**Exhibit 10.15**

 

**LEASE AMENDMENT NO. 1**

 

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

 

**Recitals**

 

A.                                   Landlordand 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 buildingcommonly 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.                                     Allcapitalized terms used in this Amendment, but not defined herein, shall havethe meanings ascribed to them in the Lease.

 

C.                                     TheTerm of the Lease expires on June 30, 2009.

 

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

 

**NOW THEREFORE**, forvaluable consideration, the receipt and sufficiency of which is herebyacknowledged, Landlord and Tenant agree to amend the Lease as follows:

 

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

 

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

 

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

 

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

 

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

 

(i)  “MinimumMonthly Rent” means the following amounts as to the following periods duringthe 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.                                       AdditionalTenant Improvement Allowance. Tenant has elected to utilize the AdditionalTenant 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) businessdays after execution of this Lease Amendment No. 1.

 

5.                                       EarlyPayoff. Tenant shall have the option, at any time without penalty, to paythe unamortized portion of this $30,000 Additional Tenant Improvement Allowanceto Landlord. In such event, upon receipt of the unamortized amount, Landlordand Tenant shall execute another Lease Amendment which shall reduce the MinimumMonthly Rent by $637.41 per month throughout the remaining lease term.

 

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

 

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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 yourattorney. Martin Smith Inc is not authorized to give legal or tax advice. NeitherLandlord nor Martin Smith Inc makes any representations or recommendations asto the legal sufficiency, legal effect or tax consequences of this document orany transaction relating thereto. These are questions for your attorney withwhom you should consult before signing the document to determine whether yourlegal rights are adequately protected.

 

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| 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 andbetween MSI 83 King L.L.C., a Washington limited liability company (“Landlord”),and Sound Health Solutions, a Washington corporation (“Tenant”), who agree asfollows:

 

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 ofSeattle, 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 83King 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 thefirst floor of the Building designated as 501 First Avenue South.

 

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

 

(e)                                  “Tenant’sShare” means the Premises Area divided by the Building Area, expressed as apercentage, which is two and fifty-one/100ths percent (2.51%). Notwithstandingthe foregoing, if one or more of the facilities, services and utilities thecosts of which are included within the definition of Operating Costs is notfurnished to one or more spaces or to particular types of spaces, then inconnection with the calculation of Tenant’s Share of each of such costs theBuilding Area shall be reduced by the number of rentable square feet containedin such space and Tenant’s Share shall be separately computed as to each ofsuch costs. If the Building shall contain non-office uses during any period,Landlord shall have the right to determine, in accordance with sound accountingand management principles, Tenant’s Share of Real Property Taxes and OperatingCosts for only the office portion of the Building; in such event, Tenant’sShare shall be based on the ratio of the rentable area of the Premises to therentable 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 ofspace in the Premises or the Building, then Landlord shall adjust Tenant’sShare to equal the number of rentable square feet of space then existing in thePremises (as altered by such event) divided by the number of rentable squarefeet of space then existing in the Building (as altered by such event).

 

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

 

(g)                                 “ExpirationDate” means March 31, 2009.

 

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

 

(i)                                     “MinimumMonthly Rent” means the following amounts as to the following periods duringthe 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)                                     “PermittedUse” means office and health care management purposes, clinic that treatsindividuals suffering from obesity and its related illnesses, and related uses.

 

(k)                                  “BaseYear” means the calendar year 2004.

 

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

 

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(m)                               “SecurityDeposit” means Seventeen Thousand Nine Hundred Thirty Four and No/100thsDollars ($17,934.00).

 

(n)                                 “Landlord’sAddress 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, WA98104.

 

(o)                                 “Landlord’sAddress for Payment of Rent” means MSI 63 King L.L.C., c/o Martin Smith Inc. P.O. Box94685. Seattle. WA 98124-6985.

 

(p)                                 “Tenant’sAddress 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’sAgent” means Martin Smith Inc or such other agent as Landlord may appointfrom time to time.

 

(r)                                    “Broker(s)”means Martin Smith Inc representing the Landlord and Rex Noffsinger of ColliersInternational 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 consentof either Landlord or Tenant is required under this Lease, such consent shallnot be effective unless given in writing and shall not be unreasonably withheldor delayed, provided, however, that such consent may be conditioned asprovided in this Lease. All notices or requests required or permitted underthis Lease shall be in writing as provided in Section 42(g).

 

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

 

4.                                       **Term.**

 

(a)                                  **Commencement Date.**The Term shall commenceon the Commencement Date and expire on the Expiration Date, unless soonerterminated pursuant to this Lease. The Commencement Date shall be:

 

(i)                                     Thedate 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 Tenantoccupies the Premises earlier pursuant to Subsection 4(a)(iii), in whichcase the Commencement Date shall be such earlier date;

 

(ii)                                  Suchlater date on which the Tenant Improvements to be made to the Premises byLandlord, if any, are substantially complete, provided, however, that Landlordshall give notice of substantial completion to Tenant at least five (5) daysbefore such date.

 

(iii)                               If Tenant shall occupythe Premises for the Permitted Use prior to the Commencement Date specified in Section 1or 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 TenantImprovements, If any, are not substantially completed on the Commencement Datespecified in Section 1 primarily due to Tenant’s failure to promptlyreview and approve the plans

 

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

 

(c)                                  **Tenant Termination Rights.**If Landlord isunable to deliver possession of the Premises with the Tenant improvements, ifany, substantially completed to Tenant on the Commencement Date as a result ofcauses beyond its reasonable control, Landlord shall not be liable for anydamage caused by failing to deliver possession and this Lease shall not be voidor voidable. Tenant shall not be liable for Rent until Landlord deliverspossession of the Premises to Tenant. No delay in delivery of possession of thePremises to Tenant shall change the Expiration Date or operate to extend theTerm. If Landlord does not deliver possession of the Premises to Tenant withinthree (3) months of the Commencement Date, then Tenant may elect toterminate this Lease by giving notice to Landlord within ten (10) daysfollowing the end of such six (6) month period.

 

(d)                                 **Confirmation of Commencement Date.**When theCommencement Date as provided in Subsection 4(a)(ii) or Subsection 4(a)(iii) hasbeen established as an earlier or later date than the Commencement Datespecified in Section 1, Landlord shall confirm the Commencement Date bynotice to Tenant.

 

5.                                       **Minimum Monthly Rent; Late Charge.**

 

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

 

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

 

6.                                       **Prepaid Rent and Security Deposit.**Aspartial consideration for Landlord’s execution of this Lease, on execution ofthis Lease, Tenant shall deposit with Landlord the Prepaid Rent, as monthlyrent for the first full month of the Term for which Rent is payable, and theSecurity Deposit, as a Security Deposit for the performance by Tenant of theprovisions of this Lease. If Tenant is in default, Landlord may use theSecurity Deposit, or any portion of it, to cure the default, including withoutlimitation, paying for the cost of any work necessary to restore the Premises,the Tenant improvements and any alterations to good condition or to compensateLandlord for all damage sustained by Landlord resulting from Tenant’s default. Tenantshall within five (5) days of demand pay to Landlord a sum equal to theportion of the Security Deposit expended or applied by Landlord as provided inthis Section so as to maintain the Security Deposit in the sum initiallydeposited with Landlord. If Tenant has not been and is not then in default asof the thirtieth (30th) month of the Term including withoutlimitation, 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 expirationor termination of the Term, including without limitation, in default in paymentof the Rent for the last month of the Term, then Landlord shall return thebalance of the Security Deposit, without interest, to Tenant within areasonable period of time not to exceed thirty (30) days after the expirationor termination of the Term. Landlord’s obligations with respect to the SecurityDeposit are those of a debtor and not a trustee. Landlord may comminglethe Security Deposit with Landlord’s general and other funds.

 

7.                                       RealProperty Taxes.

 

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

 

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payments made during that calendar year exceed Tenant’s Share of theincrease in such Real Property Taxes for that calendar year over such RealProperty Taxes for the Base Year, then, at Landlord’s option, either Landlordshall pay Tenant the excess at the time Landlord furnishes the statement toTenant, or Tenant shall be entitled to offset the excess against the nextinstallment(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 timeLandlord furnishes the statement to Tenant.

 

(b)                                 **General and Special Assessments.**Withrespect to any general or special assessments which may be levied againstor upon the Property, or which under the laws then in tome may beevidenced by improvement or other bonds or may be paid in annualinstallments, only the amount of such annual installment, and interest duethereon, shall be included in the computation of Real Property Taxes.

 

(c)                                  **Proration.**Tenant’s Share of Real PropertyTaxes shall be prorated on the basis of a 360-day year to account for anyfractional portion of a tax year included in the Term at its commencement andexpiration.

 

(d)                                 **No Effect on Minimum Monthly Rent.**Notwithstandinganything to the contrary in this Section, the Minimum Monthly Rent payable byTenant shall in no event be less than the Minimum Monthly Rent specified in Section 1.

 

a.                                       **Personal Property Taxes.**Tenant shall payprior to delinquency all personal property taxes assessed against and leviedupon trade fixtures, furnishings, equipment and all other personal property ofTenant contained in the Premises or elsewhere. If possible, Tenant shall causesuch trade fixtures, furnishings, equipment and all other personal property ofTenant to be assessed and billed separately from the Property.

