EXHIBIT 10.13
LEASE
THIS LEASE is made as of the 19th day of May, 1999, by and between THE
PLAZA AT YARROW BAY, LLC, a Washington limited liability company ("Landlord"),
and XxxxXxxxxx.xxx, Inc., a Delaware corporation ("Tenant").
For and in consideration of the mutual promises, covenants and conditions
set forth in this Lease, Landlord and Tenant agree as follows:
SECTION I - PREMISES
1.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases
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from Landlord, those certain premises (the "Premises") having a rentable area of
72,104 square feet and a usable area of 68,874 square feet. The area of the
Premises is based upon the building area survey dated September 7, 1998,
prepared by Xxxx Xxxxxx Design Group. The Premises are situated on the first,
second, third and fourth floors of a building located on the real property
legally described in Exhibit A-1 attached, and all improvements thereon, and all
rights appurtenant thereto (the "Building"). The Premises are more particularly
shown on the floor plan of the Building attached to this Lease as Exhibit B. The
Building is part of a multi-phase project located on the real property legally
described on Exhibit A-2 attached, and all improvements thereon, and all rights
appurtenant thereto, commonly known as The Plaza at Yarrow Bay (the "Park"). The
Building is commonly referred to as Building II of the Park.
1.2 Reserved to Landlord. Landlord reserves all air rights over the
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Premises, the use of the exterior walls, the roof, and the right to install,
maintain, use, repair and replace pipes, ducts, conduits and wires leading
through the Premises in locations which will not materially interfere with
Tenant's use thereof to serve other parts of the Building and/or the Park.
1.3 Changes to Park. Landlord reserves the right at any time to make
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alterations or additions to the Building and to build adjoining the same.
Landlord also reserves the right from time to time to construct other buildings
or improvements in the Park, to make alterations thereof or additions thereto,
and to relocate the various buildings, parking and other common areas comprising
the Park.
SECTION II - TERM
2.1 Lease Term. This Lease shall be for a term of approximately sixty (60)
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months, commencing the day (the "Commencement Date") specified in Landlord's
notice to Tenant in writing that the Premises will be available for Tenant's
occupancy; provided that if a portion of the Premises (but in no event less than
all of the Premises located on a given floor of the Building) becomes available
before some other portion of the Premises is available, then Landlord shall
provide the notice for Lease commencement for the available portion when it
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comes available and the Lease shall commence with respect to that space on the
date specified in Landlord's written notice to Tenant.
The "Target Commencement Date" is September 1, 1999, which date is only an
estimate of the date the Premises will be available for Tenant's occupancy.
Landlord shall have no liability to Tenant and this Lease shall not be void or
voidable if the Premises are not delivered to Tenant by the Target Commencement
Date. Notwithstanding the foregoing, if Landlord has not delivered possession of
the Premises to Tenant within sixty (60) days from the Target Commencement Date,
then at Tenant's option, which must be exercised by written notice given to
Landlord within thirty (30) days after the expiration of said 60-day period,
this Lease shall terminate and neither party shall have any further rights or
liabilities hereunder; provided, if Landlord is unable to deliver possession of
the Premises to Tenant within the 60-day period due to delays caused by Tenant,
or material shortages, labor strikes or other reasons beyond Landlord's control,
the 60-day period shall be extended by the number of days of delay experienced
by Landlord.
2.2 Early Entry. If Tenant is permitted entry to the Premises prior to
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Commencement Date for the purpose of installing tenant improvements or fixtures
or any other purpose permitted by Landlord, such early entry will be at Tenant's
sole risk and subject to all the terms and provisions of this Lease as though
the Commencement Date had occurred, except for the payment of rent and
additional rent. Tenant, its agents and employees will not interfere with or
delay Landlord's completion of construction of any improvements to be made by
Landlord. All rights of Tenant under this Section 2.2 will be subject to the
requirements of all applicable building codes and zoning requirements, and must
not interfere with Landlord. Landlord has the right to impose such additional
conditions on Tenant's early entry as Landlord deems appropriate in its sole
discretion, and will further have the right to require that Tenant execute an
early entry agreement containing such conditions prior to Tenant's early entry.
2.3 Acceptance of Premises. Tenant shall inspect the Premises, or any
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portion thereof, upon taking possession, and except as Tenant may otherwise
notify Landlord in writing within thirty (30) days after taking possession,
Tenant shall be deemed to have accepted the Premises in their condition at that
time, except as to latent defects.
