per square foot
of rentable area of the Premises specified in Section 16(a), or (iv) any
rearrangement of partitioning or other improvements, Landlord may install
any equipment, or modify any existing equipment (including the standard air
conditioning equipment) Landlord deems necessary to restore the temperature
balance. The cost of any such equipment, including without limitation, the cost
of design and installation thereof, and the cost of operating, metering,
maintaining or repairing the same, shall be paid by Tenant to Landlord upon
demand. Tenant shall not install or operate window-mounted heating or
air-conditioning units.


 


(d)                                 Special Electrical or Water Connections; Electricity
Use. Tenant will not, without the prior consent of Landlord, which
Landlord in its sole discretion may refuse, connect or use any apparatus
or device in the Premises (i) using current in excess of 220 volts or (ii) which
will cause the amount of electricity, water, heating, air conditioning or
ventilation furnished to the Premises to exceed the amount required for use of
the Premises for ordinary general office purposes, as determined by Landlord,
during normal business hours or (iii) which would cause Tenant’s connected
load to exceed any limits established in Section 16(a). Tenant shall not
connect with electric current except through existing outlets in the Premises
and shall not connect with water pipes except through existing plumbing
fixtures in the Premises. In no event shall Tenant’s use of electricity exceed
the capacity of existing feeders to the Building or the risers or wiring
installation, and Landlord may prohibit the use of any electrical
equipment which in Landlord’s opinion will overload such wiring or interfere
with the use thereof by other tenants in the Building. If Landlord consents to
the use of equipment requiring such changes, Tenant shall pay the cost of
installing any additional risers, panels or other facilities that may be
necessary to furnish energy to the Premises.


 


Landlord will not permit additional coring of the
floor of the Premises in order to install new electric outlets in the Premises
unless Tenant furnishes Landlord with X-ray scans of the floor area where the
Tenant wishes to place additional electrical outlets and Landlord, in its
absolute discretion, is satisfied, on the basis of such X-ray scans and other
information obtained by Landlord, that coring of the floor in order to install
such additional outlets will not weaken the structure of the floor.


 


(e)                                  Landlord’s Duties. Landlord shall not be in
default under this Lease or liable for any damages resulting from, or
incidental to, any of the following, nor shall any of the following be an
actual or constructive eviction of Tenant, nor shall the Rent be abated by
reason of:  (i) failure to furnish
or delay in furnishing any of the services


 


8

















 


described in this Section when such failure or delay is caused by
accident or any condition beyond the reasonable control of Landlord, including
the making of necessary repairs or Improvements to the Premises or to the
Building, (ii) any electrical surges or spikes, or (iii) failure to
make any repair or to perform any maintenance, unless such failure shall
persist for an unreasonable time after notice of the need for such repair or
maintenance is given to Landlord by Tenant. Landlord shall use reasonable
efforts to remedy any interruption in the furnishing of such services.


 


(f)                                    Governmental Regulations. Any other
provisions of this Section notwithstanding. if any governmental authority
or utility supplier imposes any laws, controls, conditions, or other
restrictions upon Landlord, Tenant, or the Building, relating to the use or
conservation of energy or utilities, mandated changes in temperatures to be
maintained in the Premises or the Building or the reduction of automobile or
other emissions (collectively, the “Controls”), or in the event Landlord is
required or elects to make alterations to the Building in order to comply with
the Controls, Landlord may, in its sole discretion, comply and may require
Tenant to comply with the Controls or make such alterations to the Building in
order to comply with the Controls. Such compliance and the making of such
alterations shall not constitute an actual or constructive eviction of Tenant,
impose on Landlord any liability whatsoever, or entitle Tenant to any abatement
of Rent.


 


17.                                 Indemnity.


 


(a)                                  Generally. Tenant shall hold Landlord
harmless from and against any and all damages arising out of any damage to any
persons or property occurring in, on or about the Premises or the Property
resulting from the acts or omissions of Tenant or its authorized
representatives. Landlord shall hold Tenant harmless from and against any and
all damages arising out or any damage to any persons or property occurring in,
on or about the Premises or the Property resulting from the acts or omissions
of Landlord or its authorized representatives. A party’s obligation under this Section to
indemnify and hold the other party harmless shall be limited to the sum that
exceeds the amount of insurance proceeds, if any, received by the party being
indemnified.


 


(b)                                 Concurrent Negligence of Landlord and Tenant. Notwithstanding
Section 17(a) above, in the event of concurrent negligence of Tenant,
or its authorized representatives, on the one hand, and that of Landlord, or
its authorized representatives, on the other hand, which concurrent negligence
results in damage to any persons or property occurring in, on or about the
Premises or the Property, either party’s obligation to indemnity the other
party as set forth in Section 17(a) shall be limited to the extent of
the negligence of the indemnifying party, or its authorized representatives,
including the indemnifying party’s proportional share of costs and attorneys’
fees incurred in connection with any claims, actions or proceedings brought
with respect to such damage.


 


(c)                                  Waiver of Worker’s Compensation Immunity. The
indemnification obligations contained in this Section shall not be limited
by any worker’s compensation, benefit or disability laws, and each indemnifying
party hereby waives (solely for the benefit of the indemnified party) any
immunity that said indemnifying party may have under the Industrial
Insurance Act, Title 51 RCW and similar worker’s compensation, benefit or
disability laws.


 


(d)                                 Provisions Specifically Negotiated. LANDLORD
AND TENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH OF THE
INDEMNIFICATION PROVISIONS OF THIS LEASE (SPECIFICALLY INCLUDING BUT NOT
LIMITED TO THOSE RELATING TO WORKER’S COMPENSATION BENEFITS AND LAWS) WERE
SPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT.


 


18.                                 Exemption of Landlord from Liability. Landlord
and Landlord’s Agent shall not be liable for injury to Tenant’s business or
loss of income therefrom or for damage which may be sustained by the
person, goods, wares, merchandise or property of Tenant, its authorized
representatives, or any other person in or about the Premises, caused by or
resulting from fire, steam, electricity, gas, water or rain, which may leak
or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same,
whether the said damage or injury resulting from conditions arising upon the
Premises or upon other portions of the Building or the Property unless such
injury or damage is caused by the gross negligence or willful misconduct of
Landlord or its authorized representatives.


 


19.                                 Commercial General Liability and Property Damage
Insurance. Tenant, at its cost, shall maintain commercial general
liability insurance (including contractual liability and products end completed
operations liability) with liability limits of not less than $1,000,000 per
occurrence, and $2,000,000 annual aggregate, insuring against all liability of
Tenant and its authorized representatives arising out of or in connection with
Tenant’s use and occupancy of the Premises and property damage insurance with
liability limits of not less then $1,000,000. All such commercial general
liability and property damage insurance shall insure performance by Tenant of
the indemnity provisions of Section 17 captioned “Indemnity”. Landlord and
Landlord’s Agent shall be additional named insureds on such insurance policy.


 


20.                                 Tenant’s Fire Insurance. Tenant, at its
cost, shall maintain on all of Tenant’s Alterations, Trade Fixtures and
Personal Property in, on or about the Premises, a policy of standard All Risk
fire insurance, in an amount equal to at least their full replacement cost. The
proceeds of any such policy shall be used by Tenant for the restoration of
Tenant’s Alterations and Trade Fixtures and the replacement of its Personal
Property. Any portion of such proceeds not used for such restoration shall
belong to Tenant.


 


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21.                                 Waiver of Claims; Waiver of Subrogation  Landlord and Tenant release each other, and
their respective authorized representatives, from, and waive their entire claim
of recovery for, any claims for damage to the Premises and the Building and to
Tenant’s alterations, trade fixtures and personal property that are caused by
or result from fire, lightning or any other perils normally included in an “all
risk” property insurance policy whether or not such loss or damage is due to
the negligence of Landlord, or its authorized representatives, or of Tenant, or
its authorized representatives. Landlord and Tenant shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by such insurance policy.


 


22.                                 Other Insurance Matters. All insurance
required to be carried by Tenant under this Lease shall: (i) be issued by
insurance companies authorized to do business in the Slate of Washington with a
rating of A/VI or better as rated in the most recent edition of Best’s
Insurance Reports; (ii) be issued as a primary policy, and (iii) contain
an endorsement requiring thirty (30) days’ prior written notice from the
insurance company to both parties, to Landlord’s Agent, and, if requested by
Landlord, to Landlord’s lender. before cancellation or change in the coverage,
scope, or amount of any policy. Each policy or a certificate of the policy,
together with evidence of payment of premiums, shall be deposited with Landlord
on or before the Commencement Date, and on renewal of the policy not less than
ten (10) days before expiration of the term of the policy.


