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HomeMy WebLinkAbout3657RESOLUTION NO. 3 6 5 7 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A CONTRACT WITH AUBURN ON MAIN, L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY FOR A LEASE AGREEMENT WITH OPTION TO PURCHASE THE PREMISES AT 340 E MAIN STREET, AUBURN, WASHINGTON, SUBSEQUENT TO A COMPLETE RENOVATION OF THE PROPERTY TO INCLUDE MUNICIPAL COURT AND POLICE FACILITIES. WHEREAS, the City of Auburn is engaged in various municipal functions, including providing for public safety services; and WHEREAS, in order to provide for such services, it is appropriate that the City retain space for municipal courts and police department; and WHEREAS, in order to provide for those services, the City of Auburn ("Tenant") has negotiated a contract with AUBURN ON MAIN, L.L.C. ("Landlord") for such services, and the City has determined that AUBURN ON MAIN, L.L.C. is able and qualified to provide the services necessary, at a cost that is acceptable to the City; and WHEREAS, Landlord is currently the contract purchaser of, and prior to the issuance of a Building Permit (defined in Agreement Exhibit "C" attached hereto), will be the fee simple title owner of, that certain real property legally described on Agreement Exhibit "A" attached hereto (the "Premises"); and WHEREAS, Landlord proposes a renovation of the Premises that includes Landlord's Work, (hereinafter defined); and Resolution 3657 November 5, 2003 Page 1 WHEREAS, the Tenant is authorized by RCW 35.42.010.090 to lease with an option to purchase the Premises as improved by Landlord's Work; and WHEREAS, in consideration of landlord performing Landlord's Work, and providing other valuable consideration, Tenant has deemed it to be in the best interest of Tenant to lease with an option to purchase the Premises from Landlord. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, HEREBY RESOLVES as follows: Section 1. That the Mayor and the City Clerk are authorized to execute an agreement in substantial conformity with the Agreement attached hereto, marked as Exhibit "A" and incorporated herein by this reference. Section 2. That the Mayor is authorized to implement such administrative procedures as may be necessary to carry out the directives of this legislation. Section $. That this Resolution shall take effect and be in full force upon passage and signatures hereon. Dated and Signed this //? ~day of ,~/7/,¢¢~, 200-~ PETTER B~. LEWIS MAYOR Resolution 3657 November 5, 2003 Page 2 ATTEST: Danielle E. Daskam, City Clerk AP~ TO FORM: D~niel i. City Attorney Resolution 3657 November 5, 2003 Page 3 LEASE AGREEMENT This lease ("Lease"), dated ~'~OW'~L~r' ~.~, , 2003 is entered into between AUBURN ON MAIN, L.L.C., a Washington limited liability company ("Landlord"), and THE CITY OF AUBURN, a code city of the state of Washington ("Tenant"). WITNESSETH: WHEREAS, Landlord is currently the contract purchaser of, and prior to the issuance of a Building Permit (defined in Exhibit "C" attached hereto), will be the fee simple title owner of, that certain real property legally described on Exhibit "A' attached hereto (the "Premises"); and WHEREAS, Landlord proposes a renovation of the Premises that includes Landlord's Work, (hereinafter defined); and WHEREAS, Tenant has determined that the proposed renovation of the Premises would strengthen the financial stability and general economic vitality of the City and add substantial tax revenues to the City and promote the public safety and welfare; and WHEREAS, the Tenant is authorized by RCW 35.42.010-.090 to lease with an option to purchase the Premises as improved by Landlord's Work; and WHEREAS, in consideration of Landlord performing Landlord's Work, and providing other valuable consideration, Tenant has deemed it to be in the best interest of Tenant to lease with an option to purchase the Premises from Landlord; and WHEREAS, by Resolution No. 3657, Tenant authorized the execution of this Lease. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions hereinafter contained, the parties hereto agree as follows: SECTION 1. PARTIES. The parties to this Lease are Auburn on Main, L.L.C., as Landlord, and the City of Auburn, as Tenant. Each of the parties enters into this Lease by its own volition and choice, without compulsion. Landlord acknowledges that Tenant, in its official capacity as the City of Auburn (a code city under applicable Washington law) having jurisdiction, powers and rights afforded to it under applicable laws, does not waive such jurisdiction, power and rights by virtue of its execution of the Lease, including the power of eminent domain. Landlord warrants that it is authorized to enter into this Lease (the "Lease") and the lease created hereunder, and to convey fee simple title to the Premises (subject to the Title Exceptions hereinafter defined) should Tenant exercise its Option (hereinafter defined), and that the person executing this Lease on behalf of Landlord is authorized to do so. Landlord warrants that not later than the date of issuance of the Building Permit, it will be the owner of fee simple title to the Premises, subject to the Title Exceptions. Tenant warrants that it is authorized to enter into this Lease and the lease created hereunder (the "Lease"), and to acquire fee simple title to the Premises (subject to the Title Exceptions hereinafter defined) should Tenant exercise its Option, and that the person executing this Lease on behalf of Tenant is authorized to do so. SECTION 2. PREMISES; BUILDING. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, that certain real property legally described on Exhibit "A" attached hereto and incorporated herein by this reference (hereinafter called the "Premises"). A site plan of the Premises, substantially depicting the condition required upon completion of Landlord's Work, is set forth on Exhibit "B" attached hereto and incorporated herein by this reference (hereinafter "Site Plan"). The "Buildings" shall be defined as the two structures designated as such on the Site Plan, which Buildings are to be improved as more particularly set forth in Landlord's Work. SECTION 3. INITIAL CONDITION OF PREMISES Landlord shall perform, at Landlord's expense, "Landlord's Work", as set forth on Exhibit "C" attached hereto. Tenant shall perform, at Tenant's expense, "Tenant's Work", as set forth on Exhibit "D" attached hereto. Upon delivery of the Premises to Tenant, Tenant shall inspect the same, and shall advise Landlord in writing of any discrepancies or objections to the condition of the Premises delivered by Landlord; Tenant's failure to provide such notice to Landlord within thirty (30) days after Landlord's delivery of the Premises shall be deemed as Tenant's full and final acceptance of the Premises and Tenant's unconditional waiver any claims against Landlord concerning the same; subject in all respects to "Valid Claims" made during the Warranty Period, each as defined in Exhibit "C'. SECTION 4. TERM AND TERMINATION OPTION. 4.1 Term. This Lease shall be for a term of approximately fifty (50) years, commencing precisely as of the earlier of Tenant's entry (other than for inspection purposes) into the Premises or delivery (by written notice from Landlord) of the Premises by Landlord to Tenant ("Lease Commencement Date" or "LCD"), and expiring precisely at midnight on last day of the six hundredth (600th) full calendar month after the Lease Commencement Date, unless sooner terminated as herein provided ("Term"). 4.2 Tenant's Right to Terminate. Tenant shall have the right to terminate the Lease effective as of the dates herein set forth, without cause, strictly and solely in accordance with the provisions of this subsection 4.2 ("Tenant's Termination Right"). If Tenant exercises Tenant's Termination Right, the Lease and the obligations of the parties hereunder shall cease to accrue as of the "Effective Date of Termination", and the Term shall come to an end as of such date. To exercise Tenant's Termination Right, Tenant shall give Landlord not less than three hundred sixty five (365) days advance written notice. The Effective Date of Termination shall be the date selected b,~ Tenant, but shall be limited solely to the last day of 240th, 300th, 360th, 420th, 480th and/or 540"' month after the LCD. Notwithstanding the foregoing, Tenant's Termination Right (and any exercise of the same) shall, at Landlord's option, lapse and be of no force or effect whatever during any period when: (a) Tenant shall be in default of any of its covenants and/or obligations under this Lease; and (b) as a result of such default, Landlord has issued a notice of default (or similar notice) to Tenant and Tenant has not cured the same within the period for cure prescribed in the Lease, if any. If Tenant exercises its right hereunder, Tenant shall pay all rent and observe all of its obligations under the Lease accruing through the Effective Date of Termination. SECTION 5. RENT. 5.1 Rent. The terms "rent" and "rental" as used herein and elsewhere in this Lease shall be deemed to be and mean the minimum rent, all additional rents, rental adjustments and any and all other assessments, charges and sums, however designated, including but not limited to Taxes applicable to the Premises (as hereinafter defined), under the terms of the Lease required to be paid by Tenant to Landlord or to any third party hereunder. 5.2 Minimum Rent. During the Term, Tenant shall pay "minimum rent", as follows: (a) for the period commencing upon the LCD and continuing through and including the last day of the sixtieth (60th) full calendar month after the LCD, the sum of Seven Hundred Thirty Seven Thousand Four Hundred Thirty Seven and 50/100 Dollars ($737,437.50) per annum; (b) for the period commencing upon the first day of the sixty first (61st) full calendar month after the LCD and continuing through the last day of the one hundred twentieth (120th) full calendar month after the LCD, the sum of Nine Hundred Seventy Two Thousand and 00/100 dollars ($972,000.00) per annum; 4(0ct~ for each sixty (60) month period thereafter through and including the two hundred fortieth (2 ) full calendar month after the LCD, the sum payable for the prior sixty (60) month period increased by the lesser of: (i) fifteen percent (15%); or (ii) eighty percent (80%) of the increase in the "cost of living". The cost of living shall be defined as in the increase in the Consumer Price Index between the base month (which shall be the month that is sixty-three (63) months prior to the effective date of increase) and the measurement month (which shall be the month that is three (3) months prior to the effective date of increase). The applicable Consumer Price Index is the Consumer Price Index for All Urban Consumers (1982 -1984 = 100) for Seattle - Tacoma, as published by the United States Government. If the Consumer Price Index is changed or replaced by the United States Government, the conversion factor published by the United States Government on a new comparable index shall be used to compute the periodic increase in the minimum rent. (d) for each sixty (60) month period of time between the two hundred forty first (241st) full calendar month after the LCD and the last day of the Term, Tenant shall pay, on a monthly basis, as minimum rent the "fair market rental value" for the Premises. The "fair market rental value" shall be determined in good faith between Landlord and Tenant not later than the last day of the sixth (6th) full calendar month prior to the commencement of the applicable sixty (60) month period. If the parties are unable to agree upon the fair market rental for the Premises, then the following appraisal procedure shall be followed. Landlord and Tenant shall each engage a commercial real estate appraiser or broker unaffiliated with the parties, which appraisers or brokers shall have at least ten (10) years experience in the south King / north Pierce County area. The two appraisers and/or brokers shall engage a similarly qualified third appraiser and/or broker. The three appraisers and/or brokers shall individually determine in writing the fair market rental value for the Premises for the applicable sixty (60) month period. In considering the fair market rental value for the Premises, the appraisers and/or brokers shall consider the highest and best use for the Premises, and shall include the highest and best use / rental value for all improvements on the Premises, including the Buildings. When each appraiser and/or broker has submitted his/her determination of the fair market rental value for the applicable sixty (60) month period of the Term, the three submittals shall be compared. If the highest submittal shall be 120% (or less) of the lowest submittal for each sixty (60) month period, then the mean of the three submittals shall be fair market rental value for the Premises applicable to such sixty (60) month period. If the highest submittal shall be more than 120% of the lowest submittal for each such sixty (60) month period, the two submittals closest to one another shall be used (with the third submittal discarded), and the mean of the aforesaid two submittals shall be the fair market rental value for the Premises for such sixty (60) month year period. Landlord and Tenant shall each pay for the appraiser and/or broker engaged by it, and shall equally pay for the appraiser or broker engaged by the two appraisers and/or brokers. Notwithstanding the foregoing, in no event shall the fair market rental value for the Premises for the applicable sixty (60) month period be less than the minimum rent payable during the immediately preceding period prior to such increase. The minimum rent shall be due and payable, without prior notice or demand, in equal monthly installments on the first day of each calendar month, without any set-off or deduction, during the Term hereof. 5.3 Fractional Months. Should the Lease Commencement Date be a day of the month other than the first day of such month, or should there be any other fractional month during the Term, then Tenant shall pay, upon the Lease Commencement Date, or the first day of the month, whichever is applicable, a pro rata portion of all rent, pro rated on a per diem basis, with respect to said fractional month. 5.4 Place of Payment. Tenant shall pay rent herein provided to Landlord at 3700 Beazer Road, Bellingham, Washington 98226, or to such other address as Landlord may from time to time designate at least thirty (30) days prior to the next ensuing rent payment date. 5.5 Full Faith and Credit. During the period between the Lease Commencement Date and the last day of Closing Period One (hereinafter defined) [the "Full Faith Period"], the obligation of Tenant to make rental payments constitutes a limited tax general obligation of Tenant. During the Full Faith Period, Tenant hereby pledges irrevocably to include in its budget and levy taxes annually, within the constitutional and statutory limitations provided by law without a vote of the electors of the Tenant, on all of the taxable property within the city limits of Tenant, in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the rental payments. During the Full Faith Period, the full faith, credit and resources of Tenant are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of the rental payments. The foregoing covenants of Tenant shall not apply after the Full Faith Period, provided, however, Tenant shall nonetheless be obligated to pay the full rent and perform all of its obligations and covenants throughout the entire Term. After the Full Faith Period, the provisions of RCW 35.42.010-.090 shall not apply to this Lease. SECTION 6. TENANT'S USE OF PREMISES 6.1 Authorized Use. Tenant shall use and occupy the Premises during the Term only for governmental purposes. Tenant shall not sublet the Premises or allow the same to be used for purposes inconsistent with the conduct of government business operations, including such inconsistent purposes as non income tax exempt commercial purposes. Tenant shall not use or permit the use of said Premises for any other purpose without Landlord's consent, which consent Landlord shall not unreasonably withhold or delay. 