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EXHIBIT 10.2
SINGLE TENANT INDUSTRIAL LEASE
THIS LEASE AGREEMENT made this 18th day of July, 1997, by and BETWEEN NORTHWEST
REAL ESTATE-XXXXXX, L.L.C., a Washington limited liability company (the
"Lessor") and GARGOYLES, INC., a Washington Corporation (the "Lessee").
1. PREMISES. Lessor does hereby lease to Lessee those certain premises, to
wit: The building containing approximately 73,936 square feet of space,
which will be increased in size to no less than 95,000 square feet,
located at 00000 00xx Xxxxxx Xxxx in Lynnwood Washington, as outlined on
Exhibit A attached hereto (hereinafter called "Premises"). See Legal
Description attached as Exhibit B.
2. TERM. This Lease shall be for a term of ten years commencing January 1,
1998 (the "Commencement Date") and terminating December 31, 2007.
Notwithstanding the foregoing, Lessee agrees to diligently pursue the
application and receipt of all permits and approvals of whatever kind
from all authorities as may be required to construct Lessee's Work (as
such term is defined in Exhibit C Hereto) in the configuration as shown
on Exhibit A hereto. If, after such diligent pursuit Lessee is unable to
obtain such permits and approvals this Lease shall automatically
terminate and be of no further force or effect.
3. RENT. Lessee covenants and agrees to pay Lessor at 0000 Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, XX 00000, or to such other party or at such other
place as Lessor may hereafter designate, monthly rent in advance without
offset or deduction, on or before the first (1st) day of each month of
the Lease term in the amounts as follows: $58,333.33.
The base monthly rent will be adjusted during the term as follows:
On every third anniversary (1/1/01, 1/1/04, 1/1/07) during the Term of
this Lease (each such date is herein called a "Rental Adjustment Date"),
the base monthly rental shall be adjusted to equal the product obtained
by multiplying the base monthly rent immediately preceding the Rental
Adjustment Date by a fraction, the numerator of which is the Consumer
Price Index for All Urban Consumers - All Items (Reference Base
1982-84=100) published for Seattle-Tacoma, Washington by the United
States Department of Labor, Bureau of Labor Statistics ("CPI") for the
latest period for which a CPI has been published prior to the applicable
Rental Adjustment Date, and the denominator of which is the CPI for the
last published index three years preceding the numerator CPI index. In
no event will the application of the rental adjustment formula result in
a rent reduction. In the event the CPI is discontinued for
Seattle-Tacoma, Washington, such index for the entire United States
(currently the All Cities Average) shall be used for the purposes of the
preceding calculation, and in the event no such index is then published,
its successor index shall be used for such purposes. If there is no such
successor index, Landlord shall select for the purposes of such
calculation such other available index or other data as shall reasonably
reflect the cost-of-living changes in Seattle, Washington during the
appropriate period.
4. SECURITY DEPOSIT. Lessee has deposited with Lessor on the date hereof
$58,333.33. Said sum shall be held by Lessor as security for the
faithful performance by Lessee of all the terms, covenants and
conditions of this Lease to be kept and performed by Lessee during the
entire Term hereof. If Lessee defaults with respect to any provision of
this Lease, including, but not limited to, the provisions relating to
the payment of Minimum Rent, Adjustments or other charges or sums due
under this Lease, Lessor may (but shall not be required to) use, apply
or retain all or any part of the security deposit for the payment of any
Minimum Rent, Adjustments or other charges or sums due under this Lease
or any sum in default, or for the payment of any amount which
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Lessor may spend or become obligated to spend by reason of Lessee's
default, or to compensate Lessor for any other loss, damage, cost or
expense (including attorneys' fees) which Lessor may suffer or incur by
reason of Lessee's default. If any portion of said security deposit is
so used or applied, Lessee shall, within five (5) days after written
demand therefor, deposit a certified or cashier's check with Lessor in
an amount sufficient to restore the security deposit to its original
amount and Lessee's failure to do so shall be a default under this
Lease. Lessor shall not be required to keep the security deposit
separate from its general funds and Lessee shall not be entitled to
interest on such deposit. If Lessee shall fully and faithfully perform
every provision of this Lease to be performed by it, the security
deposit or any balance thereof after deduction hereunder by Lessor shall
be returned to Lessee (or, at Lessor's option, to the last assignee of
Lessee's interest hereunder) within thirty (30) days following
expiration of the Lease Term; provided, that in the event this Lease
shall be terminated upon the default of the Lessee, the security deposit
shall be applied against the damages suffered by Lessor by reason of the
Lessee's default and the balance shall be returned to Lessee. In the
event of termination of Lessor's interest in this Lease, Lessor shall
transfer said deposit to Lessor's successor in interest. On each Rental
Adjustment Date, Lessee will deposit with Lessor an amount equal to the
incremental monthly increase in rent so that the amount of the Security
Deposit will be equal to one month of base rent.
5. USE. Lessee shall use the Premises for the purposes of light
manufacturing, assembly, storage, distribution, and related office uses
and for no other purposes, without prior written consent of Lessor, and
shall comply with all governmental laws, ordinances, regulations, orders
and directives and insurance requirements applicable to Lessee's use of
the Premises.
6. RULES AND REGULATIONS. Lessee agrees to comply with any Rules and
Regulations attached hereto, as well as such other reasonable rules and
regulations as may from time to time be adopted by Lessor for the
management, good order and safety of the building. Lessee shall be
responsible for the compliance with such rules and regulations by its
employees, agents and invitees. Lessor's failure to enforce any of such
rules and regulations against Lessee shall not be deemed to be a waiver
of same.