 

9.                                       **Operating Costs.**

 

(a)                                  **Payment of Tenant’s Share of Increases in OperatingCosts.**Tenant shall pay to Landlord, as Additional Rent, monthly, inadvance on the first day of each month during the Term, an amount equal toone-twelfth (1/12th) of Tenant’s Share of the increase in the Operating Costsof the Property for each calendar year during the Term over the Operating Costsfor the Base Year as reasonably estimated by Landlord. Landlord may, inaccordance with sound accounting and management principles, both reasonablyestimate, and finally determine, the Operating Costs for the Base Year and foreach calendar year during the Term based on the Operating Costs that would havebeen incurred if the Building had been 95% occupied during the Base Year oreach such calendar year, as the case may be, taking into accounthistorical operating costs for the Building. Such Additional Rent is exclusiveof any sales, franchise, business or occupation or other tax based on rents andshould such taxes apply during the Term, such Additional Rent shall be increasedby the amount of such taxes. Within one hundred twenty (120) days after the endof each calendar year during the Term or within such longer period of time as may bereasonably necessary, Landlord shall furnish to Tenant a statement of theOperating Costs for the preceding calendar year and Tenant’s Share of theincrease in the Operating Costs. If Tenant’s Share of the increase in theOperating Costs for that calendar year over the Operating Costs for the BaseYear exceeds the monthly payments made by Tenant, then Tenant shall payLandlord the deficiency within thirty (30) days after receipt of the statement.If Tenant’s payments made during that calendar year exceed Tenant’s Share ofthe increase in the Operating Costs for that calendar year over the OperatingCosts for the Base Year, then, at Landlord’s option, either Landlord shall payTenant the excess at the time Landlord furnishes the statement to Tenant, orTenant shall be entitled to offset the excess against the next Installment(s)of Minimum Monthly Rent and Additional Rent, provided, however, that at the endof the Term Landlord shall pay Tenant the excess at the time Landlord furnishesthe statement to Tenant.

 

(b)                                 **Proration.**Tenant’s Share of OperatingCosts shall be prorated on the basis of a 360-day year to account for anyfractional portion of a year included in the Term at its commencement andexpiration.

 

(c)                                  **No Effect on Minimum Monthly Rent.**Notwithstandinganything to the contrary in this Section, the Minimum Monthly Rent payable byTenant 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’sbooks and records relating to Operating Costs of the Property upon reasonableprior notice specifying such records Tenant desires to examine, during normalbusiness hours at the place or places where such records are normally kept bysending such notice no later than six (6) months following the furnishingof the Landlord’s statement of the Operating Costs for the preceding calendaryear and Tenant’s Share of the increase in the Operating Costs. Tenant’sauthorized representative shall be compensated on an hourly or project basisand not on (i) a contingent basis, (ii) the basis of a percentage ofany savings or refund resulting from the audit, or (iii) in any othermanner that makes such representative’s compensation for such audit in any waydependent on the results of the audit. Tenant may take exception tomatters included in Operating Costs, or Landlord’s computation of Tenant’sShare, by sending notice specifying such exception end the reasons therefor toLandlord no later than thirty (30) days after Landlord makes such recordsavailable for examination. Landlord’s statement of the Operating Costs for thepreceding calendar year and Tenant’s Share of the increase in the Operating Costsshall be considered final, except as to matters to which exception is takenafter examination or Landlord’s books and records relating to Operating Costsof the Property in the foregoing manner and within the foregoing times. Tenantacknowledges that Landlord’s ability to budget and incur expenses depends onthe finality of such statement, and accordingly agrees that time is of theessence of this

 

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Section. If Tenant takes exception to any matter contained in suchstatement as provided herein, Landlord shall refer the matter to an independentcertified public accountant, whose certification as to the proper amount shallbe final and conclusive as between Landlord and Tenant. Tenant shall promptlypay the cost of such certification unless such certification determines thatLandlord’s statement of the Operating Costs overstated the Operating Costs bymore than five percent (5%). Pending resolution of any such exceptions in theforegoing manner, Tenant shall continue paying Tenant’s Share of OperatingCosts in the amounts determined by Landlord, subject to adjustment after anysuch exceptions are so resolved. If such certification determines that Landlord’sstatement of the Operating Costs overstated the Operating Costs, then Tenantshall receive a credit for Tenant’s Share of the amount of such overstatementagainst 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 excessat the time Landlord furnishes the statement to Tenant.

 

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

 

(a)                                  **Insurance.**Tenant shall not do, bring, orkeep anything in or about the Premises or the Property that will cause acancellation of any insurance covering the Property. If the rate of anyinsurance carried by Landlord on the Property as published by the WashingtonSurvey and Rating Bureau, or any successor rating bureau or agency, isIncreased as a result of Tenant’s use, then Tenant shall pay to Landlord notless than ten (10) days before the date Landlord is obligated to pay apremium on the insurance, a sum equal to the difference between the originalpremium and the increased premium.

 

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

 

(c)                                  **Waste, Nuisance and Improper Use.**Tenantshall not use the Premises in any manner that will constitute waste, nuisanceor unreasonable annoyance to other tenants in the Building, including withoutlimitation, (i) the use of loudspeakers or sound or light apparatus thatcan be heard or seen outside the Premises, (ii) for cooking or otheractivities that cause odors that can be detected outside the Premises, or (iii) forlodging or sleeping rooms.

 

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

 

(e)                                  **Rules and Regulations.**Tenant and itsauthorized representatives shall comply with the Rules and Regulations setforth on Exhibit D attached hereto. Landlord shall have the rightto reasonably amend the Rules and Regulations from time to time. In theevent of a conflict between this Lease and the Rules and Regulations, asamended, this Lease shall control. Landlord shall have the right to enforce theRules and Regulations. Landlord shall have no liability or responsibilitywhatsoever with respect to the noncompliance by other tenants or theirauthorized representatives with any of such Rules and Regulations.

 

11.                                 **Hazardous Substances.**Tenant shall notdispose of or otherwise allow the release of any Hazardous Substances in, on orunder the Premises, or the Property, or in any tenant improvements oralterations placed on the Premises by Tenant. Tenant represents and warrants toLandlord that Tenant’s intended use of the Premises does not involve the use,production, disposal or bringing on to the Premises of any HazardousSubstances, except for products normally used in general business offices whichconstitute Hazardous Substances, provided that such products are used, storedand disposed of in accordance with applicable laws and manufacturer’s andsupplier’s guidelines. Tenant shall promptly comply with all laws and with allorders, decrees or judgments of governmental authorities or courts havingjurisdiction, relating to the use, collection, treatment, disposal, storage,control, removal or cleanup of Hazardous Substances, on or under the Premisesor the Property, or incorporated in any tenant improvements or alterations, atTenant’s expense.

 

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

 

(b)                                 **Indemnity by Tenant.**Tenant agrees to holdLandlord harmless from and against any and all damages, charges, cleanup costs,remedial actions, costs and expenses, which may be imposed on, incurred orpaid by, or asserted against Landlord, the Premises or the Property by reasonof, or in connection with the acts or omissions of Tenant, its authorizedrepresentatives, or any subtenant or other person for whom Tenant wouldotherwise be liable, resulting in the release of any Hazardous Substances onthe Premises or the Property.

 

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

 

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

 

(e)                                  **Survival.**The provisions of this Section shallsurvive the expiration or sooner termination of the Term. No subsequentmodification or termination of this Lease by agreement of the parties orotherwise shall be construed to waive or to modify any provisions of this Section unlessthe termination or modification agreement or other document expressly so statesin writing.

 

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

 

(a)                                  **Landlord’s Maintenance.**Except as providedin Section 13 captioned “Tenant’s Maintenance; Remedies”, Section 23captioned “Destruction” and Section 24 captioned “Condemnation” and exceptfor damage caused by any negligent or intentional act or omission of Tenant orits authorized representatives, Landlord shall maintain in good condition andrepair the following:  (i) thestructural parts of the Building, which structural parts include only thefoundations, bearing and exterior walls, subflooring and roof, (ii) thebuilding standard lighting fixtures, window coverings and ceiling tiles and theunexposed electrical, plumbing and sewage systems, including withoutlimitation, those portions lying outside the Premises, (iii) the heating,ventilating and air-conditioning system, if any, servicing the Building, (iv) thelobbies, corridors, elevators, public or common restrooms and other commonareas 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 ofmaintaining, repairing, replacing or servicing the portions of the Buildingthat Landlord is required to maintain pursuant to this Section shall beincluded in Operating Costs to the extent provided in Section 9 captioned “OperatingCosts”.

 

13.                                 **Tenant’s Maintenance; Remedies.**

 

(a)                                  **Tenant’s Maintenance.**Except as provided inSection 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 oromission of Landlord or his authorized representatives, Tenant, at its cost,shall maintain to good condition and repair the Premises, including withoutlimitation, all of the Tenant Improvements, Tenant’s alterations, Tenant’strade fixtures, Tenant’s personal property, signs, walls, interior partitions,wall coverings, windows, non-building standard window coverings, glass withinthe Premises, doors, carpeting and resilient flooring, non-building standardceiling tiles, plumbing fixtures and non-building standard lighting fixtures. Tenantshall be liable for any damage to the Premises and the Building resulting fromthe acts or omissions of Tenant or its authorized representatives.

