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OPTION AND REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS OPTION AND REAL ESTATE PURCHASE AND SALE AGREEMENT ("Agreement") is
made and entered into as of this November 26, 1997 ("Effective Date") by and
between THE QUADRANT CORPORATION, a Washington corporation ("Seller"), and
OPTIVA CORPORATION, a Washington corporation ("Purchaser").
RECITALS
A. Seller (or its affiliate) is the owner of that certain parcel of land
lying and being situated in the City of Snoqualmie, Washington, and being more
particularly described on Exhibit A hereto, which parcel of Land includes
approximately 00 xxxxx ("Xxxx").
B. Concurrently with the execution of this Agreement, Seller, as
Landlord, and Purchaser, as Tenant, have entered into a Lease ("Lease") under
which certain Premises to be constructed on the Land by Seller will be leased to
Purchaser. Concurrently with the Lease, the parties also entered into a
Construction Agreement for Lease ("Construction Agreement"), governing Seller's
construction of the Building Shell and Tenant Improvements constituting such
Premises. As a part of such Lease, Purchaser and Seller also agreed that
Purchaser would have the option to purchase the Land and Improvements.
C. Seller is now constructing or is about to commence construction of
Building 1 and Building 2, constituting the Premises under the Lease and
Construction Agreement, which two buildings will contain 176,609 square feet of
Gross Building Area ("GBA") in the aggregate. One Building ("Building 1") will
contain 79,800 GBA of space for offices and associated uses. The other Building
("Building 2") will consist of 91,471 GBA, including 65,150 GBA of space for
manufacturing, warehouse, office and associated uses on the first floor plus
approximately 26,321 GBA of space for office and associated uses on a second
floor mezzanine. The Premises also will include a separate 5,338 GBA link
between the two Buildings. The Premises are more fully described in the Building
Shell Construction Documents and Tenant Improvements Construction Documents, as
defined in the Construction Agreement. All such property and improvements,
together with all other improvements situated on the Land, and all appurtenances
thereto, all to the extent completed on the Closing Date, are called the
"Improvements" in this Agreement;
D. Upon the exercise of the option to purchase granted to Purchaser in
this Agreement, Seller desires to sell and Purchaser desires to purchase the
Land, the
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Improvements, to the extent completed as of the Closing Date, and related
property further described below, under the terms and subject to the conditions
set forth in this Agreement
Seller and Purchaser agree as follows:
ARTICLE I
PROPERTY
If Purchaser exercises its Option granted in Article II below, Seller
agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from
Seller, subject to the terms and conditions set forth herein, the following:
1.1 the Land;
1.2 the Improvements;
1.3 All of the rights, privileges and easements, all development rights
and government approvals, and rights and appurtenances pertaining to or used in
connection with the beneficial use and enjoyment of the Land and the
Improvements, including all right, title and interest of Seller in and to
adjacent or abutting streets, alleys, water courses, water bodies, easements and
rights-of-way;
1.4 All of Seller's rights in all personal and other tangible property
now or hereafter through the Closing Date located on the Land, or in the
Improvements, or necessary to the construction of the Improvements on the Land,
or to Purchaser's operation of its business on the Land and in the Improvements,
including without limitation all fixtures, furnishings, equipment, machinery,
landscaping, tools and spare parts related to the foregoing (including without
limitation the commercial kitchen fixtures and equipment called for in the
Construction Agreement), all books, records, studies, documents, tests, reports,
licenses, permits, drawings, surveys, maps, plans, specifications, and deposits
hold by government authorities, all of which currently or hereafter in any way
relate to the Land or the Improvements;
1.5 All of Seller's rights in all of the intangible property now or
hereafter existing with respect to the Land and Improvements, including without
limitation accounts, contractual and other rights, warranties, service and
maintenance contracts, equipment leases (all as accepted by Purchaser); claims
or causes of action for tort, product liability, breach of contract, warranty,
or presentation, approvals, certificates, or other rights granted by any
governmental authority, non-proprietary financial and tax data, rights to
condemnation awards, or claims for insurance proceeds, all of which currently or
hereafter relate in any way to the Land or the Improvements.
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1.6 All other rights, title and interest now owned or hereafter acquired
by Seller in the Land, Improvements, or any of the other foregoing described
property.
All of the items described above, shall be collectively referred to as the
"Property".
ARTICLE II
GRANT OF OPTION
In consideration of the payment of the Option Payment and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Seller hereby grants to Purchaser an option to purchase the
Property ("Option").
2.1 Exercise. Purchaser may exercise the Option by written notice of
Purchaser's exercise to Seller on or before expiration of the Option Term.
Notwithstanding the foregoing, Purchaser may not exercise the Option at any time
when Purchaser is in default under the Lease or the Construction Agreement
(after the expiration without cure of any cure periods provided therein).
2.2 Option Term. The Option Term shall commence on the Effective Date
and shall terminate on that date which is ten days after the Construction
Commencement Date or May 1, 1998, whichever is later ("Option Term"). As used
herein, the "Construction Commencement Date" shall be that date upon which
Seller commences any bona fide work, not including mobilization, on any portion
of the Land permitted by any grading, utility or building permit issued after
the date hereof in connection with the construction of the Improvements, and as
to which date Seller shall notify Purchaser in writing. If Tenant exercises the
Option, but fails to pay the Option Payment called for in Section 3 within five
business days following Seller's written notice to Purchaser of Purchaser's
failure to pay the Option Payment when due, then the Option shall terminate at
12:01 am on the sixth business day following Seller's notice.
2.3 Cancellation of Exercise. Purchaser's exercise of the Option in
accordance with the foregoing shall be subject to cancellation under the terms
and conditions of Article XVIII.
ARTICLE III
OPTION PAYMENT
The following option payments (collectively, "Option Payment") shall be
payable to Seller in the following manner upon the date specified hereinbelow:
3.1 First Option Payment. On the Effective Date, Purchaser shall pay to
Seller, in cash, the amount of $10.00.
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3.2 Second Option Payment. No later than 6:00 p.m. on the fifth day
after Purchaser's exercise of the option to purchase the Property, Purchaser
shall pay to Seller, in cash, the amount of $100,000.
3.3 Treatment of Option Payment. Except as provided in Article XVIII,
the Option Payment and all portions thereof are nonrefundable to Purchaser,
except in the event of Seller's default hereunder, and shall be retained by
Seller as Seller's sole property. The Option Payment and all portions thereof
shall be credited against the Purchase Price at Closing.
3.4 Return of Option Payment. The Option Payment may be required to be
returned to Purchaser, without affecting the effectiveness of the exercise of
the Option, under the circumstances described in Article XVIII.
ARTICLE IV
PURCHASE PRICE
4.1 Purchase Price. The Purchase Price for the Property shall be the sum
of the following:
4.1.1 $7.25 times the gross square feet of the actual Land area
(as measured to the internal Business Park road rights-of-way and the
boundary between Lots 9 and 10, as shown on the BSIP 1, as defined in
Article XVIII), which shall constitute the "Land Value". The gross
square feet of the Land area shall be reasonably established by Seller's
engineer/surveyor at the time of final BSIP 1 approval by the City of
Snoqualmie and such determination shall be provided to Purchaser for
Purchaser's review and comment; and
4.1.2 An amount equal to the "Building Value at Closing". The
Building Value at Closing shall include the amount of Soft Costs
incurred to date, together with Progress Payments on account of the
Building Shell and Tenant Improvements. Such Progress Payments shall be
made on a Completion Percentage basis determined by Inspector as of a
date at least 10 business days prior to the Closing Date, in the manner
provided in Section 7.2 of the Construction Management Agreement
attached hereto as Exhibit D, and shall be subject to the Holdback of
Hard Costs as provided therein. Seller shall prepare and provide (a) a
Progress Payment Request, in the form prescribed by the Construction
Management Agreement, and (b) invoices and other reasonably detailed
evidence of Soft Costs incurred to date, for Purchaser's review not less
than 10 business days prior to Closing. Examples of the calculation of
Progress Payments are attached to the Construction Management Agreement
as Exhibit 4. For purposes of determining Building Value at Closing, the
terms Soft Costs,
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Completion Percentage, Progress Payment, Inspector and Holdback shall
have the meanings set forth in the Construction Management Agreement.
4.2 Payment on the Closing Date. The Purchase Price shall be paid in all
cash, via wire transfer in immediately available funds, on or before 12 Noon
Seattle time on the Closing Date.
ARTICLE V
TITLE TO THE PROPERTY
5.1 Conveyance of Title to Land and Improvements. Upon the Closing Date,
Seller shall execute and deliver to Purchaser a Statutory Warranty Deed ("Deed")
conveying fee title to the Property, subject to the Permitted Exceptions
determined in accordance with Section 5.3. Except as may be provided herein,
Seller shall be solely responsible for discharging all liens, assessments and
other encumbrances against the Property not included as Permitted Exceptions
prior to the Closing Date.
5.2 Conveyance of Remainder of the Property. Upon the Closing Date,
Seller shall execute and deliver to Purchaser all documents necessary to convey,
assign and transfer the Property not otherwise conveyed by the Deed. Many of
these documents are set forth in Article X below.
5.3 Title Insurance. On the Closing Date, Seller shall cause Chicago
Title Insurance Company ("Title Company") to issue to Purchaser an ALTA Extended
Coverage Owner's Policy of Title Insurance (1970 Form B) ("Title Policy") with
liability in the amount of the Building Value as defined in the Construction
Management Agreement, insuring fee simple title in Purchaser to the Land and
Improvements and against any loss or damage by reason of defect in Seller's
title to the Property, subject only to the Title Company's standard preprinted
exceptions for such form and the Permitted Exceptions determined in accordance
with this Article V.
5.4 Title Review. Not later than February 1, 1998, Seller shall see that
Purchaser is furnished with a preliminary commitment for the Title Policy,
("Title Commitment"), together with complete and legible copies of any
exceptions identified in Schedule B thereof. Purchaser shall conduct its review
of the Title Commitment in accordance with the following procedures:
5.4.1 Purchaser's Notice. At least 60 days prior to the
expiration of the Option Term, Purchaser shall notify Seller in writing
of its approval and disapproval of each exception in Schedule 8 of the
Title Commitment, other than those exceptions to which Purchaser may
object within 10 business days after receiving the survey as provided in
Section 5.5. Failure to so deliver such notice shall constitute
Purchaser's approval of all exceptions in Schedule B as of the date of
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such Title Commitment. Exceptions not disapproved by Purchaser shall be
Permitted Exceptions.
5.4.2 Seller's Notice. Seller shall have 20 business days after
receipt of Purchaser's notification in which to notify Purchaser whether
or not it elects to cure or remove any of the disapproved exceptions of
which Seller receives notice pursuant to Section 5.4.1. Seller's failure
to so notify Purchaser shall constitute Seller's agreement to remove all
such exceptions on or before the Closing Date. Seller shall remove all
exceptions it agrees to remove both from the real estate records and
from the Title Commitment on or before the Closing Date.
5.4.3 Purchaser's Election. If Seller does not elect to remove
all exceptions disapproved by Purchaser, Purchaser may, on or before
five business days after receipt of Seller's notice pursuant to Section
5.4.2, elect to terminate this Agreement by written notice to Seller;
and upon termination pursuant to this Section, Purchaser shall have no
obligation to pay the Second Option Payment, and if paid already shall
receive a prompt refund. If Purchaser does not so elect to terminate
this Agreement, disapproved exceptions that Seller has not elected to
remove shall become Permitted Exceptions. The foregoing notwithstanding,
Seller agrees that the lien for any nondelinquent taxes and the lien for
any nondelinquent special assessments are Permitted Exceptions, and that
Seller shall cause all liens for borrowed money against the Property
which are not accepted by Purchaser to be released of record by the
Closing Date.
5.4.4 New Exceptions. Seller shall remove any and all title
exceptions appearing subsequent to its delivery of the Title Commitment,
unless such exceptions are expressly agreed to in writing by Purchaser.
Purchaser shall not unreasonably withhold its approval of any such
exceptions to the extent they are consistent with Seller's planned
development approvals or do not otherwise materially restrict or affect
Purchaser's intended occupancy and use of the Land and Improvements.
5.4.5 Deemed Permitted Exceptions. Notwithstanding the foregoing,
the following shall be deemed Permitted Exceptions: (i) rights reserved
under federal patents or state deeds, (ii) existing easements of record
which do not materially interfere with Purchaser's intended use, (iii)
access, driveway, and utility easements as required between the Land and
Lot 10, (iv) water, sanitary sewer, storm drainage, electrical,
telephone, CATV and any and all other utility easements necessary to
enable the Premises to be served by such utilities (and not impairing
access to or the use of such Premises by Purchaser), and (v) the Binding
Site Improvements Plan 1 for the Property and those agreements,
covenants, easements and restrictions relating to Snoqualmie Ridge
Business Park and the Snoqualmie Ridge Master Plan Community, including
without limitation that
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Declaration of Protective Covenants, Conditions, Restrictions, Easements
and Agreements for Snoqualmie Ridge Business Park ("CC&R's") and the
Snoqualmie Ridge Council Declaration.
5.4.6 Title Not Insurable. If title is not insurable at the
Closing Date subject only to the Permitted Exceptions determined in
accordance with this Agreement, Purchaser may elect to proceed to close
the purchase despite such noninsurability thereby accepting any such
matters as Permitted Exceptions or Purchaser may claim that such
non-insurability constitutes the default of Seller entitling Purchaser
to exercise its remedies under Section 17.11 herein.
5.5 Survey. Seller shall, at its expense, cause an ALTA survey of the
Land to be delivered to the Purchaser on or before 30 days prior to the Closing
Date. Said survey shall:
5.5.1 State the legal description for the Land by metes and
bounds, as surveyed;
5.5.2 Show the corners, boundary lines, courses and distances of
the Land and the locations of all power lines, fences, easements,
setback lines, public and private rights-of-way, streams, railroads, and
encroachments, apparent or of record, to which the Property is subject;
5.5.3 Certify that there are no encroachments, easements of
record or apparent, setbacks, rights-of-way or streams, except as shown
on the survey;
5.5.4 Certify that no part of the Land is within a wetland or
other regulated environmentally sensitive area or a flood plain or a
special flood hazard area as designated by the applicable Federal
Emergency Management Agency Flood Insurance Rate Map;
5.5.5 Certify the approximate number of square feet comprising
the Land;
5.5.6 Certify that all of the parcels comprising the Land are
contiguous and without conflicts, overlaps, boundary gaps or
nonclosures;
5.5.7 Certify that access to and from the Land is available to a
public right-of-way; and
5.5.8 Include the survey date and the surveyor's name,
registration and seal.
Said survey shall be certified to the Purchaser and be in such form as to enable
the Title Company to issue its title policy without exceptions or qualifications
relating to boundary locations, gaps, nonclosures, encroachments, setbacks, and
easement locations.
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5.6 UCC Search. Seller shall, at its expense, obtain from a commercial
search service a report disclosing the existence of any UCC financing statements
or liens recorded or filed against any portion of the Property and shall deliver
such search to Purchaser within ten days following Purchaser's exercise of the
Option. Purchaser shall notify Seller within 20 days after receiving such report
as to whether it objects to any security interests or liens reflected in such
report. In the event of any such disapproval, such security interests or liens
shall be treated as title exceptions and the parties' rights and options shall
be governed by the provisions applicable to title exceptions in Section 5.4.
5.7 Termination of Lease. On the Closing Date, Purchaser and Seller
shall enter into a Termination of Lease Agreement in the form attached hereto as
Exhibit B ("Termination of Lease").
5.8 General Assignment. On the Closing Date, Seller shall deliver to
Purchaser a General Assignment in the form attached hereto as Exhibit C
("General Assignment"), pursuant to which Seller shall assign to Purchaser: (i)
all permits and approvals for the Improvements; and (ii) the documents,
contracts, and Building Shell Construction Documents and Tenant Improvements
Construction Documents relating to the Improvements, and Purchaser shall assume
any obligations under any Permitted Exceptions, including the maintenance,
repair, and insurance obligations arising under those utility and access
easements encumbering and benefiting the Property. The assignment and transfer
of rights and obligations under the General Assignment shall be subject,
however, to Seller's retention of all power and authority necessary or
appropriate to enable Quadrant to complete the Improvements pursuant to the
Construction Management Agreement, including without limitation the right to
enforce the Building Shell Construction Documents and Contract and the Tenant
Improvements Construction Documents and Contract.
ARTICLE VI
IMPROVEMENTS CONSTRUCTION
6.1 Completion of Construction of Building. Quadrant and Purchaser
shall, concurrently with the Closing, enter into the Construction Management
Agreement in the form attached hereto as Exhibit D, under which Seller shall
complete construction of the improvements for Purchaser.
6.2 Completion Guaranty. Concurrently with the Closing, Weyerhaeuser
Real Estate Company, a Washington corporation ("WRECO") shall issue its
Completion Guaranty to Purchaser in connection with Quadrant's performance of
its obligations under the Construction Management Agreement ("Completion
Guaranty"), which Completion Guaranty shall be executed by WRECO in the form
attached as Exhibit 4 to the Construction Management Agreement.