7. MAINTENANCE. Lessee agrees by taking possession that the Premises are in
tenantable and good condition. Lessee has leased the Premises in as-is
condition (except that Lessor will remove the existing VAT which
contains asbestos) and prior to occupancy plans significant
renovation/expansion. Lessee shall at its expense and at all times keep,
maintain, repair and replace the Premises, including but not limited to
storefronts, exterior doors and windows, roof, exterior walls,
foundations, landscaping and mechanical, electrical, sprinkler and other
utility systems, together with connections to utility distribution
systems, in good condition, repair and order and in accordance with
applicable laws, ordinances, rules, regulations and requirements of
government authorities and insurance rating bureaus. Lessee agrees to
maintain a preventative maintenance contract providing for the regular
inspection and maintenance of the heating and air conditioning systems
with a licensed mechanical contractor and containing terms and
specifications acceptable to Lessor. Lessee shall further keep the
Premises and adjoining areas in a neat, clean, safe and sanitary
condition; protect water, drain, gas and other pipes to prevent freezing
or clogging and repair all leaks and damage caused thereby; replace all
glass and panels in windows and doors of the Premises which become
cracked, broken or damaged; and remove ice and snow from entries and
areas immediately adjacent to the Premises.
8. UTILITIES, REAL ESTATE TAXES AND FEES. Lessee agrees to pay promptly
when due all charges for real estate taxes and assessments, light, heat,
water, sewer, garbage, fire protection and other utilities and services
to the Premises, and all license fees and other governmental charges
levied on Lessee's property and the operation of Lessee's business on
the Premises. Lessor shall not be liable for any injury or damages
suffered as a result of the interruption of utilities or services by
fire, or other casualty, strike, riot, vandalism, the making of
necessary repairs or improvements, or other causes beyond Lessor's
control. Lessee shall provide Lessor with
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evidence of payment of those costs and expenses referred to in this
paragraph prior to any such expense becoming delinquent.
9. OPERATING EXPENSES. Lessee shall pay as additional rent all expenses
incurred by Lessor for operation and management of the Project during
the term hereof, including but not limited to:
a) The costs of insurance provided for under Paragraph 16 C below which
amount will be paid to Lessor as provided below in this paragraph 9.
c) A Management fee equal to one and one half percent (1 1/2%) of Lessee's
monthly base rent which amount will be payable monthly
Upon receipt of its invoice from its insurance carrier or within
thirty (30) days of the policy renewal date, Lessor will deliver an
invoice to Lessee for the insurance premium required to be maintained by
Lessor hereunder. Such amount shall be paid to Lessor by Lessee prior to
the later of fifteen (15) days after the date of Lessor's statement or
ten (10) days prior to the policy renewal date. Lessor's records showing
expenditures made for expenses incurred directly for the Premises shall
be available for Lessee's inspection at any reasonable time
10. LESSOR'S RESERVATIONS. Lessor reserves the right without liability to
Lessee: (a) to inspect the Premises, to show them to prospective
Lessees, and if they are vacated, to prepare them for re-occupancy; (b)
to retain at all times and to use in appropriate instances keys to doors
within and into the Premises; (c) to make any repairs, alterations,
additions or improvements, whether structural or otherwise, in or about
the building which are the responsibility of Lessor under this Lease, if
any, and for such purposes to enter upon the Premises and during the
continuance of any work, to interrupt or temporarily suspend building
services and facilities, all without affecting any of Lessee's
obligations hereunder, so long as the Premises are reasonably
accessible; and (d) generally to perform any act relating to the safety,
protection and preservation of the Premises or building.
11. POSSESSION. If Lessor does not deliver possession of the Premises at the
Commencement Date of the term of this Lease, Lessee may give Lessor
written notice of its intention to cancel this Lease if possession is
not delivered within ninety (90) days after receipt of such notice by
Lessor. Lessor shall not be liable for any damages caused by failure to
deliver possession of the Premises and Lessee shall not be liable for
any rent until such time as Lessor delivers possession. A delay of
possession shall not extend the termination date. If Lessor offers
possession of the Premises or any portion thereof prior to the
Commencement Date of the term of this Lease, and if Lessee accepts such
early possession, then both parties shall be bound by all of the
covenants and terms contained herein during such period of early
possession including the payment of rent which shall be pro-rated
accordingly and for the number of days of such early possession.
12. ASSIGNMENT AND SUBLETTING. Lessee shall not either voluntarily or by
operation of law assign, transfer, convey or encumber this Lease or any
interest under it, or sublet to occupy or use the Premises without
Lessor's prior written consent which consent shall not be unreasonably
withheld, conditioned or delayed. Lessor reserves the right to recapture
the Premises or applicable portion thereof in lieu of giving its consent
by notice given to Lessee within twenty (20) days after receipt of
Lessee's written request for assignment or subletting. Such recapture
shall terminate this Lease as to the applicable space effective on the
prospective date of assignment or subletting, which shall be the last
day of a calendar month and not earlier than sixty (60) days after
receipt of Lessee's request hereunder. In the event that Lessor shall
not elect to recapture and shall thereafter give its consent, Lessee
shall pay Lessor a reasonable fee, not to exceed One Thousand
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And No/100 Dollars ($1,000.00) to reimburse Lessor for processing costs
incurred in connection with such consent. Lessor's consent shall not
release or discharge Lessee from future liability under this Lease and
shall not waive Lessor's right to consent to any future assignment or
sublease. Any assignment or subletting without Lessor's consent shall be
void and shall, at Lessor's option, constitute a default under this
Lease. A transfer by the present majority shareholders of ownership or
control of a majority of the voting stock of a corporate Lessee shall be
deemed an assignment.
13. ALTERATIONS. After obtaining the prior written consent of Lessor which
consent shall not be unreasonably withheld, conditioned or delayed,
Lessee may make non structural alterations, additions and improvements
in said Premises at its sole cost and expense. Lessee agrees to save
Lessor harmless from any damage, loss, or expense arising therefrom and
to comply with all laws, ordinances, rules and regulations. Upon
termination of this Lease, all alterations, additions and improvements
made in, to or on the Premises (including without limitation all
electrical, lighting, plumbing, heating, air conditioning, and
communications equipment and systems, doors, windows, partitions,
drapery, carpeting, shelving, counters, and physically attached fixtures
unless excluded by written agreement annexed hereto), shall remain upon
and be surrendered as a part of the Premises [For additional terms
related to the initial improvements to the Premises see the Work Letter
attached as Exhibit C.]