 

(b)                                 **Landlord’s Remedies.**If Tenant fails tomaintain the Premises in good condition and repair (reasonable wear and tearaccepted) as required by Subsection 13(a) and if such failure is notcured within thirty (30) days after notice of such failure is given by Landlordto Tenant, then Landlord may, at its option, cause the Premises to bemaintained in good condition and repair and Tenant shall promptly reimburseLandlord for all reasonable costs incurred by Landlord in performance of Tenant’sobligation to maintain the Premises.

 

14.                                 **Tenant Improvements; Alterations and Trade Fixtures.**

 

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

 

(b)                                 **Alterations.**Any improvements andalterations made by either party shall remain on and be surrendered with thePremises on expiration or termination of the Term, except that Landlord canelect by giving notice to Tenant within thirty (30) days before the expirationof the Term, or within thirty (30) days after termination of the Term, torequire Tenant to remove any improvements and alterations that Tenant has madeto the Premises. If Landlord so elects, Tenant, at its cost, shall restore thePremises to the condition designated by Landlord in its election (reasonablewear 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 improvementsand alterations that remain on the Premises on expiration or termination of theTerm shall automatically become the property of Landlord and title to suchimprovements and alterations shall

 

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automatically pass to Landlord at such time without any paymenttherefor by Landlord to Tenant. If Tenant or its authorized representativesmake any improvements or alterations to the Premises as provided in thisSection, then such improvements and alterations (i) shall be made in afirst class manner in conformity with then building standard improvements,(ii) shall be made utilizing then building standard materials, (iii) shallbe made in compliance with the Rules and Regulations and the reasonabledirections of Landlord, (iv) shall be made pursuant to a valid buildingpermit to be obtained by Tenant, at its cost, and (v) shall be made Inconformity with then applicable laws, including without limitation, buildingcodes.

 

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

 

15.                                 **Mechanics’ Liens.**Tenant shall pay, orcause to be paid, all costs of labor, services and/or materials supplied inconnection with any Work. Tenant shall keep the Property free and clear of allmechanics’ liens and other liens resulting from any Work. Prior to thecommencement of any Work costing more than an amount equal to $25,000.00, orthe supply or furnishing of any labor, services and/or materials in connectionwith any such Work, Tenant shall provide Landlord with a labor and materialpayment bond, a letter of credit or other security satisfactory to Landlord inan amount equal to one hundred percent (100%) of the aggregate price of allcontracts therefor, with release of the bond conditioned on Tenant’s payment infull of all claims of lien claimants for such labor, services and/or materialssupplied in the prosecution of the Work. Said payment bond shall name Landlordas a primary obligee, shall be given by a surety which is satisfactory toLandlord, and shall be in such form as Landlord shall approve in its solediscretion. Tenant shall have the right to contest the correctness or validityof any such lien if, immediately on demand by Landlord, it procures and recordsa lien release bond issued by a responsible corporate surety in an amountsufficient to satisfy statutory requirements therefor in the State ofWashington. Tenant shall promptly pay or cause to be paid all sums awarded tothe claimant on its suit, and, in any event, before any execution is issuedwith respect to any judgment obtained by the claimant in its suit or beforesuch judgment becomes a lien on the Premises, whichever is earlier. If Tenantshall be in default under this Section, by failing to provide security for or satisfactionof any mechanic’s or other liens, then Landlord may (but shall not beobligated to), in addition to any other rights or remedies it may have,discharge said lien by (i) paying the claimant an amount sufficient tosettle and discharge the claim, (ii) procuring and recording a lienrelease bond, or (iii) taking such other action as Landlord shall deemnecessary or advisable, and, in any such event, Tenant shall pay as AdditionalRent, on Landlord’s demand, all reasonable costs (including reasonable attorneyfees) incurred by Landlord in settling and discharging such lien together withinterest thereon in accordance with Section 39 captioned “Interest onUnpaid Rent” from the date of Landlord’s payment of said costs. Landlord’spayment of such costs shall not waive any default of Tenant under this Section.

 

16.                                 **Utilities and Services.**

 

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

 

(i)                                     Electricityfor lighting and power suitable for the use of the Premises for ordinarygeneral office and medical/workout purposes; provided, however, that Tenantshall not at any time have a connected electrical load for lighting purposes inexcess of the wattage per square foot of Premises Area required for buildingstandard amounts of lighting, or a connected load for all other powerrequirements in excess of four (4) watts per square foot of Premises Areaas determined by Landlord, and the electricity so provided for lighting andpower shall not exceed such limits, subject to any lower limits set by anygovernmental authority with respect thereto;

 

(ii)                                  Subjectto the reasonable limitations of the existing building systems, heating,ventilating and air-conditioning, if the Building has an air-conditioningsystem, to maintain a temperature range in the Premises which is customary forsimilar office space in the Seattle, Washington area (but in compliance withany applicable governmental regulations with respect thereto). Tenant agrees tokeep closed, when necessary, blinds, draperies and windows which must be closedto provide for the efficient operation of the heating and air-conditioningsystems, if any, and Tenant agrees to cooperate with Landlord and to abide bythe regulations and requirements which Landlord may prescribe for theproper functioning and protection of the heating, ventilating andair-conditioning system, if any. If Tenant requires heating, ventilating andair conditioning to the Premises other than during normal business hours from6:00 A.M. to 8:30 P.M. Monday through Friday and 6..00 A.M. to3:00 P.M. Saturday, except Sundays and those legal holidays generallyobserved to the State of Washington, Landlord shall, upon Tenant’s request madenot 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 whichTenant requires such service, and not later than Noon of the day before anyholiday on which Tenant requires such service (except as otherwise provided inthe Rules and Regulations), furnish such heating, ventilating and airconditioning. If Tenant receives such services, then Tenant shall pay, upondemand, an amount equal to Tenant’s proportionate share of the actual directcost to Landlord in providing the heating, ventilating and air conditioningoutside of normal business hours;

 

(ii)                                  Waterfor restroom and drinking purposes and access to restroom facilities;

 

(iv)                              Elevatorservice for general office pedestrian usage if the Building is serviced byelevators;

 

(v)                                 Relampingof building-standard light fixtures;

 

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(vi)                              Washingof interior end exterior surfaces of exterior windows with reasonablefrequency; and

 

(vii)                           Janitorial service five (5) timesper week, except holidays. Janitorial specifications are attached hereto as Exhibit E.Tenant acknowledges that the standard janitorial service provided by Landlord may notbe adequate to meet Tenant’s specific cleaning requirements. Any janitorial andcleaning services required by Tenant over and above the standard serviceprovided by Landlord shall be provided by Tenant at Tenant’s sole cost andexpense. Tenant may provide access to the Premises after Tenant’s businesshours for its contractors providing such additional janitorial services

 

(b)                                 **Payment for Excess Utilities and Services.**Allservices and utilities for the Premises not required to be furnished byLandlord pursuant to Section 16(a) shall be paid for by Tenant. IfTenant requires, on a regular basis, water, heat, air conditioning, electriccurrent, 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 bewithheld in Landlord’s sole discretion. If Landlord consents to such excessuse, 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 causethe 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) thecost of any and all water, heat, air conditioning, electric current,janitorial, elevator or other services or utilities required to be furnished toTenant in excess of the services and utilities required to be furnished byLandlord as provided in Section 16(a); (ii) the cost of installation,maintenance and repair of any meter installed in the Premises; (iii) thecost of all electricity and water consumed by Tenant in connection with anydedicated heating, ventilating and/or air conditioning, computer power and/orair conditioning, telecommunications or other special systems of Tenant, includingany power usage other than through existing standard 110-volt and 220-volt ACoutlets; and (v) any reasonable cost incurred by Landlord in keepingaccount of or determining such excess utilities or services furnished to Tenant.Landlord’s failure to bill Tenant for any such excess utilities or servicesshall not waive Landlord’s right to bill Tenant for the excess at a later time.

 

(c)                                  **Temperature Balance.**Landlord makes norepresentation to Tenant regarding the adequacy or fitness of the heating,ventilating and air-conditioning systems in the Building to maintaintemperatures that may be required for, or because of, any of Tenant’sequipment other than normal office equipment, such as personal computers, laserprinters, copiers, dictating machines and other small equipment normally usedin business offices, and workout equipment such as treadmills. ellipticaltrainers, bicycles and stacked weights, and Landlord shall have no liabilityfor loss or damage suffered by Tenant or others in connection therewith. Landlord’sobligations are limited to maintaining the HVAC in good working order and thatLandlord does not warrant that the HVAC is adequate to cool the Premises ifexcess heat is generated from the exercise equipment (or the bodies on them). Ifthe temperature otherwise maintained in any portion of the Premises by theheating, air conditioning or ventilation system is affected as a result of (i) anylights, machines or equipment (including without limitation electronic dataprocessing machines) used by Tenant in the Premises or the use of more than onepersonal computer per person, (ii) the occupancy of the Premises by morethan one person per two hundred (200) square feet of rentable area therein, (iii) anelectrical load for lighting or power in excess of the limits per square footof rentable area of the Premises specified in Section 16(a), or (iv) anyrearrangement of partitioning or other improvements, Landlord may installany equipment, or modify any existing equipment (including the standard airconditioning equipment) Landlord deems necessary to restore the temperaturebalance. The cost of any such equipment, including without limitation, the costof design and installation thereof, and the cost of operating, metering,maintaining or repairing the same, shall be paid by Tenant to Landlord upondemand. Tenant shall not install or operate window-mounted heating orair-conditioning units.