6.2 Compliance with Laws; Hazardous Substances. Tenant shall at its cost, obtain all permits, licenses and approvals necessary or appropriate for the conduct of its business as herein specified. Tenant shall not use the Premises nor shall the Premises be used, in whole or in part, during any portion of the Term for any purpose or use in violation of, and Tenant shall comply with, any and all, present and/or future laws, ordinances, regulations or rules of any public authority, including but not limited to the Americans with Disabilities Act and any similar federal or state laws relating to the manner and use of the Premises. Except for small quantities stored and used in accordance with the applicable law, Tenant shall not keep within, on or around the Premises for use, disposal, treatment, generation, storage ~)j 4 sale any substances designated as, or containing components designated as, a hazardous, dangerous, toxic material or substance or any material or substance that is subject to regulation under any local, state or federal law, statute, ordinance or regulation pertaining to health, hygiene, safety or the environment or substance that is otherwise subject to such regulation as hazardous, dangerous, toxic or harmful (collectively "Hazardous Substances"). Tenant shall be solely responsible for and shall defend, indemnify and hold Landlord and any successors-in-interest to Landlord, including any lender of Landlord, and their respective agents and employees harmless from all claims, costs, damages, damage, liabilities, including attorneys' fees and costs, arising out of or in connection with Tenant's breach of its obligations contained in this paragraph or arising out of or in connection with removal, clean-up or restoration deemed reasonably necessary by any governmental entity or Landlord to remove, clean-up or restore any portions of the Premises as the result of Hazardous Substances used, disposed, treated, generated or stored by Tenant. Tenant's obligations under this paragraph shall survive expiration and termination of the Lease. SECTION 7. UTILITIES; TRASH COLLECTION. 7.1 Payment by Tenant. Beginning as the Lease Commencement Date and continuing thereafter throughout the Term, Tenant shall pay before delinquency for all water, gas, heat, electricity, power, sewage, telephone, trash collection, and all other utility and other services supplied to or consumed in or on the Premises. 7.2 Utility Connection Fees and Deposits. Tenant shall be solely liable for all utility service companies' hook-up fees, connection fees, utility meters, and applications for service and security deposits. 7.3 Interruption of Utility Services. In no event shall Landlord be liable for any interruption or failure in the supply of any utility to the Premises. SECTION 8. TAXES. 8.1 Tenant's Property. Tenant shall be liable for and shall pay when due all taxes levied against the Personal Property (hereinafter defined) located on the Premises. If any taxes on Personal Property are levied against Landlord or Landlord's property, or if the assessed value of Landlord's property is increased by the inclusion of the value placed on the Personal Property, and Landlord pays the taxes resulting therefrom, Tenant shall, at the option of Landlord, pay to Landlord such taxes relating to Personal Property within thirty (30) days after receipt from Landlord of a statement therefor. 8.2 Taxes Applicable to the Premises. The word "Taxes" shall mean and include: (a) any form of assessment (including without limitation special assessments and local improvement districts), including real property taxes; (b) any tax on Landlord's right to receive rent or other income, or to conduct any business at, from or in any portion of the Premises; and (c) any tax allocable to or measured by the area of the Premises or the rental payable hereunder, including without limitation any gross income tax or excise tax levied by or permitted by any governmental body with respect to the receipt of such rental, or upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises, or any portion thereof. $ Notwithstanding the preceding paragraph: (i) franchise, estate, inheritance, succession, capital levy, transfer, income and excess profits taxes imposed upon Landlord shall be excluded from the definition of "Taxes" (except that real property taxes altered by inheritance, succession, transfer or sale of the Premises, or any portion thereof, shall not be excluded from the definition of "Taxes"); and (ii) with respect to any assessment which may be levied against or upon the Premises and which under the laws then in force may be evidenced by improvement or other bonds, or may be paid in annual installments, there shall be included within the definition of "Taxes" with respect to any tax fiscal year only the amount currently payable on such bond for such tax fiscal year, as hereinafter defined, or the current annual installment for such tax fiscal year. The phrase "Taxes applicable to the Premises" shall mean all Taxes levied, assessed or payable in any tax fiscal year (as such year is determined by Washington law) during the Term, against the land and improvements comprising the Premises. Landlord shall pay to the taxing authority the Taxes applicable to the Premises, subject to payment or reimbursement by Tenant as provided in Section 8.3 hereof. 8.3 Reimbursement by Tenant. Beginning as of the Lease Commencement Date, Tenant shall reimburse Landlord for Taxes applicable to the Premises, as and when invoiced therefor by Landlord. During any part of the Term which shall be less than a full tax fiscal year, Taxes applicable to the Premises shall be pro rated on a daily basis between the parties to the end that Tenant shall pay only the Taxes applicable to the Premises which are attributable to the portion of the tax fiscal year occurring within the Term. Notwithstanding the foregoing, at either party's election made from time to time, Tenant shall pay on a timely basis directly to the taxing authority the Taxes applicable to the Premises and provide evidence of such timely payment to Landlord, or in the alternative, Tenant shall provide documentation from the taxing authority reasonably acceptable to Landlord to the effect that the Premises are exempt from the obligation to pay Taxes. SECTION 9. HOLD HARMLESS. 9.1 Indemnity by Tenant. To the extent permitted by applicable law, Tenant shall defend, indemnify, and hold harmless the Landlord, its officers and employees from and against any and all claims, suits, actions, or liabilities for injury or death of any person, or for loss or damage to property, which arises on and/or after the Lease Commencement Date and/or from any action or activity of Tenant (or its agents, officers, officials, employees, volunteers and/or contractors) occurring at any time, except only such injury or damage as shall have been occasioned by the sole negligence of the Landlord. Notwithstanding the foregoing, the foregoing duty of Tenant to indemnify, defend and hold Landlord harmless shall be expanded to afford Landlord the same protection Landlord would have received had Tenant obtained a separate policy of commercial general liability ("CGL") insurance, including contractual, on an occurrence basis, with coverage at least as broad as the most commonly available ISO Commercial General Liability policy CG 00 01, on which Landlord had been named as an "additional insured" as to claims relating to the Lease and/or the Premises, using ISO Additional Insured-Managers or Lessors of Premises Form CG 20 11. 9.2 Indemnity by Landlord. To the same extent applicable law provides for indemnification as set forth in subsection 9.1 above, Landlord shall defend, indemnify, and hold harmless the Tenant, its officers, officials, employees and volunteers from and against any and all claims, suits, actions, or liabilities for injury or death of any person, or for loss or damage to property, which arises before the Lease Commencement Date and/or from any action or activity of Landlord (or its agents, members, employees and/or contractors) occurring at any time, except only such injury or damage as shall have been occasioned by the sole negligence of the Tenant. 9.3 Waivers. The parties hereby stipulate and agree that the provisions of RCW 4.24.115 are not applicable to this Lease; however, should a court of competent jurisdiction determine that this Lease is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Landlord and Tenant or the latter's its officers, officials, employees, or volunteers, each party's liability hereunder shall be only to the extent of that party's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes each party's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Lease. Furthermore, Landlord and Tenant waive all rights against each other any of their subcontractors, sub-subcontractors, agents and employees, each of the other, for damages caused by fire or other perils to the extent covered by Builders Risk insurance or other property insurance obtained in connection with this Lease, or other property insurance applicable to the Premises. The policies shall provide such waivers by endorsement or otherwise. 9.4 No Time Limitation. It is the intention of the parties hereto that the provisions of this Section of the Lease survive the termination or expiration of this Lease. SECTION 10. INSURANCE. 10.1 Fire and All Risk Coverage by Tenant. Beginning as of the Lease Commencement Date and continuing throughout the Term, Tenant shall procure and maintain, at its expense, for the benefit of Landlord and Tenant, fire insurance with an "all risk" endorsement (excluding earthquake, flood and volcano coverage) insuring the Buildings, including all fixtures appurtenant thereto, all in an amount equal to one hundred percent [100%] of the insurable replacement value thereof. The proceeds received from any claim made under Tenant's insurance policy described in this subsection shall be used solely to satisfy Tenant's obligations under Section 11 hereof. 10.2 Commercial General Liability Coverage by Tenant. Tenant shall procure and maintain, at its expense, for the benefit of Landlord and Tenant with respect to the Premises, commercial general liability (including bodily injury liability, property damage liability and contractual liability) insurance with coverage in amounts appropriate to satisfy any and all reasonable claims, but in no event in amounts less than the greater of Five Million Dollars [$5,000,000] combined single limit or such higher limit as may customary for similar buildings utilized for similar purposes in the state of Washington, or, if higher, as may be reasonably required by Landlord from time to time. 10.3 Policy Provisions. All of the insurance required to be obtained by Tenant pursuant to the provisions of this Section shall be with companies that are licensed to do business in Washington, that have at all times a general policyholder's rating of not less than A and a financial rating of not less than class × as rated in the then most current "Best's Insurance Reports", and written on policy forms satisfactory and acceptable to Landlord. Commercial general liability policies shall only be written on "occurrence forms". In the event "occurrence forms" become no longer available, the insurance policy form obtained by Tenant shall be subject to Landlord's approval. Each policy shall designate Landlord, and any other entity Landlord shall reasonably require to be designated, additional named insureds. Although named as an insured, Landlord shall not be barred by reason any willful act or the negligence of Tenant, its servants, agents and employees, to recover under said policies procured by Tenant for any loss occasioned to Landlord. In lieu of providing the policies or copies thereof, Tenant shall provide Landlord with a certificate(s) of insurance issued by each of the insurance companies issuing any of the policies required pursuant to the provisions of this Section (prior to entry by Tenant on the Premises, and with respect to renewals, at least thirty days prior to the expiration of such expiring policies), and said certificate(s) shall provide that the insurance issued thereunder shall not be altered or canceled until after thirty (30) days written notice to Landlord. Tenant agrees to permit Landlord at all reasonable times upon reasonable notice to inspect the policies of insurance of Tenant covering risks upon the Premises for which policies or copies of thereof are not required to be delivered to Landlord. In the event Tenant shall fail to procure and maintain any of the insurance required pursuant to this Section, Landlord shall have the right, but not the obligation, to obtain said policies and to pay any premium due thereon. The amount of any such premiums shall be reimbursed by Tenant to Landlord within ten (10) days after demand. All commercial liability and other policies to be procured and maintained by Tenant shall be written as primary policies, not contributing with and not in excess of coverage that Landlord may carry. 10.4 Blanket Insurance Policies. Notwithstanding anything to the contrary contained in this Section, Tenant's obligations to carry the insurance provided herein may be brought within the coverage of a so-called blanket policy or policies of insurance procured and maintained by Tenant, provided, however, that Landlord (and any entity Landlord shall reasonably designate) shall be designated as an additional named insured(s) thereunder as its (their) interests may appear, and that the coverage afforded Landlord (and any Landlord designated entities) shall not be reduced or diminished by reason of the use of such blanket policy of insurance, and provided further that the requirements set forth herein are otherwise satisfied. 10.5 Self Insurance. Notwithstanding anything to the contrary contained in this Section, if the Tenant at the time in question is the City of Auburn, or the County of King or the State of Washington (that is, Tenant's interest has not been transferred to any private entity or person, or to any governmental agency other than those described above), the aforementioned insurance and self- insurance requirements of this Section 10 may be met by Tenant's membership in the Washington Cities Insurance Authority ("WCIA"), a municipal insurance pool. So long as Tenant is providing the insurance required hereunder through the WClA, Tenant will not be required to provide policies or certificates of insurance, and will not be required to name Landlord as an "additional insured", "additional named insured", "named insured," "loss payee," or any similar designation. Tenant shall, prior to the Commencement Date, and subsequently upon Landlord's request therefor, provide reasonable evidence of Tenant's continued participation from time to time thereafter in the WClA. The coverage afforded Landlord (and any Landlord designated entities) shall not be reduced or diminished by reason of the use of such self insurance program. SECTION 11. DESTRUCTION. 