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ARTICLE VII
PURCHASER'S RIGHT OF ACCESS FOR INVESTIGATION
7.1 Right of Access. Seller agrees that Purchaser and its agents,
employees and designees shall be afforded access and entry on the Land and to
the Improvements for inspection and investigation between the exercise of the
Option and the Closing Date to conduct such studies, tests, inspections and
evaluations as Purchaser requires. All such investigations and inspection
requested by Purchaser shall occur at Purchaser's sole cost and expense.
Purchaser shall notify Seller in advance of any such investigation in order that
Seller may take such steps to prevent interruption or impairment of construction
of the Improvements which may then be on-going and to insure Purchaser's safety;
and provided, further that Purchaser may be precluded from entering the Property
or performing tests thereon if such entry or testing would interfere with
construction activities which may then be occurring with respect to the
Improvements. Purchaser shall indemnify and hold Seller harmless from any claim,
liability, loss or expense asserted against Seller or the Property in connection
with Purchaser's or its agents', employees' and designees' entry onto the Land
or Improvements, including without limitation damage which might occur to the
construction of the Improvements, and Purchaser shall provide Seller, at no cost
to Seller other than routine copying expenses, with copies of all reports and
studies conducted by Purchaser concerning the Land or the Improvements.
7.2 Copies of Leases, Contracts, Other Information. As soon as
practicable (and except to the extent delivered to Purchaser before the date of
this Agreement, Seller shall deliver to Purchaser or provide Purchaser access to
all of the following documents and reports: to the extent the same exist and are
in Seller's possession or which belong to Seller: all leases and contracts
affecting the Property, planning and zoning documents and approvals, plans and
specifications for the Improvements, and all environmental or soil or other
construction tests for the Property. Purchaser acknowledges Seller shall be
under no obligation to create any additional data or documentation or obtain any
reports for Purchaser.
ARTICLE VIII
PURCHASER'S CONDITIONS TO CLOSING
In addition to the conditions provided in other provisions of this
Agreement, Purchaser's obligation to purchase the Property is subject to the
fulfillment prior to the Closing Date of each of the following conditions, each
of which is for the benefit of Purchaser and any or all of which may be waived
by Purchaser in writing at its option:
8.1 Correctness of Representations and Warranties. The continuing
accuracy in all material respects on and as of the Closing Date of all of
Seller's warranties and representations in this Agreement, including the lack of
discovery of any material fact or
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circumstance at variance with Seller's representations and warranties, of which
Seller did not have knowledge on the date Seller executes this Agreement
(regardless of whether such fact or circumstance arose or was discovered
thereafter) with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date. Seller, by having closed
the sale of the Property, shall be deemed conclusively to have certified at
Closing that all such representations and warranties were true and correct on
and as of the Closing Date.
8.2 Compliance by Seller. Seller shall have performed, observed, and
complied with all of the covenants, agreements, obligations and conditions
required by this Agreement to be performed, observed and complied with by it
prior to or as of the Closing.
8.3 Title Policy. Issuance of the Title Policy in accordance with
Section 5.2, and deposit by Seller of the appropriate indemnity benefiting the
Title Company for issuance of the Title Policy to Purchaser free and clear of
any materialman's and mechanic's liens.
8.4 Construction Management Agreement. The Construction Management
Agreement shall have been executed by Quadrant and delivered to Escrow.
8.5 Termination of Lease. The Termination of Lease shall have been
executed by Seller and delivered to Escrow.
8.6 General Assignment. The General Assignment shall have been executed
by Seller and delivered to Escrow.
8.7 Completion Guaranty. The Completion Guaranty shall have been
executed by WRECO and delivered to Escrow.
8.8 No Adverse Change. The absence of any material and adverse changes
(i) regarding the access or utility service to Property, (ii) in the currently
existing zoning, building, development, environmental, health, occupancy, or
other laws or regulations which would materially impair the Purchaser's ability
to use the Property for Purchaser's intended purposes, and no material change in
the physical condition of any of the Property (other than attributable to the
ongoing construction of the Improvements).
8.9 Restrictions. The absence of any restrictive ordinance, utility
moratorium, bankruptcy, receivership, or litigation which, if undertaken, levied
or enacted, could materially impair the Purchaser's ability to use the Property
for Purchaser's intended purpose or increase the costs thereof;
8.10 Status of Title. The absence of any exception to title that is not
a Permitted Exception or otherwise approved by Purchaser;
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8.11 Permitted Uses. The absence of any material violation of any
applicable statute, law or regulation regarding the physical condition of the
Property or Seller's use thereof as an office, manufacturing, warehousing and
distribution facility, or of any material change in any laws or statutes that
materially affects Purchaser's ability to use the Property for its intended
purpose.
ARTICLE IX
SELLER'S CONDITIONS TO CLOSING
In addition to the conditions provided in other provisions of this
Agreement, Seller's obligation to sell the Property is subject to the
fulfillment at or prior to the Closing Date of each of the following conditions,
each of which is for the benefit of Seller and any or all of which may be waived
by Seller in writing at its option:
9.1 Compliance by Purchaser. Purchaser shall have performed, observed,
and complied with all of the covenants, agreements, obligations and conditions
required by this Agreement and the Lease and Construction Agreement to be
performed, observed and complied with by it prior to or as of the Closing Date.
9.2 Correctness of Representations and Warranties. The representations
and warranties of Purchaser stated in this Agreement shall be true and correct
on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date.
Purchaser, by having closed the sale of the Property, shall be deemed
conclusively to have certified at Closing that all such representations and
warranties were true and correct on and as of the Closing Date.
9.3 Construction Management Agreement. The Construction Management
Agreement shall have been executed by Purchaser and delivered to Escrow.
9.4 Termination of Lease. The Termination of Lease shall have been
executed by Purchaser and delivered to Escrow.
9.5 General Assignment. The General Assignment shall have been executed
by Purchaser and delivered to Escrow.
ARTICLE X
CLOSING
Execution and exchange of documents called for and completion of all
steps necessary to record the Deed in favor of the Purchaser ("Closing") shall
take place in the offices of the Title Company in Seattle or Bellevue,
Washington (or at such other place as the parties may mutually agree to in
writing) by an escrow officer of the Title Company, acting as escrow agent
("Escrow") and shall occur on a date which is no later than
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45 days after Purchaser's exercise of the Option (the date on which the Deed is
recorded being herein referred to as the "Closing Date"); provided, however,
that notwithstanding the foregoing, the Closing Date may be extended in the
event the BSIP 1 has not yet recorded pursuant to Section 18. Purchaser and
Seller shall place into Escrow all instruments, documents and moneys necessary
to complete the sale in accordance with this Agreement. Closing shall take place
in the manner and in accordance with the provisions set forth in this Agreement.
10.1 Delivery to Escrow. On or before the Closing Date, the following
documents and moneys shall be delivered to Escrow:
10.1.1 By Seller. Original documents and agreements, duly
executed and acknowledged by Seller, Quadrant or WRECO, as applicable,
which shall include:
(a) the Deed;
(b) the Termination of Lease;
(c) the General Assignment;
(d) the Construction Management Agreement;
(e) a real estate excise tax affidavit;
(f) FIRPTA Affidavit;
(g) the Completion Guaranty;
(h) the Title Policy;
(l) the warranty xxxx of sale for all personal
property; and
(i) any and all such other documents as may be required
by the Purchaser to convey or assign the Property or by the Title
Company as are consistent with the provisions of this Agreement.
10.1.2 By Purchaser. Original documents and agreements, duly
executed and acknowledged by Purchaser and any other party as may be
required thereunder, and moneys, which shall include:
(a) the Termination of Lease;
(b) the General Assignment;
(c) the Construction Management Agreement;
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(d) a real estate excise tax affidavit;
(e) the Purchase Price; and
(f) any and all other documents and agreements as may
be required by the Title Company as are consistent with the terms of this
Agreement.
10.2 Seller's Closing Costs. In connection with the Closing, Seller
shall pay the cost of the Title Policy to the extent of the premium for standard
Purchaser's coverage, the real estate excise taxes, one-half the Escrow fee, and
Seller's own attorneys' fees.
10.3 Purchaser's Closing Costs. In connection with the Closing,
Purchaser shall pay the cost of the Title Policy to the extent in excess of the
premium for standard Purchaser's coverage together with all endorsements to the
Policy requested by Purchaser, the cost of recording the Deed, one-half the
Escrow fee, and Purchaser's own attorneys' fees.
10.4 Prorations, Adjustments. At the Closing, prorations shall be
effected through Escrow as follows:
10.4.1 Taxes and Assessments. Real property taxes and public and
private assessments shall be prorated (based upon the year in which they
are payable) as of 12:01 AM on the Closing Date; and Seller shall be
reimbursed for the entirety of any taxes paid by Seller for the calendar
year of recording of the BSIP 1 or any subsequent calendar year
occurring after the Closing Date.
10.4.2 Utilities. Water charges, fuel charges or utility charges
(including, without limitation, telephone, gas and electricity) shall be
prorated as of 12:01 AM on the Closing Date;
10.4.3 Prepaid Rent, Security Deposits and Option Payments.
Prepaid Rent in the amount of $173,077 and the Option Payments shall be
applied as a credit to the Purchase Price (except to the extent
previously returned to Purchaser under Article XVIII).
10.5 Events of Closing. Subject to the conditions on Closing provided
for in this Agreement, this transaction will be closed on the Closing Date as
follows:
10.5.1 Seller shall provide Purchaser with a certificate to the
effect that except as therein identified, there have been no changes in
Seller's warranties under this Agreement.
10.5.2 Seller shall provide Purchaser with the Certificate of
Nonforeign Status as provided in I.R.C. Section 1445.
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10.5.3 Seller shall deliver the original copies of all of
Seller's documents, licenses, contracts, tests, studies and reports
relating to the Property and to be provided to Purchaser under the other
provisions of this Agreement, which are in Seller's or its agents'
possession or under their control and which have not previously been
provided to Purchaser
10.5.4 The Escrow Agent shall calculate the prorations described
in Section 10.4, and the parties shall be charged and credited
accordingly.
10.5.5 Purchaser shall pay the Purchase Price called for at the
Closing Date to Seller in cash, against which Purchaser shall be
credited with the Option Payment (unless previously returned to
Purchaser under Article XVIII), any Deposit held by Seller under the
Lease, and any Holdback provided for under Section 4.1.2.
10.5.6 Any liens to be paid by Seller at closing shall be paid
and satisfied of record at Seller's expense.
10.5.7 Seller shall convey the Land and Improvements to Purchaser
by statutory warranty deed, subject to the Permitted Exceptions.
10.5.8 Seller shall convey the personal property, if any, by xxxx
of sale with Seller warranties as to lien-free ownership, and shall
assign the matters covered by the General Assignment pursuant thereto.
10.5.9 The Escrow Agent shall be committed to issuing the Title
Policy upon recordation of the closing documents.
10.5.10 The Escrow Agent shall record the deed to Purchaser at
Purchaser's expense.
10.6 Failure of Closing Conditions. In the event any one or more of the
conditions to closing is not satisfied as of the Closing Date, the party whom
such condition is intended to benefit may by notice in writing to the other
party:
10.6.1 waive such condition, whereupon this sale shall close in
accordance with the terms hereof;
10.6.2 extend the Closing Date for up to ten business days; or
10.6.3 elect to cancel this Agreement, whereupon the Option
Payment shall be immediately paid to the party entitled thereto, in
which event the parties shall have the rights and remedies provided in
this Agreement.
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ARTICLE XI
POSSESSION
Subject to the rights of Quadrant under the Construction Management
Agreement, Purchaser shall be entitled to possession of the Property on the
Closing Date, free and clear of all liens, encumbrances and exceptions other
than the Permitted Exceptions, on the Closing Date.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF SELLER
12.1 Representations and Warranties of Seller. Seller hereby represents
and warrants, as of the date hereof and as of the Closing Date, that:
12.1.1 Organization. Seller is a corporation or limited liability
company, duly organized and validly existing and in good standing under
the laws of the State of Washington and is qualified to do all things
required of it under this Agreement; all corporate or limited liability
company actions have been taken to approve this Agreement; and this
Agreement shall be binding on Seller in accordance with its terms.
12.1.2 Authority. Seller has the full right, title, authority and
capacity to execute and perform this Agreement and to consummate all of
the transactions contemplated herein, and the individual(s) who on
Seller's behalf, as the case may be, execute and deliver the Agreement
and all documents to be delivered to Purchaser hereunder, are and shall
be duly authorized to do so.
12.1.3 No Litigation. There is no litigation, administrative
action (other than routine land use administrative proceedings involving
the permit process for the Property, the Business Park and the
Snoqualmie Ridge Master Plan Community), attachment, execution,
assignment for the benefit of creditors, receivership, conservatorship,
employment dispute, or voluntary or involuntary proceedings in
bankruptcy or pursuant to any other debtor relief laws contemplated by
Seller or pending or, to Seller's knowledge, threatened, against Seller
before any court or administrative agency, in each case materially
affecting the Property not previously disclosed to Purchaser, or which
might result in Seller being unable to consummate this transaction.
12.1.4 No Conflict. Neither the execution of this Agreement nor
the consummation by Seller of the transactions contemplated hereby will
(i) conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default, or result in a termination of any
agreement or instrument to which Seller is
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a party; (ii) violate any restriction to which Seller is subject; or
(iii) constitute a violation of any applicable law or legal requirement
of which Seller has knowledge.
12.1.5 Non-Foreign. Seller is not a foreign person, non-resident
alien, foreign corporation, foreign partnership, foreign trust, or
foreign estate, as those terms are defined in the Internal Revenue Code
and the Income Tax Regulations promulgated thereunder.
12.1.6 Title. At Closing, Seller will hold marketable fee title
to the Property, subject only to the Permitted Exceptions. At Closing,
no person will adversely possess or have obtained any prescriptive
easement in any portion of the Land and no person will have any right of
possession, club membership, timeshare interest, or other similar right
or license of any nature or description to use any of the Property
(other than contractors constructing the Improvements pursuant to the
Construction Agreement). At Closing, the Land will be neither classified
as open space nor have any similar characterization for the purpose of
reducing or deferring real property taxes. At Closing, there will be no
local improvement district or other special assessments against the
Property, and the Seller will have knowledge that any such assessments
have been proposed, other than assessments for a storm water utility
that may be created.
12.1.7 Condemnation. There is to Seller's knowledge no threat of
condemnation or eminent domain, or other governmental taking of the
Property, or any portion thereof.
12.1.8 Access and Common Area Improvements. On Substantial
Completion, as defined in the Construction Management Agreement, of the
Improvements, the Land will have readily usable vehicular and pedestrian
access to and from public roads, streets or rights of way. All roads,
curb and gutter, drainage systems, access ways, detention ponds and
other common improvements to the Business Park to be constructed have
been or will be complete on or before the date of Substantial Completion
of the Improvements to the extent necessary to obtain a temporary
certificate of occupancy for the Improvements.
12.1.9. Utilities. On or before the date of Substantial
Completion of the Improvements, the Land shall be serviced by
electrical, gas, water, telephone, and sewer lines sufficient to service
the uses of the Property contemplated by the Purchaser as described in
the Lease; there exists no threatened moratorium on the extension or
expansion of such services; all utilities shall be stubbed to the
Improvements, and there exist no unpaid connection, hook-up or similar
charges with respect to the Property that either have not been paid by
Substantial
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Completion or that have not been disclosed in the Title Commitment. All
utilities serving the Improvements are or will be on meters.
12.1.10 No Development Obligations. No commitments have been made
to any person or entity, including without limitation any governmental
or quasi-governmental authority, utility company, religious body, or
association which would impose an obligation upon the Purchaser or its
successors or assigns to make any contribution or dedications of money
or land or to construct, install, or maintain any improvements of a
public or private nature on or off the Land, and no governmental
authority has imposed any requirement that any owner of the Land pay
directly or indirectly any special fees or contributions or to incur any
expenses or obligations in connection with any development of the Land,
except for the CC&R's (if recorded by Closing)or the Snoqualmie Ridge
Council Declaration (if recorded by Closing), or as reflected in the
Title Commitment or as otherwise previously disclosed by Seller to
Purchaser, unless the same have been fully paid and performed.
12.1.11 Property Condition. No portion of the Land lies within
any riparian corridor, wetland or other environmentally sensitive area
which prohibits or restricts development or the 100 year flood plain
established by the federal government. No portion of the Property or any
contiguous property has to Seller's knowledge been used at any time for
the generation, storage or disposal of hazardous substances, sewage,
petroleum products, hazardous materials, toxic substances or any
pollutants or substances, defined as hazardous or toxic in applicable
federal, state and local laws and regulations ("Hazardous Substances").
The drainage of surface and subsurface waters does not adversely affect
the Property to an extent that has not been taken into account in the
design of the Improvements, and the Seller has not been involved in, or
to its knowledge threatened by or notified of litigation or claims
respecting the drainage of such waters.
12.1.12 No Violations. The Property complies, or, with respect to
the Improvements, will upon Substantial Completion comply, with all
applicable federal, state and local laws, including specifically, all
applicable building, development, zoning, health, occupancy, shoreline
management and environmental statutes, ordinances, and regulations; and
the Seller has no knowledge of receiving any citations or violation
notices with respect to the Property (including notices regarding the
physical condition or use thereof or relating to the alleged presence of
any Hazardous Substances). If, between the date of this Agreement and
the Closing Date Seller receives any written notice or written citation
of any alleged violation of any statute, code or ordinance with respect
to the Property or Seller's use thereof, it shall promptly provide
Purchaser with a true and correct copy thereof. To the best of Seller's
knowledge, all licenses, permits and other
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approvals required for the construction of the Improvements have been or
will be, upon commencement of construction or the relevant element of
construction, issued and are or will be in good standing.