14. LIENS. Lessee shall keep the Premises free from any liens arising out of
any work performed, materials furnished, equipment supplied, or
obligations incurred by or on behalf of Lessee. No work performed,
material furnished, equipment supplied or obligations incurred by or on
behalf of Lessee shall be deemed to be for the immediate use and benefit
of Lessor so that no mechanic's lien or other lien shall be allowed
against Lessor's estate in the premises. Lessee shall provide, at
Lessee's own cost, a waiver of lien signed by any party (including the
Lessee) who commences to perform work, furnish materials, or supply
equipment to the Premises. Lessor does not authorize or consent to the
performance of any work, furnishing of material or supply of equipment
incurred by or on behalf of Lessee prior to Lessee providing Lessor with
the signed waiver of lien referred to above. Lessor may require, at
Lessee's sole cost and expense, a lien release and completion bond in an
amount equal to either the actual contract price or one and one-half
times the estimated cost of any improvements, additions or alterations
in the Premises which Lessee desires to make, to insure Lessor against
any liability for lien and to insure completion of the work.
15. SIGNS. Prior to termination of this Lease, Lessee will remove all signs
placed by it upon the Premises, and will repair any damages caused by
such removal.
16. INSURANCE.
A. Lessee shall pay for and maintain, during the entire Lease Term, the
following policies of insurance:
(i) Commercial general liability insurance, including products,
completed operations coverage and auto liability insurance covering
Lessee's operations and the Premises including but not limited to
coverage for personal injuries with limits of not less than $2,000,000
combined single limit for death, personal injury, and property damage,
per occurrence, including Lessor as an additional insured. Such policies
shall be endorsed to provide contractual liability insurance covering
all liability assumed by Lessee under the provisions of this Lease
subject to the terms, conditions and endorsements of the policy for such
insurance and a certificate of insurance and a copy of the Additional
Insured Endorsement will be delivered to Lessor prior to commencement of
the Term.
(ii) Special cause of loss or "all risk" perils property
insurance upon Lessee's property, including but not limited to Fire and
Extended Coverage, Vandalism and Malicious Mischief, in
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the amount of one hundred percent (100%) full replacement cost,
including Lessor as an additional insured, as its interests may appear,
with a loss payable clause in favor of Lessor to the extent of Lessor's
interest in property damaged, except to the extent proceeds are required
to be paid to holders of mortgages or trust deeds.
B. Each policy provided by Lessee shall expressly provide that it shall not
be subject to cancellation or material change without at least thirty
(30) days prior written notice to the Lessor. Lessee shall furnish
Lessor, prior to commencement of the Term, with insurance certificates
and, upon request, copies of such policies required to be maintained
hereunder.
X. Xxxxxx shall pay for and maintain special extended coverage and
earthquake property insurance covering the building during the entire
Lease term. Such insurance shall be in the amount of one hundred percent
(100%) full replacement value of the Building and improvements.
17. INDEMNITY AGAINST LIABILITY FOR LOSS OR DAMAGE BY LESSEE.
A. Lessee assumes all liability for and shall indemnify, hold harmless
and defend Lessor from and against all loss, damage or expense which the
Lessor may sustain or incur, and against any and all claims, demands,
suits and actions whatsoever, including expense of investigation and
litigation, on account of injury to or death of persons, including
without limitation employees of Lessor, employees of Lessee or its
affiliated companies or on account of damage to or destruction of
property, including without limitation property owned by and property in
the care, custody or control of Lessor during the Term, due to or
arising in any manner from:
(i) The acts or negligence of Lessee or any contractor, subcontractor,
or agent of Lessee or their respective employees;
(ii) The condition, use or operation of the Premises and/or materials or
substances used by Lessee or any of its contractors, subcontractors or
agents of Lessee or by their respective employees, regardless of whether
or not furnished by Lessor under this Lease or otherwise;
(iii) Any damage or injury to persons or property arising out of
Lessee's breach or this Lease, including, but not limited to,
obligations of Lessee under Section 7, Maintenance.
X. Xxxxxx shall have no liability to Lessee as a result of loss or
damage to Lessee's property or for death or bodily injury caused by the
acts or omissions by third parties (including criminal acts).
C. It is mutually understood and agreed that the assumption of
liabilities and indemnification provided for in this Section shall
survive any termination of this Lease.
18. DAMAGE OR DESTRUCTION. If any substantial part of the Premises, or a
substantial part of the building in which the Premises are located,
shall be damaged or destroyed by fire or other insured casualty, and
repair of the damage can not be completed within one hundred twenty
(120) days, Lessor shall have the option either (a) to repair or rebuild
within a reasonable time utilizing the insurance proceeds to effect such
repair, or (b) not to repair or rebuild, and to cancel this Lease on
thirty (30) days notice. If damage or destruction of the Premises is not
substantial and no substantial part of the Building is involved, Lessee
shall have the right, within five (5) days following Lessor's election
to cancel this Lease to override such Cancellation by agreeing to (i)
pay full rent due hereunder while repairs are being performed, and (ii)
agreeing to pay all uninsured repairs. If Lessor fails to give Lessee
written notice of its election within thirty (30) days from the date of
damage, or if the restoration of the Premises cannot be completed within
one hundred twenty (120) days from date of notice, Lessee may cancel
this Lease at its option on thirty (30) days notice. During the period
of untenantability, rent shall xxxxx in the same ratio as
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the portion of the Premises rendered untenantable, bears to the whole of
the Premises; provided that if the damage is due to the fault or neglect
of Lessee, there shall be no abatement of rent.
If the Premises or the building in which the Premises are located shall
be damaged or destroyed by fire or other insured casualty, and repair of
the damage can be completed within one hundred twenty (120) days, Lessor
shall repair or rebuild within a reasonable time utilizing the insurance
proceeds to effect such repair.