11.1 Damage to the Buildings and/or other Improvements on the Premises. If the event of any damage or destruction to the Buildings and/or other improvements on the Premises, Tenant shall forthwith repair, rebuild and reconstruct the same pursuant to plans and specifications approved by Landlord. Tenant may utilize the insurance proceeds available to it pursuant to Section 10 above. In the event such insurance proceed are, for any reason, inadequate, Tenant shall nonetheless be so obligated to repair, rebuild and reconstruct the Buildings and other improvements on the Premises. Notwithstanding the foregoing, in the event of fire or other damage or destruction during the last three (3) years of the Term greater than thirty percent (30%) of the value of the Buildings, and the Buildings are fully insured for such event in the amount required under Section 10, then Tenant shall have the option to not repair, rebuild and/or reconstruct and instead terminate the Lease and deliver to Landlord the entire insurance proceeds applicable to the Buildings and other improvements on the Premises, plus the applicable insurance deductible amount and plus the maximum allowable portion of business interruption insurance applicable to loss or payment of rent (collectively, the "insurance proceeds"). In the event Tenant so elects to terminate the Lease, the effective date of termination shall be the latest of the date: (a) Tenant so notifies Landlord of such election; (b) that is ninety (90) days after the occurrence of such event of damage or destruction; or (c) that Tenant delivers to Landlord all of the insurance proceeds required to be delivered to Landlord hereunder. 11.2 No Restoration by Landlord. Landlord shall have no responsibility whatever to repair any damage, or to rebuild or reconstruct any portion of the Premises, including the Buildings and/or any other improvements thereon that have been damaged or destroyed. 11.3 Restoration by Tenant. Subject to Tenant's right to terminate the Lease, if applicable, pursuant to subsection 11.1 above, Tenant shall, at its expense, repair, rebuild and reconstruct the Buildings and/or any other improvements, alterations and additions that have been damaged or destroyed, within three hundred sixty (360) days after such damage or destruction, pursuant to plans and specifications therefor approved by Landlord. Further, Tenant shall, at its expense, promptly thereafter restore, replace and repair all Personal Property installed or located in any part of the Buildings and/or Premises that were damaged or destroyed, so as to restore the Buildings (and the entire Premises) and its function to a condition substantially equal to that which existed immediately prior to said damage or destruction. 11.4 No Abatement of Any Rent. Except as specifically provided in subsection 11.1 above, the occurrence of any event resulting in damage or destruction to the Buildings and/or any other improvements on the Premises shall not give Tenant the right to terminate the Lease and Tenant hereby waives the benefit of any laws or custom that provide any such right. Further, Tenant shall continue to pay all rent, without any abatement or reduction whatever, notwithstanding the occurrence of any event resulting in damage or destruction to the Buildings and/or any other improvements on the Premises, and Tenant hereby waives the benefit of any laws, court decisions or custom that provide any such right of termination, abatement and/or reduction. SECTION 12. REPAIRS AND MAINTENANCE 12.1 No ObligationsbyLandlord. This Lease has been made upon the express understanding that Landlord has no obligation and has made no promises to alter, remodel, repair, maintain, replace, improve, decorate or paint the Premises or any part thereof including the Buildings, the parking lot and/or the drive aisles, and that, except as set forth as a part of Landlord's Work, no representations have been made concerning the condition of the Premises or any part thereof including the Buildings, the parking lot and/or the drive aisles. Tenant hereby waives any obligation under law, in equity and/or by custom that requires Landlord to repair or maintain the Premises. 12.2 Tenant's Covenants. Tenant acknowledges that it has been leased and does hereby accept, upon delivery to it by Landlord, the Premises in a strictly "AS-IS" condition, subject to Landlord's requirements set forth as part of Landlord's Work. Tenant shall have the right to inspect the Premises at any time prior to delivery of the Premises, and become fully aware of the condition thereof. Further, upon such delivery of the Premises, Tenant shall inspect the same as provided in Section 3 hereof and Exhibit "C" hereto. Tenant acknowledges it has not relied upon any statements, commitments or claims made by or on behalf of Landlord. During the Term, Tenant shall, at its sole cost and expense, keep and maintain in good order and repair, and if needed, replace, the Premises and every part thereof, including, without limiting the generality of the foregoing, the Buildings and all components, pads and systems thereof, and fully maintain the Premises, including the parking lots, drive aisles, exterior lighting and landscaping thereon, so that at all times the Premises (including the Buildings) is in a modern first-class condition, subject to ordinary wear and tear. SECTION 13. ALTERATIONS. 13.1 Optional Alterations by Tenant. Tenant may, at its sole cost and expense, from time to time during the Term, make such alterations, additions and changes in and to the interior of the Buildings as it may find necessary or convenient for its purposes. 13.2 Procedure for Alterations and Repairs. All alterations, additions, repairs or changes to be made to the Buildings and/or other pads of the Premises shall be made in accordance with plans and specifications fully complying with all applicable laws, codes and ordinances. Tenant, at its sole cost and expense, shall obtain all necessary governmental permits and approvals, shall comply with all present and future governmental laws, rules and regulations, and shall pay for all assessments, fees, taxes and charges associated with such alterations, additions, repairs or changes. All work with respect to any alterations, additions, repairs or changes shall be done in good and workmanlike manner, diligently prosecuted to completion to the end that the Buildings shall at all times be a complete unit except during the period of work and performed strictly in compliance with applicable law. Copies of as-built plans or marked-up construction drawings for any such alterations, additions, or improvements made by Tenant shall be promptly provided to Landlord following final inspection and sign-off by the applicable building official. SECTION 14. MECHANIC'S LIENS. Tenant shall pay or cause to be paid all costs for work done by it or caused to be done by it on the Premises, and Tenant shall keep the Premises free and clear of all mechanic's liens and other liens on account of work done for Tenant or persons claiming under it. Tenant hereby indemnifies and saves Landlord free and harmless against liability, loss, damage, costs, reasonable attorney's fees and all other expenses on account of claims of lien of laborers or material suppliers or others for work performed for or materials or supplies furnished to Tenant or persons claiming under it. If Tenant shall desire to contest any claim of lien, it shall furnish the security required by law to prevent foreclosure during the pendency of the contest. If a final judgment establishing the validity or existence of a lien for any amount is entered, Tenant shall pay and satisfy the same at once unless it is superseded in compliance with applicable law. If Tenant shall be in default in paying any charge for which a mechanic's lien claim and suit to foreclose the lien has been filed, or shall not have given the security to protect the Premises and Landlord against such a claim, Tenant shall be in default of this Lease. If Tenant shall be delinquent or otherwise in default in paying any charge for which a mechanic's lien claim and suit to foreclose the lien have been filed, and shall not have given the security to protect the Premises and Landlord against such claim of lien, Landlord may (but shall not be required to) pay said claim and any costs, and the amount so paid, together with attorney's fees incurred in connection therewith, shall be due and owing from Tenant to Landlord within thirty (30) days of demand therefor. Should Tenant receive notice that a claim of lien has been filed against the Premises or notice of any action affecting the title to such property, Tenant shall forthwith provide Landlord with a copy of such notice. Landlord or its representatives shall have the right to go upon and inspect the Premises at all reasonable times, and shall have the right to post and keep posted thereon notices such as those provided for by Title 60 RCW, or which Landlord may deem to be proper for the protection of Landlord's interest in the Premises. Tenant shall, before the commencement of any work which might result in any such lien, give Landlord written notice of its intention to do so in order that Landlord may timely post and record such notices. It is the intention of the parties that the provisions of this Section survive the termination or expiration of this Lease. 10 SECTION 15. WAIVER BY TENANT OF CODE SECTIONS AND RIGHTS. To the maximum extent permitted under law and except as expressly set forth in this Lease, Tenant hereby waives the benefit of all present or future laws, regulations or court decisions inconsistent with the provisions of this Lease, including, but not limited to, those pertaining to self- help, to make repairs at the expense of Landlord, to terminate this Lease upon destruction of the Buildings (or any portion of either or both of them) or the Premises, to abatement or reduction in rent due to damage or destruction, and to offset from rent or other sums due Landlord any sums Tenant believes or are actually due from Landlord to Tenant. Except as otherwise expressly provided in this Lease, this Lease shall not terminate, nor shall Tenant have any right to terminate this Lease or to be released or discharged from any obligations or liabilities hereunder for any reason, including without limitation any damage or destruction occurring on the Premises and/or to the Buildings thereon, it being the intention of the parties hereto that all rental payments payable by Tenant hereunder shall continue to be payable in all events in the manner and at the times herein provided unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Lease. In that connection, Tenant hereby waives, to the extent permitted by applicable law, any and all rights that it may now have or that may at any time hereafter be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Lease except in accordance with the express terms of this Lease and agrees that if, for any reason whatsoever, this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided in this Lease, Tenant nevertheless shall pay to Landlord an amount equal to each rental payment at the time such payment would have become due and payable in accordance with the terms hereof had such termination not occurred. SECTION 16. SURRENDER OF PREMISES AND REMOVAL OF PERSONAL PROPERTY. 16.1 Improvements. Upon the expiration or sooner termination of this Lease, except only as to Personal Property, Tenant shall surrender the Premises (including the Buildings) to Landlord in good condition and repair, damage from casualties, ordinary wear and tear excepted, and without any payment therefor (except applicable insurance proceeds), including the Buildings and other improvements, additions, machinery, apparatus, equipment and fixtures therein or thereon, and the same shall thereafter be the property of Landlord. Said property to be surrendered to Landlord shall include but not be limited to all components of the Buildings' heating, air conditioning and/or ventilating system(s), (including any portion thereof outside the Buildings), plumbing and electrical systems, lighting fixtures, lighting components, tubes and bulbs, elevators and dumbwaiters, ceiling tiles, all partitions (whether removable or otherwise), back-up and emergency power generators and all components of systems associated therewith, and those portions of the communications, security, computer and Iow voltage electrical systems provided as part of Landlord's Work (except fiber communications equipment and materials), and any replacements thereof that cannot be removed with damaging any portion of the Buildings. 16.2 Personal Property. Trade fixtures, moveable equipment (except as noted in subsection 16.1 above) and Tenant's other personal property shall at all times be the property of Tenant ("Personal Property"). Personal Property shall also include all furniture, movable partitions, cabinets, racks, computers, office equipment, communications equipment including fiber communications equipment and materials [except as noted in subsection 16.1], and signs (except signs required by applicable laws regardless of building occupancy or use). Tenant, at its sole cost, shall remove all Personal Property prior to the expiration or termination of this Lease, and shall completely repair any and all damage to the Premises (including the Buildings) resulting from or caused by such removal. If Tenant fails to remove any of such Personal Property, Landlord may, at Landlord's option, retain all or any of the same without payment therefor, thereupon vesting title thereto in Landlord; or Landlord may remove the then remaining Personal Property from the Premises and dispose thereof in any manner, in which latter event Tenant shall, within ten (10) days of demand, pay to Landlord the actual cost of such removal and disposition, and the cost of repair of any and all damage to the Premises resulting from or caused by such removal. SECTION 17. HOLDING OVER. If Tenant holds possession of the Premises after the expiration of the Term, any such holding over shall be deemed to be a month-to-month tenancy terminable on thirty (30) days notice from either party to the other, upon a monthly minimum rental equal to one hundred fifty percent (150%) of the monthly minimum rental provided for the last full month of the Term, and otherwise subject to all of the terms and provisions of this Lease, including, without limitation, any and all terms and provisions relating to all other rent payable hereunder. Tenant hereby indemnifies and holds Landlord harmless from any and all losses and liabilities resulting from Tenant's failure to timely surrender the Premises upon the expiration or termination of the Lease. SECTION 18. QUIET POSSESSION. Subject to all other terms and provisions of this Lease, upon paying the rent and performing the covenants and conditions of this Lease, may quietly have, hold and enjoy the Premises during the Term, subject and subordinate, however, to the "Title Exceptions" set forth in Exhibit "E" attached hereto and incorporated herein by this reference. SECTION 19. ESTOPPEL CERTIFICATES. Tenant shall execute, acknowledge and deliver to Landlord, within fifteen (15) days after request by Landlord, a statement in writing, certifying, if such be the case: (a) that this Lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified); (b) the Lease Commencement Date; (c) the expiration date of the Term; (d) the dates and amounts for which the minimum rent and other rent has been paid; (e) that Tenant has no offsets or deductions from rent payments (except as specified in such estoppel certificate); (f) whether or not Tenant has exercised its right to purchase the Premises, and if so, the particulars pertaining thereto; (g) that Landlord is not in default of any of the provisions of the Lease to be kept and performed by Landlord (except as specified in such estoppel certificate); and (h) such other information as Landlord shall reasonably request. Tenant hereby acknowledges that any such statements are intended to be delivered by Landlord and relied upon by parties having or prospectively having an interest in the Premises, including purchasers, mortgagees, beneficiaries under deeds of trust, or assignees thereof. Similarly, Landlord shall execute, acknowledge and deliver to Tenant, within the same time period, a similar statement if so requested by Tenant, and Landlord acknowledges such statement is intended to be delivered by Tenant and relied upon by parties having or prospectively having an interest in Tenant's leasehold estate. SECTION 20. LANDLORD'S FINANCING REQUIREMENTS AND SUBORDINATION. 