12.1.13 Permitted Use. The Seller has no knowledge of any
federal, state or local statutes, ordinances, laws or regulations which
would prohibit or materially interfere with Purchaser's intended use of
the Property.
12.1.14 Accuracy of Records. To Seller's knowledge, all of the
books, records, tests, studies, assessments, documents and other data
Seller has provided and hereafter provides to Purchaser in connection
with this Agreement are true and accurate in all material respects.
12.1.15 Contract Default. To the best of Seller's knowledge,
there exist no material defaults under any management, maintenance or
service contracts executed in connection with the Property.
12.1.16 Executory Agreements. There are no management, service
or maintenance agreements or equipment leases for the Property.
12.1.17 No Condominium. There has not been any documentation
recorded to establish any portion or all of the Property as a
condominium or cooperative property under Washington state law.
12.1.18 Insurability of Property. Neither Seller nor its agents
have received any formal or informal notice from any insurance company
of any defect or inadequacies in the Property which would adversely
affect the insurability of the Improvements, or which would increase the
cost of any insurance beyond that which would ordinarily and customarily
be charged for comparable property.
12.1.19 Soil Conditions. To Seller's knowledge, the surface and
subsurface condition of the Land is such that it will support the
Improvements as they are before and after the date hereof initially
constructed consistent with recommendations of geotechnical reports that
Seller has obtained and will obtain.
12.2 No Other Warranties; Survival. The foregoing constitutes the
express warranties and representations of Seller, and, except for such
additional warranties and representations as may be made by Seller elsewhere in
this Agreement or under the Lease or Construction Agreement, Seller makes no
other warranties or representations, express or implied, direct or indirect. All
of the representations and warranties of Seller contained in this Agreement
shall survive the Closing Date in the same manner as Quadrant's warranties under
the Construction Management Agreement, and Seller shall indemnify and hold
Purchaser harmless from and against all claims, losses, demands,
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allegations or liabilities (including attorneys' fees) which are suffered as a
result of the breach of any inaccuracy thereof.
12.3 "Knowledge" Defined. As used in this Section 12, "Seller's
knowledge" means the actual knowledge of Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx
Xxxxxxxx or Xxxxx Xxxxxx, without any special inquiry.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
13.1 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants, as of the Effective Date and as of the Closing Date,
that:
13.1.1 Organization. Purchaser is a corporation, duly organized
and validly existing and in good standing under the laws of the State of
Washington, and is qualified to do all things required of it under this
Agreement; all corporate actions have been taken to approve this
Agreement; and this Agreement shall be binding on Seller in accordance
with its terms.
13.1.2 Authority. Purchaser has full right, title, authority and
capacity to execute and perform this Agreement and to consummate all of
the transactions contemplated herein, and the individual(s) who on
Purchaser's behalf execute and deliver the Agreement and all documents
to be delivered to Seller hereunder are and shall be duly authorized to
do so.
13.1.3 No Litigation. There is no litigation, administrative
action, attachment, execution, assignment for the benefit of creditors,
receivership, conservatorship, employment dispute, or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor
relief laws contemplated by Purchaser or pending or, to Purchaser's
knowledge, threatened, against Purchaser before any court or
administrative agency which might result in Purchaser being unable to
consummate this transaction.
13.1.4 No Conflict. Neither the execution of this Agreement nor
the consummation by Purchaser of the transactions contemplated hereby
will (i) conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default, or result in a termination of any
agreement or instrument to which Purchaser is a party; (ii) violate any
restriction to which Purchaser is subject; or (iii) constitute a
violation of any applicable law or legal requirement of which Purchaser
is aware.
13.2 Survival. The foregoing constitutes the express warranties and
representations of Purchaser, and, except for such additional warranties and
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representations as may be made by Purchaser elsewhere in this Agreement or under
the Lease or the Construction Agreement, Purchaser makes no other warranties or
representations, express or implied, direct or indirect. All of the
representations and warranties of Purchaser contained in this Agreement shall
survive the Closing Date, and Purchaser shall indemnify and hold Seller harmless
from and against all claims, losses, demands, allegations or liabilities
(including attorneys' fees) which are suffered as a result of the breach of any
inaccuracy thereof.
ARTICLE XIV
NOTICES
All notices and demands which may or are to be required or permitted to
be given under this Agreement shall be in writing and if personally delivered
shall be effective when received. If mailed, a notice shall be deemed effective
on the third day after deposited as registered or certified mail, postage
prepaid, directed to the other party. Notices shall be delivered or mailed to
the following address and telephone numbers:
Seller: The Quadrant Corporation
11100 N.E. 8th, Xxxxx 000
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Commercial Division
Tel: 000-000-0000
Fax: 000-000-0000
Purchaser: Optiva Corporation
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Corporate Counsel
Tel: 0-000-000-0000
Fax: 000-000-0000
with a copy to: Xxxxxx X. Xxxxxx
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Tel: 000-000-0000
Fax: 000-000-0000
Either party may change its address for notices by at least fifteen (15) days'
advance written notice to the other.
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ARTICLE XV
BROKERAGE COMMISSIONS
Other than a brokerage commission payable to Colliers Xxxxxxxx Xxxxxxx,
Inc., in connection with this transaction, pursuant to the terms of a separate
agreement, which commission shall be paid by Seller in accordance with the terms
of such separate agreement, each party represents to the other that no brokerage
commission, finder's fee, acquisition fee or like payment arises through such
party with regard to the sale or lease of the Property. Purchaser hereby
indemnifies and holds Seller harmless from any claim, liability, loss or expense
for any brokerage commission, finder's fee, acquisition fee, or like payment
asserted against Seller arising out of any agreement entered into by Purchaser
in connection with this Agreement or the Property, arising through Purchaser;
and Seller hereby indemnifies and holds Purchaser harmless from any claim,
liability, loss or expense for any brokerage commission, finder's fee,
acquisition fee, or like payment asserted against Purchaser in connection with
this Agreement or the Property, arising through Seller. No sales commission
shall be paid or charged as part of the Closing under this Agreement; provided
however that Colliers Xxxxxxxx Xxxxxxx, Inc. shall be paid on the Closing Date
its full leasing commission under its agreement with Seller as if the Property
were being leased to Purchaser. The obligations of the parties under this
Article 15 shall survive the Closing Date.
ARTICLE XVI
DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING
16.1 Damage. Any damage to the Improvements prior to the Closing Date
shall be repaired and restored by Quadrant in accordance with the requirements
and to the condition called for in the Construction Management Agreement.
16.2 Condemnation. If, prior to the Closing Date, all or any portion of
the Property is taken by, or made subject to, condemnation, eminent domain or
other governmental acquisition proceedings, then Purchaser, at its sole option,
may elect either:
16.2.1 Termination. To terminate this Agreement by written notice
to Seller given at or prior to the Closing Date, and, neither party
hereto shall have any further rights against, or obligations to, the
other under this Agreement; or
16.2.2 Reduce Purchase Price. To agree to close and deduct from
the Purchase Price an amount equal to any sum paid to Seller for such
governmental acquisition; provided, if no award has been paid to Seller
prior to the Closing Date, then, on the Closing Date, the Purchase Price
shall not be adjusted; and, on the Closing Date, Seller shall assign,
transfer and set over to Purchaser all of
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Seller's right, title and interest in and to any awards which may in the
future be made on account of such governmental acquisition.
16.2.3 Street Dedications. Notwithstanding anything herein to the
contrary, condemned or dedicated portions of the Land for purposes of
street construction and right of way as reflected on the BSIP 1 shall
not constitute condemnation action subject to the provisions of this
Article XVI.
ARTICLE XVII
MISCELLANEOUS
17.1 Attorneys' Fees. In the event of any litigation, arbitration or
other proceeding (including proceedings in bankruptcy and probate and on appeal)
brought to enforce or interpret or otherwise arising under this Agreement, the
substantially prevailing party therein shall be entitled to the award of its
reasonable attorneys' fees, witness fees, and court costs incurred therein and
in preparation therefor.
17.2 Counterparts. This Agreement may be executed simultaneously or in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same contract
17.3 Entire Agreement. This Agreement embodies and constitutes the
entire understanding between the parties hereto with respect to the purchase and
sale of the Property, and all prior agreements, understandings, representations
and statements, oral or written, concerning such transaction are superseded and
merged into this Agreement. The parties acknowledge there are additional
agreements between them pertaining to the Property, including without limitation
a Lease, a Construction Agreement and an Expansion Agreement between the parties
of even date herewith. Such documents are a part of the agreement of the
parties.
17.4 Modification. Neither this Agreement nor any provision hereof may
be waived, modified, amended, discharged or terminated except as provided herein
or by an instrument in writing signed by the party against which the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument.
17.5 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Washington. Venue for any action to
enforce or interpret this Agreement shall lie in the Superior Court of King
County, Washington. All sums referred to in this Agreement shall be calculated
by and payable in the lawful currency of the United States.
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17.6 Headings. Descriptive headings are used in this Agreement for
convenience only and shall not control, limit, amplify or otherwise modify or
affect the meaning or construction of any provision of this Agreement.
17.7 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted heirs,
successors and assigns.
17.8 Assignment. Purchaser shall have the right to assign its rights
under this Agreement in whole or in part to any entity acquiring, merging with
or related to Purchaser (before or after the assignment) without the prior
written consent of Seller. Any other assignment by Purchaser shall require the
prior written consent of Seller, which consent may not be unreasonably withheld,
conditioned or delayed. Seller may freely assign this Agreement, but no such
assignment shall relieve Quadrant of its obligations hereunder.
17.9 Survival of Provisions. The covenants, representations, agreements,
terms and provisions contained herein shall survive the Closing and shall not be
deemed to have merged with or into the Deed.
17.10 Time of Essence; Business Day. Time is of the essence of this
Agreement and of each covenant and agreement that is to be performed at a
particular time or within a particular period of time. However, if the final
date of any period which is set out in any provision of this Agreement or the
Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the
United States, or the State of Washington, then the time of such period or the
Closing Date, as the case may be, shall be extended to the next date which is
not a Saturday, Sunday or legal holiday.
17.11 Rights and Remedies Upon Default.
17.11.1 Seller's Default. In the event of a default by Seller of
any of its covenants, representations, warranties or other agreements
set forth in this Agreement, Purchaser may, elect (i) nevertheless to
proceed with the purchase of the Property, and to pursue specific
performance of this Agreement, or (ii) to terminate this Agreement by
written notice to Seller delivered prior to the Closing Date, whereupon
the Option Payments shall be returned to Purchaser (unless previously
returned to Purchaser under Article XVIII), or (iii) to pursue all
remedies available at law and in equity, including specific performance
of this Agreement and damages.
17.11.2 Purchaser's Default. In the event of a default by
Purchaser of any of its covenants, representations, warranties or other
agreements set forth in this Agreement, Seller shall be entitled (i) to
retain the Option Payment, and (ii) to pursue all remedies available at
law and in equity, including specific performance
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of this Agreement and/or damages up to $2,000,000 in damages, with or
without terminating this Agreement.
17.11.3 Termination. Upon termination of this Agreement under
this Article, both parties shall be relieved of all further obligations
hereunder, neither party shall have any further rights under this
Agreement, and each of the parties hereby waive any other rights or
remedies available to it at law or in equity by virtue of this
Agreement. Termination of this Agreement shall not affect the Lease or
the Construction Agreement, which shall continue until terminated in
accordance with its terms.
17.12 Invalid Provision. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
such illegal, invalid or unenforceable provision or by its severance from this
Agreement.
17.13 Right of Termination. This Agreement shall be terminated in the
event the Lease is terminated in accordance with the provisions of Section 1A.1
of the Lease.
17.14 Cooperation. The parties shall cooperate in good faith with one
another and shall use diligent efforts to carry out the intent and provisions of
this Agreement.
17.15 Interpretation. This Agreement has been submitted to the scrutiny
of all parties hereto and their counsel, if desired, and shall be given a fair
and reasonable interpretation in accordance with the words hereof, without
consideration or weight being given to its having been drafted by any party
hereto or its counsel.
17.16 Waive. The failure of either party at any time to require
performance of any provision of this Agreement shall not limit the party's right
to enforce such provision. Waiver of any breach of any provision shall not be a
waiver of any succeeding breach of the provision or a waiver of the provision
itself or any other provision.
17.17 Description of Transaction. This Agreement creates only the
relationship of seller and buyer and no joint venture, partnership or other
joint undertaking is intended hereby, and neither party hereto shall have any
rights to make any representations or incur any obligations on behalf of the
other. Neither party has authorized any agent to make any representations, admit
any liability or undertake any obligation on its behalf. Neither party is
executing this Agreement on behalf of an undisclosed principal, and no third
party is intended to be benefited by this contract. The parties agree that this
Agreement involves only the sale and purchase of real, personal and intangible
property, that Purchaser is not acquiring any business or ongoing liability of
Seller, and except to
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the limited extent assumed by Purchaser in writing, Purchaser shall have no
successor liability to any employee, agent or other person with whom Seller has
contracted or to whom Seller is liable.
17.18 Indemnified Parties. Any indemnification contained in this
Agreement for the benefit of Purchaser shall extend to Purchaser's officers,
employees, and agents.
17.19 Exhibits; Addenda. Exhibits and Addenda, if any, affixed to this
Agreement are a part of and incorporated into this Agreement.
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ARTICLE XVIII
BINDING SITE IMPROVEMENTS PLAN 1
Purchaser understands, acknowledges and agrees that Seller has applied
for and is currently seeking approval by the Hearing Examiner for the City of
Snoqualmie ("Hearing Examiner") of a Conceptual Binding Site Improvement Plan 1
for the Snoqualmie Ridge Business Park, submitted for approval under No. 9701 in
which the Land is included ("BSIP 1"); and that upon the recording of the BSIP 1
with the King County Department of Records and Elections , the Land shall be
established as legally subdivided lot(s). Seller shall diligently proceed to
prepare such materials required to obtain approval of the BSIP 1; provided,
however, that Seller's obligation to convey the Property shall be subject to
issuance of final approval of the BSIP 1 by the City Council of the City of
Snoqualmie in a manner and with such terms as are acceptable to Seller and
recording of the same. If the BSIP 1 is not approved and recorded on or before
the Closing Date, Seller shall be entitled to extend the Closing Date for such
period of time as is reasonably necessary to approve and record the BSIP 1. If,
however, the BSIP 1 is not approved and recorded on or before the Commencement
Date of the Lease, Seller shall return the Option Payment to Purchaser at
Purchaser's request, and this Agreement shall otherwise remain in full force and
effect. Furthermore, if the BSIP 1 is not approved and recorded within six
months after the Commencement Date under the Lease, Purchaser may cancel its
exercise of the Option and receive the return of the Option Payment (if not
already returned under the preceding sentence) whereupon the Lease and
Construction Agreement shall remain in full force and effect, and no party shall
have any further right or remedy hereunder. If Purchaser does not exercise its
option to terminate this Agreement, then Seller shall complete the sale of the
Property to Purchaser as soon as it may be legally conveyed.
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EXECUTED as of the day and year above written.
SELLER:
THE QUADRANT CORPORATION
By /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Its Vice President
PURCHASER:
OPTIVA CORPORATION
By /s/ Xxxxx Xxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxx
Its President
EXHIBITS
Exhibit A Legal Description of Land
Exhibit B Termination of Lease
Exhibit C General Assignment
Exhibit D Construction Management Agreement
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EXHIBIT D
CONSTRUCTION MANAGEMENT AGREEMENT
THIS CONSTRUCTION MANAGEMENT AGREEMENT is dated and effective this ___
day of __________, 1998, by and between OPTIVA CORPORATION, a Washington
corporation ("Owner"), and THE QUADRANT CORPORATION, a Washington corporation
("Quadrant").
R E C I T A L S
A. Quadrant, as seller, and Owner, as purchaser, have heretofore entered
into that certain Option and Real Estate Purchase and Sale Agreement for the
sale of the Land and Buildings (defined below), as to which Quadrant has
commenced construction.
B. Prior to such purchase and sale, Quadrant [or its assignee] was the
Landlord and Owner [or Owner's affiliate] was the Tenant, under a Lease dated
November __, 1997. Under the Lease, including a Construction Agreement for Lease
executed concurrently with the Lease, and a copy of which is attached hereto as
Exhibit 1 and incorporated herein ("Construction Agreement") and other exhibits
incorporated therein, Quadrant, as Landlord, agreed to construct for and lease
to Owner, as Tenant, and Owner agreed to lease from Quadrant, the Buildings.
C. The Lease has terminated pursuant to the Option and Real Estate
Purchase and Sale Agreement concurrently with the closing thereunder.
D. The parties have agreed that Owner shall engage Quadrant as
Construction Manager to complete construction of the Building Shell and Tenant
Improvements for Owner, at the cost of Owner, in the manner required in the
Construction Agreement and this Construction Management Agreement.