If any part of the Premises or the building in which the Premises are
located shall be damaged or destroyed by an uninsured casualty Lessor
shall have the option either (a) to repair or rebuild within a
reasonable time, or (b) not to repair or rebuild, and to cancel this
Lease on thirty (30) days notice. In the event of cancellation by Lessor
as a result of an uninsured casualty, Lessee shall have the right,
within five (5) days following Lessor's notice of cancellation, to
override such cancellation by agreeing to repair the damage at Lessee's
sole cost and expense. In such event, the Lessee shall repair or rebuild
within a reasonable time following the damage or destruction. During the
period of repairs, if such repairs are performed by Lessor, rent shall
xxxxx as provided in this Section 18 above.
19. EMINENT DOMAIN. If the whole of the Premises shall be taken by any
public authority under the power of eminent domain, or purchased by the
condemnor in lieu thereof, then the term of this Lease shall cease as of
the date possession is taken by such public authority. If only part of
the Premises shall be so taken, the Lease shall terminate only as to the
portion taken, and shall continue in full force and effect as to the
remainder of said Premises, and the monthly rent shall be reduced
proportionately; provided, however, if the remainder of the Premises
cannot be made tenantable for the purposes for which Lessee has been
using the Premises or if more than twenty-five percent (25%) of the
rentable square footage of the Premises shall be so taken, then either
party, by written notice to the other, given at least thirty (30) days
prior to the date that possession must be surrendered to the public
authority, may terminate this Lease effective as of such surrender of
possession. In the event of any taking, whether whole or partial, Lessor
shall be entitled to all awards, settlements, or compensation which may
be given for the land and buildings. Lessee shall have no claim against
Lessor for the value of any unexpired term of this Lease, but may
initiate a separate condemnation action for the sole purpose of seeking
damages for moving expenses and other similar losses of Lessee.
20. INSOLVENCY. If Lessee shall be declared insolvent or bankrupt, or if
Lessee's leasehold interest herein shall be levied upon or seized under
writ of any court of law, or if a trustee, receiver or assignee be
appointed for the property of Lessee, whether under operation of State
or Federal statutes, then Lessor may, at its option, immediately,
without notice (notice being expressly waived), terminate this Lease and
take possession of said Premises, without, however, terminating Lessee's
obligations under this Lease.
21. DEFAULT AND RE-ENTRY. If Lessee fails to keep or perform any of the
covenants and agreements herein contained, then the same shall
constitute a breach hereof, and if Lessee has not remedied such breach
within ten (10) days after written notice thereof from Lessor if the
breach is non-payment of rent or other charges, or commence to cure the
breach of any other covenant within thirty (30) days after written
notice thereof from Lessor, with Lessee continuing to pursue such remedy
with good faith and diligently to a cure, then Lessor may, at its
option, without further notice or demand:
(a) Cure such breach for the account and at the expense of Lessee
and such expense shall be deemed additional rent due on the first of the
following month; or
(b) Re-enter the Premises, remove all persons therefrom, take
possession of the Premises and remove all personal property therein at
Lessee's risk and expense and (1) terminate this Lease,
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or (2) without terminating the Lease or in any way affecting the rights
and remedies of Lessor or the obligations of Lessee, re-let the whole or
any part of the Premises as agent for Lessee, upon such terms and
conditions as Lessor may deem advisable. In either event, any moneys
received from Lessee and any deposit or other amounts held by Lessor may
first be applied by Lessor to any damages suffered by Lessor as a result
of such default, including without limitation, costs and expenses
incurred on re-entry and re-letting, any unamortized tenant improvements
and commissions, cleaning, necessary repairs, restoration and
alteration, and any commissions incurred on re-letting, and the balance
of such amounts may be applied toward payment of other sums due to
Lessor hereunder. In the event the Premises are re-let for Lessee's
account, Lessee shall pay to Lessor monthly any deficiency; however,
Lessor shall not be required to pay any excess to Lessee. Upon
termination of this Lease or of Lessee's right to possession, Lessor has
the right to recover from Lessee: (1) The worth of the unpaid rent that
had been earned at the time of such termination; (2) The worth of the
amount of the unpaid rent that would have been earned after the date of
such termination; and (3) Any other amount, including court, attorney
and collection costs, necessary to compensate Lessor. "The Worth," as
used in Section (1) is to be allowing interest at 18% per year. "The
worth" as used for Section (2) is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of termination. The above remedies of Lessor are cumulative
and in addition to any other remedies now or hereafter allowed by law or
elsewhere provided for in this Lease.
22. REMOVAL OF PROPERTY. Any property of Lessee removed by Lessor in
accordance with Section 21 above may be stored by Lessor or may be
deposited on any area adjacent to the building at the sole risk and
expense of Lessee and without any further responsibility of Lessor, and
Lessor may at its sole discretion without or after removing said
property, without obligation to do so and without notice to Lessee, sell
or dispose of the same at public or private sale for the account of
Lessee, in which event the proceeds therefrom may be applied by Lessor
upon any indebtedness due from Lessee to Lessor. Lessee waives all
claims for damages that may be caused by Lessor re-entering the Premises
and removing or disposing of said property as herein provided.
23. COSTS AND ATTORNEYS' FEES. In the event either party shall commence
legal action to enforce any provision of this Lease, the court shall
award to the prevailing party all reasonable attorneys' fees and all
costs incurred in connection therewith, including fees and costs on
appeal. Any action relating to this Lease shall be brought in the County
in which the Premises are located or, at Lessor's election, in King
County, Washington.
24. SUBROGATION WAIVER. Lessor and Lessee each herewith and hereby release
and relieve the other and waive its entire right of recovery against the
other for loss or damage arising out of or incident to the perils of
fire, explosion or any other perils described in the "all risk"
insurance endorsement approved for use in the state in which the
Premises are situated which occurs in, on or about the Premises, whether
due to the negligence of either party, their agents, employees or
otherwise.