20.1 Subordination. At the request of any lender of Landlord, Tenant shall subordinate the priority of this Lease to the lien of any mortgage or deed of trust of such lender, provided, however, as a condition to such subordination where the Lease would otherwise have priority, Landlord, Landlord's lender and Tenant shall execute and record a subordination, non-disturbance and attornment agreement reasonably acceptable to Tenant. Notwithstanding the foregoing, Tenant's Option (as defined in Section 29 hereof) below shall not be subordinated to any mortgage, deed of trust, or any other lien or encumbrance, and shall survive any foreclosure or other exercise of remedies in connection therewith. 12 20.2 Attornment. In the event of any foreclosure of any mortgage covering the Premises, or any part thereof, this Lease shall continue in full force and effect and Tenant shall attorn to and acknowledge the foreclosure purchaser or purchasers as landlord, and Tenant as tenant; but such lessor, transferee or purchaser shall not be liable for any act or omission of Landlord prior to such person's succession to title, nor be subject to any offset, defense or counterclaim accruing prior to such person's succession to title, nor be bound by any modification or amendment to the Lease made without the express written consent of the mortgagee under the foreclosed mortgage if Tenant had notice of such party, nor be bound by any payment of rent prior to such person's succession to title for more than one (1) month in advance. In the event of any other sale or assignment of Landlord's interest under this Lease or in the Premises, Tenant shall attorn to and recognize such purchaser or assignee as landlord under this Lease without any further act by Landlord or such purchaser or assignee. SECTION 21. INTEREST ON PAST DUE OBLIGATIONS. Any rent accruing to Landlord or any other sum due from one party hereunder to the other under the terms and provisions of this Lease which shall not be paid when due shall bear interest at the maximum lawful rate of interest, or in the event no such rate is specified under Washington law, then at the rate of twelve percent [12%] per annum from the date which is thirty (30) days after the same becomes due and payable by the terms and provisions hereof until paid. SECTION 22. DEFAULTS AND REMEDIES. 22.1 Defaults. The occurrence of any of the following shall constitute a material breach and default of this Lease by Tenant: (a) any failure by Tenant to pay when due any of the rent required to be paid by Tenant hereunder; however, Tenant shall have twenty (20) days after written notice to cure such default; (b) any failure by Tenant to observe and perform any of the other provisions of this Lease to be observed or performed by Tenant where such failure continues for thirty (30) days after written notice thereof from Landlord; provided that if the nature of such default is such that the same cannot with due diligence be cured within said period, Tenant shall not be deemed to be in default if it shall within said period commence such curing and thereafter shall diligently prosecute the same to completion; or (c) any abandonment of the Premises. 22.2 Termination of Lease and Remedies. In the event of any default as aforesaid by Tenant, then in addition to any and all other remedies available to Landlord at law or in equity, Landlord shall have the right to immediately terminate this Lease and all rights of Tenant hereunder by giving written notice to Tenant of its election to do so. If Landlord shall elect to terminate this Lease, then it may recover from Tenant: (a) the worth at the time of the award of any unpaid rent that had been earned at the time of termination; (b) the worth at the time of the award of the amount by which the unpaid rent that would have been earned after termination until the time of award exceeds the amount of the loss of such rent that Tenant proves could have been reasonably avoided; (c) the worth at the time of the award of the amount by which the unpaid rent for the balance of the Term after the time of the award exceeds the amount of the loss of such rent that Tenant proves could have been reasonably avoided; {d) any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to any costs or expenses incurred by Landlord: (i) in retaking possession of the Premises, including reasonable attorney's fees therefor; (ii) in maintaining or preserving the Premises after such default; (iii) in preparing the Premises for reletting to a new tenant including repairs or alterations to the Premises for such reletting; {iv) as brokerage fees, leasing commissions and reasonable attorney's fees in connection with the reletting of the Premises to a new tenant; and (v) any other costs necessary or appropriate to relet the Premises; and {e) at Landlord's election, such other amount in addition to and/or in lieu of the foregoing as may be permitted from time to time by applicable Washington law. 22.3 Definitions. As used in subparagraphs (a) and (b) above, the "worth at the time of the award" is computed by allowing interest at the rate of eighteen percent [18%] per annum. As used in subparagraph (c) above, the "worth at the time of the award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award plus one percent [1%]. 22.4 Lease Not Terminated. In the event of any default as aforesaid by Tenant, then in addition to any and all other remedies available to Landlord at law or in equity, Landlord may elect to continue this Lease in effect and to enforce all rights and remedies under the Lease, including but not limited to the recovery of all rent as it becomes due under the Lease. Although Tenant's right to possession of the Premises has not been terminated upon such election by Landlord, Landlord shall have the right at any time when Tenant has abandoned the Premises or the Premises are otherwise unoccupied to preserve or maintain the Premises or to attempt to relet the Premises to another party. Tenant covenants that the institution by Landlord of an unlawful detainer action or the service of any notice pursuant to the unlawful detainer statutes of Washington and the surrender of possession pursuant to such notice shall not (unless Landlord elects to the contrary in writing at the time of or at a time subsequent to the institution of such action or the serving of such notices and such election) be deemed a termination of this Lease. Notwithstanding a prior election by Landlord not to terminate the Lease (or prior inaction pertaining thereto), Landlord shall nevertheless have the right to terminate the Lease in the event of any default or the continuance of any default, as aforesaid; a termination shall be effective only upon written notice to Tenant of such termination. In the event of such termination, the provisions of subsection 22.2 of the Lease shall be applicable. 22.5 Indemnification. Nothing contained in this Section shall constitute a waiver of Landlord's right to recover damages by reason of Landlord's efforts to mitigate the damage to it caused by Tenant's default; nor shall anything in this Section adversely affect Landlord's right, as in this Lease elsewhere provided, to indemnification against liability and claims arising or occurring prior to a termination of this Lease. 22.6 Counterclaims. In the event Landlord files an action to recover, among other remedies, possession of the Premises, Tenant hereby waives the right to interpose any non-compulsory counterclaims against any portion of Landlord's action. 14 SECTION 23. ATTORNEY'S FEES. The term "attorney's fees" as used herein and elsewhere in this Lease shall mean and include all reasonable legal fees and charges, including appellate fees and charges, paralegal fees and charges, court, filing, and process fees, marshal's and sheriff's fees and charges, investigative fees and charges, and all other sums related thereto. In any action or arbitration, as the case may be, brought to enforce the provisions of this Lease, the prevailing party shall be entitled to recover attorney's fees. SECTION 24. CONDEMNATION. 24.1 Area Taken. If the whole or any part of the Premises is taken for public or quasi-public use by the exercise or the threat of the exercise of the right of eminent domain, with or without litigation, or by judgment or agreement, then solely aS to the portion of the Premises taken, as of the date that title vests in the condemning authority, this Lease shall no longer apply. 24.2 Area Not Taken; Right to Terminate. In the event of a taking of more than twenty percent (20%) of the Premises, Landlord and Tenant shall each have the option for a period of thirty (30) days after such taking to terminate this Lease. If the Lease is not terminated, upon receipt of the applicable portion of the condemnation award, Tenant, at its sole expense, shall promptly restore the Premises (including the Building) to an architectural unit as comparable and practicable to the condition existing prior to such taking. Tenant shall also do likewise, at Tenant's sole expense, with respect to all Personal Property so as to bring the Premises (including the Buildings) and every portion thereof, to the condition required under subsection 12.2 hereof. There shall be no abatement or reduction of the rent payable under the Lease as a result of such taking. 24.3 Award. If the Lease is terminated, Landlord shall receive all the proceeds of any damages, award(s) paid for any such taking, including the value of the land and the leasehold estate. If the Lease is not terminated, Tenant shall receive all the proceeds of any damages, award(s) paid for such taking, including the value of the land and leasehold estate, except as provided herein. Tenant shall have no claim against Landlord or the condemning authority for the unexpired portion of the Term and/or thereafter, and Tenant hereby assigns to Landlord all of its right in and to such award. Nothing herein shall prevent Tenant from making a claim at any time prior to the last five years of the Term, for the then value of the improvements paid for directly by Tenant and located on the Premises, plus, at any time: (a) the value of any Personal Property installed and paid for by Tenant; and (b) reimbursement of any relocation costs to be incurred by Tenant. 24.4 Restoration by Tenant. In the event this Lease is not terminated, Tenant shall restore the Premises and all improvements thereon (including the Buildings) to the extent practical, following the procedures set forth in Section 13 hereof. In the event of such restoration, Landlord shall make available for the purpose of restoration a portion of the award received from the condemning authority, not to exceed the lesser of: (a) that portion of the award attributable to value of the restoration work performed by Tenant; or (b) the third party cost of the restoration work performed by Tenant. 24.5 Voluntary Sale. A voluntary sale by Landlord to any public or quasi-public body, agency or person, corporate or otherwise, having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed to be a taking by eminent domain. 15 SECTION 25. ASSIGNMENT. 25.1 Prohibition Against Assignment by Tenant. Subject to subsection 29.4 hereof, Tenant shall be absolutely prohibited from assigning this Lease, or any right or interest, voluntarily, involuntarily, or by operation of law, from encumbering all or any part of Tenant's interest in this Lease (collectively "assignment of the Lease or "assign the Lease" and the proposed transferee "assignee"), without first obtaining Landlord's written consent, which consent shall not be unreasonably withheld. 25.2 Limitation of Landlord's Consent. Landlord's consent to any proposed assignment of the Lease: (a) shall not be deemed to be a grant of waiver and/or consent to any subsequent requested, attempted or proposed assignment of the Lease; and (b) shall not in any way relieve Tenant and/or any subsequent assignee of liability under this Lease. Any requested, attempted or purported assignment of the Lease made without obtaining the prior written grant of waiver and consent of Landlord shall, at the option of Landlord, be null and void and/or constitute a default under this Lease. 