A G R E E M E N T S
The parties agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the same meanings as in the Construction
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Base Building Shell Price" means the amount of $__________
[TBD--$125 TIMES 145,000 GBA, MINUS LAND VALUE, MINUS TI ALLOWANCE
($4,945,052), PLUS MEZZANINE STRUCTURE ALLOWANCE ($389,000), PLUS
INCREASE IN
Page 1 of Exhibit D
29
LINK STRUCTURE ALLOWANCE ($344,000), PLUS INCREASE IN SPACE PLANNING
ALLOWANCE ($176,609), PLUS SHELL IMPROVEMENTS ALLOWANCE ($932,534)].
"Buildings" means the Building Shell and Tenant Improvements for
each of Building 1 and Building 2, all as defined more fully in the
Construction Agreement.
"Building Plans" means the Building Shell Construction Documents
and the Tenant Improvements Construction Documents, as created and
modified from time to time in accordance with the Construction
Agreement.
"Building Value" means the total amount to be paid to Quadrant
under this Agreement, and is an amount equal to the Base Building Shell
Price plus Tenant Improvement Costs plus Excess Mezzanine Structure
Costs, plus Excess Link Structure Costs, Excess Shell Improvements
Allowance Costs, plus any increases resulting from changes to the
Buildings under Section 9 of this Agreement. The Building Value consists
of the sum of the Building Value At Closing and the Building Value After
Closing.
"Building Value After Closing" means an amount equal to the
Building Value minus the Building Value at Closing. The Building Value
After Closing is to be paid to Quadrant on a Progress Payment basis
under Section 7.2.
"Building Value At Closing" means the amount of the Building
Value to be paid at Closing under Section 4.1.2 of the Purchase
Agreement, and equals Soft Costs incurred to a date at least ten
business days prior to Closing plus a Progress Payment of Building Value
made on a Completion Percentage basis in accordance with the procedures
described in this Agreement, as of a date prior to Closing.
"Completion Percentage" means that certain percentage of the
construction of the Building Shell and the Tenant Improvements which is
determined, at the time of each payment of each Progress Payment, to
have been completed. Such determination shall be made by Inspector,
subject to the review and comment by Owner and Quadrant; notwithstanding
such review and comment, however, the determination of Inspector shall
control. For purposes of calculating the Completion Percentages,
Inspector shall assume that Substantial Completion of the Building Shell
or Tenant Improvements, as the case may be, constitutes 100% completion
thereof. In determining the Completion Percentages, Inspector shall
consider the following information: (i) a physical inspection of the
Buildings; and (ii) a comparison of the work completed against the work
remaining to be completed based upon an analysis of the Building Plans.
"Construction Agreement" means the Construction Agreement for
Lease dated the same date as the Lease, between Quadrant and Owner,
entered into and
Page 2 of Exhibit D
30
made a part of the Lease. Although the Lease has terminated, the
Construction Agreement is incorporated into this Agreement by reference
and as part of this Agreement shall continue to apply to the
construction of the Buildings.
"Effective Date" means the date upon which delivery of this
Agreement fully executed by all parties thereto shall have occurred.
"Final Completion" means that Substantial Completion has occurred
and all post-substantial completion obligations under Section 8 have
been fulfilled.
"Hard Costs" means that portion of the Building Value After
Closing consisting of those construction costs identified in the
Building Shell Construction Contract and Tenant Improvements
Construction Contract, not including taxes applicable thereto.
"Holdback Amount" means an amount equal to 5% of Hard Costs, to
be held back from Progress Payments in accordance with Section 7 of this
Agreement.
"Inspector" means Xxxxxx & Associates, who has been engaged to
determine the Completion Percentage during construction in accordance
with this Agreement.
"Land" means that certain real property described on Exhibit 2
attached hereto.
"Land Value" means the gross Purchase Price paid by Owner at
Closing for the Land, under Section 4.1.1 of the Purchase Agreement.
"Lease" means that certain Lease of the Buildings dated November
__, 1997, between Quadrant, as Landlord, and Owner, as Tenant, together
with all exhibits thereto. The Lease terminated at closing of Owner's
purchase of the Land and Buildings.
"Progress Inspection" means the inspection(s) undertaken by
Inspector for each Progress Payment Request during the construction of
the Building, on which inspections each of Quadrant and Optiva shall
have the opportunity to have their Representatives accompany the
Inspector. Following each Progress Inspection, Inspector shall issue its
written determination of the Completion Percentages on or before the
first day of each calendar month for each Progress Payment Request in
accordance with Section 7.3.
"Progress Payments" means those certain progress payments made to
Quadrant from time to time by Owner in accordance with Section 7 of this
Agreement toward payment of the Building Value After Closing.
Page 3 of Exhibit D
31
"Project Costs" means all out-of-pocket costs actually expended
by Quadrant (as opposed to Quadrant's internal costs), as Landlord or as
Quadrant for the design, development, and construction of the Land and
Buildings and all improvements, systems and installations therein and
thereto, including without limitation all of the following reasonably
allocated to the Land and the Buildings:
(i) all architectural, engineering (civil and structural),
mechanical, electrical, geotechnical, accounting, legal, environmental
and any other consulting fees and expenses of any kind or nature;
(ii) all traffic mitigation, signalization, and any other
improvements related to vehicular traffic and transportation management
for the Property;
(iii) all site preparation costs and expenses;
(iv) utilities installation and connection costs, fees and
charges (as opposed to costs, fees and charges for actual usage),
including without limitation, storm drainage, sanitary sewer,
electrical, water, natural gas, and any other utility (excluding
telephone, cable television, data transmission, satellite transmission,
and security system equipment and services or computer cabling or
wiring);
(v) all Hard and Soft Costs;
(vi) any and all insurance premiums, retail sales and business
and occupation taxes and any other applicable premiums or taxes in
addition to those identified above;
(vii) any and all fees, charges and expenses in connection with
obtaining, environmental and other review and issuance of any and all
permits required for design, development, construction and occupancy of
the Buildings and the Land, including expenses incurred in providing any
bonds to secure completion obligations to the City of Snoqualmie;
(viii) any and all costs of the removal and remediation of
Hazardous Substances from the Land, if any;
(ix) any other cost, expense, fee, charge or interest incurred by
Quadrant, as Landlord or as Quadrant on an "out of pocket" basis
relating to or arising from the planning, design, development,
marketing, testing, and construction of the Buildings and performance of
Quadrant's obligations, as Landlord and as Construction Manager, to
achieve final completion of the Buildings;
(x) the cost of any ALTA survey with respect to the Land required
by the City of Snoqualmie upon completion of the Buildings;
Page 4 of Exhibit D
32
(xi) any and all legal and other consultant's or other third
party costs incurred in connection with the negotiation and execution of
this Agreement and the Purchase Agreement, including without limitation
real estate brokerage commissions applicable thereto;
(xii) closing costs incurred in connection with closing under the
Purchase Agreement;
(xiii) any cost, expense and charge in order to enforce the
obligations of any Owner to the extent such cost, expense or charge is
not otherwise recovered from Owner;
(xiv) interest accruing on all of such items from time to time as
they are incurred from and after the date of execution of the Lease, at
the floating rate per annum of one percent over the prime rate in effect
at Seafirst Bank or its successor.
"Purchase Agreement" means that certain Option and Real Estate
Purchase and Sale Agreement dated the same date as the Lease, between
Quadrant, as Seller, and Owner, as Purchaser, under which the Land and
Buildings have been sold and conveyed to Owner.
"Soft Costs" means that portion of the Building Value consisting
all costs other than Hard Costs arising in connection with the
Buildings, such as design, architectural, engineering, environmental,
soils analysis, permitting and similar costs, and all taxes applicable
thereto.
"State" means the State of Washington.
2. Engagement of Quadrant as Construction Manager; Construction
Agreement. Owner hereby engages Quadrant as Construction Manager and Quadrant
agrees, subject to Owner's performance of its obligations hereunder, to cause,
supervise, manage and complete the Buildings by performing all of Quadrant's
obligations set forth in the Construction Agreement, as supplemented and
modified by the terms and conditions of this Agreement. Quadrant shall have all
the rights and obligations of Quadrant under the Construction Agreement, and
Owner shall have all the rights of Optiva under the Construction Agreement. The
Construction Agreement and this Agreement shall be construed together and read
harmoniously where possible, but to the extent of inconsistency between the
Construction Agreement and this Agreement, this Agreement shall control.
3. Diligent Efforts; General Responsibility; Authorized Representatives.
Page 5 of Exhibit D
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3.l In providing its services hereunder, Quadrant shall use
diligent efforts and shall furnish its best skill and judgment.
3.2 Quadrant shall cooperate with, coordinate, manage, direct and
supervise the General Contractor, Architect, TI Architect and all other
engineers, design consultants, managers, and other contractors retained in
connection with the development and construction of the Building so as to cause
Substantial Completion in accordance with and subject to the provisions of this
Agreement.
3.3 Subject to Owner's performance of its obligations under this
Agreement, Quadrant shall complete the Building in accordance with the Building
Plans and all applicable laws and ordinances, free of all liens (except as
otherwise provided in this Agreement) for work performed by or under the
direction of Quadrant; Quadrant's warranty liability shall be as set forth in
Section 10 of the Construction Agreement.
4. Mutual Cooperation. Quadrant and Owner shall cooperate in good faith
with each other in all aspects of performance under this Agreement, to
accomplish each of the purposes hereof. Such cooperation shall include without
limitation Owner's granting of easements to public utilities and municipalities
if reasonably necessary or beneficial for the Buildings or the Business Park and
to the extent that any of such easements is not already in place by the date of
this Agreement.
5. Term. The rights and obligations of the parties hereunder shall
commence on the Effective Date and shall continue through Quadrant's completion
of the Post-Substantial Completion obligations set forth in Section 8, until the
end of the Warranty Period.
6. Quadrant's Duties. Quadrant shall see to it that the Buildings are
Substantially Completed in accordance with the Building Plans and that the
Substantially Complete Buildings are delivered by the Scheduled Substantial
Date, as it may change from time to time, and shall have the following specific
duties and responsibilities relating to the construction of the Buildings,
unless otherwise specifically provided or unless already accomplished under the
Construction Agreement:
6.1 Design, Bidding and Contracting. In connection with the
design and bidding of construction work for the Building:
6.1.1 Quadrant shall oversee all design work by Architect,
TI Architect and engineers for the development and construction of the
Buildings.
6.1.2 Either Owner or Quadrant, acting as Owner's agent,
shall enter into any and all contracts relating to the design,
construction or permitting of the Buildings.
Page 6 of Exhibit D
34
6.1.3 Quadrant shall enforce, administer, oversee and
implement all contracts entered into by Owner (or by Quadrant, as
Owner's agent) with General Contractor subcontractors, suppliers,
agents, employees, or other persons in connection with the development
and construction of the Buildings.
6.2 Development. In connection with the development
of the Buildings, as agent for Owner, Quadrant shall arrange for and supervise
the completion and submission of all applications, grading permits, building
permits, occupancy permits, and other land use or development applications and
documentation required by applicable governmental authority to accomplish
development of the Buildings.
6.3 General Matters Related to Construction. Quadrant shall:
6.3.1 Coordinate the scheduling of construction of the
Buildings, including sequence of operations among contractors and
employees, the receipt of material and equipment deliveries and the
inspection of completed work.
6.3.2 In consultation with the Architect and TI Architect,
conduct necessary inspections to determine that the Buildings are
completed in accordance with all applicable Building Plans.
6.3.3 Subject to its receipt of the Building Value as and
when required in this Agreement, Quadrant shall cause any mechanic's or
materialmen's lien or liens against the Buildings to be immediately
discharged; provided, however, that if Quadrant disputes any such lien,
then Quadrant shall not be required to discharge any such lien until
such dispute is resolved to Quadrant's satisfaction.
6.3.4 Subject to its receipt of Progress Payments as and
when required in this Agreement, Quadrant shall cause all retail sales
and excise taxes to be paid.
6.3.5 Quadrant shall at all times during construction of
the Buildings keep and maintain the site in a safe condition.
6.4 Owner's Liability for Costs. Notwithstanding any other
provision of this Agreement, Owner shall not be liable for and Quadrant shall
pay all costs to complete construction of the Building Shell in excess of the
Base Building Shell Price, excluding however, any cost for construction of the
Building Shell if such costs result from Owner initiated changes pursuant to
Section 9 or if such costs are Excess Mezzanine Structure Costs, Excess Link
Structure Costs, Excess Shell Improvements Allowance Costs, and costs exceeding
insurance proceeds necessary to restore the damage or destruction in accordance
with Section 11.1.
Page 7 of Exhibit D
35
7. Payment of Building Value After Closing
7.1 Progress Payments. Owner shall pay the Building Value After
Closing to Quadrant on a Progress Payment basis directly to Quadrant as
described in this Section 7.
7.2 Progress Payments Determination and Procedure. Progress
Payments shall be made monthly in accordance with the following procedures and
shall continue until the Building Value, including the Holdback Amount, has been
paid in full:
7.2.1 Quadrant shall provide to Inspector on or before the
25th day of each calendar month after the Effective Date such
information as is required for Inspector to determine the Completion
Percentage for each of the Building Shell and the Tenant Improvements.
Inspector shall issue its determination of the Completion Percentages as
of the date of determination on or before of the 30th day of such month;
7.2.2 For purposes of calculating Progress Payments, the
Building Value after Closing shall be paid in two separate components:
Building Shell and Tenant Improvements.
7.2.3 For purposes of calculating Progress Payments, the
Completion Percentage for the Building Shell shall be applied against
the Base Building Shell Price, and the Completion Percentage for the
Tenant Improvements shall be applied against the Tenant Improvements
Costs, including the Tenant Improvements Allowance and any Excess Tenant
Improvements Costs identified by Closing under the Purchase Agreement.
7.2.4 Within five business days after the receipt of
Inspector's determination of the Completion Percentages, Quadrant shall
provide to Owner a Progress Payment Request in the form attached hereto
as Exhibit 3, requesting payment of a specified dollar amount.
7.2.5 For the Building Shell, the payment amount shall be
equal to the Completion Percentage of the Building Shell determined by
Inspector, times the Base Building Shell Price, minus the amount
(including taxes) previously paid (or held back) against the Base
Building Shell Price, plus retail sales and excise taxes due on amounts
paid to General Contractor for the Building Shell covered by the
Progress Payment Request, and minus a Holdback equal to 5% of Building
Shell Hard Costs covered by such Progress Payment Request.
7.2.6 For the Tenant Improvements, the payment amount
shall be equal to the Completion Percentage of the Tenant Improvements
determined by Inspector, times the amount of Tenant Improvements Costs
identified by the
Page 8 of Exhibit D
36
parties on or before Closing under the Purchase Agreement, minus the
amount (including taxes) previously paid (or held back) against such
costs, plus retail sales and excise taxes due on amounts paid to General
Contractor for the Tenant Improvements covered by the Progress Payment
Request, and minus a Holdback equal to 5% of Tenant Improvements Hard
Costs covered by such Progress Payment Request.
7.2.7 Within three days of receipt of a Progress Payment
Request, Owner shall either approve or provide detailed reasons why it
does not approve the Progress Payment Request. Owner shall exercise
reasonable and good faith discretion in its review and approval or
non-approval of Progress Payment Requests. If Inspector and Owner and/or
Quadrant disagree regarding the Completion Percentages, Quadrant,
Inspector, and Owner shall meet within the subsequent two-day period and
diligently attempt to resolve such differences. If such differences are
not resolved within said two-day period, then the determination by
Inspector shall control, and Owner shall make the Progress Payment based
on the Inspector's determination. Any remaining dispute over such
Progress Payment may be resolved by reference to the dispute resolution
procedures set forth in Section 19.7 of the Lease (and the provisions of
such section are incorporated in this Agreement despite the termination
of the Lease); provided, however, that Owner shall timely make the
Progress Payment in accordance with the Inspector's determination even
if the parties are pursuing such dispute resolution procedures, and may
not invoke such procedures unless it has made such payment. Payments to
be made thereafter under this Agreement shall be adjusted as necessary
to reflect the outcome of such dispute resolution procedures.
7.2.8 An example illustrating the determination of
Progress Payments is set forth on Exhibit 4 hereto. Such example shall
be read in conjunction with the provisions of this Section 7.2.
7.3 Payment of Progress Payment. Owner shall pay each Progress
Payment to Quadrant not later than three business days after the amount thereof
is determined in accordance with the foregoing.
7.4 Progress Payment Upon Substantial Completion. Within ten days
after Substantial Completion, a Progress Payment shall be made using a
Completion Percentage of 100% for the Building Shell and the Tenant
Improvements.
7.5 Final Payment of Building Value. Any remaining portion of the
Building Value After Closing, including without limitation the Holdback Amount,
plus any additional Excess Tenant Improvement Costs, plus any Excess Mezzanine
Structure Costs, plus any Excess Link Structure Costs, plus any Excess Building
Shell Allowance
Page 9 of Exhibit D
37
Costs, plus any increases resulting from changes to the Buildings under Section
9 of this Agreement, shall be paid by Owner to Quadrant as the final Progress
Payment. Such payment shall be made at Final Completion, or as soon thereafter
as such costs are finally determined in accordance with the Construction
Agreement and this Agreement, not later than 30 days after Quadrant's submittal
of a written request for payment.