25. HOLDING OVER. If Lessee, with the express consent of Lessor, shall hold
over after the expiration of the term of this Lease, Lessee shall remain
bound by all the covenants and agreements herein, except that (a) the
tenancy shall be from month-to-month and (b) the monthly rent to be paid
by Lessee shall be determined by multiplying the monthly rent in effect
immediately preceding such expiration times 150%. If Lessee holds
possession of the Demised Premises after the expiration of the Lease
without the express written consent of Lessor, Lessee shall remain bound
by all the covenants and agreements herein, except that (a) the tenancy
shall be from month-to-month and (b) the monthly rent to be paid by
Lessee shall be determined by multiplying the monthly rent in effect
immediately preceding such expiration times 200%. Any such tenancy may
be terminated as provided by Washington State law.
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26. SUBORDINATION AND ATTORNMENT; MORTGAGE PROTECTION
A. SUBORDINATION-NOTICE TO MORTGAGEE. At the request of Lessor, Lessee
shall promptly execute, acknowledge and deliver, all instruments which
may be required to subordinate this Lease to any existing or future
mortgages, deeds of trust and/or other security documents on or
encumbering the Premises or on the leasehold interest held by Lessor,
and to any extensions, renewals, or replacements thereof, provided that
the mortgagee or beneficiary, as the case may be, shall agree to
recognize this Lease in the event of foreclosure if Lessee is not in
default at such time.
B. LESSEE'S CERTIFICATE. Lessee shall at any time and from time to time
upon not less than three (3) days prior written notice from Lessor
execute, acknowledge and deliver to Lessor a statement in writing (a)
certifying that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification and certifying
that this Lease as so modified is in full force and effect), and the
date to which the rental and other charges are paid in advance, if any;
and (b) acknowledging that there are not, to Lessee's knowledge, any
uncured defaults on the part of the Lessor or Lessee hereunder, or
specifying such defaults if any are claimed; and (c) setting forth the
date of commencement of rents and expiration of the Lease Term hereof.
Any such statement may be relied upon by any prospective purchaser on
encumbrancer of all or any portion of the Premises of which the Premises
are a part.
C. MORTGAGEE PROTECTION CLAUSE. Lessee agrees to notify any mortgagee
and/or trust deed holders, by registered mail, with a copy of any notice
of default served upon the Lessor, provided that prior to such notice
Lessee has been notified in writing (by way of Notice of Assignment of
Rents and Lease, or otherwise) of the addresses of such mortgagees
and/or trust deed holders. Lessee further agrees that if Lessor shall
have failed to cure such default, then the mortgagees and/or trust deed
holders have thirty (30) days within which to cure such default or if
such default cannot be cured within that time, then such additional
times as may be necessary if within such thirty (30) days any mortgagee
and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings if necessary to affect such
cure), in which event this Lease shall not be terminated if such
remedies are being so diligently pursued.
27. SURRENDER OF POSSESSION. Lessee shall, prior to the termination of this
Lease or of Lessee's right to possession, remove from the Premises all
personal property which Lessee is entitled to remove and those
alterations, additions, improvements or signs which may be required by
Lessor to be removed, pursuant to Sections 13 and 15 above, and shall
repair or pay for all damage to the Premises caused by such removal. All
such property remaining and every interest of Lessee in the same shall
be conclusively presumed to have been conveyed by Lessee to Lessor under
this Lease as a xxxx of sale, without compensation, allowance, or credit
to Lessee. Lessee shall upon termination of this Lease or of Lessee's
right of possession, deliver all keys to Lessor and peacefully quit and
surrender the Premises without notice, neat and clean, and in as good
condition as when Lessee initially completed Lessee's work pursuant to
the Work Letter, except for reasonable wear and tear as determined by
Lessor.
28. LATE PAYMENT AND INTEREST. If any amount due from Lessee is not received
in the office of Lessor on or before the third (3rd) day following the
date upon which such amount is due and payable, a late charge of five
percent (5%) of said amount shall become immediately due and payable,
which late charge Lessor and Lessee agree represents a fair and
reasonable estimate of the processing and accounting costs that Lessor
will incur by reason of such late payment. All past due amounts owing to
Lessor under this Lease, including rent, shall be assessed interest at
an annual percentage rate of eighteen percent (18%) from the date due or
date of invoice, whichever is earlier, until paid. Notwithstanding the
foregoing Lessor agrees to waive any fee payable under this Paragraph 28
once per calendar year if the Lessee makes any such late payment within
ten
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(10) days following written notice by Lessor to Lessee. If, however,
during the same calendar year as a previously waived late payment was
made by Lessee, Lessee is again more than three (3) days delinquent in
the payment of any amount due under this Lease both the then current and
the previously waived fees due under this paragraph will be immediately
due and payable by Lessee to Lessor.
29. NOTICE. Any notice required to be given by either party to the other
pursuant to the provisions of this Lease or any law, present or future,
shall be in writing, and shall be deemed to have been duly given or sent
if either delivered personally or deposited in the United States Mail,
postage prepaid, registered or certified, return receipt requested,
addressed to the Lessor at the address specified for the payment of rent
under paragraph 3 of this Lease or to Lessee at the Premises or to such
other address as either party may designate to the other in writing from
time to time.
30. NO WAIVER OR COVENANTS. Time is of the essence of this Lease. Any waiver
by either party of any breach hereof by the other shall not be
considered a waiver of any future similar or other breach.
31. ENTIRE AGREEMENT. It is expressly understood and agreed by Lessor and
Lessee that there are no promises, agreements, conditions,
understandings, inducements, warranties, or representations, oral or
written, express or implied, between them, other than as herein set
forth and that this Lease shall not be modified in any manner except by
an instrument in writing executed by the parties.
