ADDENDUM NO. 2 TO CONSTRUCTION AND LEASE AGREEMENT
Exhibit
10.2
ADDENDUM
NO. 2
THIS
AGREEMENT, made and entered into effective the first day of __June
8________,
2005, by and between the PORT OF WALLA WALLA, a municipal corporation of the
State of Washington (hereinafter referred to as "Lessor"), and KEY TECHNOLOGY,
INC., an Oregon corporation (hereinafter referred to as "Lessee"),
W
I T N E S S E T H:
WHEREAS,
Lessor and Lessee entered into a Construction and Lease Agreement (hereinafter
the "Agreement") dated October 17, 1989 and recorded with the Walla Walla County
Auditor under Auditor's File No. 9105334 regarding the construction and leasing
of certain premises located on Xxxxx Street in Walla Walla, Washington,
and
WHEREAS,
Lessor and Lessee entered into Addendum No. 1 to Construction and Lease
Agreement (hereinafter the "Addendum No. 1") dated January 1, 2002 regarding
the
Lessor’s reduction in the Lessee’s monthly rent for the period of January 1,
2002 through December 31, 2002, and
WHEREAS,
the parties desire to further amend certain provisions of the
Agreement,
NOW,
THEREFORE, in consideration of the Lessor's expansion of the Lessee’s Xxxxx
Facility located at 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, the parties
agree
as follows:
1. Section
3 of said Agreement, as amended by Addendum No. 1, is amended to read as
follows:
“3. Term.
"This
Lease shall be for a term of THIRTY (30) years, commencing at 12:01 a.m.
effective on September 20, 1990 and terminating at 11:59 p.m. on September
19,
2020."
2. Xxxxxxx
0, Xxxxxxxxx X of said Agreement, as amended by Addendum No. 1, is amended
to
read as follows:
"D. It
is agreed by the parties that the rental due for the penultimate five (5) years
of this Agreement (September 21, 2010 through September 20, 2015) shall be
the
sum of FIFTY SIX THOUSAND ONE HUNDRED SEVENTY FIVE DOLLARS AND THIRTEEN CENTS
($56,175.13) per month plus applicable leasehold tax. It is further agreed
by
the parties that the rental due for the last five (5) years of this Agreement
(September 21, 2015 through September 20, 2020) shall be the sum of FIFTY SEVEN
THOUSAND EIGHT HUNDRED SIXTY DOLLARS AND THIRTY EIGHT CENTS ($57,860.38) per
month plus applicable leasehold tax."
3. Section
4 of said Agreement is amended by adding new Paragraphs “E"and “F” thereto to
read as follows:
".
. . .
E. In
addition to the rental hereinbefore provided to be paid to Lessor, Lessee agrees
to pay additional monthly rent to the Lessor for the Lessor's construction
of a
20,160 sq. ft. manufacturing bay expansion on the east side of Key’s Xxxxx
facility, the construction of a 2,400 sq.ft. research and development area
on
the north side of said facility, the construction of an additional 62 stall
parking lot adjacent to said facility, the installation of new carpeting in
Key's administrative offices, and for certain other construction costs
associated with the expansion project. The estimated project cost for said
improvements is TWO MILLION EIGHT HUNDRED FOUR THOUSAND SEVEN HUNDRED FORTY
NINE
DOLLARS ($2,804,749).
The estimated additional monthly rental commencing January 1, 2006 (subject
to
the issuance of a Certificate of Occupancy by the City of Walla Walla) shall
be
the sum of NINETEEN THOUSAND ONE HUNDRED TWENTY-SEVEN AND 03/100 DOLLARS
($19,127.03) per month plus applicable state leasehold tax, pursuant to the
terms of the Letter of Authorization to Proceed executed by the Lessee and
dated
April 27, 2005 (attached hereto and incorporated herein as Exhibit 1). The
additional monthly rental for said improvements shall be adjusted and finalized
based on the final actual costs of construction. Any difference, positive or
negative, between the actual final cost of the project and the current budget
of
$2,804,749 will result in an adjustment to the monthly lease cost by applying
a
3% rate and a 15 year term in the same manner used in calculating the current
expected lease rate as set forth in Exhibit 1. The parties shall confirm the
amount of additional monthly rental in writing.