7.6 Maximum Amount of Payments. Not later than 90 days after the
date of Final Completion, Quadrant shall submit to Optiva an itemized, detailed
statement of actually incurred Project Costs. If requested by Optiva, such
submittal shall include the General Contractor's actual job cost report,
including individual entries, payroll reports, timecards and copies of invoices.
Such submittal may include such other information that reasonably bears on the
determination of Project Costs. If the positive difference, if any, between (i)
the total amounts paid to Quadrant as the Building Value at Closing under the
Purchase Agreement and as Progress Payments under this Agreement, and (ii) all
Project Costs, exceeds $1.4 million, Owner shall have no further obligation to
pay Progress Payments or the final payment of Building Value, and Quadrant shall
pay Owner the amount of any such difference in cash within ten business days
after the submittal of such statement.
8. Post-Substantial Completion Obligations. Following Substantial
Completion (as defined in the Construction Agreement), and on or before 90 days
after the Substantial Completion Date, or, if not completed within such period,
then as soon as practically possible, Quadrant and Owner shall complete the
items of work and provide the documents of items of information as are set forth
below:
8.1 By Quadrant. Quadrant shall provide to Owner the following:
8.1.1 Final Certificate of Occupancy. The issued final
Certificate of Occupancy for the Buildings.
8.1.2 Punch List. Completion of the Punch List Items as
developed under the Construction Agreement.
8.1.3 Manuals. All technical and service, instruction and
procedure manuals relating to the operation and maintenance of all HVAC
systems and other mechanical devices and equipment installed in the
Buildings, except insofar as relating to Optiva's furniture, fixtures
and equipment.
8.1.4 Warranties. An assignment and delivery of all
warranties, guarantees, maintenance contracts, and machinery and
equipment warranties received by Quadrant from the General Contractor,
or any subcontractor thereof, or any supplier, materialmen or
manufacturer relating to the Buildings.
Page 10 of Exhibit D
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8.1.5 Title Endorsement. Title insurance for the Buildings
dated down, to reflect no mechanic's, materialman's, contractor's
supplier's or similar liens or claims affecting title to the Buildings.
8.2 By Owner and Quadrant. Owner and Quadrant shall complete the
following:
8.2.1 Access and Utility Easements. Any and all access,
driveway and utility easements as may be required by and between the
Land and certain adjacent real property owned by Quadrant or
Weyerhaeuser Real Estate Company or their successors shall have been
executed, recorded and of full force and effect upon such terms as are
acceptable to Quadrant. In addition, Owner shall cooperate with Quadrant
as reasonably required to establish such water, sanitary sewer, storm
drainage, electrical, telephone, CATV and any and all other utility
easements to serve the Buildings with such utilities. Such cooperation
shall include without limitation execution of any and all such easement
documentation.
8.2.2 Bonds. Quadrant shall have posted such bonds as may
be required by the City of Snoqualmie in order to obtain issuance of the
final certificate of occupancy and any other matters related to the
Business Park. Quadrant shall maintain such bonds in full force and
effect during the term such bonds are required to be maintained;
provided, however, that Owner shall take no action to invalidate such
bonds and, except to the extent covered by Quadrant's warranty under
Section 13, shall assume and comply with the requirements of all such
bonds, such that the bonds can remain in full force and effect.
9. Building Changes. Changes made after the date of this Agreement to
the Building Plans shall be governed by Sections 5 and 6 of the Construction
Agreement. The cost of Mandatory Changes and changes initiated by Owner (or
Optiva) to the Building Shell and Tenant Improvements shall be Project Costs.
The cost of Mandatory Changes to the Building Shell shall not increase the Base
Building Shell Price, except to the extent resulting from Optiva-initiated
changes to the Building Shell or Tenant Improvements or to the extent such costs
are Excess Link Structure Costs, Excess Mezzanine Structure Costs, or Excess
Shell Improvements Allowance Costs. The cost of Mandatory Changes to the Tenant
Improvements shall increase the Building Value to the extent such costs are
Excess Tenant Improvement Costs.
10. Insurance.
10.1 Prior To Substantial Completion. Prior to the Substantial
Completion Date, Quadrant shall obtain and maintain the following insurance in
full force and effect, at Quadrant's initial expense and as a Project Cost,
which insurance shall be evidenced by the submittal of evidence of insurance:
Page 11 of Exhibit D
39
10.1.1 All-Risk Builder's Risk insurance (with standard
exclusions including earthquake and flood exclusions) in an amount
sufficient to cover the completed value of the Buildings, on which Owner
shall be an additional insured.
10.1.2 Commercial General Liability insurance in the
amount of $5,000,000 combined single limit and $5,000,000 general
aggregate, upon which Owner and General Contractor shall be additional
insureds.
10.2 After the Date of Substantial Completion. After the date of
Substantial Completion and before Final Completion, the following insurance
shall be provided and maintained in full force and effect by the party
indicated. No portion of the premium for such insurance attributable to such
period shall be included in Project Costs or paid by Quadrant. Such insurance
shall be evidenced by the submittal of evidence of insurance:
10.2.1 All-Risk Builder's Risk insurance (with standard
exclusions including earthquake and flood exclusions except to the
extent Owner desires such coverage and pays the cost therefor) in amount
of the completed value of the Buildings, to be provided by Owner or
continued by Quadrant, and upon which Quadrant and Owner shall be
insureds, as their interests may appear.
10.2.2 Commercial General Liability Insurance in the
amount reasonably deemed appropriate by Owner, and on which Quadrant
shall be an additional insured.
11. Damage and Destruction. Quadrant shall give Owner prompt written
notice of any casualty to the Buildings during construction.
11.1 Prior to Substantial Completion. If, prior to Substantial
Completion, damage or destruction occurs to the Buildings, Quadrant shall
proceed diligently to reconstruct and restore the Buildings in accordance with
the Building Plans and this Agreement. Insurance proceeds available for such
reconstruction and restoration shall be fully available to Quadrant for payment
of the costs of such restoration of the Buildings. Unless such damage or
destruction to the Buildings occurred as a result of the breach, default, or
negligence of Owner under this Agreement, the Building Value After Closing shall
not be affected by such damage or destruction or delays occasioned thereby, and
all costs of such restoration of the Buildings exceeding the amount of the
insurance proceeds shall be paid by Quadrant, regardless of whether adequate
insurance proceeds exist to pay the same, provided, however, that all such costs
shall constitute a Project Cost and up to $25,000 of the deductible under such
insurance shall be added to the Building Value.
11.2 After Substantial Completion. If, after Substantial
Completion, damage or destruction occurs to the Buildings, Owner elects in its
discretion to repair such damage or destruction, Quadrant shall proceed
diligently to reconstruct and restore
Page 12 of Exhibit D
40
the Buildings in accordance with the Building Plans; provided, however, that all
insurance proceeds shall be available to Owner with respect to such
reconstruction and restoration, and the provisions of this Construction
Management Agreement with respect to the Building Value, Project Costs or
maximum payment under Section 7.6 shall not be applicable; and Owner shall pay
all costs arising with respect to the reconstruction and restoration of the
Buildings, including without limitation any and all costs of such restoration of
the Buildings exceeding the amount of the insurance proceeds Quadrant shall have
the right and obligation to carry out such reconstruction and restoration for
Owner, and Owner shall elect to repair such damage or destruction, unless and
until Owner has paid Quadrant in full the entire amount that would have been
paid to Quadrant under this Agreement through Final Completion as though
Quadrant had achieved Final Completion without such damage or destruction having
occurred.
12. Completion Guaranty. The obligations of Quadrant to achieve
Substantial Completion under this Agreement are guaranteed by Weyerhaeuser Real
Estate Company ("WRECO") in accordance with the Completion Guaranty attached
hereto as Exhibit 5 ("Completion Guaranty"), which Completion Guaranty is to be
executed by WRECO and delivered to Owner as of the Effective Date.
13. Quadrant Warranty. Effective upon Substantial Completion, Quadrant
makes the representations and warranties set forth in Section 10 of the
Construction Agreement
14. Default.
14.1 Quadrant Default. If Quadrant materially fails to perform
any of its obligations under this Agreement such failure shall constitute an
"Event of Default" by Quadrant.
14.2 Owner Remedies upon Quadrant Event of Default. Upon any
Event of Default by Quadrant, Owner may give Quadrant written notice of the
same. Quadrant shall have ten days following receipt of such written notice
within which to commence all necessary action to cure any such Event of Default
(and if such cure is commenced, proceed to diligently complete such cure within
a reasonable period of time thereafter and not later than 90 days thereafter).
In the event Quadrant fails to commence or proceed to diligently complete a cure
of such Event of Default within the time period set forth above, and such Event
of Default relates to an obligation covered by the Completion Guaranty, Owner
shall first demand performance by WRECO under the Completion Guaranty. If (i)
Owner has given written notice of a failure by Quadrant to perform its
obligations under this Agreement (ii) Quadrant has failed to commence and
diligently proceed to cure such Event of Default within the required time
periods, and (iii) if the Event of Default relates to an obligation covered by
the Completion Guaranty, Owner has demanded performance by WRECO and WRECO fails
to perform in accordance with the
Page 13 of Exhibit D
41
Completion Guaranty, then Owner shall have the right to pursue its rights and
remedies at law and in equity under this Agreement.
14.3 Owner Default. The following shall constitute an "Event
of Default" by Owner:
14.3.1 Owner fails to pay timely to Quadrant any amount of
money owed to Quadrant under this Agreement within five days after
Owner's receipt from Quadrant of notice of such non-payment, including
without limitation, all moneys due and owing in connection with the
Building Value After Closing , including the Holdback Amount.
14.3.2 Owner materially fails to perform any other
obligation under this Agreement.
14.4 Quadrant Remedies Upon Owner Event of Default. Upon any
Event of Default by Owner, Quadrant may give Owner written notice of the same,
whereupon receipt of such written notice Owner shall have five additional days,
if the Event of Default arises under to Section 14.3.1 and, 30 days, if the
Event of Default arises under Section 14.3.2, to cure such Event of Default. In
the event Owner fails to cure such Event of Default within the applicable
period, Quadrant shall have the right but shall not be required to (i) stop all
work relating to the construction of the Buildings, (ii) fund all or any portion
of the costs of the Buildings which Owner's Progress Payment should have covered
and which Owner has failed to make hereunder, and/or (iii) pursue its rights and
remedies at law and in equity under this Agreement, including without limitation
specific performance of Owner's obligations hereunder, recovery of Default
Interest and other late changes and assessments under Section 14.5, and all
other damages.
14.5 Default Interest. In the event of any Event of Default by
Owner under Section 14.3.1, Owner shall pay Quadrant a late charge in the amount
of $3,500 per occurrence to cover Quadrant's administrative and accounting
expenses in connection with each such funding, and the amount that Owner has
failed to pay shall bear interest at the prime rate in effect at Seafirst Bank,
Main Office on the date such payment is made, and as it may thereafter may
change, plus five percent per annum ("Default Interest") from the date such
payment was due until paid in full.
15. Remedies Not Exclusive. No remedy conferred upon either party in
this Agreement is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity.
16. Notices. Wherever in this Agreement a notice is required to be
given, such notice shall be in writing, addressed to the person entitled to such
notice, and shall be sent by either (i) personal service (ii) recognized
overnight express service which
Page 14 of Exhibit D
42
customarily maintains a contemporaneous permanent delivery record, or (iii) fax,
to the address of such person as set forth in this Agreement, or such other
address or addresses designated in writing from time to time. The notice shall
be deemed delivered on the earlier of (i) the date of actual delivery by
personal service, (ii) the delivery date as shown in the regular business
records of the overnight courier service, or (iii) the date of actual receipt by
the recipient, as the case may be. A copy of each notice sent by shall be sent
to:
To Owner at: Optiva Corporation
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Corporate Counsel
Telephone: 0-000-000-0000
Fax: 000-000-0000
with a copy to Xxxxxx X. Xxxxxx
Stoel Rives LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000
To Quadrant at: The Quadrant Corporation
11100 X.X. 0xx, Xxxxx 000
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Commercial Division
Telephone: 000 000-0000
Fax: 000-000-0000
Either party may change its address for the purposes of this section by giving
written notice of such change to the other party in the manner provided in this
Section.
17. Entire Agreement. This Agreement, including its exhibits,
constitutes the entire agreement among the parties with respect to the subject
matter hereof and may be amended only in writing signed by both parties. This
Agreement may be signed in counterpart or duplicate copies, and any signed
counterpart, duplicate or telephonic facsimile copy shall be equivalent to a
signed original for all purposes.
18. Further Encumbrances of the Land or Buildings Prohibited. Owner
shall not encumber, mortgage, or grant any security interest in the Land or
Buildings during the term of this Agreement, except upon terms which are
mutually acceptable to Quadrant and Owner.
Page 15 of Exhibit D
43
EXECUTED as of the date first above written.
OWNER:
OPTIVA CORPORATION
By______________________________________
____________, its_____________________
CONSTRUCTION MANAGER:
THE QUADRANT CORPORATION
By______________________________________
____________, its_____________________
Page 16 of Exhibit D
44
EXHIBIT 1
TO CONSTRUCTION MANAGEMENT AGREEMENT
CONSTRUCTION AGREEMENT FOR LEASE
[ATTACH WHEN EXECUTED]
45
CONSTRUCTION AGREEMENT FOR LEASE
This Agreement is dated November 26, 1997, and supplements and
constitutes a part of that certain Lease by and between THE QUADRANT
CORPORATION, a Washington corporation ("Quadrant"), as Landlord, and OPTIVA
CORPORATION, a Washington corporation ("Optiva"), as Tenant (the "Lease"). With
respect to the construction of the Premises to be leased by Quadrant to Optiva
pursuant to the Lease, Quadrant and Optiva hereby agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
terms shall have the following meanings. All other capitalized terms shall have
the meanings ascribed to them in the Lease:
"Architect" means Xxxxx Xxxxxxx & Associates, Seattle,
Washington.
"Building(s)" means Buildings 1 and 2, comprising the Premises,
all as defined in the Lease.
"Building Plans" means the Building Shell Construction Documents
and the Tenant Improvements Construction Documents, as created and modified from
time to time in accordance with this Agreement.
"Building Shell" means that certain scope of work to be
undertaken and completed by Quadrant as more particularly set forth in the
Building Shell Construction Documents, which shall include the Mezzanine
Structure and the Link Structure, all as more particularly described in the
Building Shell Schematic Plans.
"Building Shell Construction Contract" means that certain
Construction Agreement by and between General Contractor and Quadrant for actual
construction of the Building Shell.
"Building Shell Construction Documents" means those certain
detailed drawings, and final plans and specifications determined by Landlord
which provide for the construction of the Building Shell, consistent with the
Building Shell Schematic Plans prepared by Architect and upon which Optiva shall
have an adequate opportunity to review and comment and which Optiva shall
initial to indicate that it has had such opportunity.
"Building Shell Schematic Plans" means those certain schematic
plans and outline specifications for the Building Shell that have been approved
by Tenant and are referenced in Exhibit 2.
"Consultant" means the consultant engaged by Optiva to monitor
construction progress.
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"Excess Link Structure Costs" means Link Structure Costs in
excess of the Link Structure Allowance.
"Excess Mezzanine Structure Costs" means Mezzanine Structure
Costs in excess of the Mezzanine Structure Allowance.
"Excess Shell Improvements Allowance Costs" means Shell
Improvements Allowance Costs in excess of the Shell Improvements Allowance.
"Excess Tenant Improvements Costs" means Tenant Improvements
Costs in excess of the Tenant Improvements Allowance.
"Final Completion" means the Building Shell and Tenant
Improvements are Substantially Complete, all Punch List Items have been
completed, and a final certificate of occupancy for the Building Shell and
Tenant Improvements has been issued.
"GBA" means gross building area (in square feet) as defined for
single-tenant buildings in the Standard Method for Measuring Floor Area in
Office Buildings (An American National Standard ANSI/BOMA Z65.1-1996 (Revised
and readopted June 7, 1996) published by Building Owners and Managers
Association International ("BOMA Standard").
"General Contractor" means Gall, Landau Young Construction Co.,
Inc.
"Link" means the structural link between Building 1 and Building
2, consisting of 5,338 GBA.
"Link Structure" means the portion of the Link to be constructed
as part of the construction of the Building Shell, as distinguished from the
Tenant Improvements in the Link.
"Link Structure Allowance" means the amount of Link Structure
Costs to be paid by Quadrant as part of its payment of the costs of Building
Shell Construction, without reimbursement by Optiva, as described in Section 3B.
"Link Structure Costs" means costs of construction of the Link
Structure, which shall consist of all line items in the Building Shell
Construction Contract specifically allocable to the Link, as disclosed to
Optiva, and an additional portion of the guaranteed maximum price set forth in
the Building Shell Construction Contract that is reasonably allocable to the
Link, as the same may be adjusted by changes in accordance with the terms of the
Building Shell Construction Contract and this Agreement. Link Structure Costs
shall also include certain other charges not covered as a part of the guaranteed
maximum price, consisting of (i) any and all applicable municipal fees and
charges relating or allocable to the Link Structure, including without
limitation, building
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permit application and issuance fees, and necessary third-party inspection fees,
(ii) all applicable taxes, including without limitation retail sales taxes and
business and occupation taxes allocable to the Link Structure; (iii) all
third-party design and engineering costs attributable to the Link Structure; and
(iv) all third-party costs (not otherwise covered by the Building Shell
Construction Contract) relating to or allocable to the Link Structure of
compliance during construction with all requirement of the Americans With
Disabilities Act and the Occupational Safety and Health Act and similar state or
local laws. Quadrant and Optiva shall mutually determine and agree on the amount
of Link Structure Costs in accordance with the foregoing as part of the process
of developing Building Shell Construction Documents. Link Structure Costs shall
be subject to final determination following construction in the manner provided
in Section 3.3.6.