32. BINDING ON HEIRS, SUCCESSORS AND ASSIGNS. The covenants and agreements
of this Lease shall be binding upon the heirs, executors,
administrators, successors and assigns of both parties hereto, except as
hereinabove provided.
33. LESSOR'S ASSIGNMENT. It is fully understood that Lessor shall have the
full right to assign this Lease, without any notice to Lessee, thereby
relieving Lessor from all and any liabilities; provided however, that
the assignee assumes all Lessor's responsibilities as set forth in this
Lease.
34. ENVIRONMENTAL. See Rider One attached.
LESSOR: LESSEE:
NORTHWEST REAL ESTATE-XXXXXX, L.L.C. GARGOYLES, INC.
/S/ XXXXX X. XXXXXXXX By: /S/ XXXXXXX X. XXXXX
By: Xxxxx X. Xxxxxxxx
Its: Manager Its: PRESIDENT
Date: 7/21/97 Date: 7/18/97
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STATE OF WASHINGTON ]
] ss.
COUNTY OF KING ]
I certify that I know or have satisfactory evidence that Xxxxx X. Xxxxxxxx
is the person who appeared before me, a Notary Public in and for the State of
Washington duly commissioned and sworn, and acknowledged that he is the Manager
of Northwest Real Estate-Xxxxxx, L.L.C., a Washington limited liability company,
who executed the within and foregoing instrument, and acknowledged the
instrument to be the free and voluntary act and deed of said company for the
uses and purposes therein mentioned, and on oath stated that affiant is
authorized to execute said instrument on behalf of said company.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year first above written.
-------------------------------------
Notary Public in and for the
State of_____________________________
residing at__________________________
Commission expires___________________
Print Name___________________________
STATE OF WASHINGTON ]
] ss.
COUNTY OF KING ]
I certify that I know or have satisfactory evidence that _____________ is
the person who appeared before me, a Notary Public in and for the State of
Washington duly commissioned and sworn, and acknowledged that he/she is the
_________________, of _________________________, a _________________________ who
executed the within and foregoing instrument, and acknowledged the instrument to
be the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that affiant is authorized to
execute said instrument on behalf of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year first above written.
-------------------------------------
Notary Public in and for the
State of_____________________________
residing at__________________________
Commission expires___________________
Print Name___________________________
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RIDER ONE
EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE
a. EMISSIONS. Lessee shall not (i) discharge, emit or permit to be
discharged or emitted, any liquid, solid or gaseous matter, or any combination
thereof, into the atmosphere, the ground or any body of water, which does or may
pollute or contaminate the same, or does or may adversely affect the health or
safety of persons, or the use or enjoyment of the Premises; nor (ii) transmit,
receive or permit to be transmitted or received, any electromagnetic, microwave
or other radiation in, on or about the Premises unless it is required by
Lessee's business and so long as it complies with applicable laws.
b. STORAGE. If, with or without violation of this Lease, Lessee
possesses at the Premises any matter described in Section A above or any
Hazardous Substances (as defined below), Lessee shall store the same in
appropriate leak proof containers and/or areas which comply with all laws and
all prudent practices.
c. DISPOSAL OF WASTE. Lessee shall not keep any trash, garbage, waste or
other refuse on the Premises except in sanitary containers and shall regularly
and frequently remove same from the Premises. Lessee shall keep all such
containers in a clean and sanitary condition. Lessee shall properly dispose of
all sanitary sewage and shall not use the sewage system for the disposal of
anything except sanitary sewage, nor in excess of capacity. Lessee shall not
cause any obstruction in the sewage disposal system.
d. COMPLIANCE OF LAW. Notwithstanding any other provision in the Lease
to the contrary, Lessee shall comply with all Laws in complying with its
obligations under this Lease, and in particular, Laws relating to the storage,
use and disposal of Hazardous Substances (as defined below).
e. INDEMNIFICATION FOR BREACH. Lessee shall defend, indemnify and hold
Lessor, the Project and the holder of a trust deed or mortgage on the Project
harmless from any loss, claim, liability or expense, including, without
limitation, attorneys fees and costs, at trial and/or on appeal and review,
arising out of or in connection with its failure to observe or comply with the
provisions of this Rider. This indemnity shall survive the expiration or earlier
termination of the term of the Lease or the termination of Lessee's right of
possession and be fully enforceable thereafter.
f. INDEMNIFICATION REGARDING HAZARDOUS SUBSTANCES. In addition to the
indemnity obligations contained elsewhere herein, Lessee shall indemnify, defend
and hold harmless Lessor, the Premises, the Project, and the holder of a trust
deed or mortgage on the Project, from and against all claims, losses, damages,
monitoring costs, response costs, liabilities, and other costs expenses caused
by, arising out of, or in connection with, the generation, release, handling,
storage, discharge, transportation, deposit or disposal in, on, under or about
the Premises by Lessee or any of Lessee's agents of the following (collectively
referred to as "Hazardous Substances"): hazardous materials, hazardous
substances, toxic wastes, toxic substances, pollutants, petroleum products,
underground tanks, oils, pollution, asbestos, PCB's, radioactive materials, or
contaminants, as those terms are commonly used or as defined by federal, state,
and/or local law or regulation related to protection of health or the
environment as any of same may be amended from time to time, and/or by any rules
and regulations promulgated thereunder. Such damages, costs, liability and
expenses shall include such as are claimed by any regulating and/or
administering agency, any ground lessor or master lessor of the Project, the
holder of any Mortgage or Deed of Trust on the Project, and/or any successor of
the Lessor named herein. This indemnity shall include (i) claims of third
parties, including governmental agencies, for damages, fines, penalties,
response costs, monitoring costs, injunctive or other relief; (ii) the costs,
expenses or losses resulting from any injunctive relief, including preliminary
or temporary injunctive relief; (iii) the expenses, including fees of attorneys
and experts, of report the existence of Hazardous Substances to an agency of the
State of which the Premises is located or of the United States as required by
applicable laws and regulations; and (iv) any and all expenses or obligations,
including attorney's fees, incurred at, before and after any administrational
proceeding, trial, appeal and review. This indemnity shall survive the
expiration or earlier termination of the term of the Lease
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or the termination of Lessee's right of possession and shall remain fully
enforceable thereafter.