 

(d)                                 **Special Electrical or Water Connections; ElectricityUse.**Tenant will not, without the prior consent of Landlord, whichLandlord in its sole discretion may refuse, connect or use any apparatusor device in the Premises (i) using current in excess of 220 volts or (ii) whichwill cause the amount of electricity, water, heating, air conditioning orventilation furnished to the Premises to exceed the amount required for use ofthe Premises for ordinary general office purposes, as determined by Landlord,during normal business hours or (iii) which would cause Tenant’s connectedload to exceed any limits established in Section 16(a). Tenant shall notconnect with electric current except through existing outlets in the Premisesand shall not connect with water pipes except through existing plumbingfixtures in the Premises. In no event shall Tenant’s use of electricity exceedthe capacity of existing feeders to the Building or the risers or wiringinstallation, and Landlord may prohibit the use of any electricalequipment which in Landlord’s opinion will overload such wiring or interferewith the use thereof by other tenants in the Building. If Landlord consents tothe use of equipment requiring such changes, Tenant shall pay the cost ofinstalling any additional risers, panels or other facilities that may benecessary to furnish energy to the Premises.

 

Landlord will not permit additional coring of thefloor of the Premises in order to install new electric outlets in the Premisesunless Tenant furnishes Landlord with X-ray scans of the floor area where theTenant wishes to place additional electrical outlets and Landlord, in itsabsolute discretion, is satisfied, on the basis of such X-ray scans and otherinformation obtained by Landlord, that coring of the floor in order to installsuch additional outlets will not weaken the structure of the floor.

 

(e)                                  **Landlord’s Duties.**Landlord shall not be indefault under this Lease or liable for any damages resulting from, orincidental to, any of the following, nor shall any of the following be anactual or constructive eviction of Tenant, nor shall the Rent be abated byreason of:  (i) failure to furnishor delay in furnishing any of the services

 

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

 

(f)                                    **Governmental Regulations.**Any otherprovisions of this Section notwithstanding. if any governmental authorityor utility supplier imposes any laws, controls, conditions, or otherrestrictions upon Landlord, Tenant, or the Building, relating to the use orconservation of energy or utilities, mandated changes in temperatures to bemaintained in the Premises or the Building or the reduction of automobile orother emissions (collectively, the “Controls”), or in the event Landlord isrequired or elects to make alterations to the Building in order to comply withthe Controls, Landlord may, in its sole discretion, comply and may requireTenant to comply with the Controls or make such alterations to the Building inorder to comply with the Controls. Such compliance and the making of suchalterations shall not constitute an actual or constructive eviction of Tenant,impose on Landlord any liability whatsoever, or entitle Tenant to any abatementof Rent.

 

17.                                 **Indemnity.**

 

(a)                                  **Generally.**Tenant shall hold Landlordharmless from and against any and all damages arising out of any damage to anypersons or property occurring in, on or about the Premises or the Propertyresulting from the acts or omissions of Tenant or its authorizedrepresentatives. Landlord shall hold Tenant harmless from and against any andall 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 omissionsof Landlord or its authorized representatives. A party’s obligation under this Section toindemnify and hold the other party harmless shall be limited to the sum thatexceeds the amount of insurance proceeds, if any, received by the party beingindemnified.

 

(b)                                 **Concurrent Negligence of Landlord and Tenant.**NotwithstandingSection 17(a) above, in the event of concurrent negligence of Tenant,or its authorized representatives, on the one hand, and that of Landlord, orits authorized representatives, on the other hand, which concurrent negligenceresults in damage to any persons or property occurring in, on or about thePremises or the Property, either party’s obligation to indemnity the otherparty as set forth in Section 17(a) shall be limited to the extent ofthe 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 broughtwith respect to such damage.

 

(c)                                  **Waiver of Worker’s Compensation Immunity.**Theindemnification obligations contained in this Section shall not be limitedby any worker’s compensation, benefit or disability laws, and each indemnifyingparty hereby waives (solely for the benefit of the indemnified party) anyimmunity that said indemnifying party may have under the IndustrialInsurance Act, Title 51 RCW and similar worker’s compensation, benefit ordisability laws.

 

(d)                                 **Provisions Specifically Negotiated.**LANDLORDAND TENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH OF THEINDEMNIFICATION PROVISIONS OF THIS LEASE (SPECIFICALLY INCLUDING BUT NOTLIMITED TO THOSE RELATING TO WORKER’S COMPENSATION BENEFITS AND LAWS) WERESPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT.

 

18.                                 **Exemption of Landlord from Liability.**Landlordand Landlord’s Agent shall not be liable for injury to Tenant’s business orloss of income therefrom or for damage which may be sustained by theperson, goods, wares, merchandise or property of Tenant, its authorizedrepresentatives, or any other person in or about the Premises, caused by orresulting from fire, steam, electricity, gas, water or rain, which may leakor 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 thePremises or upon other portions of the Building or the Property unless suchinjury or damage is caused by the gross negligence or willful misconduct ofLandlord or its authorized representatives.

 

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

 

20.                                 **Tenant’s Fire Insurance.**Tenant, at itscost, shall maintain on all of Tenant’s Alterations, Trade Fixtures andPersonal Property in, on or about the Premises, a policy of standard All Riskfire insurance, in an amount equal to at least their full replacement cost. Theproceeds of any such policy shall be used by Tenant for the restoration ofTenant’s Alterations and Trade Fixtures and the replacement of its PersonalProperty. Any portion of such proceeds not used for such restoration shallbelong to Tenant.

 

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

 

22.                                 **Other Insurance Matters.**All insurancerequired to be carried by Tenant under this Lease shall: (i) be issued byinsurance companies authorized to do business in the Slate of Washington with arating of A/VI or better as rated in the most recent edition of Best’sInsurance Reports; (ii) be issued as a primary policy, and (iii) containan endorsement requiring thirty (30) days’ prior written notice from theinsurance company to both parties, to Landlord’s Agent, and, if requested byLandlord, 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 Landlordon or before the Commencement Date, and on renewal of the policy not less thanten (10) days before expiration of the term of the policy.

 

23.                                 **Destruction.**

 

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

 

(b)                                 **Major or Uninsured Damage.**If during theTerm the Premises or the Building are partially or totally destroyed by anycasualty and Landlord is not obligated under Section 23(e) captioned “InsuredDamage” to restore the Premises or the Building, as the case may be, thenLandlord may, at its election, either (i) restore the Premises or theBuilding to substantiality the same condition as they were in immediatelybefore such destruction, or (ii) terminate this Lease effective as of thedate 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 thePremises or the Building, as the case may be, Landlord shall be deemed tohave elected to terminate this Lease. If Landlord elects to restore thePremises or the Building, as the case may be, Landlord shall usecommercially reasonable efforts to complete such restoration within one hundredeighty (180) days after the date on which Landlord obtains all permitsnecessary 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 ForceMajeure, and such destruction shall not terminate this Lease. If Landlord doesnot complete such restoration within one (1) year following the date ofsuch destruction, then Tenant may elect to terminate this Lease by givingnotice to such effect to Landlord within ten (10) days following the endof such one (1) year period.

 

(c)                                  **Damage to the Building.**If during the Termthe Building is partially destroyed by any casualty and if in the opinion ofLandlord the Building should be restored in such a way as to materially alterthe Premises, then Landlord may, at Landlord’s election, terminate this Leaseby 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.**IfLandlord is required or elects to restore the Premises as provided in thisSection, Landlord shall not be required to restore alterations made by Tenant. Tenant’strade fixtures and Tenant’s personal property, such excluded items being the soleresponsibility of Tenant to restore.

 

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

 

24.                                 **Condemnation.**If during the Term there isany 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 lessthan ten percent (10%) of the Premises, this Lease shall remain in full forceand effect.

 

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(b)                                 **Major Taking.**If there is a taking of tenpercent (10%) or more of the Premises and if the remaining portion of thePremises is of such size or configuration that Tenant in Tenant’s reasonablejudgment is unable to conduct its business in the Premises, then the Term shallterminate as of the date of taking.