 


23.                                 Destruction.


 


(a)                                  Insured Damage. If during the Term the
Premises or the Building are partially or totally destroyed by any casualty
that is covered by any Insurance carried by Landlord covering the Building,
rendering the Premises partially or totally inaccessible or unusable, Landlord
shall restore the Premises or the Building to substantially the same condition
as they were in immediately before such destruction, if (i) the insurance
proceeds available to Landlord equal or exceed the cost of such restoration, (ii) in
the opinion of a registered architect or engineer appointed by Landlord such
restoration can be completed within one hundred eighty (180) days after the
date on which Landlord obtains all permits necessary for such restoration, and (iii) such
restoration is permitted under then existing laws to be done in such a manner
as to return the Premises, or the Building, as the case may be, to
substantially the same condition as they were in immediately before such
destruction. To the extent that the insurance proceeds must be paid to a
mortgagee under, or must be applied to reduce any debt secured by, a mortgage
covering the Property, the Insurance proceeds shall be deemed not to be
available to Landlord unless such mortgagee permits Landlord to use the
insurance proceeds for such restoration. Such destruction shall not terminate
this Lease.


 


(b)                                 Major or Uninsured Damage. If during the
Term the Premises or the Building are partially or totally destroyed by any
casualty and Landlord is not obligated under Section 23(e) captioned “Insured
Damage” to restore the Premises or the Building, as the case may be, then
Landlord may, at its election, either (i) restore the Premises or the
Building to substantiality the same condition as they were in immediately
before such destruction, or (ii) terminate this Lease effective as of the
date of such destruction. If Landlord does not give Tenant notice within sixty
(60) days after the date of such destruction of its election to restore the
Premises or the Building, as the case may be, Landlord shall be deemed to
have elected to terminate this Lease. If Landlord elects to restore the
Premises or the Building, as the case may be, Landlord shall use
commercially reasonable efforts to complete such restoration within one hundred
eighty (180) days after the date on which Landlord obtains all permits
necessary for such restoration, provided, however, that such one hundred eighty
(180) day period shall be extended by a period equal to any delays caused by Force
Majeure, and such destruction shall not terminate this Lease. If Landlord does
not complete such restoration within one (1) year following the date of
such destruction, then Tenant may elect to terminate this Lease by giving
notice to such effect to Landlord within ten (10) days following the end
of such one (1) year period.


 


(c)                                  Damage to the Building. If during the Term
the Building is partially destroyed by any casualty and if in the opinion of
Landlord the Building should be restored in such a way as to materially alter
the Premises, then Landlord may, at Landlord’s election, terminate this Lease
by giving notice to Tenant of Landlord’s election to do so within sixty (60)
days after the date of such destruction.


 


(d)                                 Extent of Landlord’s Obligation to Restore. If
Landlord is required or elects to restore the Premises as provided in this
Section, Landlord shall not be required to restore alterations made by Tenant. Tenant’s
trade fixtures and Tenant’s personal property, such excluded items being the sole
responsibility of Tenant to restore.


 


(e)                                  Abatement or Reduction of Rent. In case of
damage to, or destruction of, the Premises or the Building the Minimum Monthly
Rent shall be abated or reduced, between the date of destruction and the date
of completion of restoration, by an amount that is in the same ratio to the
Minimum Monthly Rent as the total number of square feet of the Premises that
are so damaged or destroyed bears to the total number of square feet in the
Premises.


 


24.                                 Condemnation. If during the Term there is
any taking of part or all of the Premises or the Building by condemnation,
then the rights and obligations of the parties shall be as follows:


 


(a)                                  Minor Taking. If there is a taking of less
than ten percent (10%) of the Premises, this Lease shall remain in full force
and effect.


 


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(b)                                 Major Taking. If there is a taking of ten
percent (10%) or more of the Premises and if the remaining portion of the
Premises is of such size or configuration that Tenant in Tenant’s reasonable
judgment is unable to conduct its business in the Premises, then the Term shall
terminate as of the date of taking.


 


(c)                                  Taking of Part of the Building. If
there is a taking of a part of the Building other than the Premises and if
in the opinion of Landlord the Building should be restored in such a way as to
materially alter the Premises, then Landlord may terminate the Term by
giving notice to such affect to Tenant within sixty (60) days after the date of
vesting of title in the condemnor and the Term shall terminate as of the date
specified in such notice, which date shall not be less then sixty (60) days
after the giving of such notice.


 


(d)                                 Award. The entire award for the Premises,
the Building and the Property, shall belong to and be paid to Landlord, Tenant
hereby assigning to Landlord Tenant’s interest therein, if any, provided,
however, that Tenant shall have the right to claim and recover from the
condemnor compensation for the loss of any alterations made by Tenant, Tenant’s
trade fixtures, Tenant’s personal property, moving expenses and business
interruption,


 


(e)                                  Abatement of Rent. If any part of the
Premises is taken by condemnation and this Lease remains in full force and
effect, on the date of taking the Minimum Monthly Rent shall be reduced by an
amount that is in the same ratio to the Minimum Monthly Rent as the total
number of square feet in the Premises taken bears to the total number of square
feet in the Premises immediately before the date of taking.


 


25.                                 Assignment and Subletting.


 


(a)                                  Landlord’s Consent; Definitions. Tenant
acknowledges that the Building is a multi-tenant office building, occupied by
tenants specifically selected by Landlord, and that Landlord has a legitimate
interest in the type and quality of such tenants, the location of tenants in
the Building and in controlling the leasing of space in the Building so that
Landlord can better meet the particular needs of its tenants and protect and
enhance the relative image, position and value of the Building in the office
building market. Tenant further acknowledges that the rental value of the
Premises may fluctuate during the Term in accordance with market
conditions, and, as a result, the Rent paid by Tenant under the Lease at any
particular time may be higher or lower than the then market rental value
of the Premises. Landlord and Tenant agree, and the provisions of this Section are
intended to so provide, that, if Tenant voluntarily assigns its interest in
this Lease or in the Premises or subleases any part or all of the
Premises, a portion of the profits from any increase in the market rental value
of the Premises shall belong to Landlord. Tenant acknowledges that, if Tenant
voluntarily assigns this Lease or subleases any part or all of the
Premises, Tenant’s investment in the subject portion of the Premises
(specifically including, but not limited to, tenant improvements, good will or
other assets) may be lost or reduced as a result of such action.


 


(b)                                 Consent Required. Tenant shall not voluntarily
assign or encumber its interest in this Lease or in the Premises, or sublease
any part or all of the Premises, without Landlord’s prior consent, which
consent shall not be unreasonably withheld. Any assignment, encumbrance or
sublease without Landlord’s consent shall be voidable and, at Landlord’s
election, shall constitute a default by Tenant under this Lease. In determining
whether to approve a proposed assignment or sublease, Landlord shall place
primary emphasis on the proposed transferee’s reputation and creditworthiness,
the character of the business to be conducted by the proposed transferee at the
Premises and the affect of such assignment or subletting on the tenant mix in
the Building. In addition, Landlord shall have the right to approve the
specific form of any assignment or sublease agreement, in no event shall
Landlord be obligated to consent to any assignment or subletting which increases
(i) the Operating Costs, (ii) the burden on the Building services, or
(iii) the foot traffic, elevator usage or security concerns in the
Building, or creates an increased probability of the comfort and/or safety of
the Landlord and other tenants in the Building being unreasonably compromised
or reduced (for example, but not exclusively, Landlord may deny consent to
an assignment or subletting where the space will be used for a school or
training facility, an entertainment, sports or recreation facility, retail
sales to the public (unless Tenant’s permitted use is retail sales), a
personnel or employment agency, a medical office, or an embassy or consulate or
similar office). Landlord shall not be obligated to approve an assignment or
subletting to (x) a current tenant of the Building or (y) a prospective tenant
of the Building with whom Landlord is then negotiating. Landlord’s foregoing
rights and options shall continue throughout the entire term of this Lease. No
consent to any assignment, encumbrance or sublease shall constitute a waiver of
the provisions of this Section and no other or subsequent assignment,
encumbrance or sublease shall be made without Landlord’s prior consent. Neither
an assignment or subletting nor the collection of Rent by Landlord from any
person other than Tenant, nor the application of any such Rent as provided in
this Section shall be deemed a waiver of any of the provisions of this Section or
release Tenant from its obligation to comply with the terms and provisions of
this Lease and Tenant shall remain fully and primarily liable for all of Tenant’s
obligations under this Lease, including the obligation to pay Rent under this
Lease. Any personal guarantee(s) of Tenant’s obligations under this Lease shall
remain in full force and effect following any such assignment or subletting. In
addition to Landlord’s other rights under this Section, Landlord may condition
approval of an assignment or subletting hereunder on an increase in the amount
of the Security Deposit or on receipt of personal guarantees of the assignee’s
or sublessee’s obligations under this Lease. If Landlord approves of an
assignment or subletting hereunder and this Lease contains any renewal or
extension options, expansion options, rights of first refusal, rights of first
negotiation or any other rights or options pertaining to additional space in
the Building, such rights and/or options shall not run to the assignee or
subtenant, it being agreed by the parties hereto that any such rights and
options are personal to Tenant named herein and may not be transferred.