LESSOR REPRESENTS AND WARRANTS TO LESSEE THAT LESSOR HAS NO ACTUAL KNOWLEDGE
OF THE EXISTENCE OF ANY HAZARDOUS ENVIRONMENTAL CONDITION AFFECTING THE
PROPERTY OTHER THAN THE VAT FLOOR COVERING WHICH LESSOR HAS AGREED TO REMOVE
OR AS MAY HAVE BEEN DISCLOSED BY THE PHASE 1 ENVIRONMENTAL SITE ASSESSMENT
DATED MARCH 1997 PREPARED BY AGRA EARTH & ENVIRONMENTAL, INC. A COPY OF
WHICH HAS BEEN PROVIDED TO LESSEE
g. INFORMATION. Lessee shall give prior written notice to Lessor of any
use, whether incidental or otherwise, of Hazardous Substances on the Premises,
and shall immediately deliver to Lessor a copy of any notice of any violation of
any Law with respect to such use. Lessee shall also provide to Lessor, upon
request, with any and all information regarding Hazardous Substances in the
Premises, including contemporaneous copies of all filings and reports to
governmental entities, and any other information requested by Lessor. In the
event of any accident, spill or other incident involving Hazardous Substances,
Lessee shall immediately report the same to Lessor and supply Lessor with all
information and reports with respect to the same. All information described
herein shall be provided to Lessor regardless of any claim by Lessee that it is
confidential or privileged.
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EXHIBIT A
PREMISES
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Sketch of building floor plan.
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RULES AND REGULATIONS
1. Lessee shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by Law. Lessor shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects shall, if considered necessary by
Lessor, stand on such platforms as determined by Lessor to be necessary to
properly distribute the weight, which platforms shall be provided at Lessee's
expense. Business machines and mechanical equipment belonging to Lessee which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein shall be placed and maintained by Lessee, at
Lessee's expense, on vibration eliminators, or other devices sufficient to
eliminate noise or vibration. Lessor will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all damage
done to the building by maintaining or moving such equipment or other property
shall be repaired at the expense of Lessee.
2. Lessee shall not use or keep in the Premises any kerosene, gasoline
or inflammable or combustible fluid or material other than those limited
quantities necessary for the operation of Lessee's business or the operation or
maintenance of Lessee's equipment. Lessee shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow the
Premises to be occupied or used in manner offensive or objectionable to Lessor
or other occupants of the building by reason of noise, odors or vibrations, nor
shall Lessee bring into or keep in or about the Premises any birds or animals.
3. Lessee shall not use any method of heating or air conditioning other
than that supplied by Lessor.
4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Lessee has actual notice.
5. Lessee shall entirely shut off any water faucets or other water
apparatus, and electricity, gas or air outlets before Lessee and its employees
leave the Premises. Lessee shall be responsible for any damage or injuries
sustained by Lessor for noncompliance with this rule.
6. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein.
7. Lessee shall not use the Premises for any business or activity other
than that specifically provided for in Lessee's Lease.
8. Lessee shall not install any, loudspeaker or other devices on the
roof(s) or exterior walls of the Building or Project.
9. Lessee shall not in any way deface the Premises or any part thereof,
except in accordance with the provisions of the Lease pertaining to alterations.
Lessor reserves the right to direct electricians as to where and how telephone
and telegraph wires are to be introduced to the Premises. Lessee shall not cut
or bore holes for wires. Lessee shall not affix any floor covering to the floor
of the Premises in any manner except as approved by Lessor. Lessee shall repair
any damage resulting from noncompliance with this rule.
10. Lessee shall store all its trash and garbage within its Premises or
in other facilities provided for the Premises. Lessee shall not place in any
trash box or receptacle any material which cannot be disposed of in the ordinary
and customary manner of trash and garbage disposal.
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11. The Premises shall not be used for the storage of merchandise held
for sale to the general public, or for lodging, nor shall the Premises be used
for any improper, immoral or objectionable purpose.
12. Lessee shall comply with all safety, fire protection and evacuation
procedures and regulations established by Lessor or any governmental agency.
13. Lessee assumes any and all responsibility for protecting its
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed.
14. Lessor may waive any one or more of these Rules and Regulations for
the benefit of Lessee, but no such waiver by Lessor shall be construed as a
waiver of such Rules and Regulations in favor of Lessee, nor prevent Lessor from
thereafter enforcing any such Rules and Regulations against Lessee.
15. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease.
16. Lessor reserves the right to make such other and reasonable Rules
and Regulations as, in its judgment, may from time to time be needed for safety
and security, for care and cleanliness of the Project and for the preservation
of good order therein. Lessee agrees to abide by all such Rules and Regulations
hereinabove stated and any additional rules and regulations which are adopted.
17. Lessee shall be responsible for the observance of all of the
foregoing rules by Lessee's employees, agents, clients, customers, invitees and
guests.
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EXHIBIT B
LEGAL DESCRIPTION
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Xxx 0, Xxxxx 0, Xxxxxxxxx Xxxxx, according to the plat recorded in Volume 9 of
Plats, Page 71, records of Snohomish County, Washington.
Except the East 30 feet for road conveyed to the City of Lynnwood by deed under
Auditor's File No. 2308132.
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EXHIBIT C
WORK LETTER AGREEMENT
To Lease made on this 18th day of July, 1997, between NORTHWEST REAL
ESTATE-XXXXXX, LLC, a Washington limited liability company (the "Lessor") and
GARGOYLES, INC., a Washington corporation (the "Lessee").