"Mezzanine" means the mezzanine office space in Building 2 to be
constructed as part of the Building Shell and Tenant Improvements under this
Agreement.
"Mezzanine Structure" means the portion of the Mezzanine to be
constructed as part of the construction of the Building Shell, as distinguished
from the Tenant Improvements in the Mezzanine.
"Mezzanine Structure Allowance" means the amount of Mezzanine
Structure Costs to be paid by Quadrant as part of its payment of the costs of
Building Shell Construction, without reimbursement by Optiva, as described in
Section 3A.
"Mezzanine Structure Costs" means costs of construction of the
Mezzanine Structure, which shall consist of all line items in the Building Shell
Construction Contract specifically allocable to the Mezzanine, as disclosed to
Optiva, and an additional portion of the Guaranteed Maximum Price set forth in
the Building Shell Construction Contract that is reasonably allocable to the
Mezzanine, as the same may be adjusted by changes in accordance with the terms
of the Building Shell Construction Contract and this Agreement. Mezzanine
Structure Costs shall also include certain other charges not covered as a part
of the Guaranteed Maximum Price, consisting of (i) any and all applicable
municipal fees and charges relating or allocable to the Mezzanine Structure,
including without limitation, building permit application and issuance fees, and
necessary third-party inspection fees, (ii) all applicable taxes, including
without limitation retail sales taxes and business and occupation taxes
allocable to the Mezzanine Structure; (iii) all third-party design and
engineering costs attributable to the Mezzanine Structure; and (iv) all
third-party costs (not otherwise covered by the Building Shell Construction
Contract) relating to or allocable to the Mezzanine Structure of compliance
during construction with all requirement of the Americans With Disabilities Act
and the Occupational Safety and Health Act and similar state or local laws.
Quadrant and Optiva shall mutually determine and agree on the amount of
Mezzanine Structure Costs in accordance with the foregoing as part of the
process of developing Building Shell
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Construction Documents. Mezzanine Structure Costs shall be subject to final
determination following construction in the manner provided in Section 3.3.6.
"Optiva Inspection" means the inspection(s) undertaken by Optiva
from time to time during the course of construction of the Premises, provided
that inspections shall occur only following reasonable prior notice to Quadrant
(which notice may be delivered telephonically or otherwise without being in
writing), and upon which inspections Optiva and its Consultant and other
representatives shall be accompanied by a representative of Quadrant. Quadrant
and Optiva will each provide to the other in writing the name of their
respective authorized representative(s) at the time construction of the Building
Shell commences. Optiva Inspections shall include the Preliminary Punch List
Inspection and the Punch List Inspection.
"Optiva's Personal Property" means Optiva's office furniture,
telephone lines, computer cabling and movable property placed in the Premises by
Optiva, including any trade fixtures and any property installed in or on the
Premises by Optiva for the purposes of conducting Optiva's business, ornament,
decoration or similar related use in the Premises.
"Pre-Construction Schedule" means that schedule set forth in
Exhibit 1 hereto, which shall serve as the schedule for taking the actions set
forth herein in order to achieve Substantial Completion on or before Scheduled
Substantial Completion Date.
"Preliminary Punch List Inspection" means the inspection
occurring approximately 30 days before the estimated Substantial Completion
Date, but in any event before Optiva enters the Premises under Section 3.3.2. At
the Preliminary Punch List Inspection, which may occur in one meeting or a
series of separate meetings, Quadrant, Optiva, General Contractor, Architect, TI
Architect, Consultant and the designated representatives of Quadrant and Optiva
shall conduct a preliminary on-site tour and inspection of the Buildings. Such
parties shall, acting reasonably and in good faith, prepare and submit to
Quadrant an itemized list ("Preliminary Punch List") of certain "punch list"
matters required to be installed or completed for Substantial Completion of the
Building Shell and Tenant Improvements to occur ("Preliminary Punch List
Items"); provided, however, that no matter on the Preliminary Punch List shall
exceed the scope, quality or quantity of the Building Shell or Tenant
Improvements as set forth in the Building Shell Construction Documents or the
Tenant Improvements Construction Documents.
"Punch List Inspection" means the inspection occurring no later
than 30 days after the Substantial Completion Date. At the Punch List
Inspection, which may occur in one meeting or a series of separate meetings,
Quadrant, Optiva, General Contractor, Architect, TI Architect, Consultant and
other the designated representatives of Quadrant and Optiva shall again conduct
an on-site tour and inspection of the Buildings.
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Such parties shall, acting reasonably and in good faith, prepare and submit to
Quadrant an itemized list ("Punch List") of certain "punch list" matters
required to be installed or completed for Final Completion of the Building Shell
and Tenant Improvements to occur ("Punch List Items"); provided, however, that
no matter on the Punch List shall exceed the scope, quality or quantity of the
Building Shell or Tenant Improvements as set forth in the Building Shell
Construction Documents or the Tenant Improvements Construction Documents.
"Representative" means any of the representatives appointed to
act for Optiva or Quadrant under Section 9.2.
"Scheduled Substantial Completion Date" means April 1, 1999,
subject to adjustment under Section 7 or by agreement of the parties.
"Shell Improvements Allowance" means the amount of Shell
Improvements Allowance Costs to be paid by Quadrant as part of its payment of
the costs of Building Shell construction, without reimbursement by Optiva, as
described in Section 3C.
"Shell Improvements Allowance Costs" means costs of construction
of the mechanical, electrical and other Building Shell improvements covered by
the Shell Improvements Allowance, as identified in the Building Shell Schematic
Plans. Shell Improvements Allowance Costs shall consist of all line items in the
Building Shell Construction Contract specifically allocable to such
improvements, and an additional portion of the guaranteed maximum price set
forth in the Building Shell Construction Contract that is reasonably allocable
to such improvements, as the same may be adjusted by changes in accordance with
the terms of the Building Shell Construction Contract and this Agreement. Shell
Improvements Allowance Costs shall also include certain other charges not
covered as a part of the guaranteed maximum price, consisting of (i) any and all
applicable municipal fees and charges relating or allocable to such
improvements, including without limitation, building permit application and
issuance fees, and necessary third-party inspection fees, (ii) all applicable
taxes, including without limitation retail sales taxes and business and
occupation taxes allocable to such improvements; (iii) all third-party design
and engineering costs attributable to such improvements; and (iv) all
third-party costs (not otherwise covered by the Building Shell Construction
Contract) relating to or allocable to such improvements of compliance during
construction with all requirement of the Americans With Disabilities Act and the
Occupational Safety and Health Act and similar state or local laws. Quadrant and
Optiva shall mutually determine and agree on the amount of Shell Improvements
Allowance Costs in accordance with the foregoing as part of the process of
developing Building Shell Construction Documents. Shell Improvements Allowance
Costs shall be subject to final determination following construction in the
manner provided in Section, 3.3.6.
"Substantial Completion" means that the following shall have
occurred:
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Tenant Improvements. The Tenant Improvements shall have
been completed in accordance with the Tenant Improvement Construction Documents,
which Substantial Completion shall be conclusively deemed to have occurred upon
(i) issuance by the City of Snoqualmie of a temporary certificate of occupancy
for the Premises (such temporary certificate of occupancy to be obtained by
Quadrant) and (ii) issuance by TI Architect of a Certificate of Substantial
Completion for the Tenant Improvements, which Certificate of Substantial
Completion shall be in the form of AIA Document G704. The existence of Punch
List Items or additional work required for issuance of a final certificate of
occupancy by the City of Snoqualmie shall not be matters which will delay
Substantial Completion from having occurred; but Quadrant shall correct and/or
complete such Punch List Items, complete the work necessary to obtain issuance
of a final certificate of occupancy and obtain issuance of such final
certificate of occupancy within 90 days thereafter or as soon as reasonably
practical if any such Punch List Item or work required for issuance of a final
certificate of occupancy cannot be completed within such 90-day period. That
there are outstanding Punch List Items and/or work required for City of
Snoqualmie issuance of a final certificate of occupancy shall not delay the
Commencement Date or corresponding Rent Commencement Date of the Lease under any
circumstances provided that Substantial Completion has occurred; and
Building Shell. The Building Shell shall have been
completed in accordance with the Building Shell Construction Documents, which
Substantial Completion shall be conclusively deemed to have occurred upon (i)
issuance by the City of Snoqualmie of a temporary certificate of occupancy for
the Buildings (such temporary certificate of occupancy to be obtained by
Quadrant) and (ii) issuance by Architect of a Certificate of Substantial
Completion for the Building Shell, which Certificate of Substantial Completion
shall be in the form of AIA Document G704. The existence of Punch List Items or
additional work required for issuance of a final certificate of occupancy by the
City of Snoqualmie shall not be matters which will delay Substantial Completion
from having occurred; but Quadrant shall correct and/or complete such punch list
Items, complete the work necessary to obtain issuance of a final certificate of
occupancy and obtain issuance of such final certificate of occupancy within 90
days thereafter or as soon as reasonably practical if any such punch list Item
or work required for issuance of a final certificate of occupancy cannot be
completed within such 90-day period. That there are outstanding Punch List Items
and/or work required for City of Snoqualmie issuance of a final certificate of
occupancy shall not delay the Commencement Date or corresponding Rent
Commencement Date of the Lease under any circumstances, provided that
Substantial Completion has occurred.
"Substantial Completion Date" means the actual date of
Substantial Completion.
"TI Architect" means NBBJ.
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"Tenant Improvements" means those certain interior improvements
to the Premises, to be constructed by Quadrant, all of which are more
specifically defined in the Tenant Improvements Schematic Plans and, ultimately,
the Tenant Improvements Construction Documents.
"Tenant Improvements Allowance" means the amount of Tenant
Improvements Costs to be paid by Quadrant, without reimbursement by Optiva, as
described in Section 3.3.3.
"Tenant Improvements Construction Contract" means the
Construction Agreement entered into by Quadrant and General Contractor for
construction of the Tenant Improvements, which Construction Agreement shall be
in the form of the Cost of the Work Plus a Fee with a Guaranteed Maximum Price
(AIA Document A111) and shall reflect a General Contractor fee of 4.3% of the
Cost of the Work (exclusive of applicable taxes).
"Tenant Improvements Construction Documents" means detailed
drawings, and final plans and specifications determined to be mutually
acceptable to Quadrant and Optiva providing for the construction of the Tenant
Improvements which shall supersede the Tenant Improvements Schematic Plans.
Quadrant and Optiva shall sign the Tenant Improvement Construction Documents
indicating their approval thereof.
"Tenant Improvements Costs" means costs of construction of the
Tenant Improvements which shall consist of (i) the Guaranteed Maximum Price set
forth in the Tenant Improvements Construction Contract as the same may be
adjusted by changes in accordance with the terms of that Contract and this
Agreement plus certain other charges not covered as a part of the Guaranteed
Maximum Price, consisting of (ii) any and all applicable municipal fees, and
charges relating to such Tenant Improvements, including without limitation,
building permit application and issuance fees, and necessary third-party
inspection fees, (iii) all applicable taxes, including without limitation retail
sales taxes and business and occupation taxes; and (iv) all third-party costs
(not otherwise covered by the Tenant Improvements Construction Contract)
allocable to the Tenant Improvements of compliance during construction with all
requirements of the Americans With Disabilities Act and the Occupational Safety
and Health Act and similar state or local laws. Tenant Improvements Costs shall
be subject to final determination following construction in the manner provided
in Section 3.3.6.
"Tenant Improvements Schematic Plans" means the preliminary floor
plans and outline specifications that have been prepared by TI Architect and
approved by Landlord and Tenant, as referenced in Exhibit 3.
2. Building Shell.
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2.1 Contracts. Quadrant shall contract with Architect for design
services and preparation of the Building Shell Construction Documents; and with
General Contractor for the construction of the Building Shell pursuant to the
Building Shell Construction Contract. The forms of the Quadrant/Architect
Contract for the Building Shell and Building Shell Construction Contract have
been approved by Optiva. The final Building Shell Construction Contract (without
dollar amounts) shall be provided to Optiva for review and comment.
2.2 Construction; Payment.
2.2.1 Construction. The Building Shell shall be
constructed in accordance with the Building Shell Construction Documents as set
forth in the Building Shell Construction Contract. Quadrant shall commence
construction of the Building Shell as soon as reasonably possible after issuance
of all necessary governmental permits and approvals; and shall diligently and
continuously pursue Substantial Completion of the Building Shell. Quadrant shall
use diligent efforts to achieve Substantial Completion of the Building Shell by
the Scheduled Substantial Completion Date and Final Completion no later than 90
days thereafter. In the event Substantial Completion of the Building Shell does
not occur on or before the Scheduled Substantial Completion Date, Quadrant shall
make the applicable payments set forth in Section 7.4 of this Agreement.
2.2.2 Payment. The entire cost of construction, design,
development and installation of the Building Shell (other than Excess Link
Structure Costs, Excess Mezzanine Structure Costs, and Excess Shell Improvements
Costs, and except as otherwise provided in Section 5), including all applicable
taxes and all costs of compliance of the Building Shell with the Americans With
Disabilities Act and, during construction, with the Occupational Safety and
Health Act, shall be paid by Quadrant.
2.3 Footings Inspection. When the footings for the foundation of
the Building Shell are framed, Quadrant shall notify Optiva, and Architect shall
inspect the footing locations for compliance with the Building Shell
Construction Documents, shall re-calculate the projected actual GBA of the
Premises based on the actual footing locations (together with construction plans
for the Mezzanine), and shall report Architect's conclusions in writing to
Quadrant and Optiva. If Architect determines that, based on the actual locations
of the footings the GBA of the Premises will be less than the GBA of the
Premises stated in Section 1 of the Lease by a difference of 000 XXX or more,
Quadrant shall at Quadrant's option either (i) cause the footings to be
re-located to reduce such discrepancy to within 000 XXX of the GBA of the
Premises stated in Section 1 of the Lease (which re-location shall be inspected
and reported on by Architect), or (ii) agree to reduce the GBA of the Premises
stated in Section 1 of the Lease to the Architect's projected actual GBA of the
Premises based on such inspection, with corresponding reductions in the Base
Monthly Rent, the Security Deposit, the Prepaid Rent, the Tenant Improvements
Allowance and the Space Planning Allowance. Such
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reduction in the GBA of the Premises and corresponding reductions in other terms
shall be reflected in an amendment of this Lease to be executed by the parties.
If Architect determines that the projected actual GBA of the Premises will be
greater than the GBA of the Premises stated in Section 1 of the Lease, Landlord
shall have the right but not the obligation to cause the footings to be
re-located to reduce the discrepancy to within 000 XXX of the GBA of the
Premises stated in Section 1 of the Lease (which relocation shall be inspected
and reported on by Architect). In no event shall the GBA of the Premises, or
such other Lease terms, be increased in such event, however. Following the
inspection, whether or not the footings are re-located, the Building Shell
Construction Documents shall be amended by Quadrant and initialed by Quadrant
and Optiva to reflect the actual locations of the footings. Except to the extent
the Lease and the Building Shell Construction Documents are so amended, the
Lease (including the GBA of the Premises stated therein) shall not be affected
for any purpose by any re-measurement of the Premises unless Landlord and Tenant
agree otherwise.
3. Tenant Improvements.
3.1 Determination of Tenant Improvements Subcontractors.
Quadrant, and Optiva have agreed that General Contractor shall serve as
contractor for the Tenant Improvements pursuant to the Tenant Improvements
Construction Contract and have further agreed that the mechanical subcontractor
shall be XxXxxxxxx Company and the electrical subcontractor shall be Prime
Electric. Quadrant shall furnish Optiva with the names of subcontractors who
bid. For every other subcontractor for the Tenant Improvements, General
Contractor shall obtain a minimum of three competitive bids, which bids shall be
available for Optiva's review and comment. After receipt of such bids, Quadrant
and Optiva shall each review and consult each other regarding the bids whereupon
the other subcontractors shall be selected by Quadrant and General Contractor.
Bid packages will clearly identify and distinguish the Building Shell and Tenant
Improvement work. Optiva shall also be entitled to receive copies of
subcontractor bids for Building Shell work, without amounts. Selection shall not
be based solely upon the lowest bid, but shall also evaluate such factors as
financial creditworthiness, expertise, reputation, work history and experience.
3.2 Contracts. Optiva shall contract with TI Architect for design
services, including Tenant Improvements Schematic Plans and Tenant Improvements
Construction Documents. Quadrant shall contract with General Contractor for
construction of the Tenant Improvements pursuant to the Tenant Improvements
Construction Contract. Quadrant's contract with General Contractor is subject to
Optiva's review and approval prior to such contracts being effective.