2.4 Term. The term of this Lease shall commence on the Commencement Date
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for each respective floor and, regardless of when the Lease commences with
respect to various portions of the Premises, this Lease shall expire at 11:59
p.m. on August 31, 2004, unless sooner terminated or extended as provided in
this Lease.
2.5 Option to Extend.
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a. So long as Tenant is not then in default under this Lease, and so
long as Tenant has not been ten (10) or more days late in payment of rent after
written notice thereof more than a total of three (3) times during the term of
this Lease, Tenant shall have the right to extend the Lease term for two (2)
additional five (5) year periods (each an "Additional Term") on
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the terms and conditions stated in this paragraph. To exercise its right to
extend this Lease for an Additional Term, Tenant must deliver to Landlord a
written notice exercising its rights under this paragraph at least two hundred
seventy (270) days, but not more than three hundred sixty (360) days, prior to
the date the Lease term will expire. All the terms and conditions of this Lease
shall apply during each Additional Term except (i) the minimum rent shall be an
amount mutually agreed to by Landlord and Tenant or determined by arbitration as
set forth below but in no event shall it be less than that due from Tenant
immediately prior to the commencement of the Additional Term; (ii) unless
otherwise agreed by Landlord in writing, there shall be no further extension
options; and (iii) except as set forth in Section 2.5(e) below, Landlord shall
have no tenant improvement or lease commission obligations with respect to the
Premises. When the rental rate for the Additional Term is determined, either by
agreement of the parties or pursuant to arbitration as provided below, Landlord
and Tenant shall enter into a lease extension agreement setting forth the new
minimum rent for the Premises and such other terms as may be applicable. If at
the time Tenant delivers to Landlord its written notice electing to extend this
Lease term, or at any time between such date and the commencement date of the
Additional Term, Tenant defaults under this Lease and fails to cure the default
within the applicable cure period, if any, Landlord shall have the option to
declare Tenant's notice of exercise null and void by written notice to Tenant,
in which case the Lease term shall expire on the expiration of the then current
Lease term.
b. If Tenant exercises an extension right under this paragraph, the
minimum rent for the Additional Term shall be the then "fair market rent"
(defined below) for the Premises. For purposes of this Lease, the term "fair
market rent" shall mean the triple net rate per rentable square foot that
willing, non-equity, non-renewal tenants are paying for comparable space in the
building and in comparable buildings in the Kirkland-Bellevue areas for leases
having a five (5) year term without including the value of any improvements paid
for by Tenant (but including any improvements made by Tenant at the commencement
of the initial Lease term). Landlord shall advise Tenant in writing of
Landlord's determination of fair market rent for the Premises not later than
thirty (30) days after Tenant exercises its extension right. Within thirty (30)
days after receiving Landlord's determination of fair market rent, Tenant shall
notify Landlord in writing whether or not Tenant accepts Landlord's
determination of fair market rent. If Tenant disagrees with Landlord's
determination of fair market rent, Tenant shall advise Landlord of Tenant's
determination of fair market rent in the notice required pursuant to the
preceding sentence. If Tenant fails to so notify Landlord prior to expiration of
its thirty (30) day period to respond to Landlord's notice, then Tenant's notice
exercising its renewal rights under this paragraph shall be deemed null and
void, unless otherwise agreed in writing by Landlord and Tenant. If Tenant does
not accept Landlord's determination of fair market rent, the parties shall
promptly meet and attempt to resolve their differences. If the parties have not
agreed on the fair market rent within sixty (60) days after Tenant has exercised
its renewal right, or sooner, if Tenant disagrees with Landlord's determination
of fairmarket rent, and Tenant's renewal option is still in effect in accordance
with the terms of this paragraph, then unless otherwise agreed in writing by the
parties, the parties shall submit the matter to arbitration in accordance with
the terms of paragraph (c) below. The last day of such period shall be referred
in this Lease as the "Arbitration Commencement Date."
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c. The arbitration will be conducted by three MIA real estate
appraisers who have been active over the five (5) year period ending on the
Arbitration Commencement Date in the appraisal of office properties in the
Kirkland-Bellevue area. One appraiser will be selected by Tenant, one appraiser
will be selected by Landlord, and the third will be selected by the two
appraisers so chosen. If the two appraisers chosen by the parties cannot agree
on a third appraiser within ten (10) days after the date the second appraiser
has been appointed, the third appraiser will be appointed by the Seattle office
of the American Arbitration Association upon the application of either party.