 


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(c)                                  Conditions to Assignment or Sublease. Tenant
agrees that any instrument by which Tenant assigns or sublets all or any
portion of the Premises shall expressly provide that the assignee or subtenant may not
further assign or sublet the assigned or sublet space without Landlord’s prior
consent (which consent shall not, subject to Landlord’s rights under this
Section, be unreasonably withheld or delayed), and that the assignee or
subtenant will comply with all of the provisions of this Lease and that
Landlord may enforce the Lease provisions directly against such assignee
or subtenant. If this Lease is assigned, whether or not in violation of the
terms and provisions of this Lease, Landlord may collect Rent from the
assignee. If the Premises, or any part thereof, is sublet, Landlord may,
upon a default under this Lease, collect rent from the subtenant. In either
event, Landlord may apply the amount collected from the assignee or
subtenant to Tenant’s obligation to pay Rent under this Lease.


 


d)                                     Events Constituting an Assignment or Sublease. For
purposes of this Section provided the following transactions do not result
in a decrease in the Tenant’s “net worth”, the following events shall not be
deemed an assignment or sublease, as appropriate: (i) the issuance of
equity interests (whether stock, partnership interests or otherwise) in Tenant,
or any assignee or subtenant, if applicable, or any entity controlling any of
them, to any person or group of related persons, in a single transaction or a series of
related or unrelated transactions, such that, following such issuance, such
person or group shall have Control (as defined below) of Tenant, or any
assignee or subtenant, if applicable; or (ii) a transfer of Control of
Tenant, or any assignee or subtenant, if applicable, or any entity controlling
any of them, in a single transaction or a series of related or unrelated
transactions (including, without limitation, by consolidation, merger,
acquisition or reorganization).


 


(e)                                  Processing Expenses. Tenant shall pay to Landlord
the amount of Landlord’s cost of processing each proposed assignment or
subletting including without limitation, reasonable attorneys’ and other
professional fees, and the cost of Landlord’s administrative, accounting and
clerical time (collectively, “Processing Costs”), and the amount of all
reasonable direct and indirect expense incurred by Landlord arising from the
assignee or sublessee taking occupancy of the subject space, including without
limitation, reasonable costs of freight elevator operation for moving of
furnishings and trade fixtures, security service, janitorial and cleaning
service, rubbish removal service, costs of changing signage, and costs of
changing locks and making new keys (collectively, “Occupancy Costs”). Notwithstanding
anything to the contrary herein, Landlord shall not be required to process any
request for Landlord’s consent to an assignment or subletting until Tenant has
paid to Landlord Three Hundred Dollars ($300.00), or Landlord’s estimate of the
Processing Costs and the Occupancy Costs, whichever is greater.


 


(f)                                    Consideration to Landlord. In the event of
any assignment or sublease, whether or not requiring Landlord’s consent,
Landlord shall be entitled to receive, as Additional Rent, one-half (1/2) of
any consideration, including without limitation, payment for leasehold
improvements paid for by Landlord, paid by the assignee or subtenant for the
assignment or sublease and, in the case of sublease, the excess of the amount
of rent paid for the sublet space by the subtenant over the total amount of
Minimum Monthly Rent under Section 5 and Additional Rent under Sections 7
and 9. Upon Landlord’s request, Tenant shall assign to Landlord all amounts to
be paid to Tenant by the assignee or subtenant and shall direct such assignee
or subtenant to pay the same directly to Landlord. If there is more than one
sublease under this Lease, the amounts (if any) to be paid by Tenant to
Landlord pursuant to the preceding sentence shall be separately calculated for
each sublease and amounts due Landlord with regard to any one sublease may not
be offset against rental and other consideration due under any other sublease.


 


(g)                                 Procedures. If Tenant desires to assign
this Lease or any interest therein or sublet all or part of the Premises,
Tenant shall give Landlord written notice thereof designating the space
proposed to be sublet and the terms proposed. If the proposed sublease covers
the entire Premises and if the term of the proposed sublease (including any
renewal terms) will expire during the final six (6) months of the Term (or
if Tenant has exercised a renewal option, if any, then during the final six (6) months
of the subject renewal period), then Landlord shall have the prior right and
option (to be exercised by written notice to Tenant given within fifteen (15)
days after receipt of Tenant’s notice) (i) to terminate this Lease, or (ii) to
approve Tenant’s proposal to sublet conditional upon Landlord’s subsequent
written approval of the specific sublease obtained by Tenant and the specific
subtenant named therein. If Landlord exercises its option described in (ii) above,
Tenant shall submit to Landlord for Landlord’s written approval Tenant’s
proposed sublease agreement (in which the proposed subtenant shall be named)
together with a current reviewed or audited financial statement prepared by a
certified public accountant for such proposed subtenant and a credit report on
such proposed subtenant prepared by a recognized credit reporting agency. If
Landlord fails to exercise its option to terminate this Lease, this shall not
be construed as or constitute a waiver of any of the provisions of this Section.
If Landlord exercises its option to terminate this Lease, Landlord shall not
have any liability for any real estate brokerage commission(s) or with respect
to any of the costs and expenses that Tenant may have incurred in
connection with its proposed subletting, and Tenant agrees to hold Landlord
harmless from and against any and all claims (including, without limitation,
claims for commissions) arising from such proposed subletting. Landlord’s
foregoing rights and options shall continue throughout the Term. For purposes
of this Section, a proposed assignment of this Lease in whole or in part shall
be deemed a proposed subletting of such space.


 


(h)                                 Documentation. No permitted subletting by
Tenant shall be effective until there has been delivered to Landlord a counterpart of
the sublease in which the subtenant agrees to be and remain jointly and
severalty liable with Tenant for the payment of Rent pertaining to the sublet
space and for the performance of all of the terms and provisions of this Lease;
provided, however, that the subtenant shall be liable to Landlord for rent only
in the amount set forth in the sublease. No permitted assignment shall be
effective unless and until there has been delivered to Landlord a counterpart of
the assignment in which the assignee assumes all of Tenant’s obligations under
this Lease


 


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arising on or after the date of the assignment. The failure or refusal
of a subtenant or assignee to execute any such instrument shall not release or
discharge the subtenant or assignee from its liability as set forth above.


 


(I)                                    No Merger. Without limiting any of the
provisions of this Section, if Tenant has entered into any subleases of any
portion of the Premises, the voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation by Landlord and Tenant, shall not work a
merger, and shall, at the option of Landlord, terminate all or any existing
subleases or subtenancies or, at the option of Landlord, operate as an
assignment to Landlord of any or all such subleases or subtenancies.


 


26.                                 Default. The occurrence of any of the
following shall constitute a default by Tenant under this Lease:


 


(a)                                  Failure to Pay Rent. Failure to pay Rent
when due, if the failure continues for a period of three (3) days after
notice of such default has been given by Landlord to Tenant.


 


(b)                                 Failure to Comply with Rules and Regulations. Failure
to comply with the Rules and Regulations, if the failure continues for a
period of twenty-four (2d) hours after notice of such default is given by
Landlord to Tenant. If the failure to comply cannot reasonably be cured within
twenty-four (24) hours, then Tenant shall not be in default under this Lease if
Tenant commences to cure the failure to comply within twenty-four (24) hours
and diligently and in good faith continues to cure the failure to comply.


 


(c)                                  Other Defaults. Failure to perform any
other provision of this Lease, if the failure to perform is not cured
within thirty (30) days after notice of such default has been given by Landlord
to Tenant. If the default cannot reasonably be cured within thirty (30) days,
then Tenant shall not be in default under this Lease if Tenant commences to
cure the default within thirty (30) days and diligently and in good faith
continues to cure the default.


 


(d)                                 Appointment of Trustee or Receiver. The
appointment of a trustee or receiver to take possession of substantially all of
the Tenants assets located at the Premises or of Tenant’s interest in this
Lease, where possession is not restored to Tenant within sixty (60) days; or
the attachment, execution or other judicial seizure of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease,
where such seizure is not discharged within sixty (60) days.