 

(c)                                  **Taking of Part of the Building.**Ifthere is a taking of a part of the Building other than the Premises and ifin the opinion of Landlord the Building should be restored in such a way as tomaterially alter the Premises, then Landlord may terminate the Term bygiving notice to such affect to Tenant within sixty (60) days after the date ofvesting of title in the condemnor and the Term shall terminate as of the datespecified in such notice, which date shall not be less then sixty (60) daysafter 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, Tenanthereby assigning to Landlord Tenant’s interest therein, if any, provided,however, that Tenant shall have the right to claim and recover from thecondemnor compensation for the loss of any alterations made by Tenant, Tenant’strade fixtures, Tenant’s personal property, moving expenses and businessinterruption,

 

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

 

25.                                 **Assignment and Subletting.**

 

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

 

(b)                                 **Consent Required.**Tenant shall not voluntarilyassign or encumber its interest in this Lease or in the Premises, or subleaseany part or all of the Premises, without Landlord’s prior consent, whichconsent shall not be unreasonably withheld. Any assignment, encumbrance orsublease without Landlord’s consent shall be voidable and, at Landlord’selection, shall constitute a default by Tenant under this Lease. In determiningwhether to approve a proposed assignment or sublease, Landlord shall placeprimary emphasis on the proposed transferee’s reputation and creditworthiness,the character of the business to be conducted by the proposed transferee at thePremises and the affect of such assignment or subletting on the tenant mix inthe Building. In addition, Landlord shall have the right to approve thespecific form of any assignment or sublease agreement, in no event shallLandlord 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 theBuilding, or creates an increased probability of the comfort and/or safety ofthe Landlord and other tenants in the Building being unreasonably compromisedor reduced (for example, but not exclusively, Landlord may deny consent toan assignment or subletting where the space will be used for a school ortraining facility, an entertainment, sports or recreation facility, retailsales to the public (unless Tenant’s permitted use is retail sales), apersonnel or employment agency, a medical office, or an embassy or consulate orsimilar office). Landlord shall not be obligated to approve an assignment orsubletting to (x) a current tenant of the Building or (y) a prospective tenantof the Building with whom Landlord is then negotiating. Landlord’s foregoingrights and options shall continue throughout the entire term of this Lease. Noconsent to any assignment, encumbrance or sublease shall constitute a waiver ofthe provisions of this Section and no other or subsequent assignment,encumbrance or sublease shall be made without Landlord’s prior consent. Neitheran assignment or subletting nor the collection of Rent by Landlord from anyperson other than Tenant, nor the application of any such Rent as provided inthis Section shall be deemed a waiver of any of the provisions of this Section orrelease Tenant from its obligation to comply with the terms and provisions ofthis Lease and Tenant shall remain fully and primarily liable for all of Tenant’sobligations under this Lease, including the obligation to pay Rent under thisLease. Any personal guarantee(s) of Tenant’s obligations under this Lease shallremain in full force and effect following any such assignment or subletting. Inaddition to Landlord’s other rights under this Section, Landlord may conditionapproval of an assignment or subletting hereunder on an increase in the amountof the Security Deposit or on receipt of personal guarantees of the assignee’sor sublessee’s obligations under this Lease. If Landlord approves of anassignment or subletting hereunder and this Lease contains any renewal orextension options, expansion options, rights of first refusal, rights of firstnegotiation or any other rights or options pertaining to additional space inthe Building, such rights and/or options shall not run to the assignee orsubtenant, it being agreed by the parties hereto that any such rights andoptions are personal to Tenant named herein and may not be transferred.

 

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(c)                                  **Conditions to Assignment or Sublease.**Tenantagrees that any instrument by which Tenant assigns or sublets all or anyportion of the Premises shall expressly provide that the assignee or subtenant may notfurther assign or sublet the assigned or sublet space without Landlord’s priorconsent (which consent shall not, subject to Landlord’s rights under thisSection, be unreasonably withheld or delayed), and that the assignee orsubtenant will comply with all of the provisions of this Lease and thatLandlord may enforce the Lease provisions directly against such assigneeor subtenant. If this Lease is assigned, whether or not in violation of theterms and provisions of this Lease, Landlord may collect Rent from theassignee. If the Premises, or any part thereof, is sublet, Landlord may,upon a default under this Lease, collect rent from the subtenant. In eitherevent, Landlord may apply the amount collected from the assignee orsubtenant to Tenant’s obligation to pay Rent under this Lease.

 

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

 

(e)                                  **Processing Expenses.**Tenant shall pay to Landlordthe amount of Landlord’s cost of processing each proposed assignment orsubletting including without limitation, reasonable attorneys’ and otherprofessional fees, and the cost of Landlord’s administrative, accounting andclerical time (collectively, “Processing Costs”), and the amount of allreasonable direct and indirect expense incurred by Landlord arising from theassignee or sublessee taking occupancy of the subject space, including withoutlimitation, reasonable costs of freight elevator operation for moving offurnishings and trade fixtures, security service, janitorial and cleaningservice, rubbish removal service, costs of changing signage, and costs ofchanging locks and making new keys (collectively, “Occupancy Costs”). Notwithstandinganything to the contrary herein, Landlord shall not be required to process anyrequest for Landlord’s consent to an assignment or subletting until Tenant haspaid to Landlord Three Hundred Dollars ($300.00), or Landlord’s estimate of theProcessing Costs and the Occupancy Costs, whichever is greater.

 

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

 

(g)                                 **Procedures.**If Tenant desires to assignthis Lease or any interest therein or sublet all or part of the Premises,Tenant shall give Landlord written notice thereof designating the spaceproposed to be sublet and the terms proposed. If the proposed sublease coversthe entire Premises and if the term of the proposed sublease (including anyrenewal terms) will expire during the final six (6) months of the Term (orif Tenant has exercised a renewal option, if any, then during the final six (6) monthsof the subject renewal period), then Landlord shall have the prior right andoption (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) toapprove Tenant’s proposal to sublet conditional upon Landlord’s subsequentwritten approval of the specific sublease obtained by Tenant and the specificsubtenant named therein. If Landlord exercises its option described in (ii) above,Tenant shall submit to Landlord for Landlord’s written approval Tenant’sproposed sublease agreement (in which the proposed subtenant shall be named)together with a current reviewed or audited financial statement prepared by acertified public accountant for such proposed subtenant and a credit report onsuch proposed subtenant prepared by a recognized credit reporting agency. IfLandlord fails to exercise its option to terminate this Lease, this shall notbe 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 nothave any liability for any real estate brokerage commission(s) or with respectto any of the costs and expenses that Tenant may have incurred inconnection with its proposed subletting, and Tenant agrees to hold Landlordharmless from and against any and all claims (including, without limitation,claims for commissions) arising from such proposed subletting. Landlord’sforegoing rights and options shall continue throughout the Term. For purposesof this Section, a proposed assignment of this Lease in whole or in part shallbe deemed a proposed subletting of such space.

 

(h)                                 **Documentation.**No permitted subletting byTenant shall be effective until there has been delivered to Landlord a counterpart ofthe sublease in which the subtenant agrees to be and remain jointly andseveralty liable with Tenant for the payment of Rent pertaining to the subletspace 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 onlyin the amount set forth in the sublease. No permitted assignment shall beeffective unless and until there has been delivered to Landlord a counterpart ofthe assignment in which the assignee assumes all of Tenant’s obligations underthis Lease

 

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

 

(I)                                    **No Merger.**Without limiting any of theprovisions of this Section, if Tenant has entered into any subleases of anyportion of the Premises, the voluntary or other surrender of this Lease byTenant, or a mutual cancellation by Landlord and Tenant, shall not work amerger, and shall, at the option of Landlord, terminate all or any existingsubleases or subtenancies or, at the option of Landlord, operate as anassignment to Landlord of any or all such subleases or subtenancies.

 

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

 

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

 

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

 

(c)                                  **Other Defaults.**Failure to perform anyother provision of this Lease, if the failure to perform is not curedwithin thirty (30) days after notice of such default has been given by Landlordto 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 tocure the default within thirty (30) days and diligently and in good faithcontinues to cure the default.

 

(d)                                 **Appointment of Trustee or Receiver.**Theappointment of a trustee or receiver to take possession of substantially all ofthe Tenants assets located at the Premises or of Tenant’s interest in thisLease, where possession is not restored to Tenant within sixty (60) days; orthe attachment, execution or other judicial seizure of substantially all ofTenant’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 toany remedies now or later allowed by law:

 

(a)                                  **Maintain Lease In Force.**Maintain thisLease in full force and effect and recover the Rent and other monetary chargesas they become due, without terminating Tenant’s right to possession,irrespective of whether Tenant shall have abandoned the Premises. If Landlordelects to not terminate the Lease, Landlord shall have the right to attempt tore-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 Landlorddeems reasonable and necessary without being deemed to have elected toterminate the Lease including removal of all persons and property from thePremises; such property may be removed and stored in a public warehouse orelsewhere at the cost of and for the account of Tenant. In the event any suchre-letting occurs, this Lease shall terminate automatically upon the new Tenanttaking possession of the Premises. Notwithstanding that Landlord fails to electto terminate the Lease initially, Landlord at any time during the term of thisLease may elect to terminate this Lease by virtue of such previous defaultof Tenant.

 

(b)                                 **Terminate Lease.**Terminate Tenant’s rightto possession by any lawful means, in which case this Lease shall terminate andTenant shall immediately surrender possession of the Premises to Landlord. Insuch event Landlord shall be entitled to recover from Tenant all damagesincurred by Landlord by reason of Tenant’s default including without limitationthereto, the following:  (i) Theworth at the time of award of any unpaid Rent which had been earned at the timeof such termination; plus (ii) the worth at the time of award of theamount by which the unpaid Rent which would have been earned after terminationuntil the time or award exceeds the amount or such rental loss that Tenantproves could have been reasonably avoided; plus (iii) the worth at thetime of award of the amount by which the unpaid Rent for the balance of theTerm after the time of award exceeds the amount of such rental loss that isproved could be reasonably avoided; plus (iv) any other amount necessaryto compensate Landlord for all the detriment proximately caused by Tenant’sfailure to perform its obligations under this Lease or which in theordinary course of things would be likely to result therefrom. Includingwithout limitation, any costs or expenses incurred by Landlord in (A) retakingpossession of the Premises, including reasonable attorney fees therefor, (B) maintainingor preserving the Premises after such default, (C) preparing the Premisesfor reletting to a new tenant, including repairs or necessary alterations tothe Premises for such reletting, (D) leasing commissions incident toreletting to a new tenant, and (E) any other costs necessary orappropriate to relet the Premises; plus (v) at Landlord’s election, suchother amounts in addition to or in lieu of the foregoing as may bepermitted from time to time by applicable state law. The amounts described inclauses (C) and (D) shall be amortized over the term of the newtenant’s lease, and Tenant shall only be liable to Landlord for the portion ofsuch amounts attributable to the period prior to the Expiration Date of thisLease set forth in Section 1. Upon any such re-entry Landlord shall havethe right to make any reasonable repairs, alterations or modifications to thePremises, which Landlord in its sole discretion deems reasonable and necessary.As used in Subsection 27(b)(i) the “worth at the time of award” iscomputed by allowing interest at the rate of fifteen percent (15%) per yearfrom 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 thediscount rate of eight percent (8%) per year.