25.3 Limited Restriction on Original Landlord's Right to Assign. Auburn on Main, L.L.C. hereby warrants that its manager and managing member is Oliphant Real Estate Services, Inc., a Washington corporation ("ORES") wholly owned by Jeffrey Oliphant ("Oliphant"). Notwithstanding anything in this Lease to the contrary, subject to the exceptions herein set forth, absent the written consent of Tenant, the herein restrictions and limitations shall apply during the period between the execution of this Lease and the last day of Closing Period One (hereinafter defined): (a) Auburn on Main, L.L.C. shall not have the right to sell the Premises or assign its interest in this Lease; and (b) Auburn on Main, L.L.C. shall not enter into any agreements or take or allow any action (and shall prevent ORES and Oliphant from entering into any agreements or from taking or allowing any action) whereby Oliphant, directly or indirectly, is no longer the president, responsible officer, manager and/or managing member of Auburn on Main, L.L.C. Excepted from the foregoing are the following: (i) transfers made to prospective or actual mortgagees, and the exercise of such mortgagee's rights (including but not limited to the right of judicial and non-judicial foreclosure, and subsequent resale of the Premises to any third party after any such foreclosure); (ii) transfers to any entity or entities controlled and/or managed by Oliphant and/or members of his immediate family; (iii) transfers made at any time after the death or incapacity of Oliphant; and/or (iv) transfers of fee simple and/or easement interests to governmental authorities and/or utility companies necessary or appropriate so that Landlord can complete Landlord's Work as required under this Lease. Subject to the Option and Tenant's rights thereunder, after the last day of Closing Period One there shall be no restrictions or prohibitions on Landlord's right to sell the Premises or assign its interest in the Lease and there shall be no restrictions upon the ability of ORES and Oliphant to sell or transfer their interests in Auburn on Main, L.L.C. and ORES, respectively. SECTION 26. NONWAIVER. No covenant, term or condition of this Lease (or breach thereof) shall be deemed waived except if expressly waived in a written instrument executed by the waiving party specifically reciting the covenant, term or condition (or breach thereof) being waived, and any such waiver of such covenant, term, condition or breach, shall not be deemed to be a waiver of any preceding or succeeding, covenant, term, condition, or breach. Acceptance by Landlord of all or any portion of rent at any time shall not be deemed to be a waiver of any covenant, term or condition, except as to the rent payment accepted. 16 SECTION 27. NOTICE. All notices, consents, approvals or demands required under this Lease shall be in writing and shall be deemed delivered when either: {a) deposited in the United States mail, certified or registered, postage prepaid; {b) transmitted by telegraphic or electronic means or by recognized courier service, with proof of service provided, or (c) delivered in person; in any event addressed to or delivered to the appropriate party at all addresses for such party, as follows: Landlord: Auburn on Main, L.L.C. 3700 Beazer Road Bellingham, Washington 98226 Attn: President with concurrent copies to: Michael John Klein, Esq. 5743 Corsa Avenue, Suite 216 Westlake Village, California 91362 and to: Robert Tull, Esq. Langabeer Tull & Lee, P.S. 709 Dupont Street Bellingham, Washington 98225 Tenant: City of Auburn 25 West Main Street Auburn, Washington 98001-4998 Attention: Mayor with concurrent copies to: City of Auburn 25 West Main Street Auburn, Washington 98001-4998 Attention: Finance Director and to: City of Auburn 25 West Main Street Auburn, Washington 98001-4998 Attention: City Attorney and to: Foster Pepper & Shefelman, PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101-8965 Attention: Hugh D. Spitzer 17 or to such other and additional addresses as either party may from time to time designate for this purpose. SECTION 28. MISCELLANEOUS. 28.1 Captions. Captions of Sections and subsections of this Lease are for convenience only and shall not be considered in resolving any questions of interpretation or construction of any term, covenant or provision. 28.2 Landlord Defined. The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the then lessor under this Lease of the Premises at the time in question, and if they shall be different from the then lessor under this Lease, shall not mean and shall not include any mortgagee, fee owner or ground lessor. In the event of any transfer or transfers of title thereto, then the Landlord herein named (and in the case of any subsequent transfers or conveyances, the then transferor) shall be automatically freed and relieved from and after the date of such transfer or conveyance of all liability as respects the performance of any covenants or obligations hereunder on the part of Landlord to be performed after the transfer date, provided the then transferee assumes such liability thereafter. 28.3 Binding Effect. Except as otherwise expressly set forth in subsection 28.2 above, and as otherwise expressly provided elsewhere in this Lease, each and all of the terms, covenants and conditions of this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors in interest and assigns. Nothing in this subsection shall be deemed to permit any assignment of the Lease or use of the Premises other than as provided for in Sections 6 and 25 hereof. 28.4 Disclaimer. Nothing contained herein shall be deemed to create any relationship between the parties other than the relationship of landlord and tenant. It is stipulated that the parties are not partners, or joint venturers, or, except as expressly provided to the contrary herein, agents of one another. 28.5 Void or Voidable. If any part of this Lease shall be determined to be void or voidable as a result of the application of any statute or by any court of competent jurisdiction, such application or determination shall not affect any other provision of this Lease, and all such other provisions shall remain in full force and effect. It is the intention of the parties hereto that if any provision of this Lease is capable of two constructions, one of which would render the provision void or voidable and the other of which would render the provision valid, then the provision shall have the meaning which renders it valid. 28.6 Governing Law. This Lease shall be governed and interpreted solely by the laws of the State of Washington. Venue for any action hereunder or relating hereto shall solely be in King County, Washington. 28.7 Gender. The terms "Landlord" and "Tenant" wherever used herein shall be applicable to one or more persons as the case may be, and the singular shall include the plural, and the neuter shall include the masculine and feminine. The word "person", "persons", "party" and "parties", wherever used in this Lease, shall all include individuals, partnerships, firms, trusts, associations and/or corporations or any other form or forms of business and governmental entity(ies), including code cities and/or other municipal or county forms of government. 28.8 Time. Time is of the essence of this Lease and of each and every provision thereof. 28.9 Joint and Several. All of the terms, covenants and conditions contained in this Lease to be performed by Tenant, if Tenant shall consist of more then one person or organization, shall be deemed to be joint and several. 28.10 Force Majeure. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not the fault of the party delayed in performing work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The insufficiency or the lack of funds, or the filing of or against Tenant under Title 11 of the United States Code shall not excuse or delay the timely performance by Tenant of its covenants under the Lease. The provisions of this subsection shall not operate to excuse Tenant from the timely payment of the rent as required by the terms of this Lease or to extend the Term, or to extend the time period in which any notice is provided or right is to be exercised. 28.11 Entire Agreement. This Lease contains the entire agreement of the parties. It is understood that there are no verbal agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, representations, brochures, agreements and understandings, if any, between the parties hereto or made or displayed by Landlord or agent of Landlord to Tenant with respect to the subject matter thereof, and none shall be used to interpret or construe this Lease. It is further agreed by and between the parties hereto that there shall be no modifications or amendment of this Lease, except as may be executed in writing between the parties, or successors to the parties, hereto. 28.12 Landlord's Liability. Notwithstanding anything to the contrary in this Lease, there shall be absolutely no personal liability of any person, firm or entity who constitutes Landlord with respect to any of the terms, covenants, conditions and provisions of this Lease, and Tenant shall, subject to the rights of any mortgagees, fee owners and ground lessors, look solely to the interest of Landlord, its successors and assigns, in the Premises (and in no other property), for the satisfaction of each and every remedy of Tenant in the event of default by Landlord hereunder; such exculpation of personal liability is absolute and without any exception whatsoever. No other property or assets of Landlord shall be subject to levy, attachment, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) or for the satisfaction of any other remedy of Tenant arising out of, or in connection with, this Lease or the relationship of Landlord and Tenant or Tenant's use of the Premises and, if Tenant shall acquire a lien on or interest in any other properties or assets by judgment or otherwise, Tenant shall promptly release such lien on or interest in such other properties and assets by executing, acknowledging and delivering to Landlord an instrument to that effect prepared by Landlord's attorneys. 28.13 Landlord's Performance for Account of Tenant. If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provisions of this Lease, Landlord may after any notice and the expiration of any reasonable period with respect thereto as required pursuant to the applicable provisions of this Lease, perform the same for the account of Tenant. If Landlord, at any time, is compelled to pay or elects to pay any sum of money or do any act which would require the payment of any sum of money by reason of the failure of Tenant, after any notice and the expiration of any period with respect thereto as required pursuant to the applicable provisions of this Lease, to comply with any provision of this Lease, or if Landlord is compelled to or elects to incur any expense including attorney's fees, in bringing, prosecuting or defending any action or proceeding instituted by reason of any default of Tenant hereunder, the sum or sums so paid by Landlord with all interest, costs and damages, shall be paid by Tenant to Landlord within ten (10) days of demand therefor. 28.14 Tenant's Performance for Account of Landlord. If Tenant is compelled to incur any expense including reasonable attorney's fees, in bringing, prosecuting or defending any action or proceeding instituted by reason of any default of Landlord hereunder, the sum or sums so paid by Tenant with all interest, costs and damages, shall be due and payable from Landlord to Tenant within ten (10) days of demand therefor. Tenant shall not withhold from the rent payable to Landlord any of the aforesaid sums. 28.15 Tenant's Waiver of Any and All Rights of Set-Off. Except as may be specifically set forth herein, Tenant hereby waives any and all rights it may now, hereafter or claim to have set-off or deduct any sums due from Landlord from the rent payable by Tenant, and Tenant shall promptly remit to Landlord the full rent hereunder as the same becomes due. 28.16 Remedies Cumulative. Except as otherwise expressly provided herein, the various rights, options, elections, powers and remedies contained in this Lease shall be construed as cumulative and no one of them shall be exclusive of any of the others, or of any other legal or equitable remedy which either party might otherwise have, except as provided, restricted or waived herein, in the event of default in the terms hereof, and the exercise of one right or remedy by such party shall not impair its right to any other right or remedy, except as provided, restricted or waived herein, until all obligations imposed upon the other party have been fully performed. 28.17 No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual termination thereof between Landlord and Tenant shall not result in a merger, but shall, at the option of Landlord, operate either as an assignment to Landlord of any and all existing subleases and subtenancies, or as a termination of all or any existing subleases or subtenancies. 28.18 Waiver of Jury Trial. The parties hereby waive the right to trial by jury. Any dispute between Landlord and Tenant or in which they are joined as parties shall only be submitted to a judge sifting without a jury. 28.19 Brokers. The parties represent to one another that they have not engaged any real estate broker(s) in connection with this Lease. Landlord hereby indemnifies Tenant against claims of real estate and business brokers claiming through Landlord and Tenant hereby indemnifies Landlord against claims of all real estate and business brokers claiming through Tenant. 28.20 Rule Against Perpetuities. Notwithstanding anything contained in this Lease to the contrary, if the Lease Commencement Date does not occur on or before January 1, 2009, this Lease shall be null and void, and of no force or effect as of such date. If this Lease is so rendered null and void, the parties are hereby released and discharged of all liabilities and obligations hereunder or in any manner pertaining to the Premises. 28.21 Restriction on Recordation of Lease. Tenant shall not nor shall it permit the recordation of this Lease. However, the parties shall execute and record a Memorandum of Lease in the form attached hereto as Exhibit "F". SECTION 29 TENANT'S OPTION TO PURCHASE THE PREMISES. 29.1 Grant of Option. Landlord hereby grants to Tenant an irrevocable option to purchase the Premises ("Option") from Landlord pursuant to the terms hereinafter set forth. Tenant shall not exercise the Option unless it intends to acquire the Premises for public purposes. The term of the Option ("Option Term") shall commence as of the Lease Commencement Date and shall terminate at the end of the Term, provided, however, Tenant may also exercise its Option herein within thirty (30) days after the occurrence of an event that terminates this Lease by operation of law (as opposed to expiration by the terms of the Lease, by mutual consent or by Court Order in the event of default by Tenant). Subject to the foregoing, Tenant may exercise the Option at any time after the Lease Commencement Date during the Term by giving the Landlord the hereinafter set forth written notice of the Tenant's election to exercise its Option ("Exercise Notice"). The Exercise Notice shall specify Tenant's chosen closing date, which date shall be any business day that is: {a) between February 1, 2005 and the later of: (i) the last day of the twelfth (12th) full calendar month after the LCD; or (ii) January 31, 2007 ("Closing Period One"), provided regardless of the date selected by Tenant during Closing Period One, the Exercise Notice shall be delivered to Landlord not less than sixty (60) days prior to the closing date selected by Tenant; and (b) within the last thirty (30) days of the Term ("Closing Period Two"), provided regardless of the date selected by Tenant during Closing Period Two, the Exercise Notice shall be delivered not less than three hundred (300) days before the closing date selected by Tenant. If Tenant exercises Tenant's Termination Right, then Closing Period Two shall continue to apply, with the last day of said Closing Period Two being the Effective Date of Termination. Once chosen by Tenant, neither Landlord nor Tenant shall have the right to extend the closing date without the consent of the other party. Tenant's Option shall remain in full force and effect notwithstanding any transfer of Landlord's interest in the Lease and / or Premises, including without limitation the granting of any mortgage or conveyance of any deed of trust. Tenant shall not have the right to select any closing date that is not within either Closing Period One or Closing Period Two, and if such a date were to be selected, the same shall be deemed to not be an exercise of the Option. Time is of the essence. 