 


27.                                 Remedies. If Tenant commits a default,
Landlord shall have the following alternative remedies, which are in addition to
any remedies now or later allowed by law:


 


(a)                                  Maintain Lease In Force. Maintain this
Lease in full force and effect and recover the Rent and other monetary charges
as they become due, without terminating Tenant’s right to possession,
irrespective of whether Tenant shall have abandoned the Premises. If Landlord
elects to not terminate the Lease, Landlord shall have the right to attempt to
re-let the Premises at such rent and upon such conditions and for such a term,
and to do all acts necessary to maintain or preserve the Premises as Landlord
deems reasonable and necessary without being deemed to have elected to
terminate the Lease including removal of all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. In the event any such
re-letting occurs, this Lease shall terminate automatically upon the new Tenant
taking possession of the Premises. Notwithstanding that Landlord fails to elect
to terminate the Lease initially, Landlord at any time during the term of this
Lease may elect to terminate this Lease by virtue of such previous default
of Tenant.


 


(b)                                 Terminate Lease. Terminate Tenant’s right
to possession by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant’s default including without limitation
thereto, the following:  (i) The
worth at the time of award of any unpaid Rent which had been earned at the time
of such termination; plus (ii) the worth at the time of award of the
amount by which the unpaid Rent which would have been earned after termination
until the time or award exceeds the amount or such rental loss that Tenant
proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of such rental loss that is
proved could be reasonably avoided; plus (iv) any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant’s
failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom. Including
without limitation, any costs or expenses incurred by Landlord in (A) retaking
possession of the Premises, including reasonable attorney fees therefor, (B) maintaining
or preserving the Premises after such default, (C) preparing the Premises
for reletting to a new tenant, including repairs or necessary alterations to
the Premises for such reletting, (D) leasing commissions incident to
reletting to a new tenant, and (E) any other costs necessary or
appropriate to relet the Premises; plus (v) at Landlord’s election, such
other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable state law. The amounts described in
clauses (C) and (D) shall be amortized over the term of the new
tenant’s lease, and Tenant shall only be liable to Landlord for the portion of
such amounts attributable to the period prior to the Expiration Date of this
Lease set forth in Section 1. Upon any such re-entry Landlord shall have
the right to make any reasonable repairs, alterations or modifications to the
Premises, which Landlord in its sole discretion deems reasonable and necessary.
As used in Subsection 27(b)(i) the “worth at the time of award” is
computed by allowing interest at the rate of fifteen percent (15%) per year
from the date of default. As used in Subsections 27(b)(ii) and 27(b)(iii) the
“worth at the time of award” is computed by discounting such amounts at the
discount rate of eight percent (8%) per year.


 


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28.                                 Bankruptcy.


 


(a)                                  Assumption of Lease. If Tenant becomes a
Debtor under Chapter 7 of the Bankruptcy Code (“Code”) or a petition for
reorganization or adjustment of debts is filed concerning Tenant under Chapters
11 or 13 of the Code, or a proceeding is filed under Chapter 7 of the Code and
is transferred to Chapters 11 or 13 of the Code, the Trustee or Tenant, as
Debtor and as Debtor-In-Possession, may not elect to assume this Lease
unless at the time of such assumption the Trustee or Tenant has:


 


(i)                                     Cured
all defaults under the Lease and paid all sums due and owing under the Lease or
provided Landlord with “Adequate Assurance” (as defined below) that:  (I) within ten (10) days from the date
of such assumption, the Trustee or Tenant will completely pay all sums due and
owing under this Lease and compensate Landlord for any actual pecuniary loss
resulting from any existing default or breach of this Lease, including without
limitation, Landlord’s reasonable costs, expenses, accrued interest, and
attorneys’ fees incurred as a result of the default or breach; (II) within
twenty (20) days from the date of such assumption, the Trustee or Tenant will
cure all non-monetary defaults and breaches under this Lease, or, if the nature
of such non-monetary defaults is such that more than twenty (20) days are
reasonably required for such cure, that the Trustee or Tenant will commence to
cure such non-monetary defaults within twenty (20) days and thereafter diligently
prosecute such cure to completion; and (III) the assumption will be subject to
all of the provisions of this Lease.


 


(ii)                                  For
purposes of this Section, Landlord and Tenant acknowledge that, in the context
of a bankruptcy proceeding involving Tenant, at a minimum, “Adequate Assurance”
shall mean: (i) the Trustee or Tenant has and will continue to have
sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that the Trustee or Tenant will have
sufficient funds to fulfill the obligations of Tenant under this Lease; (ii) the
Bankruptcy Court shall have entered an Order segregating sufficient cash
payable to Landlord and/or the Trustee or Tenant shall have granted a valid and
perfected first lien and security interest and/or mortgage in or on property of
Trustee or Tenant acceptable as to value and kind to Landlord, to secure to
Landlord the obligation of the Trustee or Tenant to cure the monetary and/or
non-monetary defaults and breaches under this Lease within the time periods set
forth above: and (iii) the Trustee or Tenant, at the very minimum, shall
deposit a sum equal to two (2) month’s Minimum Monthly Rent to be held by
Landlord (without any allowance for interest thereon) to secure Tenant’s future
performance under the Lease.


 


(b)                                 Assignment of Lease. If the Trustee or
Tenant has assumed the Lease pursuant to the provisions of this Section for
the purpose of assigning Tenant’s interest hereunder to any other person or
entity, such interest may be assigned only after the Trustee, Tenant or
the proposed assignee have complied with all of the terms, covenants and
conditions of this Lease, including. without limitation, those with respect to
Additional Rent. Landlord and Tenant acknowledge that such terms, covenants and
conditions are commercially reasonable in the context of a bankruptcy
proceeding of Tenant. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall upon request execute
and deliver to Landlord an instrument confirming such assignment.


 


(c)                                  Adequate Protection. Upon the filing of a
petition by or against Tenant under the Code, Tenant, as Debtor and as
Debtor-In-Possession, and any Trustee who may be appointed agree to
adequately protect Landlord as follows:  (i) to
perform each and every obligation of Tenant under this Lease until such
time as this Lease is either rejected or assumed by Order of the Bankruptcy
Court; (ii) to pay all monetary obligations required under this Lease,
including without limitation, the payment of Minimum Monthly Rent, Tenant’s
Share of Real Property Taxes, Tenant’s Share of Operating Costs and any other
sums payable by Tenant to Landlord under this Lease which is considered
reasonable compensation for the use and occupancy of the Premises; (iii) provide
Landlord a minimum of thirty (30) days prior written notice, unless a shorter
period is agreed to in writing by the parties, of any proceeding relating to
any assumption of this Lease or any intent to abandon the Premises, which
abandonment shall be deemed a rejection of this Lease; and (iv) to perform to
the benefit of Landlord as otherwise required under the Code. The failure of
Tenant to comply with the above shall result in an automatic rejection of this
Lease.


 


29.                                 Limitation of Actions. Any claim, demand,
right or defense of any kind by Tenant which is based upon or arises in
connection with this Lease or the negotiations prior to its execution, shall be
barred unless Tenant commences an action thereon, or interposes in a legal
proceeding a defense by reason thereof, within one (1) year after the date
Tenant actually becomes aware of the act or omission on which such claim,
demand, right or defense is based.


 


30.                                 Limitation on Landlord’s Liability. Anything
in this Lease to the contrary notwithstanding, covenants, undertakings and
agreements herein made on the part of Landlord are made and intended not
as personal covenants, undertakings and agreements or for the purpose of
binding Landlord personally or the assets of Landlord except Landlord’s
interest in the Property, but are made and intended for the purpose of binding
only the Landlord’s interest in the Property. No personal liability or personal
responsibility is assumed by, nor shall at any time be asserted or enforceable
against Landlord or its partners and their respective heirs, legal representatives,
successors and assigns on account of this Lease or on account of any covenant,
undertaking or agreement of Landlord contained in this Lease.


 


31.                                 Signs. Tenant shall not have the right to
place, construct or maintain any sign, advertisement, awning, banner or other
exterior decoration without Landlord’s consent. Any sign that Tenant has
Landlord’s consent to place, construct and maintain shall comply with all laws,
and Tenant shall obtain any approval required by such laws. Landlord makes no
representation with respect to Tenant’s ability to obtain such approval.


 


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32.                                 Landlord’s Right to Enter the Premises. Landlord
and its authorized representatives shall have the right to enter the Premises
at reasonable times and upon reasonable prior notice (except in an emergency
when no such notice shall be required) for any of the following purposes:  (i) to determine whether the Premises
are in good condition and whether Tenant is complying with its obligations
under this Lease, (ii) to do any maintenance; to make any restoration to
the Premises or the Building that Landlord has the right or the obligation to
perform, and to make any improvements to the Premises or the Building that
Landlord deems necessary, (iii) to serve, post or keep posted any notices
required or allowed under the provisions of this Lease, (iv) to post any
ordinary “For Sale” signs at any time during the Term and to post any ordinary “For
Lease” signs during the last ninety (90) days of the Term, and (v) to show
the Premises to prospective brokers, agents, purchasers, tenants or lenders, at
any time during the Term. Landlord acknowledges that Tenant is subject to HIPAA
regulations covering patients confidentiality and will make best efforts not to
compromise this law with regard to access.