 

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28.                                 **Bankruptcy.**

 

(a)                                  **Assumption of Lease.**If Tenant becomes aDebtor under Chapter 7 of the Bankruptcy Code (“Code”) or a petition forreorganization or adjustment of debts is filed concerning Tenant under Chapters11 or 13 of the Code, or a proceeding is filed under Chapter 7 of the Code andis transferred to Chapters 11 or 13 of the Code, the Trustee or Tenant, asDebtor and as Debtor-In-Possession, may not elect to assume this Leaseunless at the time of such assumption the Trustee or Tenant has:

 

(i)                                     Curedall defaults under the Lease and paid all sums due and owing under the Lease orprovided Landlord with “Adequate Assurance” (as defined below) that:  (I) within ten (10) days from the dateof such assumption, the Trustee or Tenant will completely pay all sums due andowing under this Lease and compensate Landlord for any actual pecuniary lossresulting from any existing default or breach of this Lease, including withoutlimitation, Landlord’s reasonable costs, expenses, accrued interest, andattorneys’ fees incurred as a result of the default or breach; (II) withintwenty (20) days from the date of such assumption, the Trustee or Tenant willcure all non-monetary defaults and breaches under this Lease, or, if the natureof such non-monetary defaults is such that more than twenty (20) days arereasonably required for such cure, that the Trustee or Tenant will commence tocure such non-monetary defaults within twenty (20) days and thereafter diligentlyprosecute such cure to completion; and (III) the assumption will be subject toall of the provisions of this Lease.

 

(ii)                                  Forpurposes of this Section, Landlord and Tenant acknowledge that, in the contextof a bankruptcy proceeding involving Tenant, at a minimum, “Adequate Assurance”shall mean: (i) the Trustee or Tenant has and will continue to havesufficient unencumbered assets after the payment of all secured obligations andadministrative expenses to assure Landlord that the Trustee or Tenant will havesufficient funds to fulfill the obligations of Tenant under this Lease; (ii) theBankruptcy Court shall have entered an Order segregating sufficient cashpayable to Landlord and/or the Trustee or Tenant shall have granted a valid andperfected first lien and security interest and/or mortgage in or on property ofTrustee or Tenant acceptable as to value and kind to Landlord, to secure toLandlord the obligation of the Trustee or Tenant to cure the monetary and/ornon-monetary defaults and breaches under this Lease within the time periods setforth above: and (iii) the Trustee or Tenant, at the very minimum, shalldeposit a sum equal to two (2) month’s Minimum Monthly Rent to be held byLandlord (without any allowance for interest thereon) to secure Tenant’s futureperformance under the Lease.

 

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

 

(c)                                  **Adequate Protection.**Upon the filing of apetition by or against Tenant under the Code, Tenant, as Debtor and asDebtor-In-Possession, and any Trustee who may be appointed agree toadequately protect Landlord as follows:  (i) toperform each and every obligation of Tenant under this Lease until suchtime as this Lease is either rejected or assumed by Order of the BankruptcyCourt; (ii) to pay all monetary obligations required under this Lease,including without limitation, the payment of Minimum Monthly Rent, Tenant’sShare of Real Property Taxes, Tenant’s Share of Operating Costs and any othersums payable by Tenant to Landlord under this Lease which is consideredreasonable compensation for the use and occupancy of the Premises; (iii) provideLandlord a minimum of thirty (30) days prior written notice, unless a shorterperiod is agreed to in writing by the parties, of any proceeding relating toany assumption of this Lease or any intent to abandon the Premises, whichabandonment shall be deemed a rejection of this Lease; and (iv) to perform tothe benefit of Landlord as otherwise required under the Code. The failure ofTenant to comply with the above shall result in an automatic rejection of thisLease.

 

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

 

30.                                 **Limitation on Landlord’s Liability.**Anythingin this Lease to the contrary notwithstanding, covenants, undertakings andagreements herein made on the part of Landlord are made and intended notas personal covenants, undertakings and agreements or for the purpose ofbinding Landlord personally or the assets of Landlord except Landlord’sinterest in the Property, but are made and intended for the purpose of bindingonly the Landlord’s interest in the Property. No personal liability or personalresponsibility is assumed by, nor shall at any time be asserted or enforceableagainst 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 toplace, construct or maintain any sign, advertisement, awning, banner or otherexterior decoration without Landlord’s consent. Any sign that Tenant hasLandlord’s consent to place, construct and maintain shall comply with all laws,and Tenant shall obtain any approval required by such laws. Landlord makes norepresentation with respect to Tenant’s ability to obtain such approval.

 

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

 

Landlord shall not be liable in any manner for anyinconvenience, annoyance, disturbance, loss of business, nuisance, or otherdamage 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 Landlordor its authorized representatives. Tenant shall not be entitled to an abatementor reduction of Rent if Landlord exercises any right reserved in this Section. Landlordshall conduct its activities on the Premises as allowed in this Section ina reasonable manner so as to cause minimal inconvenience, annoyance ordisturbance to Tenant.

 

33.                                 **Subordination.**This Lease is and shall beprior to any mortgage recorded after the date of this Lease affecting theProperty. If, however, a lender requires that this Lease be subordinate to anymortgage, this Lease shall be subordinate to that mortgage if Landlord firstobtains from the lender a written agreement that provides substantially thefollowing:

 

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

 

Tenant shall attorn to any purchaser at anyforeclosure sale, or to any grantee or transferee designated in any deed givenin lieu of foreclosure. Tenant shall execute the written agreement and anyother documents required by the lender to accomplish the purposes of thisSection.

 

34.                                 **Right to Estoppel Certificates.**Tenant,within ten (10) business days after notice from Landlord, shall executeand deliver to Landlord, in recordable form, a certificate stating that thisLease is unmodified and in full force and effect, or in full force and effectas modified and stating the modifications. The certificate shall also state theamount of Minimum Monthly Rent, the dates to which Rent has been paid inadvance, and the amount of any Prepaid Rent or Security Deposit and such othermatters as Landlord may reasonably request. Failure to deliver thecertificate within such ten (10) business day period shall be conclusiveupon Tenant for the benefit of Landlord and any successor to Landlord, thatthis Lease is in full force and effect and has not been modified except as may berepresented by Landlord requesting the certificate.

 

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

 

36.                                 **Attorneys’ Fees.**If either party shallbring any action for relief against the other party, declaratory or otherwise,arising out of this Lease, including any action by Landlord for the recovery ofRent or possession of the Premises, the losing party shall pay the successfulparty a reasonable sum for attorneys’ fees which shall be deemed to haveaccrued on the commencement of such action and shall be paid whether or notsuch action is prosecuted to judgment.

 

37.                                 **Surrender; Holding Over.**

 

(a)                                  **Surrender.**On expiration or ten (10) daysafter termination of the Term, Tenant shall surrender the Premises and allTenant’s Improvements and alterations to Landlord broom clean and in goodcondition. Tenant shall remove all of its trade fixtures and personal property,which personal property specifically includes all cabling installed in thePremises by Tenant (unless Tenant has received consent from Landlord that suchcabling may be surrendered with and remain in the Premises), within thetime period stated in this Section. Tenant, at its cost, shall perform allrestoration made necessary by, and repair any damage to the Premises caused by,the removal of its trade fixtures, personal property and signs to Landlord’sreasonable satisfaction within the time period stated in this Section. Landlordmay, at its election, retain or dispose of in any manner any of Tenant’s tradefixtures or personal property that Tenant does not remove from the Premises onexpiration or within ten (10) days after termination of the Term asallowed or required by the provisions of this Lease by giving ten (10) daysnotice to Tenant. Title to any such trade fixtures and personal property thatLandlord elects to retain or dispose of on expiration of such ten (10) dayperiod shall vest in Landlord. Tenant waives all claims against Landlord forany damage to Tenant resulting from Landlord’s

 

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retention or disposition of any such trade fixtures and personalproperty. Tenant shall be liable to Landlord for Landlord’s reasonable costsfor storing, removing and disposing of Tenant’s trade fixtures and personalproperty. If Tenant fails to surrender the Premises to Landlord on expirationor ten (10) days after termination of the Term as required by thisSection, Tenant shall pay Landlord Rent in an amount equal to 150% of theMinimum Monthly Rent applicable for the month immediately prior to theexpiration or termination of the Term, or the amount provided by law, whicheveris greater, for the entire time Tenant thus remains in possession and Tenantshall be liable for, shall indemnify Landlord against and shall hold Landlordharmless from all damages resulting from Tenant’s failure to timely surrenderthe Premises, including without limitation, (i) any Rent payable by, orany damages claimed by, any prospective tenant of any part or all of thePremises, and (ii) Landlord’s damages resulting from such prospectivetenant rescinding or refusing to enter into the prospective lease of part orall of the Premises by reason of Tenant’s failure to timely surrender thePremises. If Tenant, without Landlord’s prior consent, remains in possession ofthe Premises after expiration or termination of the Term, or after the date inany notice given by Landlord to Tenant terminating this Lease, such possessionby Tenant shall be deemed to be a tenancy at sufferance terminable at any timeby either party.