29.2 Purchase Price. (a) If Tenant exercises the Option where the closing date is in Closing Period One, the purchase price for the Premises shall be equal to the sum of: (i) Ten Million Three Hundred Fifty Thousand and xx/100 Dollars ($10,350,000.00); plus (ii) Sixty One Thousand Four Hundred Fifty Three and 13/100 Dollars ($61,453.13) per month for each month between the LCD and the closing date, with partial months prorated (the "Purchase Price"), and all minimum rent paid by Tenant pursuant to subsection 5.2(a) hereunder up to and through the closing date shall be applied toward or credited against the Purchase Price. {b) If Tenant exercises the Option where the closing date is in Closing Period Two, the purchase price for the Premises, shall be the "Fair Market Value," determined in the manner set forth below (the "Purchase Price"), and no rent paid by Tenant hereunder shall be applied toward or credited against the Purchase Price. The Fair Market Value shall be determined in good faith between Landlord and Tenant during the sixty (60) days after the Exercise Notice. If the parties are unable to agree upon the Fair Market Value during such period, then the following appraisal procedure shall be followed. Landlord and Tenant shall each engage a commercial real estate appraiser or broker unaffiliated with the parties, which appraiser or broker shall have at least ten (10) years experience in the south King County/north Pierce County area. The two appraisers and/or brokers shall engage a similarly qualified third appraiser and/or broker. The three appraisers and/or brokers shall individually determine in writing the Fair Market Value as of the anticipate closing date. In considering the Fair Market Value, the appraisers and/or brokers shall consider the highest and best use for the Premises, shall include the highest and best use / rental value for all improvements on the Premises, including the Buildings, as well as the remaining length and rental under the Lease. When each appraiser and/or broker has submitted his/her determination of the Fair Market Value, the three submittals shall be compared. If the highest submittal shall be 120% (or less) of the lowest submittal, then the mean of the three submittals shall be Fair Market Value and thus the Purchase Price. If the highest submittal shall be more than 120% of the lowest submittal, the two submittals closest to one another shall be used (with the third submittal discarded), and the mean of the aforesaid two submittals shall be the Fair Market Value and thus the Purchase Price. Landlord and Tenant shall each pay for the appraiser and/or broker engaged by it, and shall equally pay for the appraiser or broker engaged by the two appraisers and/or brokers. 29.3 Closing. The closing shall occur on the closing date specified in the manner described above. At the closing, Landlord shall convey the Premises to Tenant, or Tenant's designee, by statutory warranty deed subject to the Title Exceptions and such matters as shall hereafter be approved by Tenant, with or without terminating the Lease, and shall assign to Tenant, or to Tenant's designee, all assignable construction, equipment, and supplier warranties. In connection with the exercise of the Option and the transfer of fee title, Landlord and Tenant shall each pay their own attorney's fees. Tenant shall pay the real estate transfer excise tax ["excise tax"] (if any), recording and escrow fees and the title insurance premium. 29.4 Non-Assignability. Tenant shall not have the right to assign Option rights herein to a third party independent of its leasehold estate, however, if Tenant so instructs, Landlord shall convey fee simple title to a third party designated by Tenant, provided, nothing herein shall relieve Tenant of its obligation to complete the sale / purchase of the Premises if the Option is exercised. 29.5 Landlord Cooperation Upon Exercise of Option. If Tenant does send the Exercise Notice, Landlord shall cooperate with Tenant in effectuating such modifications to the Lease and in effectuating such other matters as Tenant shall reasonably require, provided all of the same shall be effective only upon the closing herein contemplated and provided, further, Landlord shall not incur any costs or liability as a result of its cooperation as herein requested by Tenant. Landlord's cooperation may include, but shall not necessarily be limited to, modifications to the Lease so that after conveyance of Landlord's title to the successor owner of fee title to the Premises: (a) the Lease shall satisfy such requirements so that the successor owner may be able to issue Certificates of Participation in accordance with the regulations and provisions of the Internal Revenue Code (the "Code"); (b) that would require such successor owner (as landlord) and Tenant to act in such a manner so as to prevent such Certificates of Participation to be an obligation not described in Section 103(a) of the Code, so as to prevent the Lease or such Certificates of Participation to be treated as a "private activity bond" as defined in Section 141 of the Code, and/or so as to prevent the Lease or such Certificates of Participation to be considered as an "arbitrage bond" within the meaning of Section 148(a) of the Code; and (c) would allow Tenant (or a third party on Tenant's behalf) to set aside, place and pledge in a special account money and/or Government Obligations (as defined in RCW Chapter 39.53) in amounts necessary to pay or prepay all rental payments due hereunder, and as a consequence thereof, such successor landlord would not be thereafter entitled to any lien, benefit of security in any improvements constructed on the Premises (including but not limited to Landlord's Work and Tenant's Work), except the right to receive the finds so set aside and pledged. None of the matters described in this subsection 29.5 shall apply while the Original Landlord is the Landlord under this Lease. 29.6 No Obligation to Exercise Option. Unless Tenant does in fact send the Exercise Notice, nothing herein shall be construed as an obligation by Tenant to purchase the Premises and/or to exercise the Option. [This Page ends here.] (SEE EXHIBITS "A" THROUGH "F" ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE.) IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the day and year first above written. AUBURN ON MAIN, L.L.C., a Washington limited liability company By: Oliphant Real Estate Services, Inc. a Washington corporation its manager and managing member By: //]31~ph~, President STATE OF COUNTY OF On '~ ~01~.~,'~-,Z. 2003 before me, .._IAi~,,~-~'"?T ~-~: , Notary Public, personally appeared Jeffrey Oliphant, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person(s), or the entity upon behalf of which he acted, executed the instrument. WITNESS my hand and official seal. JAMES SCOTT ROE #OTARY PUBLIC - CAUFORNIA (~OMMIS$tON ~11 1434940 ~N~ COU~ SIGNA~UF~L-~OF NOTARY 2.3 THE CITY Of AUBURN a mu~ration By: Peter Lewis, Mayor STATE OF WASHINGTON COUNTY OF KING On ///~'i , 2003 before me, ~-~ ~, Notary Public, personally appeared Peter Lewis, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. sIG~~F~N~~ EXHIBIT "A" LEGAL DESCRIPTION OF THE PREMISES The Premises consists of the following real property, all of which is situated in the City of Auburn, King County, Washington: A. Lot 2, Block 1, Truitt's First Addition to Auburn, according to the Plat thereof recorded in Volume 14 of Plats, Page 51, in the official records of King County, Washington. B. Lot 4, Block 1, Truitt's First Addition to Auburn, according to the Plat thereof recorded in Volume 14 of Plats, Page 51, in the official records of King County, Washington. C. Lots 27 through 30, inclusive, and Lot 32, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington, EXCEPT that portion of said Lot 27 conveyed to the City of Auburn for street purposes by deed recorded under King County (Washington) recording number 7802070893 AND ALSO EXCEPT those portions of said Lots 30 and 32 conveyed to the City of Auburn for alley purposes by deed recorded under King County (Washington) recording number 2899234. D. The East 182.27 feet of Lots 33, 34 and 35, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington. E. The East 137.211 feet of Lot 36, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington. [This Exhibit ends here.] Z ~m EXHIBIT "C" LANDLORD'S WORK Unless other specified herein, all items and obligations set forth in this Exhibit "C" shall be performed by Landlord or its designee and shall be considered "Landlord's Work". 1. Before delivering possession of the Premises to Tenant, Landlord shall obtain all required zoning and permits (other than Tenant's business licenses, if any are required) for the construction and operation of the Premises. The Buildings shall be of such exterior and structural design and character as is reasonably acceptable to Tenant and as will also meet Tenant's requirements for its use and for any permanent exterior signs, which may extend above the Building and shall be at locations and of a size acceptable to Tenant. The landscaping on the Premises shall be of a design reasonably acceptable to Tenant. If any statute, ordinance, rule or regulation prohibits or requires modifications to any element of the Plans (hereinafter defined), Landlord or its architect shall: {a) so advise Tenant; {b) revise the Plans as necessary to comply with governmental requirements; and (c) submit the revised Plans to Tenant for its review and approval. The Premises and Buildings shall be renovated and completed by Landlord, in accordance with the plans and specifications described below, and shall contain Tenant's specific requirements for the conduct of Tenant's government operations, which requirements will include, among other things, the operation of Tenant's police headquarters, the operation of Tenant's municipal courts, the operation of Tenant's probation department and in the separate smaller building on the Premises, the operation of the evidence and special storage area of Tenant's police department. The plans shall be generally consistent with the following drawings, which are incorporated herein by this reference. Dorbritz CS-1 Cover Sheet- General Notes, Drawing Index Nov. 10, 2003 Barghausen C-1 Cover Sheet Nov. 10, 2003 Barghausen C-2 Site Plan Nov. 10, 2003 Barghausen C-3 Grading and Storm Drainage Plan Nov. 10, 2003 Barghausen C-4 Sanitary Sewer and Water Plan Nov. 10, 2003 Barghausen C-5 Construction Notes and Details Nov. 10, 2003 Barghausen C-6 Construction Details Nov. 10, 2003 Barghausen C-7 Construction Details Nov. 10, 2003 Dorbritz A-20 Main Bldg.: Door Schedules and Types Nov. 10, 2003 Dorbritz A-21 Main and Rear Bldg.: Window Door Schedule Nov. 10, 2003 Dorbritz A-30 Main and Rear Bldg.: Room Finish Schedules Nov. 10, 2003 Dorbritz A-40 Accessibility Notes and Details Nov. 10, 2003 Dorbritz A-110 Main Bldg.: Police Level Floor Plan Nov. 10, 2003 Dorbritz A-111 Police Level: Floor Finishes and Furniture Plan Nov. 10, 2003 2.7 Dorbritz A-120 Main Bldg.: Court Level Floor Plan, Section B-B Nov. 10, 2003 Dorbritz A-121 Court Level: Floor Finishes and Furniture Plan Nov. 10, 2003 Dorbritz A-130 Main Bldg.: Third Level Floor Plan Nov. 10, 2003 Dorbritz A-150 Rear Bldg.: Ground Floor and Basement Plans, Bldg. Section Nov. 10, 2003 Dorbritz A-151 Rear Bldg.: Floor Finishes, Furniture Plans, Cross Section Nov. 10, 2003 Dorbritz A-210 Main Bldg.: Enlarged Restroom Plans and Interior Elevations Nov. 10, 2003 Dorbritz A-211 Main Bldg.: Enlarged Restroom Plans and Interior Elevations Nov. 10, 2003 Dorbritz A-220 Main Bldg.: Enlarged Stair Plans and Interior Elevations Nov. 10, 2003 Dorbritz A-221 Main Bldg.: Enlarged Stair Plans and Interior Elevations Nov. 10, 2003 Dorbritz A-230 Main Bldg.: Court Room Plans and Interior Elevations Nov. 10, 2003 Dorbritz A-240 Main Bldg.: Interior Elevations Nov. 10, 2003 Dorbritz A-241 Main Bldg.: Interior Elevations Nov. 10, 2003 Dorbritz A-310 Main Bldg.: Police Level: Reflected Ceiling Plan Nov. 10, 2003 Dorbritz A-320 Main Bldg.: Court Level: Reflected Ceiling Plan Nov. 10, 2003 Dorbritz A-330 Main Bldg.: Third Level: Reflected Ceiling Plan Nov. 10, 2003 Dorbritz A-350 Rear Bldg.: Ground Floor, Basement: Reflected Ceiling Plan Nov. 10, 2003 Dorbritz A-410 Main Bldg.: Detail Plans, Sections and Elevations Nov. 10, 2003 Dorbritz A-420 Main Bldg.: Canopy Sections and Details Nov. 10, 2003 Dorbritz A-510 Main Bldg.: Exterior Elevations Nov. 10, 2003 Dorbritz A-550 Rear Bldg.: Exterior Elevations, Canopy Sections Nov. 10, 2003 Dorbritz A-610 Wall Types Nov. 10, 2003 Sargent S1.01 Structural Notes and Drawing Index Nov. 10, 2003 Sargent S2.01 Main Bldg.: Foundation Plan Nov. 10, 2003 Sargent S2.02 Main Bldg.: Main Floor Framing Plan Nov. 10, 2003 Sargent S2.03 Third Floor Framing Plan Nov. 10, 2003 Sargent S2.04 Roof Framing Plan Nov. 10, 2003 Sargent S2.05 Rear Bldg.: Plans Nov. 10, 2003 Sargent S3.01 Main Bldg.: Sections Nov. 10, 2003 Sargent S4.01 Main Bldg.: Details Nov. 10, 2003 Sargent S4.02 Main Bldg.: Details Nov. 10, 2003 Sargent S4.03 Main Bldg.: Details Nov. 10, 2003 Sargent S4.04 Main Bldg.: Mech. Support Details Nov. 10, 2003 Sargent S4.05 Main Bldg.: Details Nov. 10, 2003 BCE E-100 Electrical Legend and Lighting Fixture Schedule Nov. 10, 2003 BCE E-110 Electrical and Communication Site Plan Nov. 10, 2003 BCE E-200 Police Level Lighting Plan Nov. 10, 2003 BCE E-210 Court Level Lighting Plan Nov. 10, 2003 BCE E-220 Third Floor- Lighting, Power and F.