 


Landlord shall not be liable in any manner for any
inconvenience, annoyance, disturbance, loss of business, nuisance, or other
damage arising out of Landlord’s entry on the Premises as provided in this Section,
except damage resulting from the grossly negligent or willful acts of Landlord
or its authorized representatives. Tenant shall not be entitled to an abatement
or reduction of Rent if Landlord exercises any right reserved in this Section. Landlord
shall conduct its activities on the Premises as allowed in this Section in
a reasonable manner so as to cause minimal inconvenience, annoyance or
disturbance to Tenant.


 


33.                                 Subordination. This Lease is and shall be
prior to any mortgage recorded after the date of this Lease affecting the
Property. If, however, a lender requires that this Lease be subordinate to any
mortgage, this Lease shall be subordinate to that mortgage if Landlord first
obtains from the lender a written agreement that provides substantially the
following:


 


“As long as Tenant performs its obligations under this
Lease, no foreclosure of, deed given to lieu of foreclosure of, or sale under
the mortgage, and no steps or procedures taken under the mortgage, shall affect
Tenant’s rights under this Lease.”


 


Tenant shall attorn to any purchaser at any
foreclosure sale, or to any grantee or transferee designated in any deed given
in lieu of foreclosure. Tenant shall execute the written agreement and any
other documents required by the lender to accomplish the purposes of this
Section.


 


34.                                 Right to Estoppel Certificates. Tenant,
within ten (10) business days after notice from Landlord, shall execute
and deliver to Landlord, in recordable form, a certificate stating that this
Lease is unmodified and in full force and effect, or in full force and effect
as modified and stating the modifications. The certificate shall also state the
amount of Minimum Monthly Rent, the dates to which Rent has been paid in
advance, and the amount of any Prepaid Rent or Security Deposit and such other
matters as Landlord may reasonably request. Failure to deliver the
certificate within such ten (10) business day period shall be conclusive
upon Tenant for the benefit of Landlord and any successor to Landlord, that
this Lease is in full force and effect and has not been modified except as may be
represented by Landlord requesting the certificate.


 


35.                                 Transfer of Landlord’s Interest. If
Landlord sells or transfers the Property, Landlord, on consummation of the sale
or transfer, shall be released from any liability thereafter accruing under
this Lease if Landlord’s successor has assumed in writing, for the benefit of
Tenant, Landlord’s obligations under this Lease. If any Security Deposit or
Prepaid Rent has been paid by Tenant, Landlord shall transfer such Security
Deposit or Prepaid Rent to Landlord’s successor and on such transfer Landlord
shall be discharged from any further liability with respect to such Security
Deposit or Prepaid Rent.


 


36.                                 Attorneys’ Fees. If either party shall
bring any action for relief against the other party, declaratory or otherwise,
arising out of this Lease, including any action by Landlord for the recovery of
Rent or possession of the Premises, the losing party shall pay the successful
party a reasonable sum for attorneys’ fees which shall be deemed to have
accrued on the commencement of such action and shall be paid whether or not
such action is prosecuted to judgment.


 


37.                                 Surrender; Holding Over.


 


(a)                                  Surrender. On expiration or ten (10) days
after termination of the Term, Tenant shall surrender the Premises and all
Tenant’s Improvements and alterations to Landlord broom clean and in good
condition. Tenant shall remove all of its trade fixtures and personal property,
which personal property specifically includes all cabling installed in the
Premises by Tenant (unless Tenant has received consent from Landlord that such
cabling may be surrendered with and remain in the Premises), within the
time period stated in this Section. Tenant, at its cost, shall perform all
restoration made necessary by, and repair any damage to the Premises caused by,
the removal of its trade fixtures, personal property and signs to Landlord’s
reasonable satisfaction within the time period stated in this Section. Landlord
may, at its election, retain or dispose of in any manner any of Tenant’s trade
fixtures or personal property that Tenant does not remove from the Premises on
expiration or within ten (10) days after termination of the Term as
allowed or required by the provisions of this Lease by giving ten (10) days
notice to Tenant. Title to any such trade fixtures and personal property that
Landlord elects to retain or dispose of on expiration of such ten (10) day
period shall vest in Landlord. Tenant waives all claims against Landlord for
any damage to Tenant resulting from Landlord’s


 


15

















 


retention or disposition of any such trade fixtures and personal
property. Tenant shall be liable to Landlord for Landlord’s reasonable costs
for storing, removing and disposing of Tenant’s trade fixtures and personal
property. If Tenant fails to surrender the Premises to Landlord on expiration
or ten (10) days after termination of the Term as required by this
Section, Tenant shall pay Landlord Rent in an amount equal to 150% of the
Minimum Monthly Rent applicable for the month immediately prior to the
expiration or termination of the Term, or the amount provided by law, whichever
is greater, for the entire time Tenant thus remains in possession and Tenant
shall be liable for, shall indemnify Landlord against and shall hold Landlord
harmless from all damages resulting from Tenant’s failure to timely surrender
the Premises, including without limitation, (i) any Rent payable by, or
any damages claimed by, any prospective tenant of any part or all of the
Premises, and (ii) Landlord’s damages resulting from such prospective
tenant rescinding or refusing to enter into the prospective lease of part or
all of the Premises by reason of Tenant’s failure to timely surrender the
Premises. If Tenant, without Landlord’s prior consent, remains in possession of
the Premises after expiration or termination of the Term, or after the date in
any notice given by Landlord to Tenant terminating this Lease, such possession
by Tenant shall be deemed to be a tenancy at sufferance terminable at any time
by either party.


 


(b)                                 Holding Over with Landlord’s Consent. If
Tenant, with Landlord’s prior consent, remains in possession of the Premises
after expiration or termination of the Term, or after the date in any notice
given by Landlord to Tenant terminating this Lease, such possession by Tenant
shall be deemed to be a month-to-month tenancy terminable by Landlord by a
notice given to Tenant at least twenty (20) days prior to the end of any such
monthly period or by Tenant by a notice given to Landlord at least thirty (30)
days prior to the end of any such monthly period. During such month-to-month
tenancy, Tenant shall pay Rent in the amount then agreed to in writing by Landlord
and Tenant. All provisions of this Lease, except those pertaining to term,
shall apply to the month-to-month tenancy.


 


38.                                 Agency Disclosure; Agent/Broker Disclosure; Broker.


 


(a)                                  Agency Disclosure. Martin Smith Inc hereby
discloses that it represents the Landlord and Colliers International represents
the Tenant in this transaction.


 


(b)                                 Agent/Broker Disclosure. MSI 83 King L.L.C.
is a Washington limited liability company composed of H. Martin Smith, III,
as the managing member and other individuals as members. The managing member
and several of the members are licensed real estate brokers and/or real estate
agents in the State of Washington.


 


(c)                                  Broker. Landlord and Tenant each represent
to the other that neither is represented by any broker, agent or finder with
respect to this Lease in any manner, except the Broker(s). The commission due
to the Broker(s) shall be paid by Landlord pursuant to a separate agreement. Each
party agrees to indemnify and hold the other party harmless from and against
any and all liability, costs, damages, causes of action or other proceedings
instituted by any broker, agent or finder, licensed or otherwise. claiming
through, under or by reason of the conduct of the indemnifying party in any
manner whatsoever in connection with this Lease. If Tenant engages a broker,
agent or finder to represent Tenant in connection with any renewal of this
Lease, then the commission or any fee of such broker, agent or finder shall be
paid by Tenant.


 


39.                                 Interest on Unpaid Rent. In addition to the
Late Charge as provided in Section 5(b), Rent not paid when due shall bear
interest from the date due until paid at the rate of fifteen percent (15%) per
year, or the maximum legal rate of interest, whichever is less.


 


40.                                 Landlord’s Option to Relocate Tenant. [This
Section is intentionally omitted.]


 


41.                                 Definitions. As used in this Lease, the
following words and phrases, whether or not capitalized, shall have the
following meanings:


 


(a)                                  “Additional
Rent” means pass-throughs of increases in Operating Costs and Taxes, as defined
in this Lease, and other monetary sums to be paid by Tenant to Landlord under
the provisions of this Lease.


 


(b)                                 “Alteration”
means any addition or change to, or modification of, the Premises made by
Tenant, including without limitation, fixtures, but excluding trade fixtures as
defined in this Section.


 


(c)                                  “Authorized
representatives” means any officer, agent, employee, independent contractor or
invitee of either party.


 


(d)                                 “Award”
means all compensation, sums or anything of value awarded, paid or received on
a total or partial condemnation.