F. In
consideration that Lessee's rental payments to Lessor are based in part on
Lessor’s total cost to construct the addition to the premises, the Lessee will
receive the economic benefit of the Lessor not paying sales and use taxes.
Accordingly, Lessor will obtain the required exemption certificate pursuant
to
Ch. 82.60 RCW. Lessee warrants that it plans to create sufficient "qualified
employment positions" at the premises for Lessor to satisfy the requirements
of
WAC 458-20-24001(h) and that it will, at the request of Lessor, provide
information to support Lessor's participation in the sales and use tax deferral
program established pursuant to RCW 82.60. In the event Lessor fails to qualify
for the sales and use tax deferral program as a result of Lessee's breach of
the
foregoing warranties, Lessee will pay any additional assessments imposed on
Lessor that would not have been imposed were it not for such breaches. The
warranties provided herein shall remain in place for a period of eight (8)
years
and shall survive any sale of the property by Lessor to Lessee pursuant to
Section 37 of this Agreement. The Lessee further agrees to complete and submit
in a timely manner the annual employee's survey to the Department of Revenue
as
required by RCW 82.60.070."
4.
All
other terms and conditions of said Agreement and Addendum No. 1 not specifically
amended herein shall remain in full force and effect.
IN
WITNESS WHEREOF, the parties have executed this Addendum No. 2 to Construction
and Lease Agreement this 8th
day
of June
,
2005.
LESSOR
PORT
OF WALLA WALLA, a municipal corporation
By: _/s/
Xxxxx X. Kuntz_____________________________
Xxxxx
X. Xxxxx
Executive
Director
LESSEE
KEY
TECHNOLGY, INC.
By: _/s/
Xxxx Xxxxxx _______________________________
Xxxx
Xxxxxx
President
and CEO
STATE
OF WASHINGTON
) ss.
County
of Walla Walla )
Know
all men by these presents that XXXXX X. XXXXX appeared before me this
_8th______day
of _June__________________,
2005, and stated and acknowledged that he is the Executive Director of the
Port
of Walla Walla, and that he is duly authorized to and did execute the foregoing
Addendum No. 2 to Construction and Lease Agreement for and on behalf of the
municipal corporation as its free and voluntary act and deed and within the
scope of its municipal corporate powers.
GIVEN
under my hand and official seal this __8th_____
day of _June_____________,
2005.
/s/
Xxxxx Xxx Xxxxx
Notary
Public for State of Washington,
Residing
at Walla Walla
STATE
OF WASHINGTON
) ss.
County
of Walla Walla )
Know
all men by these presents that XXXX XXXXXX appeared before me this _8th______day
of __June________________,
2005, and stated and acknowledged that he is the President and COO of Key
Technology, Inc., and that he is duly authorized to and did execute the
foregoing Addendum No. 2 to Construction and Lease Agreement for and on behalf
of the corporation as its free and voluntary act and deed and within the scope
of its corporate powers.
GIVEN
under my hand and official seal this __8th________
day of __June___________,
2005.
/s/
Xxxxxxx X. Xxxxxxx
Notary
Public for State of Washington,
Residing
at Walla Walla
“EXHIBIT
1” - 3 PAGES
April
26, 2005
Xx.
Xxx Xxxxx
Port
of Walla Walla
000
X Xxxxxx
Xxxxx
Xxxxx, XX 00000
RE: Authorization
to Proceed on Key Technology Xxxxx Expansion Project
Dear
Xxx:
Key
Technology hereby authorizes the Port of Walla Walla to proceed with the
expansion of Key’s Avery Manufacturing Facility located at 000 Xxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx. The proposed project is to construct a 20,160 sq.ft.
manufacturing bay expansion on the east side of Key’s Xxxxx facility,
construction of a 2,400 sq.ft. research and development area on the north side
of Key’s Xxxxx facility, and the construction of an additional 62 stall parking
lot located on-site.
The
project construction will be concrete tilt-up to match existing building, the
installation of special concrete footings to support Key Technology's
manufacturing equipment, and installation of an electrical and HVAC system.
The
project cost is estimated at $2,804,749. (See Attachment A) The estimated
monthly cost for said improvements based on the project pro-forma is $19,127.03
per month plus State Leasehold Tax of 12.84% (See Attachment B).