^. Plans Nov. 10, 2003' BCE E-300 Police Level Power Plan Nov. 10, 2003 BCE E-310 Court Level Power Plan Nov. 10, 2003 BCE E-400 Police Level Fire Alarm Plan Nov. 10, 2003 BCE E-410 Court Level Fire Alarm Plan Nov. 10, 2003 BCE E-500 Rear Bldg.: First and Second Level Lighting Plans Nov. 10, 2003 BCE E-510 Rear Bldg.: First and Second Level Power Plans Nov. 10, 2003 BCE E-520 Rear Bldg.: First and Second Level F.A. Plans Nov. 10, 2003 BCE E-600 Electrical One-Line Riser Diagram Nov. 10, 2003 BCE E-610 Electrical Details and Diagrams Nov. 10, 2003 BCE E-620 Electrical Details and Diagrams Nov. 10, 2003 BCE E-630 Electrical Power Schedules Nov. 10, 2003 BCE E-710 Police Level Voice/Data and Paging Plan Nov. 10, 2003 BCE E-711 Court Level Voice/Data and Paging Plan Nov. 10, 2003 BCE E-712 Rear Bldg.: First and Second Level Voice/Data & Paging Pla Nov. 10, 2003 BCE E-713 Voice/Data and Paging Details Nov. 10, 2003 BCE E-720 Police Level Access, Duress, CCTV & CATV Plan Nov. 10, 2003 BCE E-721 Court Level Access, Duress, CCTV & CATV Plan Nov. 10, 2003 BCE E-722 Rear Bldg.: Firstand Second Floor Access, Duress, CCTVand CATV Plan Nov. 10, 2003 BCE E-723 Access Control, Duress Call, CCTV and CATV Details Nov. 10, 2003 BCE E-730 Court Level AudioNisual and Teleconference Nov. 10, 2003 BCE E-731 Audio / Visual Details Nov. 10, 2003 BCE M-100 Mechanical Site Plan Nov. 10, 2003 BCE M-200 Mechanical Equipment Schedules Nov. 10, 2003 BCE M-210 Mechanical Equipment Schedules Nov. 10, 2003 BCE M-300 Foundation Plan - Main Building Nov. 10, 2003 BCE M-310 Foundation Plan - Rear Building Nov. 10, 2003 BCE M-400 Plumbing Plan - Main Building Nov. 10, 2003 BCE M-410 Plumbing Plan - Rear Building Nov. 10, 2003 BCE M-500 Reflected Ceiling Plan - Police Level Nov. 10, 2003 BCE M-510 Reflected Ceiling Plan - Court Level Nov. 10, 2003 BCE M-520 Reflected Ceiling Plan -Third Level Nov. 10, 2003 BCE M-600 Furred Ceiling Plan - Police Level Nov. 10, 2003 BCE M-610 Furred Ceiling Plan - Court Level Nov. 10, 2003' BCE M-620 Truss Space Plan - Court Level Nov. 10, 2003 BCE M-630 Furred Ceiling Plan - Rear Building Nov. 10, 2003 BCE M-700 Roof Plan - Main Building Nov. 10, 2003 BCE M-710 Roof Plan - Rear Building Nov. 10, 2003 BCE M-800 Fire Protection Plan - Main Building Nov. 10, 2003 BCE M-810 Fire Protection Plan - Rear Building Nov. 10, 2003 Barghausen~ L1 Landscape Planting Detail Nov. 10, 2003 Barghausen L2 Landscape Notes and Detail Nov. 10, 2003 Barghausen L3 Irrigation Plan Nov. 10, 2003 Barghausen L4 Irrigation Notes and Detail Nov. 10, 2003 Sierra None Clarifications and Assumptions Nov. 10, 2003 "Dorbritz' means Dorbritz Architects. "Barghausen" means Barghausen Consulting Engineers, Inc. "Sargent" means Sargent Engineers, Inc. "BCE" means BCE Engineers, Inc. "Sierra" means Sierra Construction Company, Inc. 2. The plans and specifications (collectively the "Plans") prepared on behalf of Landlord shall be furnished to Tenant for Tenant's approval within forty-five (45) days after the execution and delivery of this Lease. All areas of design and engineering must be certified by and under the direct supervision of architects and engineers licensed and registered in Washington. Tenant agrees to approve or reject said Plans within twenty (20) days of Tenant's receipt thereof and, if not approved or rejected within said period, said Plans shall be deemed approved. (The approval herein by Tenant shall not be deemed the approval of the City of Auburn in its regulatory capacity.) In the event Tenant shall reject such Plans within the period provided above, Tenant shall return said Plans to Landlord indicating the items so rejected. Landlord shall then have twenty (20) days to resubmit the Plans to Tenant, and Tenant shall have fifteen (15) days after resubmittal to approve or reject the same. If not approved or rejected within said period, said Plans shall be deemed approved. If said Plans are rejected after being resubmitted five times to Tenant, either party may cancel this Lease. After approval of Plans, Tenant, at Tenant's sole cost and expense, shall have the right to make changes, substitutions and eliminations in said Plans ("Tenant Plan Changes") provided, however, that Tenant shall pay all costs and expenses on account of any such Tenant Plan Changes. Costs shall include an administrative fee to Landlord equal to fifteen percent (15%) of all other costs associated with such Tenant Plan Changes, and if Landlord's Work is delayed as a result of Tenant Plan Changes, such costs shall also include a sum equal to the per diem rental under this Lease for each such day Landlord's Work is delayed. Landlord shall not be obligated to perform any 30 work associated with Tenant Plan Changes, and Tenant shall not be obligated to pay for Tenant Plan Changes until Tenant provides Landlord with written authorization and approval for the same, which authorization and approval shall include the cost associated with the specific Tenant Plan Change. 3. Landlord shall apply for and obtain, at its expense, all required permits and approvals from all governmental agencies having jurisdiction, necessary for the construction contemplated by the Plans to be completed ("Building Permits"). The parties acknowledge that Tenant, in its capacity as the City of Auburn, has regulatory powers and is the primary governmental agency responsible for the issuance of Building Permits. The parties acknowledge that Tenant, in its regulatory capacity, shall treat this project and the related applications in the same and consistent manner using the same standards as its treats all other projects and applications in the City. 4. Once all required Building Permits have been received, and Tenant has approved the Plans, Landlord shall renovate and complete the Premises in accordance with such approved Plans and the associated Building Permits. All such work shall be at Landlord's sole cost and expense, without any payment by Tenant (except for Tenant Plan Changes, if any). All such work by Landlord shall be done by licensed contractors selected by Landlord. Notwithstanding anything herein to the contrary, Landlord shall provide in the construction contract between Landlord and its general contractor, and shall similarly require the general contractor to similarly provide in the general contractor's agreements with its subcontractors of all levels and tiers, that prevailing wages shall be paid to the workers, laborers and mechanics working on the Premises, as prevailing wages are determined from time to time by the Washington State Department of Labor and Industries for the particular craft in the particular geographic area, pursuant to Washington Law RCW 39.04.260 ("prevailing wage law"). $. Subject to casualty, Landlord shall complete Landlord's Work (to the point of issuance of Certificate of Occupancy by all governmental agencies having jurisdiction) not later than twenty-four (24) months after the issuance of all applicable and required Building Permits. 6. Except as herein provided, Tenant shall not have the right to inspect, review or monitor any aspect of Landlord's relationship with its general contractor or subcontractors of any level or tier. Notwithstanding the foregoing, Tenant shall have the limited right, but not the obligation, to: (a) verify and confirm compliance with the prevailing wage law; and (b) verify and confirm costs associated with any Tenant Plan Changes. 7. Prior to the Lease Commencement Date, Landlord's architect or structural engineer, as the case may be, shall certify to Landlord and to Tenant (in form and substance reasonably acceptable to Landlord and Tenant) that: (a) the Premises had been completed in conformity with the Plans and in full compliance with all Building Permits; (b) the Building and parking areas have been located as shown on the Site Plan; and {c) the structural design of the Building has been completed in conformance with the recommendations of the geotechnical report prepared for the Premises. Both Landlord and Tenant shall be entitled to rely upon such certifications. 8. Upon notice to Landlord, Tenant may, from time to time, and at any time prior to the Lease Commencement Date, enter upon the Premises for the purpose of inspecting any of Landlord's Work, provided such entry does not unreasonably interfere with the performance of Landlord's Work. Such entry shall be for the sole purpose of protecting Tenant's interest as Tenant, and Tenant shall not be deemed to be responsible to Landlord, Landlord's general contractor or any subcontractor of any level or tier as a result of such entry. 9. Landlord shall secure from the appropriate governmental authority and provide to Tenant prior to the Lease Commencement Date, a Certificate of Occupancy (or a Temporary Certificate ~ 3] Occupancy permitting occupancy pending the issuance of a Certificate of Occupancy in which event the delivery to Tenant of a Certificate of Occupancy shall be deemed a condition subsequent). 10. Prior to or within thirty (30) after the Lease Commencement Date, Tenant shall have the right to inspect the Premises, and every part thereof, to confirm its satisfaction or dissatisfaction with Landlord's Work. Within such thirty (30) day period, Tenant shall prepare and deliver to Landlord a written statement as to Punchlist Items (hereinafter defined). In the event that there are Punchlist Items as of the Lease Commencement Date, Landlord shall promptly and properly complete the same. For purposes hereof, "Punchlist Items" shall be defined as those incomplete items that, in Tenant's reasonable determination, do not materially interfere with Tenant's ability to perform Tenant's Work or open or occupy the Premises in accordance with Tenant's customary operational practices. If Landlord shall not complete the Punchlist Items within forty-five (45) days after receipt of Tenant's Punchlist, then Tenant shall notify Landlord of the same, identifying the then outstanding Punchlist Items that Landlord must complete ("Second Punchlist Notice"). If Landlord fails to correct to Tenant's satisfaction the remaining Punchlist Items within twenty five (25) days following Landlord's receipt of the Second Punchlist Notice (or longer provided Landlord is diligently pursuing completion of the same as reasonably determined by Tenant), then and in such event, Landlord shall be in default and Tenant, at Tenant's option, may (without limitation of Tenant's other remedies as a result thereof) correct and complete the Punchlist Items on behalf of Landlord in such manner as Tenant sees fit, and the full cost and expense incurred by Tenant in doing so shall be immediately due by Landlord to Tenant. If Landlord shall not pay the costs and expenses incurred by Tenant in completing the Punchlist Items under this paragraph, then Tenant shall be entitled to deduct the full cost and expense from the minimum rent payable under this Lease. Notwithstanding the foregoing, in no event shall Tenant have the right to terminate the Lease as a result of Landlord's failure to correct Punchlist Items. 11. The original named Landlord hereunder ("Original Landlord") warrants to Tenant for the "Warranty Period" hereinafter defined that: (a) as of the Lease Commencement Date, the Premises as completed shall be structurally sound, well built and fit for Tenant's intended use, free from defective materials, and constructed in accordance with sound engineering and construction standards, and constructed in a workmanlike manner; (b) as of the Lease Commencement Date, the Premises shall be constructed in accordance with applicable law and the Plans; and (c) that the Premises are free and clear of all liens and encumbrances for labor and materials furnished to Landlord. If Tenant alleges a breach of the warranties set forth in this Paragraph, Tenant shall give to Original Landlord written notice of any such allegation, together with a reasonably detailed explanation of the alleged breach (a "Claim"). If Original Landlord (or Original Landlord's general contractor) agrees that the Claim is valid and timely ("Valid Claim"), Original Landlord shall, promptly following concurrence that the same is a Valid Claim, commence the cure of any defects covered by the warranties under this Paragraph. Original Landlord shall diligently and continuously proceed with and complete such cure or correction at Original Landlord's sole cost and expense in accordance with applicable law and in such a manner as will minimize, to the extent reasonably possible, interference with Tenant's operations within the Premises. If Original Landlord is still the Landlord hereunder, minimum rent hereunder shall abate to the extent Tenant's use and enjoyment of the Premises are materially and adversely impaired. If Original Landlord fails to correct any Valid Claim, then and in such event: (i) if Original Landlord is still the Landlord hereunder, Original Landlord shall be in default hereunder; and (ii) Tenant, at Tenant's option, may (without limitation of Tenant's other remedies as a result thereof) correct and complete such uncured Valid Claim(s) on behalf of Original Landlord in such manner as Tenant reasonably sees fit, and the full cost and expense incurred by Tenant in doing so shall be immediately due from Original Landlord to Tenant. If Original Landlord shall not pay the costs and expenses incurred by Tenant in completing such uncured Valid Claim(s) under this Paragraph, and if Original Landlord is still the Landlord hereunder, then Tenant shall be entitled to deduct the full cost and expense from the minimum rent due by Tenant under this Lease. Original Landlord's warranties exclude any remedy for damage or defect caused by abuse or use by Tenant outside its normal operations, modifications not made by Original Landlord, improper and/or insufficient maintenance by Tenant and/or improper operation by Tenant. The Warranty Period shall end: (x) one year after the Lease Commencement Date as to patent defects and Claims pertaining thereto; and (y) three years after the Lease Commencement Date as to latent defects and Claims pertaining thereto, provided, however, if a product's manufacturer gives to Landlord a longer warranty and such warranty is assignable to Tenant, Landlord shall assign such warranty to Tenant (on a non-exclusive basis) and Tenant shall not be prohibited hereby from making a claim directly against such product's manufacturer (but shall not make a Claim against Landlord or Landlord's general contractor after the end of the Warranty Period). Notwithstanding anything herein to the contrary, Original Landlord shall have the right to delegate its warranty covenants herein to its general contractor, and upon acceptance of such delegation by such general contractor and notice thereof to Tenant, Tenant shall enforce such warranties initially against such general contractor. Further, notwithstanding anything herein to the contrary, upon such delegation as aforesaid, such warranties shall continue for the entire duration of (but in no event beyond the end of) the Warranty Period. If Original Landlord (or Landlord's general contractor) in good faith disputes the validity and/or timeliness of a Claim, the matter shall be submitted to arbitration under the auspices of a well-recognized experienced arbitration service located in King County, Washington selected jointly by the parties (or failing that, then by Tenant), with the arbitration costs divided equally between the parties and the arbitrator's decision binding and non-appealable (except in the event of arbitrator fraud or misconduct). In the event of such dispute, Landlord and Tenant shall each have the right to correct and complete the alleged defect after ten (10) days notice to the other party, initially at the expense of the party correcting and completing the alleged defect, which such corrective work shall not be deemed to be a waiver of that party's right to demand arbitration as herein provided. If the arbitrator's decision shall be in favor of the party who corrected and completed the repair, then the other party shall pay to the prevailing party the amount so awarded by the arbitrator. The foregoing warranties and covenants of Original Landlord (and if delegated, Original Landlord's general contractor) shall accrue throughout the Term (and, if applicable, thereafter) to the extent set forth herein, and shall survive: (m) any termination of the Lease (other than if terminated by Court order as a result of Tenant's breach of the Lease); and (n) the exercise of the Option and closing of the sale of the Premises (with or without a termination of this Lease) and any transfer of Original Landlord's interest in this Lease and/or the Premises, but shall in all events expire as of the end of the Warranty Period. 