 


(e)                                  “Common
Areas” means all areas outside the Premises and within the Building or on the
Land that are provided and designated by Landlord from time to time for the
general, non-exclusive use of Landlord. Tenant and other tenants of the
Building and their authorized representatives, including without limitation,
common entrances, lobbies, corridors, stairways and stairwells, elevators,
escalators, public restrooms and other public portions of the Building.


 


16

















 


(f)                                    “Condemnation”
means the exercise of any governmental power, whether by legal proceedings or
otherwise, by a condemnor and a voluntary sale or transfer by Landlord to any
condemnor, either under threat of condemnation or while legal proceedings for
condemnation are pending.


 


(g)                                 “Condemnor”
means any pubic or quasi-public authority or entity having the power of
condemnation.


 


(h)                                 “Damage”
means any injury, deterioration, or loss to a person, property, the Premises or
the Building caused by another person’s acts or omissions or by Acts of God. Damage
includes death.


 


(i)                                     “Damages”
means a monetary compensation or indemnity that can be recovered in the courts
by any person who has suffered damage to his person, property or rights through
another’s acts or omissions.


 


(j)                                     “Date
of taking” means the date the condemnor has the right to possession of the
property being condemned.


 


(k)                                  “Encumbrance”
means any mortgage, deed of trust or other written security device or agreement
affecting the Premises, and the note or other obligation secured by it, that
constitutes security for the payment of a debt or performance of an obligation.


 


(l)                                     “Expiration”
means the coming to an end of the time specified in the Lease as its duration,
including any extension of the Term.


 


(m)                               “Force
majeure” means strikes, lockouts, labor disputes, shortages of labor or
materials, fire or other casualty, Acts of God or any other cause beyond the
reasonable control of a party.


 


(n)                                 “Good
condition” means the good physical condition of the Premises and each portion
of the Premises, including without limitation, all of the Tenant Improvements,
Tenant’s alterations, Tenant’s trade fixtures, Tenant’s Personal Property, all as
defined in this Section, signs, walls, interior partitions, windows, window
coverings, glass, doors, carpeting and resilient flooring, ceiling tiles,
plumbing fixtures and lighting fixtures, all of which shall be in conformity
with building standard finishes, ordinary wear and tear, damage by fire or
other casualty and taking by condemnation excepted.


 


(o)                                 “Hazardous
substances” means any industrial waste, toxic waste, chemical contaminant or
other substance considered hazardous, toxic or lethal to persons or property or
designated as hazardous, toxic or lethal to persons or property under any laws,
including without limitation, asbestos material or materials containing
asbestos.


 


(p)                                 “Hold
harmless” means to defend and indemnify from all liability, losses, penalties,
damages as defined in this Section, costs, expenses (including without
limitation, attorneys’ fees), causes of action, claims or judgments arising out
of or related to any damage, as defined in this Section, to any person or
property.


 


(q)                                 “Law”
means any constitution, statute, ordinance, regulation, rule, resolution,
judicial decision, administrative order or other requirement of any federal,
state, county, municipal or other governmental agency or authority having
jurisdiction over the parties or the Property, or both, in effect either at the
time of execution of this Lease or at any time during the Term, including
without limitation, any regulation or order of a quasi-official entity or body
(e.g., board of fire examiners or public utilities) and any legally effective
conditions, covenants or restrictions affecting the Property.


 


(r)                                    “Lender”
means the mortgagee, beneficiary, secured party or other holder of an
encumbrance, as defined in this Section.


 


(s)                                  “Lien”
means a charge imposed on the Premises by someone other than Landlord, by which
the Premises are made security for the performance of an act.


 


(t)                                    “Maintenance”
means repairs, replacement, repainting and cleaning.


 


(u)                                 “Mortgage”
means any deed of trust, mortgage or other written security device or agreement
affecting the Premises, and the note or other obligation secured by it, that
constitutes security for the payment of a debt or performance of an obligation.


 


(v)                                 “Mortgagee”
means the beneficiary under a deed of trust or mortgagee under a mortgage.


 


(w)                               “Mortgagor”
means the grantor or trustor under a deed of trust or mortgagor under a
mortgage.


 


(x)                                   “Operating
Costs” means all costs of any kind incurred by Landlord in operating, cleaning,
equipping, protecting, lighting, repairing, replacing, heating,
air-conditioning, maintaining and insuring the Property. Operating Costs shall
include, without limitation, the following costs:  (i) salaries, wages, bonuses and other
compensation (including hospitalization, medical, surgical, retirement plan,
pension plan, union dues, life insurance, including group life insurance,
welfare and other fringe benefits, and vacation, holidays and other paid
absence


 


17

















 


benefits) relating to employees of Landlord or its agents directly
engaged in the operation, repair, or maintenance of the Property; (ii) payroll,
social security, workers’ compensation, unemployment and similar taxes with
respect to such employees of Landlord or its authorized representatives, and
the cost of providing disability or other benefits imposed by law or otherwise,
with respect to such employees; (iii) uniforms (including the cleaning,
replacement and pressing thereof) provided to such employees; (iv) premiums
and other charges incurred by Landlord with respect to fire, earthquake, other
casualty, all risk, rent loss and liability insurance, any other insurance as
is deemed necessary or advisable in the reasonable judgment of Landlord and,
after the Base Year, costs of repairing an insured casualty to the extent of
the deductible amount under the applicable insurance policy; (v) water
charges and sewer rents or fees; (vi) license, permit and inspection fees;
(vii) sales, use and excise taxes on goods and services purchased by
Landlord in connection with the operation, maintenance or repair of the
Property and Building systems and equipment; (viii) telephone, facsimile,
messenger, express delivery service, postage, stationery supplies and other
expenses incurred in connection with the operation, management, maintenance, or
repair of the Property; (ix) property management fees and expenses; (x)
repairs to and physical maintenance of the Property, including building systems
and appurtenances thereto and normal repair and replacement of worn-out
equipment, facilities and installations, but excluding the replacement of major
building systems (except to the extent provided in (xvi) and (xvii) below);
(xi) janitorial, window cleaning, security, extermination, water treatment,
rubbish removal, plumbing and other services and inspection or service
contracts for elevator, electrical, HVAC, mechanical and other building
equipment and systems or as may otherwise be necessary or proper for the
operation or maintenance of the Property; (xii) supplies, tools, materials, and
equipment used in connection with the operation, maintenance or repair of the
Property; (xiii) accounting, legal and other professional fees and expenses;
(xiv) painting the exterior or the public or common areas of the Building and the
cost of maintaining the sidewalks, landscaping and other common areas of the
Property; (xv) all costs and expenses for electricity, chilled water, air
conditioning, water for heating, gas. fuel, steam, heat, lights, power and
other energy related utilities required in connection with the operation,
maintenance and repair of the Property; (xvi) the cost of any improvements
which Landlord elects to capitalize made by Landlord to the Property during the
Term in compliance with the requirements of any laws or regulation or insurance
requirement with which the Property was not required to comply during the Base
Year, as reasonably amortized by Landlord, with interest on the unamortized
balance at the rate of twelve percent (12%) per year, or the maximum legal rate
of interest, whichever is less; (xvii) the cost of any improvements which
Landlord elects to capitalize made by Landlord to the Property during the term
of this Lease for the protection of the health and safety of the occupants of
the Property or that are intended to reduce other Operating Costs, as
reasonably amortized by Landlord, with interest on the unamortized balance at
the rate of twelve percent (12%) per year, or the maximum legal rate of
interest, whichever is less; (xviii) a reasonable reserve for repair or
replacement of equipment used in the maintenance or operation of the Property,
(xix) the cost of furniture, draperies, carpeting, landscaping and other
customary and ordinary items of personal property (excluding paintings,
sculptures and other works of art) provided by Landlord for use to common areas
of the Building or in the Building office (to the extent that such Building
office is dedicated to the operation and management of the Property), such
costs to be amortized over the useful life thereof; (xx) Building office rent
or rental value; and (xxi) all other costs which, in accordance with generally
sound accounting and management principles used by Landlord, as applied to the
maintenance and operation of office and/or retail buildings, are property
chargeable to the operation and maintenance of the Property.


 


Operating Costs shoe not include the following:  (i) depreciation on the Building; (ii) debt
service; (iii) capital improvements, except as otherwise provided in
clauses (xvi) and (xvii) above, (iv) rental under any ground or underlying
leases; (v) Real Property Taxes, (vi) attorney’s fees and expenses
incurred in connection with lease negotiations with prospective tenants, or
default or enforcement proceedings with respect to defaulting tenants; (vii) the
cost of tenant improvements; (viii) advertising expenses; or (ix) real
estate broker’s or other leasing commissions.


 


(y)                                 “Parties” means Landlord and
Tenant.


 


(z)                                   “Party”
means Landlord or Tenant.