 

(b)                                 **Holding Over with Landlord’s Consent.**IfTenant, with Landlord’s prior consent, remains in possession of the Premisesafter expiration or termination of the Term, or after the date in any noticegiven by Landlord to Tenant terminating this Lease, such possession by Tenantshall be deemed to be a month-to-month tenancy terminable by Landlord by anotice given to Tenant at least twenty (20) days prior to the end of any suchmonthly 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-monthtenancy, Tenant shall pay Rent in the amount then agreed to in writing by Landlordand 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 herebydiscloses that it represents the Landlord and Colliers International representsthe 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 memberand several of the members are licensed real estate brokers and/or real estateagents in the State of Washington.

 

(c)                                  **Broker.**Landlord and Tenant each representto the other that neither is represented by any broker, agent or finder withrespect to this Lease in any manner, except the Broker(s). The commission dueto the Broker(s) shall be paid by Landlord pursuant to a separate agreement. Eachparty agrees to indemnify and hold the other party harmless from and againstany and all liability, costs, damages, causes of action or other proceedingsinstituted by any broker, agent or finder, licensed or otherwise. claimingthrough, under or by reason of the conduct of the indemnifying party in anymanner whatsoever in connection with this Lease. If Tenant engages a broker,agent or finder to represent Tenant in connection with any renewal of thisLease, then the commission or any fee of such broker, agent or finder shall bepaid by Tenant.

 

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

 

40.                                 **Landlord’s Option to Relocate Tenant.**[ThisSection is intentionally omitted.]

 

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

 

(a)                                  “AdditionalRent” means pass-throughs of increases in Operating Costs and Taxes, as definedin this Lease, and other monetary sums to be paid by Tenant to Landlord underthe provisions of this Lease.

 

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

 

(c)                                  “Authorizedrepresentatives” means any officer, agent, employee, independent contractor orinvitee of either party.

 

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

 

(e)                                  “CommonAreas” means all areas outside the Premises and within the Building or on theLand that are provided and designated by Landlord from time to time for thegeneral, non-exclusive use of Landlord. Tenant and other tenants of theBuilding 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.

 

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

 

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

 

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

 

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

 

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

 

(k)                                  “Encumbrance”means any mortgage, deed of trust or other written security device or agreementaffecting the Premises, and the note or other obligation secured by it, thatconstitutes 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)                               “Forcemajeure” means strikes, lockouts, labor disputes, shortages of labor ormaterials, fire or other casualty, Acts of God or any other cause beyond thereasonable control of a party.

 

(n)                                 “Goodcondition” means the good physical condition of the Premises and each portionof the Premises, including without limitation, all of the Tenant Improvements,Tenant’s alterations, Tenant’s trade fixtures, Tenant’s Personal Property, all asdefined in this Section, signs, walls, interior partitions, windows, windowcoverings, glass, doors, carpeting and resilient flooring, ceiling tiles,plumbing fixtures and lighting fixtures, all of which shall be in conformitywith building standard finishes, ordinary wear and tear, damage by fire orother casualty and taking by condemnation excepted.

 

(o)                                 “Hazardoussubstances” means any industrial waste, toxic waste, chemical contaminant orother substance considered hazardous, toxic or lethal to persons or property ordesignated as hazardous, toxic or lethal to persons or property under any laws,including without limitation, asbestos material or materials containingasbestos.

 

(p)                                 “Holdharmless” means to defend and indemnify from all liability, losses, penalties,damages as defined in this Section, costs, expenses (including withoutlimitation, attorneys’ fees), causes of action, claims or judgments arising outof or related to any damage, as defined in this Section, to any person orproperty.

 

(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 havingjurisdiction over the parties or the Property, or both, in effect either at thetime of execution of this Lease or at any time during the Term, includingwithout limitation, any regulation or order of a quasi-official entity or body(e.g., board of fire examiners or public utilities) and any legally effectiveconditions, covenants or restrictions affecting the Property.

 

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

 

(s)                                  “Lien”means a charge imposed on the Premises by someone other than Landlord, by whichthe 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 agreementaffecting the Premises, and the note or other obligation secured by it, thatconstitutes 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 amortgage.

 

(x)                                   “OperatingCosts” 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 shallinclude, without limitation, the following costs:  (i) salaries, wages, bonuses and othercompensation (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 paidabsence

 

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benefits) relating to employees of Landlord or its agents directlyengaged in the operation, repair, or maintenance of the Property; (ii) payroll,social security, workers’ compensation, unemployment and similar taxes withrespect to such employees of Landlord or its authorized representatives, andthe 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) premiumsand other charges incurred by Landlord with respect to fire, earthquake, othercasualty, all risk, rent loss and liability insurance, any other insurance asis deemed necessary or advisable in the reasonable judgment of Landlord and,after the Base Year, costs of repairing an insured casualty to the extent ofthe deductible amount under the applicable insurance policy; (v) watercharges and sewer rents or fees; (vi) license, permit and inspection fees;(vii) sales, use and excise taxes on goods and services purchased byLandlord in connection with the operation, maintenance or repair of theProperty and Building systems and equipment; (viii) telephone, facsimile,messenger, express delivery service, postage, stationery supplies and otherexpenses incurred in connection with the operation, management, maintenance, orrepair of the Property; (ix) property management fees and expenses; (x)repairs to and physical maintenance of the Property, including building systemsand appurtenances thereto and normal repair and replacement of worn-outequipment, facilities and installations, but excluding the replacement of majorbuilding 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 servicecontracts for elevator, electrical, HVAC, mechanical and other buildingequipment and systems or as may otherwise be necessary or proper for theoperation or maintenance of the Property; (xii) supplies, tools, materials, andequipment used in connection with the operation, maintenance or repair of theProperty; (xiii) accounting, legal and other professional fees and expenses;(xiv) painting the exterior or the public or common areas of the Building and thecost of maintaining the sidewalks, landscaping and other common areas of theProperty; (xv) all costs and expenses for electricity, chilled water, airconditioning, water for heating, gas. fuel, steam, heat, lights, power andother energy related utilities required in connection with the operation,maintenance and repair of the Property; (xvi) the cost of any improvementswhich Landlord elects to capitalize made by Landlord to the Property during theTerm in compliance with the requirements of any laws or regulation or insurancerequirement with which the Property was not required to comply during the BaseYear, as reasonably amortized by Landlord, with interest on the unamortizedbalance at the rate of twelve percent (12%) per year, or the maximum legal rateof interest, whichever is less; (xvii) the cost of any improvements whichLandlord elects to capitalize made by Landlord to the Property during the termof this Lease for the protection of the health and safety of the occupants ofthe Property or that are intended to reduce other Operating Costs, asreasonably amortized by Landlord, with interest on the unamortized balance atthe rate of twelve percent (12%) per year, or the maximum legal rate ofinterest, whichever is less; (xviii) a reasonable reserve for repair orreplacement of equipment used in the maintenance or operation of the Property,(xix) the cost of furniture, draperies, carpeting, landscaping and othercustomary and ordinary items of personal property (excluding paintings,sculptures and other works of art) provided by Landlord for use to common areasof the Building or in the Building office (to the extent that such Buildingoffice is dedicated to the operation and management of the Property), suchcosts to be amortized over the useful life thereof; (xx) Building office rentor rental value; and (xxi) all other costs which, in accordance with generallysound accounting and management principles used by Landlord, as applied to themaintenance and operation of office and/or retail buildings, are propertychargeable to the operation and maintenance of the Property.

 

Operating Costs shoe not include the following:  (i) depreciation on the Building; (ii) debtservice; (iii) capital improvements, except as otherwise provided inclauses (xvi) and (xvii) above, (iv) rental under any ground or underlyingleases; (v) Real Property Taxes, (vi) attorney’s fees and expensesincurred in connection with lease negotiations with prospective tenants, ordefault or enforcement proceedings with respect to defaulting tenants; (vii) thecost of tenant improvements; (viii) advertising expenses; or (ix) realestate broker’s or other leasing commissions.

 

(y)                                 “Parties” means Landlord andTenant.

 

(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 orotherwise controls, establishes, or limits the performance required orpermitted by either party.

 

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

 

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(i)                                     anyImpositions upon, allocable to or measured by the area of the Premises or theProperty, or the rental payable hereunder, including without limitation, anygross income tax or excise tax levied by any Governmental Agencies with respectto the receipt of such rental; or

 

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

 

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

 

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

 

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

 

(vi)                              anyand all costs, including without limitation, the fees of attorneys, taxconsultants and experts, incurred by Landlord should Landlord elect tonegotiate or contest the amount of such real property taxes in formal orinformal proceedings before the Governmental Agency imposing such real propertytaxes; provided, however, that real property taxes shall in no event includeLandlord’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 thisSection, payments of Tenant’s Share of increases in Real Property Taxes andOperating Costs, Insurance, utilities and other charges payable by Tenant toLandlord.