Each party shall select its appraiser within ten (10) days after the Arbitration
Commencement Date. If either party fails to select its appraiser within such ten
(10) day period, and the other party duly selects its appraiser, then the
appraiser selected by the other party shall be the sole arbitrator for
determining fair market rent. With twenty (20) days after the selection of the
third appraiser (or if only one appraiser is to render the decision, within
twenty (20) days after the last day of the above-referenced ten (10) day
period), the appraiser(s) shall determine fair market rent. The decision of a
majority of the appraisers shall control. If a majority of the appraisers do not
agree within the stipulated time period, then each appraiser shall in writing
render his or her separate determination as to fair market rent within five (5)
days after the expiration of the twenty (20) day period. In such case, the three
determinations shall be averaged to determine the fair market rent; however, if
the lowest fair market rent or the highest fair market rent is ten percent (10%)
lower or higher, as applicable, than the middle fair market rent, then the low
fair market rent and/or the high fair market rent, as applicable, shall be
disregarded and the remaining fair market rent(s) will be averaged in order to
establish the fair market rent.
d. Both parties may submit any information to the arbitrators for
their consideration, with copies to the other party. The arbitrators shall have
the right to consult experts and competent authorities for factual information
or evidence pertaining to the determination of fair market rent. The arbitrators
shall have no power to modify the provisions of this Lease. The determination of
the arbitrators will be final and binding upon Landlord and Tenant. The cost of
the arbitration will be paid by Landlord if the fair market rent is ninety
percent (90%) or less than the fair market rent specified in the notice given by
Landlord to Tenant; by Tenant if the fair market rent is one hundred ten percent
(110%) or more than the fair market rent specified in the notice given by Tenant
to Landlord; and otherwise shall be shared equally by Landlord and Tenant.
e. This option to extend is personal to Tenant and cannot be
transferred without Landlord's consent in accordance with this Lease, except
that a Transferee who satisfies the requirements of Section 11.2 below will also
receive a transfer of this option to extend. Each time the Tenant exercises an
extension option, Landlord shall provide Tenant a three dollar ($3.00) per
useable square foot tenant improvement allowance, at the commencement of the
Additional Term, or within ten (1.0) business days after delivery to Landlord of
invoices showing payment, whichever is later, to reimburse Tenant for its out-
of-pocket expenses to be made to improve or refurbish the Premises, including
repainting, carpeting, or other improvements. At Tenant's option and upon
presentation to Landlord of proof of expenses incurred, the three dollar ($3.00)
per useable square foot allowance provided to Tenant at the
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commencement of the first Additional Term may be applied to reimburse Tenant for
the hard cost of tenant improvements previously made to the Premises not
reimbursed out of the initial five dollar ($5.00) per useable square foot tenant
improvement allowance. The Tenant Improvement Allowance provided to Tenant for
the Second Additional Term shall not be applied to reimburse Tenant improvements
previously made to the Premises.
2.6 Right of First Offer. Tenant is granted a right of first offer to all
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(but not less than all) of Building IV of the Park if such space becomes
available for lease during the initial term of the Lease, provided that Tenant
is not then in default under this Lease, and provided that Tenant is not then
subleasing more than 25,000 rentable square feet of space in the Park, or has
not then assigned its interest in more than 25,000 rentable square feet of its
space in the Park. Landlord shall provide Tenant with written notice promptly
upon learning that all of Building IV will be available for Lease, and propose a
fair market rent and other lease terms and conditions ("Landlord's Notice"). If
Tenant fails to provide written notice within fifteen (15) days after receipt of
Landlord's Notice that it wishes to negotiate for the lease of all of Building
IV, the right of first offer shall expire. If Tenant provides Landlord with a
written reply within fifteen days of receiving Landlord's Notice that Tenant
wishes to negotiate for the lease of Building IV, then Landlord and Tenant shall
promptly commence negotiations for Tenant's lease of Building IV. If Landlord
and Tenant do not execute and mutually acceptable lease for Building IV, under
which Tenant will actually occupy the Premises, within thirty (30) days after
Landlord's Notice to Tenant under this paragraph, then the right of first offer
shall expire, and Landlord may lease Building IV space to other tenants.