 


(aa)                            “Person”
means one or more human beings, or legal entities or other artificial persons,
including without limitation, partnerships, corporations, trusts, estates,
associations and any combination of human beings and legal entities.


 


(bb)                          “Property”
means the Premises, Building and Land.


 


(cc)                            “Provision”
means any term, agreement, covenant, condition, clause, qualification,
restriction, reservation, or other stipulation in the Lease that defines or
otherwise controls, establishes, or limits the performance required or
permitted by either party.


 


(dd)                          “Real
Property Taxes” means any form of tax, assessment, general assessment,
special assessment, lien, levy, bond obligation, license fee, license tax, tax
or excise on rent, or any other levy, charge or expense, together with any
statutory interest thereon, (individually and collectively, the “Impositions”),
now or hereafter imposed or required by any authority having the direct or
indirect power to tax, including any federal, state, county or city government
or any school, agricultural, lighting, drainage or other improvement or special
assessment district thereof, (individually and collectively, the “Governmental
Agencies”) on any interest of Landlord or Tenant or both (including any legal
or equitable interest of Landlord or its mortgagee, if any) in the Premises or
the Property, including without limitation:


 


18

















 


(i)                                     any
Impositions upon, allocable to or measured by the area of the Premises or the
Property, or the rental payable hereunder, including without limitation, any
gross income tax or excise tax levied by any Governmental Agencies with respect
to the receipt of such rental; or


 


(ii)                                  any
Impositions upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair or use or occupancy by Tenant or
the Premises or any portion thereof; or


 


(iii)                               any Impositions upon or
with respect to the building equipment and personal property used in connection
with the operation and maintenance of the Property or upon or with respect to
the furniture, fixtures and decorations in the common areas or the Property.


 


(iv)                              any
Impositions upon this Lease or this transaction or any document to which Tenant
is a party creating or transferring an interest or an estate fn the Premises;
or


 


(v)                                 any
Impositions by Governmental Agencies (whether or not such Impositions
constitute tax receipts) in substitution, partially or totally, of any
Impositions now or previously included within the definition of real property
taxes, including those calculated to increase tax increments to Governmental
Agencies and to pay for such services as fire protection, water drainage,
street, sidewalk and road maintenance, refuse removal or other governmental
services formerly provided without charge to property owners or occupants; or


 


(vi)                              any
and all costs, including without limitation, the fees of attorneys, tax
consultants and experts, incurred by Landlord should Landlord elect to
negotiate or contest the amount of such real property taxes in formal or
informal proceedings before the Governmental Agency imposing such real property
taxes; provided, however, that real property taxes shall in no event include
Landlord’s general income, inheritance, estate, gift or franchise taxes.


 


(ee)                            “Rent”
means Minimum Monthly Rent, as adjusted from time to time under this Lease,
Additional Rent, Prepaid Rent, Security Deposit, all as defined in this
Section, payments of Tenant’s Share of increases in Real Property Taxes and
Operating Costs, Insurance, utilities and other charges payable by Tenant to
Landlord.


 


(ff)                                “Rentable
square feet of space” as to the Premises or the Building, as the case may be,
means the number of usable square feet of space times the applicable R/U
Ratio(s) as defined in this Section.


 


(gg)                          “Restoration”
means the reconstruction, rebuilding, rehabilitation and repairs that are
necessary to return damaged portions of the Premises and the Building to
substantially the same physical condition as they were in immediately before
the damage.


 


(hh)                          “R/U
Ratio” means the rentable area of a floor of the Building divided by the usable
area of such floor, both of which shall be computed in accordance with American
National Standard Z65.1-1996 Method of Measuring Floor Space in Office
Buildings as published by the Building Owners and Managers Association, as
amended from tine to time.


 


(ii)                                  “Substantially
complete” or “substantially completed” or “substantial completion” means the
completion of Landlord’s construction obligation, subject to completion or
correction of “punch list” items, that is, minor items of incomplete or
defective work or materials or mechanical maladjustments that are of such a
nature that they do not materially interfere with or impair Tenant’s use of the
Premises for the Permitted Use.


 


(jj)                                  “Successor”
means assignee, transferee, personal representative, heir, or other persons or
entity succeeding lawfully, and pursuant to the provisions of this Lease, to
the rights or obligations of either party.


 


(kk)                            “Tenant
Improvements” means (i) the improvements and alterations set forth in Exhibit C,
(ii) window coverings, lighting fixtures, plumbing fixtures, cabinetry and
other fixtures installed by either Landlord or Tenant at any time during the
Term, and (iii) any Improvements and alterations of the Premises made for
Tenant by Landlord at any time during the Term.


 


(ll)                                  “Tenant’s
personal property” means Tenant’s equipment, furniture, and movable property
(including cabling) placed in the Premises by Tenant.


 


(mm)                      “Tenant’s
trade fixtures” means any property attached to the Premises by Tenant.


 


(nn)                          “Termination”
means the ending of the Term for any reason before expiration, as defined in
this Section.


 


(oo)                          “Work”
means the construction of any Improvements or alterations or the performance of
any repairs done by Tenant or caused to be done by Tenant on the Premises as
permitted by this Lease.


 


42.                                 Miscellaneous Provisions.


 


(a)                                  Entire Agreement. This Lease sets forth the
entire agreement of the parties as to the subject matter hereof and supersedes
all prior discussions and understandings between them. This Lease may not
be amended


 


19

















 


or rescinded in any manner except by an instrument in writing signed by
a duly authorized officer or representative of each party hereto.


 


(b)                                 Governing Law. This Lease shall be governed
by, and construed and enforced in accordance with the laws of the State of
Washington.


 


(c)                                  Severability. Should any of the provisions
of this Lease be found to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such provision shall be stricken and the remainder of
this Lease shall nonetheless remain in full force and effect unless striking
such provision shall materially alter the intention of the parties.


 


(d)                                 Jurisdiction. In the event any action is
brought to enforce any of the provisions of this Lease, the parties agree to be
subject to exclusive to in personam
jurisdiction to the Superior Court of the State of Washington in and for the
County of King or in the United States District Court for the Western District
of Washington and agree that in any such action venue shall lie exclusively at
Seattle, Washington.


 


(e)                                  Waiver. No waiver of any right under this
Lease shall be effective unless contained in a writing signed by a duly
authorized officer or representative of the party sought to be charged with the
waiver and no waiver of any right arising from any breach or failure to perform shall
be deemed to be a waiver of any future right or of any other right arising
under this Lease.


 


(f)                                    Captions. Section captions contained
in this Lease are included for convenience only and form no part of
the agreement between the parties.


 


(g)                                 Notices. All notices or requests required
or permitted under this Lease shall be in writing. If given by Landlord such
notices or requests may be personally delivered, delivered by a reputable
express delivery service such as Federal Express or DHL, or sent by certified
mail, return receipt requested, postage prepaid. If given by Tenant such
notices or requests shall be sent by certified mail, return receipt requested,
postage prepaid. Such notices or requests shall be deemed given when so
delivered or mailed, irrespective of whether such notice or request is actually
received by the addressee. All notices or requests to Landlord shall be sent to
Landlord at Landlord’s Address for Notice and all notices or requests to Tenant
shall be sent to Tenant at Tenant’s Address for Notice. Either party may change
the address to which notices shall be sent by notice to the other party.


 


(h)                                 Binding Effect. Subject to the provisions
of Section 25 captioned “Assignment and Subletting”, this Lease shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. No permitted assignment of this Lease or
Tenant’s rights hereunder shall be effective against Landlord unless and until
an executed counterpart of the instrument of assignment shall have been
delivered to Landlord and Landlord shall have been furnished with the name and
address of the assignee. The term “Tenant” shall be deemed to include the
assignee under any such permitted assignment.


 


(i)                                     Effectiveness. This Lease shall not be
binding or effective until property executed and delivered by Landlord and
Tenant.


 


(j)                                     Gender and Number. As used in this Lease,
the masculine shall include the feminine and neuter, the feminine shall include
the masculine and neuter, the neuter shall include the masculine and feminine,
the singular shall include the plural and the plural shall include the
singular, as the context may require.


 


(k)                                  Time of the Essence. Time is of the essence
to the performance of all covenants and conditions in this Lease for which time
is a factor.


 


Dated the date first above first written.


 


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
  MSI 83 King L.L.C., a Washington limited liability

  	
   

  	
  Sound Health
  Solutions, a Washington

  
	
  company

  	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
    /s/ H. Martin Smith

  	
   

  	
  By:

  	
    /s/ Teresa Girolami

  
	
   

  	
    H. Martin Smith, III

  	
   

  	
   

  	
   

  
	
   

  	
    Manager

  	
   

  	
  Its:

  	
     President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  



 


This Lease has been prepared for submission to you and your attorney. Martin
Smith Inc is not authorized to give legal or tax advice. Neither Landlord nor
Martin Smith Inc makes any representations or recommendations as to the legal


 


20

















 


sufficiency, legal effect or tax consequences of this document or any
transaction relating thereto. These are questions for your attorney with whom
you should consult before signing the document to determine whether your legal
rights are adequately protected.