12. Within sixty (60) days after the Lease Commencement Date, Landlord shall cause the following to be delivered to Tenant, at no expense to Tenant: (a) a complete set of "as-built" drawings reflecting Landlord's Work, such drawings to be in both: (i) vellum or mylar format; and (ii) computer disc format; (b) a complete set of all operating manuals, instruction booklets and similar items furnished to Landlord for equipment and items incorporated into Landlord's Work; and (c) a complete set of all warranties and guarantees received by Landlord in connection with Landlord's Work, which warranties and guarantees shall be made in favor of or assigned (in either case, on a non-exclusive basis) to Tenant. 13. By signing and being a party to this Lease, Tenant does not become responsible for nor undertake or be deemed to have undertaken any duty in connection with any or all of the following associated with Landlord's Work: (a) performance of Landlord's Work; (b) monitoring, supervising or inspecting any performance by Landlord's general contractor or any subcontractor of any level or tier; (c) monitoring loss prevention or safety procedures; (d) payment of Landlord's Work (except to extent, if any, of Tenant Plan Changes); and/or (e) third party claims of any kind or nature, including claims for bodily injury or property damage, for payments or for liens of any kind or nature, except for matters arising from Tenant's active negligence or tortious acts. 33 EXHIBIT "D" TENANT'S WORK Unless otherwise specified herein, all obligations set forth in this Exhibit "D" shall be performed by Tenant or its designee and shall be considered "Tenant's Work". Tenant's Work shall consist of: {a) Tenant's Building Work; {b) Tenant's Direct Communication Work; and {c) Tenant's FF&E Work, as such terms are hereinafter defined. 1. Before performing any construction or other work on the Premises that would in any manner alter the structure, would require a building or other governmental permit (if Tenant were not itself a governmental entity) or might in any manner affect the warranties provided to Landlord by its general contractor and/or the warranties provided to Tenant as part of Landlord's Work, Tenant shall obtain all required permits for the same and, in addition, shall obtain Landlord's written approval. In order to obtain Landlord's approval, Tenant shall submit proposed plans and specifications for the proposed work. Landlord's approval of such plans and specifications shall not be unreasonably withheld or delayed. The work herein described, and the plans associated therewith, are hereinafter called "Tenant's Building Work". 2. Once all required governmental permits and approvals have been received, and Landlord has approved the plans associated with Tenant's Building Work, Tenant shall perform Tenant's Building Work in accordance with such approved plans and the associated governmental permits and approvals. All of Tenant's Building Work shall be performed after the Lease Commencement Date, unless Landlord determines that the performance of such Tenant's Building Work will not adversely affect Landlord's Work or the estimated completion date of Landlord's Work. All of Tenant's Building Work shall be at Tenant's sole cost and expense, without any payment by Landlord. All of Tenant's Building Work by Landlord shall be done by licensed contractors selected by Tenant, provided, however, if any portion of Tenant's Building Work is to be performed before Landlord's Work is completed, Landlord shall have the right to approve or disapprove Tenant's contractor and further, Landlord shall have the right to instead designate Landlord's contractor to perform Tenant's Building Work (provided the cost thereof is not greater than what Tenant would have paid the contractor selected by Tenant). 3. Tenant shall furnish and install its Personal Property (as defined in the Section 16 of the Lease) as shall be necessary for Tenant to conduct its intended operations on the Premises collectively ("Tenant's FF&E Work"). [Notwithstanding the foregoing, Landlord, as part of Landlord's Work, will be installing certain built in wiring, fire suppression and power systems to support Tenant's FF&E Work, but only to the extent specifically set forth in the approved Plans.] Tenant shall complete Tenant's FF&E Work after the Lease Commencement Date, at Tenant's sole cost and expense. In performing Tenant's FF&E Work, Tenant shall not damage or alter any portion of Landlord's Work without Landlord's express written approval. 4. If Tenant shall desire to establish a direct communication link between the Premises and any other building or facility (i.e., a building or facility that is not part of the Premises, such as, by way of example and not limitation, Auburn City Hall or any City of Auburn fire station or emergency communications facility), Tenant shall be responsible for the same ["Tenant's Direct Communication Work"] except as herein provided. Tenant shall, at its expense, design and perform Tenant's Direct Communication Work in the manner it desires, except as herein provided. To the extent Tenant's Direct Communication Work requires wiring or other items within and/or between the Buildings, Landlord shall perform the same either: (a) if included as part of the approved Plans, then as part of Landlord's Work at Landlord's expense; or (b) if not included as part of the approved Plans, then the same shall be performed by Landlord but shall be considered as part of Tenant Plan Changes and paid for by Tenant consistent therewith. Tenant's Direct Communication Work located outside of the Buildings (but within the Premises) and located elsewhere other than the Premises shall be performed by Tenant in such a manner as to not interfere with the performance or completion date of Landlord's Work. To the extent Tenant's Direct Communication Work is performed on the Premises, the same shall be governed by the same approval, contractual and other requirements that govern Tenant's Building Work. 5. Tenant's Work shall comply with the requirements of public authorities, and shall be done in a first-class, good, and workmanlike manner, free and clear of all liens and encumbrances for labor and materials furnished to Tenant. Tenant and its independent contractors shall perform Tenant's Work in a manner so as not to allow or permit any labor disputes or strikes. Notwithstanding anything herein to the contrary, if required by law, Tenant shall provide in the construction contract between Tenant and its general contractor, and shall similarly require the general contractor to similarly provide in the general contractor's agreements with its subcontractors of all levels and tiers, and in all other contracts with vendors performing Tenant's Work, that prevailing wages shall be paid to the workers, laborers and mechanics working on the Premises, in accordance with the prevailing wage law. 6. Except as herein provided, Landlord shall not have the right to inspect, review or monitor any aspect of Tenant's relationship with its general contractor or subcontractors of any level or tier. Notwithstanding the foregoing, Landlord shall have the limited right, but not the obligation, to verify and confirm compliance with the prevailing wage law. 7. Upon notice to Tenant, Landlord may, from time to time, enter upon the Premises for the purpose of inspecting any of Tenant's Work, provided such entry does not unreasonably interfere with the performance of Tenant's Work. Such entry shall be for the sole purpose of protecting Landlord's interest as Landlord, and Landlord shall not be deemed to be responsible to Tenant, Tenant's general contractor or any subcontractor of any level or tier as a result of such entry. 8. Tenant shall secure from the appropriate governmental authority (if any) and provide to Landlord upon reasonable request, written evidence of such governmental authority's approval of Tenant's Work as completed (for those portions of Tenant's Work that required a governmental permit or approval in order to begin). 9. Within sixty (60) days after the completion of Tenant's Building Work, Tenant shall cause the following to be delivered to Landlord, at no expense to Landlord: (a) a complete set of "as-built" drawings reflecting Tenant's Building Work, such drawings to be in both: (i) vellum or mylar format; and (ii) computer disc format; (b) a complete set of all operating manuals, instruction booklets and similar items furnished to Tenant for equipment and items associated therewith; and (c) a complete set of all warranties and guarantees received by Tenant associated therewith, which warranties and guarantees shall be made in favor of or assigned (in either case, on a non-exclusive basis) to Landlord. 10. By signing and being a pady to this Lease, Landlord does not become responsible for nor undertake or be deemed to have undertaken any duty in connection with any or all of the following associated with Tenant's Work: (a) performance of Tenant's Work; (b) monitoring, supervising or inspecting any performance by Tenant's general contractor or any subcontractor of any level or tier; (c) monitoring loss prevention or safety procedures; (d) payment of Tenant's Work; and/or (e) third party claims of any kind or nature, including claims for bodily injury or property damage, for payments or for liens of any kind or nature, except in all instances for matters arising from Landlord's active negligence or tortious acts. EXHIBIT "E" TITLE EXCEPTIONS 1. Real estate taxes not yet due and payable as of the Lease Commencement Date. 2. Any easements or other conveyances to be hereafter granted to public or franchise utility companies or similar companies as are necessary or appropriate for Landlord to fulfill its obligations to Tenant under the Lease. 3. Any easements or other conveyances to be hereafter granted to any public authority for any purpose as are necessary or appropriate for Landlord to fulfill its obligations to Tenant under the Lease. 4. Any easements or other vehicular and/or pedestrian access agreements to be hereafter granted or made between Landlord and adjacent property owners. 5. Deed of Trust and Assignment of Lease and Cash Collateral, to be executed from time to time by Landlord in favor of Landlord's lender ("Mortgagee"), and to be recorded in the Official Records of King County, Washington, provided, however, this shall not be a permitted title exception as of the close of escrow should Tenant exercise the Option. Further, this permitted title exception, shall at Tenant's option, be subject to the execution and recordation of an acceptable Subordination, Non-Disturbance and Attornment Agreement by and between Landlord, Tenant and Mortgagee. 6. Terms and conditions of the Boundary and Topographic Survey prepared by Barghausen Consulting Engineers, Inc., dated August 15, 2003, as Job No. 11102. [This Exhibit ends here.] EXHIBIT "F" MEMORANDUM OF LEASE WITH OPTION TO PURCHASE RECORDING REQUESTED BY: City of Auburn AND WHEN RECORDED MAIL TO: City of Auburn 25 West Main Street Auburn, Washington 98001-4998 Attn: City Attorney Document Title: MEMORANDUM OF LEASE WITH OPTION TO PURCHASE Grantor: AUBURN ON MAIN, L.L.C. Grantees: CITY OF AUBURN Abbreviated Legal Descriptions/Assessor's Tax Parcel Numbers: In the City of Auburn, King County, Washington: Lots 2 and 4, Block 1, Truitt's First Addition to Auburn, according to Plat thereof recorded in Volume 14 of Plats, Page 51, official records of King County, Washington Portions of Lots 27 through 30, inclusive, and portions of Lots 32 through 36 inclusive, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, official records of King County, Washington Assessor's Parcel Numbers: 869810-0030-02, 869810-0040-00, 733140-0460-00, 733140-048501,733140-0486-00, 733140-0500-02 and 733140-0510-00 Reference Number of Related I Documents:t None 37 MEMORANDUM OF LEASE WITH OPTION TO PURCHASE AUBURN ON MAIN, L.LC., a Washington limited liability company ("Landlord") and THE CITY OF AUBURN, a code city of the state of Washington ("Tenant") entered into a lease agreement dated ,2003, ("the Lease"), which provides among other things, that for and in consideration of the rental therein reserved and upon the terms, conditions, covenants and provisions set forth in length therein: Landlord leases to Tenant and Tenant hires from Landlord the Premises described in said Lease for a period commencing upon the Lease Commencement Date (defined in the Lease) and expiring on the last day of the six hundredth (600th) full calendar month after the Lease Commencement Date. The Premises leased by Landlord to Tenant is the real property located in the City of Auburn, County of King, Washington, legally described as follows: Lot 2, Block 1, Truitt's First Addition to Auburn, according to the Plat thereof recorded in Volume 14 of Plats, Page 51, in the official records of King County, Washington. Lot 4, Block 1, Truitt's First Addition to Auburn, according to the Plat thereof recorded in Volume 14 of Plats, Page 51, in the official records of King County, Washington. Lots 27 through 30, inclusive, and Lot 32, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington, EXCEPT that portion of said Lot 27 conveyed to the City of Auburn for street purposes by deed recorded under King County (Washington) recording number 7802070893 AND ALSO EXCEPT those portions of said Lots 30 and 32 conveyed to the City of Auburn for alley purposes by deed recorded under King County (Washington) recording number 2899234. The East 182.27 feet of Lots 33, 34 and 35, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington. The East 137.211 feet of Lot 36, Riverview Addition to Auburn, according to the Plat thereof recorded in Volume 9 of Plats, Page 90, in the official records of King County, Washington. Landlord has granted Tenant an option to purchase the Premises at the times, upon the conditions and price set forth in the Lease. The Lease also sets forth the condition title is to be delivered upon the completion of Tenant's purchase of the Premises, if Tenant so exercises such option to purchase. The herein referenced Lease is made upon the terms, conditions, covenants and provisions set forth at length therein, each and all of which terms, conditions, covenants and provisions are hereby incorporated herein with the same force and effect as if set out at length herein. To the extent the provisions of this Memorandum of Lease with Option to Purchase conflict with the provisions of the Lease, the provisions of the Lease shall prevail and control. IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Memorandum of Lease with Option to Purchase as of the day and year first above written. AUBURN ON MAIN, L.L.C., a Washington limited liability company By: Oliphant Real Estate Services, Inc. a Washington corporation its manager and managing member By: Jeffrey Oliphant, President STATE OF COUNTY OF On , 2003 before me, , Notary Public, personally appeared Jeffrey Oliphant, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person(s), or the entity upon behalf of which he acted, executed the instrument. WITNESS my hand and official seal. SIGNATURE OF NOTARY 39 THE CITY OF AUBURN a municipal corporation By: Peter Lewis, Mayor Approved: City Attorney STATE OF WASHINGTON COUNTY OF KING On ,2003 before me, , Notary Public, personally appeared Peter Lewis, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. SIGNATURE OF NOTARY 40