3.3 Construction of Tenant Improvements; Payment.
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3.3.1 Construction. The Tenant Improvements shall be
constructed in accordance with the Tenant Improvements Construction Documents as
set forth in the Tenant Improvements Construction Contract. To the extent not
determined on the date of execution of this Agreement, Quadrant and Optiva shall
mutually determine the Tenant Improvements Construction Documents in accordance
with the Pre-Construction Schedule and in a manner consistent with the Tenant
Improvements Schematic Plans ; and upon completion of such Tenant Improvements
Construction Documents, Quadrant and Optiva shall each initial and/or sign the
same. Quadrant shall commence construction of the Tenant Improvements at such
time as has been determined in the construction schedule developed by Quadrant
and General Contractor; and shall diligently pursue Substantial Completion of
the Tenant Improvements. A copy of such determined construction schedule shall
be provided to Optiva for its information and as a guide for progress of
construction of the Tenant Improvements. Quadrant agrees to use diligent and
continuous efforts to achieve Substantial Completion of Tenant Improvements by
the Scheduled Substantial Completion Date. In the event Substantial Completion
of the Tenant Improvements does not occur on or before the Scheduled Substantial
Completion Date, Quadrant shall make the applicable payments set forth in
Section 7.4 of this Agreement.
3.3.2 Optiva Access. Quadrant and Optiva shall arrange
for Optiva to have access to the Premises a minimum of 30 days prior to the
estimated date of Substantial Completion of Tenant Improvements, or at such
earlier times as may be possible, in order to allow Optiva to install telephone
lines and telephone systems, fiber optics, computer cabling, and related similar
matters, and, on a "space ready" basis only, to commence installation of
Optiva's Personal Property. Quadrant shall use diligent efforts to provide
Optiva with a minimum of 90 days prior written notice of such estimated date of
Substantial Completion of Tenant Improvements. Optiva shall schedule
installation of such items with Quadrant and General Contractor so as not to
unreasonably impede, interfere with or delay the progress of construction of the
Building Shell and Tenant Improvements; and Optiva shall perform such
installation in accordance with reasonable guidelines promulgated by General
Contractor Any and all costs of installation of such items shall be at Optiva's
sole cost and expense. Delay of Substantial Completion caused by installation of
such items other than in accordance with such guidelines shall constitute an
Optiva Delay under Section 7.2.
3.3.3 Payment of Tenant Improvements Costs. The Tenant
Improvements Costs shall be paid by Quadrant or Optiva as follows:
3.3.3.1 $4,945,052 ("Tenant Improvements
Allowance") of the Tenant Improvements Costs shall be paid by Quadrant.
3.3.3.2 Any and all remaining Tenant Improvements
Costs shall be Excess Tenant Improvements Costs and shall be paid by
Optiva.
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3.3.4 Manner of Payment. During the construction of the
Tenant Improvements, Quadrant shall pay directly the Tenant Improvements Costs
to General Contractor or other applicable payee until Quadrant's payments equal
the Tenant Improvement Allowance. Optiva shall pay any and all Tenant
Improvements Costs exceeding the Tenant Improvements Allowance. Optiva shall pay
Tenant Improvements Costs not later than ten business days after Quadrant's
submittal of request for payment on the form of payment request agreed to by the
parties, together with applicable statements, invoices, bills and similar
requests by subcontractors, suppliers and materialmen relating thereto. Payments
by Optiva shall be paid to Quadrant, whereupon Quadrant shall pay General
Contractor, as and when due under the Tenant Improvements Construction Contract,
or other applicable payee, as and when due. Any of the foregoing approvals and
delivery of information may occur by fax transmission, followed as soon as
reasonably possible thereafter with a "hard" copy.
3.3.5 Quadrant's Right To Advance Funds. Notwithstanding
the foregoing, if Quadrant, as a result of Optiva's failure to timely pay Excess
Tenant Improvements Costs, if any, (or any request for payment of a part
thereof), elects to advance any Excess Tenant Improvements Costs in order to
expedite Substantial Completion, any such advance shall accrue interest thereon
at the three percent above prime rate of interest in effect at Seafirst Bank,
Main Office (i.e., "prime plus three") from the date of Quadrant's advance until
paid by Optiva. Quadrant shall not, however, have any obligation to advance its
own funds. Any such advance, together with interest accrued thereon shall be
repaid by Optiva to Quadrant upon demand. Optiva acknowledges and agrees that
Optiva's failure to timely pay Excess Tenant Improvements Costs may result in
Optiva Delays under Section 7.2.
3.3.6 Determination of Final, Actual Tenant Improvements
Costs. Not later than 90 days after the date of Quadrant's completion of Punch
List Items and issuance of a final certificate of occupancy by the City of
Snoqualmie for the Building Shell and Tenant Improvements, Quadrant shall submit
to Optiva an itemized, detailed statement of actually incurred Tenant
Improvements Costs. If requested by Optiva, documentation shall include the
General Contractor's actual job cost report, including individual entries,
payroll reports, timecards and copies of invoices.
3A. Payment of Mezzanine Structure Costs. Mezzanine Structure Costs shall be
paid by Quadrant or Optiva as follows:
3A.1 $389,000 of the Mezzanine Structure Costs shall be paid by
Quadrant, as the Mezzanine Structure Allowance.
3A.2 Any and all remaining Mezzanine Structure Costs shall be
Excess Mezzanine Structure Costs and shall be paid by Optiva.
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Mezzanine Structure Costs shall be paid during construction in the same manner
as Tenant Improvements Costs are paid under Section 3.3.4. Quadrant shall have
the right to advance funds in payment of Excess Mezzanine Structure Costs in the
manner provided for Excess Tenant Improvements Costs in Section 3.3.5. Mezzanine
Structure Costs shall be finally determined and submitted to Optiva in the same
manner as Tenant Improvements Costs are finally determined and submitted under
Section 3.3.6.
3B. Payment of Link Structure Costs. Link Structure Costs shall be paid by
Quadrant or Optiva as follows:
3B.1 $400,000 of the Link Structure Costs shall be paid by
Quadrant, as the Link Structure Allowance.
3B.2 Any and all remaining Link Structure Costs shall be Excess
Link Structure Costs and shall be paid by Optiva.
Link Structure Costs shall be paid during construction in the same manner as
Tenant Improvements Costs are paid under Section 3.3.4. Quadrant shall have the
right to advance funds in payment of Excess Link Structure Costs in the manner
provided for Excess Tenant Improvements Costs in Section 3.3.5. Link Structure
Costs shall be finally determined and submitted to Optiva in the same manner as
Tenant Improvements Costs are finally determined and submitted under Section
3.3.6.
3C. Payment of Shell Improvements Allowance Costs. Shell Improvements Allowance
Costs shall be paid by Quadrant or Optiva as follows:
3C.1 $932,534 of the Shell Improvements Allowance Costs shall be
paid by Quadrant, as the Shell Improvements Allowance.
3C.2 Any and all remaining Shell Improvements Allowance Costs
shall be Excess Shell Improvements Allowance Costs and shall be paid by
Optiva.
Shell Improvements Allowance Costs shall be paid during construction in the same
manner as Tenant Improvements Costs are paid under Section 3.3.4. Quadrant shall
have the right to advance funds in payment of Excess Shell Improvements
Allowance Costs in the manner provided for Excess Tenant Improvements Costs in
Section 3.3.5. Shell Improvements Allowance Costs shall be finally determined
and submitted to Optiva in the same manner as Tenant Improvements Costs are
finally determined and submitted under Section 3.3.6.
3D. Space Planning Allowance. As part of the Building Shell costs, Quadrant
shall pay for up to $212,609 for interior architecture and space planning costs
incurred with TI Architect ("Space Planning Allowance"). Quadrant has paid a
portion of such Space Planning Allowance directly to the TI Architect prior to
the date hereof. Quadrant shall
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pay the remainder such allowance to Optiva from time to time not later than ten
business days after Optiva's submittal of request for payment on the form of
payment request agreed to by the parties, together with a copy of TI Architect's
invoice relating thereto. Once Quadrant has paid the Space Planning Allowance,
all such costs in excess of the Space Planning Allowance shall be paid by
Optiva. If Optiva purchases the Buildings pursuant to the Real Estate Option and
Purchase and Sale Agreement, Quadrant shall not be required to pay any unused
portion of the Space Planning Allowance remaining at Closing.
3E. Treatment of Unused Allowances. Upon the final determination of Tenant
Improvements Costs, Mezzanine Structure Costs, Link Structure Costs, Shell
Improvements Allowance Costs, and costs subject to the Space Planning Allowance,
any unused amount of the Tenant Improvements Allowance, Mezzanine Structure
Allowance, Link Structure Allowance, Shell Improvements Allowance or Space
Planning Allowance shall be paid by Quadrant to Optiva in cash within 30 days
after Optiva's receipt of Quadrant's itemized statement under Section 3.3.6 or,
at Optiva's election, offset against any Excess Tenant Improvements Costs,
Excess Mezzanine Structure Costs, Excess Shell Improvements Allowance Costs or
Excess Link Structure Costs not yet paid by Optiva.
4. Schedule For Matters Related to Building Shell and Tenant Improvements.
4.1 Schedule. Quadrant and Optiva shall use diligent efforts to achieve
each Action by indicated the Action Date, all as set forth in the
Pre-Construction Schedule. If Quadrant or Optiva, as the case may be, except for
reasons of Force Majeure, do not complete any Action by its associated Action
Date shown in the Pre-Construction Schedule, the provisions of Section 7.2 or
7.3, as the case may be, shall be applied. As used herein, Optiva shall be
construed to include such consultants, if any, retained by Optiva, who shall be
instructed to respond in accordance with the terms of this Agreement and to
fully cooperate with Quadrant.
4.2 Quadrant and Optiva Actions. Quadrant and Optiva shall each proceed
with all necessary due diligence and in good faith to complete such matters as
require action or approval on the part of Quadrant and Optiva in accordance with
the Pre-Construction Schedule and during the course of construction anticipated
under this Agreement; and Quadrant and Optiva agree to promptly and diligently
respond to all questions and concerns raised by architects, engineers and other
consultants. Optiva and Quadrant shall each endeavor to respond to submissions
from Architect and TI Architect promptly, on an ongoing basis in order that
revisions required by Optiva, Quadrant or applicable governmental agencies, can
be promptly completed, and no later than in compliance with Section 9 of this
Agreement. During construction of the Building Shell and Tenant Improvements,
Quadrant, Optiva, General Contractor, Architect and TI Architect together with
other applicable consultants shall meet at least twice monthly in order to
review status and scheduling of Building Shell and Tenant Improvements
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construction and determine possible changes required, Delays anticipated, costs
being incurred and all related matters.
4.3 Optiva's Review and Approval of Plans. If Optiva disapproves,
objects to or requires a change to any matter in any of the documents for which
Optiva's approval is required which matter in any such document: (a) was earlier
approved by Optiva, or (b) is consistent with the earlier approved Tenant
Improvements Schematic Plans, or Tenant Improvements Construction Documents,
then any delays resulting from such disapproval or objection may constitute a
Optiva Delay and the provisions of Section 7.2 shall apply.
5. Changes To Building Shell.
5.1 Mandatory Changes. Optiva understands and agrees that Quadrant shall
make changes to the Building Shell Construction Documents as are required by
governmental authority or are required to address a circumstance arising during
construction which was not reasonably foreseen at the time of the finalization
of the Building Shell Construction Documents. Quadrant shall notify Optiva of
such changes arising under this Section 5.1 to the Building Shell Construction
Documents from time to time, promptly as such changes occur, including
particularly but without limitation any such changes that may affect the design
or cost of the Tenant Improvements. All cost of such changes made under this
Section 5.1 shall be paid by Quadrant as part of Quadrant's payment of Building
Shell costs, except to the extent such changes are made to or relate to the
Tenant Improvements, the Mezzanine Structure the Link Structure or the
improvements covered by the Shell Improvements Allowance, in which case the
costs of such changes shall be Tenant Improvement Costs, Mezzanine Structure
Costs, Link Structure Costs, or Shell Improvements Allowance Costs,
respectively.
5.2 Optiva Initiated Changes. Optiva may, at Optiva's election, request
other revisions, modifications, changes and amendments to the Building Shell
Construction Documents, and, subject to the approval process set forth in this
Section, the Building Shell Construction Documents shall be so revised,
provided, however, that all costs relating to redesign of the Building Shell for
such changes, costs for changes to the Building Shell Construction Documents,
additional permitting or fees which may be required in connection with such
change, and any increased costs relating to construction of the Building Shell
shall be paid by Optiva in the same manner as Excess Tenant Improvement Costs
are paid under Sections 3.3.3-3.3.6, except that there shall be no "Savings."
Additionally, delays resulting from any such changes together with the time
period for the preparation of estimates and review and approval by Quadrant and
Optiva as described in this Section 5.2 may constitute a Optiva Delay in
accordance with the provisions of Section 7.2. Within three business days of the
time of Optiva's request, Quadrant shall indicate its disapproval or preliminary
approval of Optiva's requested changes. If Quadrant preliminary approves
Optiva's requested changes, General
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Contractor and Architect shall provide Optiva and Quadrant with estimates of
resulting Building Shell costs adjustments from the then current budget
estimates of such Building Shell costs (and, if applicable, possible changes in
Tenant Improvements Costs as a result of changes in the Building Shell) and
estimated Optiva Delays. After reviewing such estimates, but not longer than
three business days after receiving all such estimates, Quadrant shall indicate
its final disapproval or approval of Optiva's requested changes. If Quadrant
approves Optiva's requested changes, then, within three business days after
receiving Quadrant's notice of such approval, Optiva may, by notice to Quadrant
(verbal notice being sufficient so long as it is followed by written notice),
either withdraw its request for such Optiva initiated changes to the Building
Shell or elect to proceed with such Optiva initiated changes. If
Optiva-initiated changes are approved as provided in this Section, changes to
the Building Shell Construction Documents shall be evidenced by written change
order(s) signed by Quadrant, Optiva and General Contractor. Quadrant's approval
under this Section may be granted or withheld in Quadrant's reasonable
discretion. Without limiting the foregoing, it shall be deemed reasonable for
Quadrant to reject any such proposed changes to the Building Shell Construction
Documents which reduce the quality or caliber of the Building Shell from that
then evidenced by the Building Shell Construction Documents or otherwise affect
the value of the Building Shell for future leasing. Optiva's failure to timely
notify Quadrant shall be treated as Optiva's withdrawal of such Optiva initiated
changes to the Building Shell.
6. Changes To Tenant improvements.
6.1 Mandatory Changes. Quadrant shall not, without first obtaining
Optiva's prior written approval, modify, change, or amend the Tenant
Improvements Schematic Plans or Tenant Improvements Construction Documents;
provided, however, that upon written notice to Optiva, (i) Quadrant can
substitute a product of comparable quality in the event any product specified in
the Tenant Improvements Construction Documents is not available or is not
available within a time frame required to achieve the Scheduled Substantial
Completion Date; and (ii) Quadrant shall be authorized to make changes to the
Tenant Improvement Construction Documents as are required by governmental
authority. Except to the extent of on-going minor "field changes", any and all
changes to Tenant Improvements Construction Documents shall be authorized in
writing by Optiva and Quadrant, on one or more forms to be approved by Quadrant
and Optiva. Ongoing minor "field changes" shall be formally presented to Optiva
during the meetings referenced in Section 4.2 above, and shall be subject to
approval by Optiva during such meetings; provided, however, that as soon as
reasonably possible after such field changes occur, Quadrant shall issue written
notice to Optiva of such changes made under this Section 6.1 with respect to the
Tenant Improvements. Any costs of such changes shall be included in Tenant
Improvements Costs.
6.2 Optiva Initiated Changes. Optiva may, at Optiva's election, request
other revisions, modifications, changes and amendments to the Tenant Improvement
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Construction Documents, and, subject to Quadrant's reasonable revisions,
modifications, changes or amendments to the Tenant Improvements Construction
Documents to accommodate such changes being requested by Optiva, the Tenant
Improvements Construction Documents shall be so revised, provided, however, that
all costs relating to re-design of the Tenant Improvements for such change,
costs for changes to the Tenant Improvements Construction Documents, and
additional permitting or fees which may be required in connection with such
change, shall be included in Tenant Improvements Costs. Additionally, delays
resulting from any such changes together with the time period for the
preparation of estimates and review and approval by Quadrant and Optiva as
described in this Section 6.2 may constitute a Optiva Delay in accordance with
the provisions of Section 7.2. Within three business days of Optiva's request,
General Contractor and Architect shall provide Optiva with estimates of
resulting Tenant Improvements Cost adjustments as a result of such changes in
the Tenant Improvements) and Optiva Delays. After reviewing such estimates, but
not longer than three business days after receiving all of such estimates,
Optiva may, by notice to Quadrant (verbal notice being sufficient, so long as it
is followed by written notice), either withdraw its request for such Optiva
initiated changes to Tenant Improvements, or elect to proceed with such Optiva
initiated changes, subject to Quadrant's reasonable modifications described
above. Changes to the Tenant Improvements Construction Documents shall be
authorized in writing by Optiva and Quadrant, on one or more forms to be
approved by Quadrant and Optiva. Optiva's failure to timely notify Quadrant
shall be treated as Optiva's withdrawal of such Optiva initiated changes to the
Tenant Improvements.