 


[Notary attached]


 


21

















 


RIDER


 


This Rider is part of that certain Lease dated March 31,
2004 by and between MSI 83 King L.L.C., a Washington limited liability company
(“Landlord”), and Sound Health Solutions, a Washington corporation (“Tenant”)
who further agree as follows:


 


43.                                 Parking. Landlord shall provide Tenant with
four (4) unreserved parking stalls located on the surface parking lot of
the Building and/or in the Building garage during the Term of this Lease
(subject to the following termination right on the part of Landlord). Such
perking stalls shall be made available to Tenant during periods of typical
office use from 7:00 a.m. through 6:00 p.m., Monday through Friday
each week. Tenant shall pay as rental for such unreserved parking stalls the
market rate in the location of such parking, which is currently $185.00 per
month per stall. Unreserved parking stalls may also be available on the
surface parking lot and in the Building garage 24 hours per day, Monday through
Friday each week at the market rate of $220.00 per month per stall. From time
to time the charge for such parking shall be increased to the then-prevailing
market rate in the location of such parking. Tenant shall comply with any and
all governmental rules and regulations governing such parking. Landlord may make,
modify, and enforce rules and regulations related to the parking of
automobiles in the Building garage and Tenant agrees to abide by such rules and
regulations. Notwithstanding any statement to the contrary contained elsewhere
in this Section or in this Lease. any time after March 31, 2009
Landlord may terminate all of Tenant’s parking rights if Landlord elects
to demolish the Building garage and/or if Landlord elects to develop (i.e.,
construct Improvements on) some or all of the surface parking lot of the
Building, provided Landlord gives Tenant at least ninety (90) days prior
written notice. In addition, Landlord will assist Tenant to obtain “parking
script” from the parking operator to assist Tenant’s patients with their
parking needs. This script will be purchased at Tenant’s sole cost and expense.


 


44.                                 Option to Extend. So long as Tenant is not
then in default under this Lease, Tenant shall have the option to extend the
Term of this Lease for one (1) additional five (5) year period (the “Additional
Term”). To exercise its option to extend this Lease for the Additional Term,
Tenant must deliver to Landlord a written notice (an “Option Notice”)
exercising its extension option at least nine (9) months (but not more
than fifteen (15) months) prior to the Expiration Date (i.e., the Option Notice
must be received by Landlord between January 1, 2008 and July 31,
2008). The extension option granted to Tenant pursuant to this Section 44
is personal to Tenant and may not be exercised by or for the benefit of
any assignee or sublessee of Tenant. All of the terms and conditions of this
Lease shall apply during the Additional Term except (i) the Minimum
Monthly Rent shall be an amount mutually agreed to by Landlord and Tenant or
determined by arbitration as set forth below; (ii) there shall be no
further options to extend after the commencement of the Additional Term: and (iii) there
shall be no Landlord-provided Tenant Improvements or other Landlord concessions
during the Additional Term. When the rental rate for the Additional Term is
determined, whether by agreement of the parties or pursuant to arbitration as
provided below, Landlord and Tenant shall enter into a lease extension
agreement selling forth the new Minimum Monthly Rent for the Premises and such
other terms as may be applicable. If at the time Tenant delivers the
Option Notice to Landlord, or at any time between such date and the
commencement date of the Additional Term, Tenant defaults under this Lease and
fails to cure its default within the applicable cure period, if any, Landlord may declare
the Option Notice null and void by written notice to Tenant. The Minimum
Monthly Rent for the Additional Term shall be one-twelfth (1/12th) of the then “fair
market rent” (defined below) multiplied by the number of rentable square feet
in the Premises. The term “fair market rent” means the rate per rentable square
foot per year (including increases therein over the Additional Term) that a
new, willing, non-equity tenant would pay in an arms-length transaction for the
Premises, or for comparable space in the Building, if any, or for comparable
space in comparable buildings in the Pioneer Square district of Seattle,
Washington, for leases having a five (5) year term. Landlord and Tenant
agree the fair market rent for the Additional Term shall be determined as
follows:


 


(a)                                  Promptly
after Landlord receives the Option Notice, the parties (or their designated
representatives) shall meet and attempt to agree on the fair market rent for
the Additional Term. If the parties have not agreed on the fair market rent for
the Additional Term within one hundred twenty (120) days after Landlord
receives the Option Notice, then unless otherwise agreed in writing by the
parties, the matter shall be submitted to arbitration in accordance with the
terms of the following paragraphs. The last day of such one hundred twenty
(120) day period (as the same may be extended by the written agreement of
the parties) is referred to in this Lease as the “Arbitration Commencement Date”.


 


(b)                                 Within
fifteen (15) days after the Arbitration Commencement Date, each party shall
provide the other party with written notice (a “Rent Notice”) of its
determination of fair market rent. The matter shall then be submitted for
decision to an arbitrator. The arbitrator shall be a licensed real estate
broker who has been active over the five (5) year period ending on the
Arbitration Commencement Date in the leasing of downtown office properties in
Seattle, Washington. If Landlord and Tenant are unable to agree on the
arbitrator within thirty (30) days after the Arbitration Commencement Date,
each shall select a broker who shall be qualified under the same criteria set
forth above, and so notify the other party in writing within ten (10) days
after the end of such thirty (30) day period. The two brokers so chosen by the
parties shall then appoint the arbitrator within ten (10) days after the
date of the appointment of the last appointed broker. If the two brokers so
chosen by the parties are unable to agree on the arbitrator within such ten (10) day
period, the arbitrator will be appointed by the director (or the equivalent) of
the Seattle office of the American Arbitration Association upon the application
of either party. If either party fails to timely select its broker and so
notify the other party in writing within the foregoing ten (10) day
period, and the other party timely selects its broker, then the broker selected
by the other party shall be the arbitrator for determining fair market rent.


 

















 


(c)                                  Within
thirty (30) days after the selection of the arbitrator pursuant to (b) above,
the arbitrator shall determine fair market rent by selecting either the fair
market rent stated in Landlord’s Rent Notice or the fair market rent stated in
Tenant’s Rent Notice. The arbitrator shall have no power to average such
amounts or to designate a fair market rent other than that specified in either
Landlord’s Rent Notice or Tenant’s Rent Notice,


 


(d)                                 Both
parties may submit any information to the arbitrator for his or her
consideration, with copies to the other party. The arbitrator shall have the
right to consult experts and competent authorities for factual information or
evidence pertaining to the determination of fair market rent. The arbitrator
shall render his or her decision by written notice to each party. The
determination of the arbitrator will be final and binding upon Landlord and
Tenant. The cost of the arbitration (including the charges of the broker
selected by the other party) will be paid by Landlord if the fair market rent
determined by arbitration is the fair market rent specified in Tenant’s Rent
Notice, and by Tenant if the fair market rent determined by Arbitration is the
fair market rent specified in Landlord’s Rent Notice.


 


45.                                 Landlord Option to Terminate. In the event
Tenant exercises Tenant’s Option to Extend pursuant to Section 44 and
remains in the Premises after March 31, 2009, Landlord shall have the
Option to Terminate this Lease at any time after March 31, 2009 upon not
less than nine (9) month’s advance written notice in the event Landlord is
going to demolish or substantially rehabilitate the Premises in conjunction
with the construction and development of a new building on the site of the
existing parking facilities. For example, Landlord may give a Termination
Notice to Tenant on December 1, 2008 to Terminate this Lease on August 31,
2009. In the event Landlord exercises this Option to Terminate, Tenant shall
vacate the Premises on or before the date specified in Landlord’s notice and
both Landlord and Tenant will be relieved of all obligations to each other
related to this Lease.


 


Dated the date first above written.


 


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
  MSI 83 King L.L.C., a Washington limited liability

  	
   

  	
  Sound Health
  Solutions, a Washington corporation

  
	
  company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
    /s/ H. Martin Smith

  	
   

  	
  By:

  	
    /s/ Teresa Girolami

  
	
   

  	
    H. Martin Smith, III

  	
   

  	
   

  	
   

  
	
   

  	
    Manager

  	
   

  	
  Its:

  	
     President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  



 

















 


EXHIBIT A


LEGAL DESCRIPTION


 


83 King Building


 


Lots 1 through 3, Block 3427 of Seattle Tidelands;
Excepting all coal and mineral rights as reserved under King County Recording No. 4250469;
Situate in the City of Seattle, County of King, Stale of Washington.


 


	
   

  	
  Initials:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


LEGAL DESCRIPTION


EXHIBIT A