SECTION III -- RENT
3.1 Minimum Rent. Tenant shall pay to Landlord, c/o JSH Properties, Inc.,
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at 00000 X.X. Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, or to such
other entity or address as may be specified by Landlord from time to time,
without any set-off or deduction whatsoever, as fixed minimum rent, the amounts
per month set forth on attached Exhibit D. Monthly installments of fixed minimum
rent are due on or before the first day of each month of the Lease term. Rent
for partial months shall be prorated; rent shall commence with respect to each
floor of the Premises ten (10) days after the Lease commences for such floor.
The minimum rent is referred to herein as "rent," and it does not include the
additional rent payable by Tenant pursuant to this Section III. Upon mutual
execution of this Lease, Tenant shall deposit with Landlord first month's rent
for the entire Premises. The rent rate shown on attached Exhibit D for the first
Lease year shall also apply to any rent owed by Tenant for any portion of the
Premises prior to September 1, 1999.
3.2 Additional Rent. In addition to rent, all other sums to be paid or
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reimbursed by Tenant to Landlord, whether or not so designated, are "additional
rent" for the purposes of this Lease. If Tenant defaults in the performance of
any of its obligations hereunder, Landlord may, but shall not be obligated to,
perform such obligations, and the cost thereof to Landlord shall also be
additional rent. Unless otherwise specifically provided in this Lease, Tenant
shall pay Landlord all additional rent within ten (10) days after Landlord's
demand.
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3.3 Tenant's Contributions.
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3.3.1 On or before the date on which Landlord delivers possession of
the entire Premises to Tenant, and no more than ninety (90) days after the
commencement of each calendar year thereafter, Landlord will notify Tenant in
writing of Landlord's estimate of Tenant's Share of estimated "Operating Costs"
and "Real Property Taxes" (such terms are defined in Section 3.3.2 below) for
the then current calendar year (or part thereof), which amount Tenant shall pay
in advance in twelve (12) equal monthly installments, due and payable without
set-off or deduction, on the first (1st) day of each calendar month. As used
herein, the term "Tenant's Share" is determined by multiplying the cost to be
shared by a fraction, the numerator of which is the rentable area of the
Premises from time to time and the denominator of which is the rentable area of
the Building for expenses related to the Building, and the rentable area of the
Park for expenses related to the Park. Within ninety (90) days after the end of
each year, Landlord will compute Tenant's Share for such year (or portion
thereof) based on actual costs and provide to Tenant an itemized statement (a
"Statement") of Tenant's Share for such year. If Tenant's Share of amounts due
for such year is greater than the amounts already paid by Tenant pursuant to
this Section 3.3, Tenant shall pay Landlord any deficiency within ten (10)
business days of receipt of written notice. If the total amount paid for such
year exceeds Tenant's Share, then Landlord shall credit such excess to the
payment of rent and additional rent which may thereafter become due, provided,
however, upon the expiration or sooner termination of the Lease term, Landlord
shall refund such excess to Tenant, provided that Landlord may offset any sums
owing to Tenant against sums then owed by Tenant to Landlord. If at any time
(but not more than once each calendar year) Landlord obtains additional
information regarding expenses, Landlord may at its election adjust the amount
of the monthly installments due during the balance of the year to reflect such
additional information, by giving Tenant written notice thereof, which notice
shall also state the amount of the deficiency, if any, in the prior monthly
payments for the calendar year. Tenant shall pay any such deficiency within
twenty (20) days of its receipt of the notice and shall make the adjusted
monthly payments for the remainder of the calendar year. At any time within
eighteen (18) months after a Statement for any particular calendar year is
provided to Tenant, upon twenty (20) days prior written notice and during normal
business hours at Landlord's office or at such other place as Landlord shall
reasonably designate, Tenant shall be entitled to inspect and examine the books
and records of Landlord related to the determination of any sums payable by
Tenant pursuant to this Section 3.3 which are the subject of the applicable
Statement.