 

(ff)                                “Rentablesquare 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/URatio(s) as defined in this Section.

 

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

 

(hh)                          “R/URatio” means the rentable area of a floor of the Building divided by the usablearea of such floor, both of which shall be computed in accordance with AmericanNational Standard Z65.1-1996 Method of Measuring Floor Space in OfficeBuildings as published by the Building Owners and Managers Association, asamended from tine to time.

 

(ii)                                  “Substantiallycomplete” or “substantially completed” or “substantial completion” means thecompletion of Landlord’s construction obligation, subject to completion orcorrection of “punch list” items, that is, minor items of incomplete ordefective work or materials or mechanical maladjustments that are of such anature that they do not materially interfere with or impair Tenant’s use of thePremises for the Permitted Use.

 

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

 

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

 

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

 

(mm)                      “Tenant’strade 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 inthis Section.

 

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

 

42.                                 **Miscellaneous Provisions.**

 

(a)                                  **Entire Agreement.**This Lease sets forth theentire agreement of the parties as to the subject matter hereof and supersedesall prior discussions and understandings between them. This Lease may notbe amended

 

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

 

(b)                                 **Governing Law.**This Lease shall be governedby, and construed and enforced in accordance with the laws of the State ofWashington.

 

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

 

(d)                                 **Jurisdiction.**In the event any action isbrought to enforce any of the provisions of this Lease, the parties agree to besubject to exclusive to *in personam*jurisdiction to the Superior Court of the State of Washington in and for theCounty of King or in the United States District Court for the Western Districtof Washington and agree that in any such action venue shall lie exclusively atSeattle, Washington.

 

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

 

(f)                                    **Captions.**Section captions containedin this Lease are included for convenience only and form no part ofthe agreement between the parties.

 

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

 

(h)                                 **Binding Effect.**Subject to the provisionsof Section 25 captioned “Assignment and Subletting”, this Lease shall bebinding upon, and inure to the benefit of, the parties hereto and theirrespective successors and assigns. No permitted assignment of this Lease orTenant’s rights hereunder shall be effective against Landlord unless and untilan executed counterpart of the instrument of assignment shall have beendelivered to Landlord and Landlord shall have been furnished with the name andaddress of the assignee. The term “Tenant” shall be deemed to include theassignee under any such permitted assignment.

 

(i)                                     **Effectiveness.**This Lease shall not bebinding or effective until property executed and delivered by Landlord andTenant.

 

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

 

(k)                                  **Time of the Essence.**Time is of the essenceto the performance of all covenants and conditions in this Lease for which timeis 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. MartinSmith Inc is not authorized to give legal or tax advice. Neither Landlord norMartin Smith Inc makes any representations or recommendations as to the legal

 

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sufficiency, legal effect or tax consequences of this document or anytransaction relating thereto. These are questions for your attorney with whomyou should consult before signing the document to determine whether your legalrights are adequately protected.

 

[Notary attached]

 

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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 withfour (4) unreserved parking stalls located on the surface parking lot ofthe Building and/or in the Building garage during the Term of this Lease(subject to the following termination right on the part of Landlord). Suchperking stalls shall be made available to Tenant during periods of typicaloffice use from 7:00 a.m. through 6:00 p.m., Monday through Fridayeach week. Tenant shall pay as rental for such unreserved parking stalls themarket rate in the location of such parking, which is currently $185.00 permonth per stall. Unreserved parking stalls may also be available on thesurface parking lot and in the Building garage 24 hours per day, Monday throughFriday each week at the market rate of $220.00 per month per stall. From timeto time the charge for such parking shall be increased to the then-prevailingmarket rate in the location of such parking. Tenant shall comply with any andall governmental rules and regulations governing such parking. Landlord may make,modify, and enforce rules and regulations related to the parking ofautomobiles in the Building garage and Tenant agrees to abide by such rules andregulations. Notwithstanding any statement to the contrary contained elsewherein this Section or in this Lease. any time after March 31, 2009Landlord may terminate all of Tenant’s parking rights if Landlord electsto 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 theBuilding, provided Landlord gives Tenant at least ninety (90) days priorwritten notice. In addition, Landlord will assist Tenant to obtain “parkingscript” from the parking operator to assist Tenant’s patients with theirparking needs. This script will be purchased at Tenant’s sole cost and expense.

 

44.                                 **Option to Extend.**So long as Tenant is notthen in default under this Lease, Tenant shall have the option to extend theTerm of this Lease for one (1) additional five (5) year period (the “AdditionalTerm”). 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 morethan fifteen (15) months) prior to the Expiration Date (i.e., the Option Noticemust be received by Landlord between January 1, 2008 and July 31,2008). The extension option granted to Tenant pursuant to this Section 44is personal to Tenant and may not be exercised by or for the benefit ofany assignee or sublessee of Tenant. All of the terms and conditions of thisLease shall apply during the Additional Term except (i) the MinimumMonthly Rent shall be an amount mutually agreed to by Landlord and Tenant ordetermined by arbitration as set forth below; (ii) there shall be nofurther options to extend after the commencement of the Additional Term: and (iii) thereshall be no Landlord-provided Tenant Improvements or other Landlord concessionsduring the Additional Term. When the rental rate for the Additional Term isdetermined, whether by agreement of the parties or pursuant to arbitration asprovided below, Landlord and Tenant shall enter into a lease extensionagreement selling forth the new Minimum Monthly Rent for the Premises and suchother terms as may be applicable. If at the time Tenant delivers theOption Notice to Landlord, or at any time between such date and thecommencement date of the Additional Term, Tenant defaults under this Lease andfails to cure its default within the applicable cure period, if any, Landlord may declarethe Option Notice null and void by written notice to Tenant. The MinimumMonthly Rent for the Additional Term shall be one-twelfth (1/12th) of the then “fairmarket rent” (defined below) multiplied by the number of rentable square feetin the Premises. The term “fair market rent” means the rate per rentable squarefoot per year (including increases therein over the Additional Term) that anew, willing, non-equity tenant would pay in an arms-length transaction for thePremises, or for comparable space in the Building, if any, or for comparablespace in comparable buildings in the Pioneer Square district of Seattle,Washington, for leases having a five (5) year term. Landlord and Tenantagree the fair market rent for the Additional Term shall be determined asfollows:

 

(a)                                  Promptlyafter Landlord receives the Option Notice, the parties (or their designatedrepresentatives) shall meet and attempt to agree on the fair market rent forthe Additional Term. If the parties have not agreed on the fair market rent forthe Additional Term within one hundred twenty (120) days after Landlordreceives the Option Notice, then unless otherwise agreed in writing by theparties, the matter shall be submitted to arbitration in accordance with theterms 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 ofthe parties) is referred to in this Lease as the “Arbitration Commencement Date”.

 

(b)                                 Withinfifteen (15) days after the Arbitration Commencement Date, each party shallprovide the other party with written notice (a “Rent Notice”) of itsdetermination of fair market rent. The matter shall then be submitted fordecision to an arbitrator. The arbitrator shall be a licensed real estatebroker who has been active over the five (5) year period ending on theArbitration Commencement Date in the leasing of downtown office properties inSeattle, Washington. If Landlord and Tenant are unable to agree on thearbitrator within thirty (30) days after the Arbitration Commencement Date,each shall select a broker who shall be qualified under the same criteria setforth above, and so notify the other party in writing within ten (10) daysafter the end of such thirty (30) day period. The two brokers so chosen by theparties shall then appoint the arbitrator within ten (10) days after thedate of the appointment of the last appointed broker. If the two brokers sochosen by the parties are unable to agree on the arbitrator within such ten (10) dayperiod, the arbitrator will be appointed by the director (or the equivalent) ofthe Seattle office of the American Arbitration Association upon the applicationof either party. If either party fails to timely select its broker and sonotify the other party in writing within the foregoing ten (10) dayperiod, and the other party timely selects its broker, then the broker selectedby the other party shall be the arbitrator for determining fair market rent.

 

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

 

(d)                                 Bothparties may submit any information to the arbitrator for his or herconsideration, with copies to the other party. The arbitrator shall have theright to consult experts and competent authorities for factual information orevidence pertaining to the determination of fair market rent. The arbitratorshall render his or her decision by written notice to each party. Thedetermination of the arbitrator will be final and binding upon Landlord andTenant. The cost of the arbitration (including the charges of the brokerselected by the other party) will be paid by Landlord if the fair market rentdetermined by arbitration is the fair market rent specified in Tenant’s RentNotice, and by Tenant if the fair market rent determined by Arbitration is thefair market rent specified in Landlord’s Rent Notice.

 

45.                                 **Landlord Option to Terminate.**In the eventTenant exercises Tenant’s Option to Extend pursuant to Section 44 andremains in the Premises after March 31, 2009, Landlord shall have theOption to Terminate this Lease at any time after March 31, 2009 upon notless than nine (9) month’s advance written notice in the event Landlord isgoing to demolish or substantially rehabilitate the Premises in conjunctionwith the construction and development of a new building on the site of theexisting parking facilities. For example, Landlord may give a TerminationNotice to Tenant on December 1, 2008 to Terminate this Lease on August 31,2009. In the event Landlord exercises this Option to Terminate, Tenant shallvacate the Premises on or before the date specified in Landlord’s notice andboth Landlord and Tenant will be relieved of all obligations to each otherrelated 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:                                              |   |

 

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**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

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