1. Lessee shall complete the improvements to the Premises as described and
delineated in the site plan and outline specifications, attached hereto and
designated "Lessee's Work". Lessee shall cause to be prepared final drawings
(including architectural, mechanical, electrical and structural hereafter
referred to as "Construction Drawings") for the Lessee's Work that are
consistent with and are logical evolutions of the attached plans. As soon as
such Construction Drawings are completed, Lessee shall deliver the same to
Lessor for approval. Lessor shall promptly review and approve the
Construction Drawings within two (2) days after the date of receipt thereof
and shall initial two (2) copies of the Construction Drawings as indication
of its approval thereof. Lessor's approval of the Construction Drawings
shall constitute Lessee's authorization to complete the Lessee's Work in
accordance with such Construction Drawings. If Lessee shall make any change
in the Construction Drawings, Lessee shall promptly notify Lessor in writing
of the change and Lessor shall have two (2) days to approve or reject the
requested change.
2. Lessee's general contractor shall be subject to the approval of Lessor and
such general contractor shall coordinate the construction of the Lessee's
Work with Lessor. Lessee's general contractor shall maintain a liability
insurance policy in the minimum amount of $2,000,000.00 and shall name
Lessor and Lessee as additional insureds as their interest may appear.
3. Lessee is responsible for the suitability of the design and function of the
Lessee Improvements for Lessee's needs and business. Lessee shall also be
responsible for procuring or installing in the Premises any trade fixtures,
equipment, furniture, furnishings, telephone equipment or other personal
property (collectively, "Personal Property") to be used in the Premises by
Lessee, and the cost of such Personal Property shall be paid by Lessee.
Lessee shall be subject to any and all rules of the site during construction
of the Lessee's work.
4. Lessee hereby indemnifies and agrees to protect, defend and hold Lessor, any
mortgagee, ground lessor or beneficiary of a mortgage, ground lease or deed
of trust related to the Premises or the Building harmless from and against
any and all suits, claims, actions, losses, costs or expenses (including
claims for worker's compensation) for any nature whatsoever, together with
reasonable attorney fees for counsel of Lessor's choice, arising out of or
in connection with the construction of Lessee's Work, the installation of
Lessee's Personal Property or equipment (including, but not limited to,
claims for breach of warranty, personal injury or property damage).
5. Lessee shall construct or cause to be constructed the Lessee's Work in
accordance with the approved Construction Drawings and with each of the
following requirements:
(a) Lessee shall submit to Lessor the name of Lessee's proposed
contractor, documents evidencing the financial capability of the
proposed contractor, a copy of the construction contract between Lessee
and its contractor, and a certificate of public liability and property
damage insurance carried by Lessee's contractor and subcontractors
naming Lessor as an additional insured at least fifteen (15) Business
Days before the date Lessee wishes to commence construction of Lessee
Improvements. The contractor's policy of insurance shall contain an
endorsement providing that the insurance cannot be canceled or modified
unless Lessor has received a thirty (30) day written notice in advance
of such cancellation or modification. Lessee shall provide to Lessor a
certificate of insurance showing
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the coverage required herein.
(b) Prior to the commencement of construction, Lessee shall obtain
Lessor's written approval of the proposed contractor and subcontractors,
the construction contract, and the insurance carried by the proposed
contractor.
(c) Prior to the commencement of construction, Lessee shall obtain all
appropriate government approvals and all applicable permits and
authorizations, and shall furnish satisfactory evidence of the same to
Lessor.
(d) Lessee shall cause Lessees' general contractor and all
subcontractors to provide Lessor a release of liens in connection with
Lessee's Work.
(e) All improvements shall be completed with due diligence in compliance
with all applicable laws, the Construction Drawings, and the
construction contract approved by Lessor by the contractor approved by
Lessor.
(f) All debris, trash, refuse and waste materials shall be stored only
within the Lessee's Premises and shall be regularly removed therefrom by
Lessee at its cost.
(g) Lessee's contractors and subcontractors shall abide by the Rules and
Regulations provided in this Lease.
(h) Lessee shall supply Lessor one complete set of as-built drawings
upon completion of Improvements.
6. Lessee Improvement Allowance. It is understood that the Lessee's Work will
include, but not be limited to, the construction of an addition to the building
increasing the size of the building area to approximately 95,886 square feet.
Lessee is leasing the building in an as-is condition except that Lessor will
remove the existing VAT containing asbestos.
Lessor agrees to pay Two Million, Five Hundred Sixty Thousand and No/100 Dollars
($2,560,000.00) (which amount includes Washington State sales tax) towards the
construction of Lessee's Work (the "Lessee Improvement Allowance"). Lessee will
pay all costs associated with Lessee's work in excess of the Lessee Improvement
Allowance, if any, or at Lessee's option may require Lessor to amortize
additional costs of up to $400,000 over the term of the Lease at 10-1/2%
interest. If the total cost of the Lessee's Work is less than the Lessee
Improvement Allowance (a"Savings"), then the monthly base rent will be reduced
by an amount equal to the Savings times 10-1/2% divided by 12.
The costs associated with Lessee's Work up the amount of the Lessee Improvement
Allowance will be paid by Lessor to Lessee upon receipt of appropriate Draw
Requests, signed by both the architect and the contractor, together with lien
waivers from the contractor related to all of Lessee's Work, conditioned only
upon the payment of the contractor's payment request. Subject to Lessor's review
and approval of the payment request and Lessor's satisfactory inspection of the
work, Lessor will deliver to Lessee a dual payee check in the amount of the
payment request, made payable to both Lessee and Lessee's contractor, consultant
or vendor. Upon request for final payment to the contractor Lessee will deliver
to Lessor a fully executed Certificate of Substantial Completion along with an
unconditional lien waiver from Lessee's contractor.
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NORTHWEST REAL ESTATE-XXXXXX, L.L.C. GARGOYLES, INC.
/s/ XXXXX X. XXXXXXXX /s/ XXXXXXX X. XXXXX
---------------------------------------- ------------------------------
By: Xxxxx X. Xxxxxxxx By: Xxxxxxx X. Xxxxx
Its: Manager Its: President
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