7. Delays. Quadrant and Optiva agree that the Scheduled Substantial Completion
Date, and, correspondingly, the Commencement Date of the Lease, and the time
periods for Substantial Completion may be extended in accordance with the
provisions set forth in this Section 7. If Quadrant believes there is an Optiva
Delay (as defined in Section 7.2) or any other events or circumstances
warranting an extension of the Scheduled Substantial Completion Date under this
Agreement, Quadrant shall give Optiva written notice, setting forth the reasons
for its belief and the length of such extension it believes is warranted by such
Optiva Delay or other events or circumstances. No such extension shall be
effective until Optiva has a reasonable opportunity (including up to ten
business days) either to comment upon Quadrant's notice and/or, if the parties
are unable to resolve any disagreement about the extension, to initiate dispute
resolution proceedings under Section 19.7 of the Lease. The parties shall
confirm any changes in the Scheduled Substantial Completion Date provided for in
this Section 7 in writing. No such change shall be effective without such
written confirmation.
7.1 Delays From Force Majeure. In the event Substantial Completion is
delayed by reason of acts of God, the presence of unknown Hazardous Substances
(as described in Section 8), labor troubles or strikes, natural causes, or
circumstances beyond the reasonable control of Quadrant (or General Contractor)
or Optiva, then the Scheduled Substantial Completion Date shall be extended by
the period of such delay, and the
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scheduled Commencement Date of the Lease shall be likewise extended. The
inability to obtain all required permits and approvals for the development of
the Business Park or the construction of the Premises shall not be included in
Force Majeure, except to the extent such inability is caused by an Optiva Delay.
Quadrant nevertheless acknowledges that prompt Substantial Completion is
critical to Optiva's business and that Quadrant shall, upon consultation with
Optiva, attempt to determine measures which could be taken to minimize any delay
which may occur in the event of delay occurring due to Force Majeure; provided,
however, that neither Quadrant nor Optiva shall be obligated to incur additional
costs other than those anticipated hereunder in the event of delay occurring due
to Force Majeure. In the event of Force Majeure occurring, Quadrant shall give
Optiva written notice of the same, together with the estimated period of such
Force Majeure, as provided in the first paragraph of this Section 7. Either
Optiva or Quadrant may elect, by written notice to the other, to augment the
construction schedule, at such party's sole cost and expense, in order to avoid
incurring any Force Majeure. Estimates of such costs of augmentation of the
construction schedule shall be provided by General Contractor.
7.2 Delay From Optiva Actions. In the event Substantial Completion is
delayed due to the fault or negligence of Optiva (including, without limitation,
Optiva's failure to meet the Action Dates for approvals by Optiva in accordance
with the Pre-Construction Schedule or Optiva's actions, omissions or failure to
meet the time constraints under Sections 4.2 and 9, changes by Optiva pursuant
to Section 4.3, 5.2, and 6.2, the interference with the construction progress as
a result of Optiva's access under Section 3.3(2)) or due to the failure of TI
Architect to respond promptly to requests for information or to adhere to the
Pre-Construction Schedule (provided that Quadrant promptly notifies Optiva in
the event of such failure by TI Architect so that Optiva can take such steps as
may be available to avoid an Optiva Delay), in each case to the extent not by
reason of fault, actions or inactions of Quadrant, Force Majeure or failure to
obtain all required permits and approvals for the development of the Business
Park or the construction of the Premises ("Optiva Delays"), Quadrant shall be
entitled to an equitable adjustment in the Scheduled Substantial Completion
Date. Optiva shall pay Base Monthly Rent beginning as of the date Optiva would
have been required to pay but for Optiva's Delays. In the event of Optiva Delay
occurring, Quadrant shall promptly give Optiva written notice of the same,
together with the estimated period of such Optiva Delay, as provided in the
first paragraph of this Section 7. Optiva may elect, by written notice to
Quadrant to augment the construction schedule, at Optiva's sole cost and
expense, in order to avoid incurring any Optiva Delay.
7.3 Delay from Quadrant Actions. In the event Quadrant fails to achieve
Substantial Completion by the Scheduled Substantial Completion Date and to the
extent such failure is not caused by Optiva Delay or Force Majeure ("Quadrant
Delays"), the scheduled Commencement Date of the Lease shall be adjusted in the
manner provided in the Lease, and Quadrant shall give Optiva written notice of
such Quadrant Delay, together with the estimated duration of such Quadrant
Delay, as provided in the first
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paragraph of this Section 7; or, if Optiva believes such Quadrant Delay has
occurred, then Optiva may give Quadrant written notice of the same. Quadrant may
elect, by written notice to Optiva to augment the construction schedule, at
Quadrant's sole cost and expense, in order to avoid incurring any Quadrant
Delay. In addition, Quadrant shall pay liquidated damages under the terms and
conditions of Section 7.4.
7.4 Liquidated Damages. In the event of Quadrant Delay resulting in the
failure of Substantial Completion to have occurred by the Scheduled Substantial
Completion Date, Quadrant shall make the following payments, as liquidated
damages to Optiva for such failure, the parties agreeing that the actual damages
that Optiva would occur in such event are inherently difficult to quantify:
7.4.1 If construction of the Building Shell does not start on or
before November 1, 1998, the amount of $1,000 per day shall accrue in a
memorandum account ("Late Start Account") until the date construction
starts, and shall be payable to Optiva under Section 7.4.2. For purposes
of this Section 7.4.1, construction shall start when Quadrant or its
contractors perform any bona fide construction activity on the Property
under permits issued after the date of execution of this Agreement,
including fine grading (but not including grading activities in 1997),
other than mere mobilization. At Optiva's request after construction has
started, Quadrant shall notify Optiva of the date construction started
within the meaning of this Section 7.4.
7.4.2 If Substantial Completion does not occur by the Scheduled
Substantial Completion Date, as it may be adjusted under this Section 7
or otherwise by agreement of Optiva and Quadrant, Quadrant shall pay
Optiva the balance in the Late Start Account, within ten days after the
Scheduled Substantial Completion Date;
7.4.3 If Substantial Completion does not occur by 30 days after
the Scheduled Substantial Completion Date, per diem damages shall accrue
beginning on the 31st day after the Scheduled Substantial Completion
Date and continuing until Substantial Completion. Such per diem damages
shall accrue in the amount of $5,000 per day for up to the first 30
days, in the amount of $7,500 per day for up to the next 30 days, and in
the amount of $10,000 per day thereafter. Quadrant shall pay accrued per
diem damages in cash to Optiva within ten days of after Substantial
Completion or, if Substantial Completion has not occurred, on a monthly
basis, by the fifth day of each calendar month.
8. Hazardous Substances. Quadrant acknowledges and agrees that in the event
Hazardous Substances are discovered in on or about the Property during
construction of the Building Shell and Tenant Improvements, remediation of such
Hazardous Substances shall constitute a part of Quadrant's obligations with
respect to construction of the
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Building Shell hereunder and shall be performed by Quadrant, at Quadrant's
expense, in accordance with the requirements of applicable environmental laws,
regulations and permit requirements, and in accordance with the provisions for
construction of the Building Shell as set forth in this Agreement; provided,
however, that delays occurring in Substantial Completion as a result of the
presence of Hazardous Substances not known to exist on the date of execution of
this Agreement shall constitute delays attributable to Force Majeure.
9. Approval or Consent; Representatives.
9.1 Approval or Consent. Quadrant and Optiva each shall respond
promptly, completely and diligently to all matters requiring its response in
order that the process through which the Building Shell or Tenant Improvements
Construction Documents are finalized and construction occurs can proceed as
rapidly as possible. Any consent or approval to any act or matter required under
this Agreement shall, to the extent reasonably practical, be in writing and
shall apply only with respect to the particular act or matter to which such
consent or approval is given, and shall not relieve any party from the
obligation to obtain consent or approval, as applicable, whenever required under
this Agreement or any other act or matter. To the extent any approval given by
Optiva or Quadrant is not in writing, a writing confirming such verbal approval
shall be submitted to the other party promptly thereafter, or shall be reflected
in the minutes of any meetings of the parties or their Representatives occurring
during the term of this Agreement. Except as provided in the Pre-Construction
Schedule or otherwise stated in this Agreement, Optiva, Quadrant, Architect, TI
Architect or General Contractor, as the case may be, shall be deemed to have
responded promptly if a response is made within three business days from the
date of receipt of any request for response or approval of any proposal, act,
plans, or matter; provided, however, that if such response or approval is
requested with respect to such matters as require a more urgent response Optiva,
Quadrant, Architect, TI Architect or General Contractor shall exert their best
and diligent efforts to respond more quickly than such three-business day
period, consistent with the circumstances then occurring. Optiva's or Quadrant's
failure to respond within said three-business day period shall constitute
Optiva's or Quadrant's (as the case may be) approval of the matter submitted for
approval or consent.
9.2 Representatives. Optiva appoints Xxxx Xxxxx as Optiva's
Representative to act for Tenant in all matters under this Agreement. All
inquiries, requests, instructions, authorizations, and other communications
under this Agreement may be made by Quadrant to any of Optiva's Representatives,
and any approvals to be given by Optiva under this Agreement may be given by any
of Optiva's Representatives. Optiva may change the identity of any of its
Representatives or designate one or more additional Representatives by notice in
writing to Quadrant. Quadrant appoints Xxxxxx Xxxxxxx, Xxxx Xxxxxx and Xxxxx
Xxxxxxxx as Quadrant's Representatives to act for Quadrant in all matters under
this Agreement. All inquiries, requests, instructions, authorizations, and
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other communications under this Agreement may be made by Optiva to any of
Quadrant's Representatives, and any approvals to be given by Quadrant under this
Agreement may be given by any of Quadrant's Representatives. Quadrant may change
the identity of its Representatives or designate one or more additional
Representatives by notice in writing to Optiva.
10. Warranties. Quadrant shall obtain from all contractors and subcontractors,
including General Contractor, providing material and labor in the construction
of the Building all commercially reasonable warranties (including manufacturers'
warranties) for their respective materials or labor which are available from
such contractors or subcontractors. All such warranties shall be in writing and
shall run to Quadrant and shall be assignable by Quadrant in the event of any
sale of the Building. To the extent there exists any defect in the Building
Shell or Tenant Improvements, which is covered by the warranties obtained under
this Section, Quadrant shall seek to enforce such warranties in accordance with
their terms. For a period expiring two years after Substantial Completion
(Warranty Period"), Quadrant represents and warrants to Optiva as follows:
10.1 Building Shell. The Building Shell shall have been constructed in
accordance with the Building Shell Construction Documents and in compliance with
applicable laws, including without limitation, the Americans With Disabilities
Act; and the heating, air conditioning, plumbing, ventilating, elevator,
utility, sprinkler and other mechanical and electrical systems, apparatus and
appliances (excluding telephone, cable television, data transmission, satellite
transmission, and security system equipment and services or computer cabling or
wiring) located in the Building Shell, are, and, provided the Premises
Maintenance and Services Obligations under the Lease are fulfilled and the use
and operation of such systems and equipment by Optiva is in accordance with
applicable requirements, shall at all time during the Warranty Period, remain,
in good working order, condition and repair; and the Building Shell and its
equipment and systems (excluding telephone, cable television, data transmission,
satellite transmission, and security system equipment and services or computer
cabling or wiring) are, and, provided the Premises Maintenance and Services
Obligations under the Lease are fulfilled and the use and operation of such
systems and equipment by Optiva is in accordance with applicable requirements,
shall, at all time during the Warranty Period, remain, free from defects in
workmanship and materials in connection with the construction and installation
thereof; and
10.2 Tenant Improvements. The Tenant Improvements shall be constructed
in accordance with the Tenant Improvements Construction Documents and in
compliance with applicable laws, including without limitation, the Americans
With Disabilities Act, and the equipment and systems therein (excluding
telephone, cable television, data transmission, satellite transmission, and
security system equipment and services or computer cabling or wiring), are, and,
provided the Premises Maintenance and Services
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Obligations under the Lease are fulfilled and the use and operation of such
systems and equipment by Optiva is in accordance with applicable requirements,
shall at all time during the Warranty Period remain, in good working order,
condition and repair; and the applicable Tenant Improvements are, and, provided
the Premises Maintenance and Services Obligations under the Lease are fulfilled
and the use and operation of such systems and equipment by Optiva is in
accordance with applicable requirements, shall at all time during the Warranty
Period, remain, free from defects in workmanship and materials in connection
with the construction and installation thereof.
10.3 Survival. Quadrant's warranties in this Section 10 shall expire and
be of no further force or effect, unless Optiva shall have made a Claim thereon
(as defined below) on or before the expiration of the Warranty Period. In the
event Optiva alleges a breach of any of the foregoing warranties, Optiva shall
give Quadrant written notice of any such allegation together with a detailed
explanation of the alleged breach ("Claim"). Quadrant shall, within 15 days of
receipt of the Claim, proceed to commence to cure the circumstances specified in
Claim, or provide Optiva with written notice of Quadrant's dispute of the Claim.
If Quadrant commences a cure or correction of the matter alleged in the Claim,
Quadrant shall proceed diligently and continuously to complete such cure or
correction, within a reasonable period of time not to exceed 90 days or as soon
thereafter as is reasonably practicable in the circumstances.
11. Insurance. During the period of construction of the Building Shell and
Tenant Improvements hereunder, until the date of Final Completion or such
earlier date when permanent property insurance as is required under the Lease is
available, Quadrant shall obtain and maintain in full force and effect at its
initial expense and as a cost of the Building Shell, and in addition to any
other insurance to be provided by Landlord under the Lease, a policy of All Risk
Builder's Risk insurance (with standard exclusions including earthquake and
flood exclusions) in the amount sufficient to cover the completed value of the
Premises. Optiva shall be an additional insured on such policy, and Quadrant
shall provide evidence of such coverage to Optiva.
11A. Construction of Business Park. Quadrant and Optiva have concurrently with
this Agreement entered into an Expansion Agreement, under which, among other
things, Quadrant or its successor, as Developer, shall complete construction and
development of the Business Park.
12. Notices. Wherever in this Agreement a notice is required to be given, such
notice shall be in writing and shall be given in accordance with the notice
provisions of the Lease.
13. Binding Effect. Except as otherwise stated herein, this Agreement shall bind
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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14. Entire Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and may be amended only in
writing signed by both parties. This Agreement may be signed in counterpart or
duplicate copies, and any signed counterpart, duplicate or telephonic facsimile
copy shall be equivalent to a signed original for all purposes.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
16. Relationship of Parties. Quadrant is an independent contractor with respect
to Optiva. Quadrant shall have no authority to bind Optiva except as expressly
provided in this Agreement. Quadrant and Optiva shall not be construed as joint
venturers or general partners, and neither shall have the power to bind or
obligate the other party except as set forth in this Agreement. Nothing herein
shall be construed as reserving to Optiva the right to control Quadrant's
business.
17. Neutral Authorship. In connection with the execution and delivery hereof,
each party has been represented by counsel. Each of the provisions of this
Agreement has been reviewed and negotiated, and represents the combined work
product of both parties. No presumption or other rules of construction which
would interpret the provisions of this Agreement in favor of or against the
party preparing the same shall be applicable in connection with the construction
or interpretation of any of the provisions of this Agreement.
18. Attorneys' Fees. In the event either party brings any suit or other
proceeding with respect to the subject matter or enforcement of this Agreement,
the prevailing party (as determined by the court, agency or other authority
before which such suit or proceeding is commenced) shall, in addition to such
other relief as may be awarded, be entitled to recover attorneys fees and
expenses as actually incurred (including without limitation, attorneys fees and
expenses incurred in appellate proceedings, or in any action or participation
in, or in connection with any case or proceeding under the Bankruptcy Code).
19. Miscellaneous. Time is of the essence of this Agreement. Except as herein
expressly provided, no waiver by a party of any breach of this Agreement shall
be deemed to be a waiver of any other breach by such party. No failure or delay
by a party to exercise any right it may have by reason of the default of the
other shall operate as a waiver of such default or result in the modification of
this Agreement.
20. Assignment. During any period of construction of Building Shell or Tenant
Improvements hereunder, including the completion of Punch List Items, and
obtaining issuance of a final, certificate of occupancy, the obligations of
Optiva hereunder shall not be assigned except in connection with a permitted
assignment by Optiva of the Lease. Optiva's rights and obligations hereunder
shall be assigned in connection with any
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permitted assignment by Optiva of the
Lease. In the event of such assignment Optiva shall remain liable for its
obligations under this Agreement subject to release in the same manner as Optiva
may be released under the Lease. The obligations of Quadrant hereunder may be
assigned, concurrent with the assignment of the Lease, without the prior consent
of Tenant; provided, however, that in the event of such assignment, Quadrant's
successor or assignee shall not be required to assume the obligations of
Quadrant under this Construction Agreement for Lease and, whether or not such
obligations are assumed, Quadrant shall remain fully liable to Optiva for the
obligations of Quadrant hereunder.
21. Exhibits. The Exhibits hereto are made a part of and incorporated into this
Agreement.
QUADRANT:
THE QUADRANT CORPORATION
By_______________________________
Xxxxxx X. Xxxxxxx, Xx.
Its Vice President
OPTIVA:
OPTIVA CORPORATION
By________________________________
Xxxxx Xxxxxxxx
Its President
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