Key
Technology agrees to extend the lease term on the existing Xxxxx facility for
five years to 2020. The lease term extension will commence upon the completion
of said improvements. In reference to the existing lease agreement on the Xxxxx
facility, Key Technology authorizes the Port to prepare amendments to the
existing Xxxxx lease to include the following:
|
1.
|
Amend
the lease term to 2020.
|
|
2.
|
Amend
the monthly lease payment to include the new
improvements.
|
|
3.
|
Amend
the option to purchase section to incorporate the new improvement
costs on
the site.
|
Authorization
to Proceed
_/s/
Xxxxxx X. Burgess_________________ ____4/27/05__________________
Xxxxxx
X. Xxxxxxx Date
Senior
VP & CFO
Key
Technology, Inc.
|
Key
Technology 2005 Expansion
|
|||
|
Port
of Walla Walla Budget
|
|||
|
A
|
Production
Bay Expansion
|
$
1,775,000
|
|
|
20,160
sq.ft .
|
|||
|
B
|
R&D
Building
|
$
265,000
|
|
|
2,400
sq.ft.
|
|||
|
C
|
Steel
Package
|
$
99,125
|
|
|
|
|||
|
D
|
Expanded
Parking Lot
|
$
93,500
|
|
|
62
Stalls
|
|||
|
E
|
Utility
Extension & Misc.
|
$
-
|
|
|
Sub
Total 1
|
$
2,232,625
|
||
|
Project
Contingency 9% (Sum of items A-E times 9%)
|
$
200,936
|
||
|
|
|||
|
Sub
Total 2
|
$
2,433,561
|
||
|
A
& E Cost
|
$
185,880
|
||
|
($1.9
million x 9.52% = $180,880 plus $5,000
contingency)
|
|||
|
*
State Fee Schedule for A & E is 10.58%
|
|||
|
Sub
Total 3
|
$
2,619,441
|
||
|
Sales
Tax
|
$
185,308
|
||
|
|
|||
|
Project
Total
|
$
2,804,749
|
||
|
*
|
Budget
does not include:
|
||
|
(1)
New carpet - Administrative offices $150,000
|
|||
|
Draft
Rental Schedule
|
||||||
|
Key
Technology Expansion - Proposed Financing
|
||||||
|
Project
Pro-Forma
|
||||||
|
Project
Cost
|
$
2,804,749
|
|||||
|
|
||||||
|
Project
Financing Sources
|
Amount
Financed
|
Term
|
Rate
|
Monthly
PMT
|
||
|
.08
Sales Tax Fund Grant
|
$
200,000
|
|
|
|
||
|
.08
Sales Tax Fund Loan
|
$
200,000
|
10
|
3.0%
|
$1,931.21
|
||
|
CERB
Grant
|
$
250,000
|
|
|
|
||
|
CERB
Loan
|
$
750,000
|
15
|
1.62%
|
$4,696.20
|
||
|
Port
- GO Bond/Revenue Loan
|
$
666,949
|
10
|
6.0%
|
$7,404.50
|
||
|
Port
- 2005 Capital Fund
|
$
737,800
|
15
|
3.0%
|
$5,095.11
|
||
|
Base
Lease
|
$19,127.03
|
|||||
|
|
|
State
Leasehold Tax 12.84%
|
$2,455.91
|
|||
|
Total
Monthly Lease
|
$21,582.94
|
|||||
|
|
|
Total
Annual Lease
|
$258,995.24
|
|||
|
Projected
Rental Savings
|
||||||
|
Projected
Xxxxx
|
||||||
|
Annual
Melrose
|
Expansion
|
Annual
|
||||
|
Year
|
Facility
Rental Rent
|
Rental
Rate
|
Savings
|
|||
|
2006
|
$
382,660
|
$258,995
|
$123,664.89
|
|||
|
2007
|
$
385,627
|
$258,995
|
$126,631.58
|
|||
|
2008
|
$
415,779
|
$258,995
|
$156,783.70
|
|||
|
2009
|
$
418,957
|
$258,995
|
$159,961.69
|
|||
|
2010
|
$
449,328
|
$258,995
|
$190,332.51
|
|||
|
Total
|
$757,374.37
|
|||||
|
Revised
4-22-05
|
||||||