If, after inspection and examination of such books and records, Tenant
disputes the amounts paid by Tenant pursuant to this Section 3.3, Tenant by
written notice to Landlord, may request an independent audit of such books and
records. The independent audit of Landlord's books and records shall be
conducted by a certified public accountant designated by Tenant and reasonably
acceptable to Landlord. The audit shall be limited to the determination of the
amount of any or all items payable by Tenant pursuant to this Section 3.3 for
the subject calendar year. If the audit discloses any amounts billed to and paid
by Tenant which are incorrect, the appropriate party shall pay to the other
party the deficiency or overpayment, as applicable, within thirty (30) days
after the results of the audit have been disclosed to both parties, unless
Landlord disputes
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the results of the audit within sixty (60) days of receipt of the results of the
audit, in which case, Landlord and Tenant shall agree upon a national accounting
firm to review and verify the Operating Costs, and provide the results to
Landlord and Tenant (the "Reconciliation Audit"). The determination as set forth
in the Reconciliation Audit shall be binding upon Landlord arid Tenant. If the
Reconciliation Audit is performed, Landlord and Tenant shall each pay one-half
of the cost of the Reconciliation Audit. The exercise by Tenant of its audit
rights hereunder shall not relieve Tenant of its obligations to pay prior to the
request for and inspection and examination of Landlord's books and records or
permit Tenant the right to audit any other sums. Additionally, Tenant agrees and
acknowledges that various tenants' lease provisions in the Building related to
Operating Costs vary, and that the audit right is set forth herein in the review
of books and records shall be confidential. With the exception of Tenant's
auditors, Tenant shall not disclose or discuss the audit or the results of the
audit to any third parties, including but not limited to any other tenants in
the Building or the Park. All costs and expenses of the audit shall be paid by
Tenant unless the audit shows that Landlord overstated Tenant's Share of the
subject calendar year by more than five percent (5%) of the actual amount
payable by Tenant, in which case Landlord shall pay all costs and expenses of
the audit. Notwithstanding any of the foregoing, Tenant shall not be entitled to
inspect or audit the books and records of Landlord more frequently than once
each calendar year.
3.3.2 For purposes of this Section 3.3, the following definitions
apply:
(i) "Operating Costs" shall mean all expenses paid or incurred
by Landlord or charged to Landlord for maintaining, operating, repairing,
replacing and administering the Building, the Park or both (including common
areas and facilities), and the personal property used in conjunction therewith,
together with a sum equal to five percent (5%) of the cost thereof (exclusive of
Real Property Taxes and professional management fees) as an administrative fee,
including, without limitation, the costs of refuse collection, water, sewer,
electricity, heat, air conditioning, fuel, light, fire protection, and other
utilities; services; supplies; janitorial and cleaning services; window washing;
snow, garbage and refuse removal; security services and systems; patching,
repair, maintenance, painting, lighting, cleaning, striping and securing parking
facilities; elevator operation, repair and maintenance; landscape maintenance;
services of independent contractors; compensation (including employment taxes
and fringe benefits) of all persons who perform duties in connection with the
operation, maintenance, repair, replacement and administration of the Park, the
Building or both, their equipment and common areas and facilities; insurance
premiums for all insurance carried with respect to the Building or the Park;
insurance deductibles for losses other than those caused by Landlord or those
for which Landlord has a right of reimbursement from a third party; licenses,
permits and inspection fees (but not Landlord's general business license and
related fees); subsidies and other payments required by public bodies, including
those for traffic signals and controls and for fire protection; professional
management fees (in amounts competitive with those charged by third party
property managers in connection with the management of comparable first class
office properties); legal and accounting expenses; and all other expenses or
charges whether or not hereinabove described which, in accordance with generally
accepted accounting and management practices, would be considered an expense of
maintaining, operating, repairing,
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replacing and administering the Building or the Park, but excluding: (a) costs
of any special services rendered to individual tenants (including Tenant) for
which a special charge is made; (b) Real Property Taxes; (c) lease payments on
capital equipment, or depreciation or amortization of costs (including without
limitation the cost of resurfacing parking lots) required to be capitalized in
accordance with generally accepted accounting practices (except Operating Costs
shall include amortization over their useful life, on a straight line basis, of
capital improvements made subsequent to the date the last party executes this
Lease which are either designed with a reasonable probability of reducing
Operating Costs for the Building or the Park, as applicable, or are required to
be made to operate the Building or the Park in accordance with applicable
federal, state and local laws, regulations, ordinances and codes); (d) executive
salaries (i.e., salaries of all persons above Building management level); (e)
salaries of Building management and service personnel to the extent such
personnel perform services not solely in connection with the management,
operation, repair or maintenance of the Building or the Park, unless such
salaries are prorated to reflect time spent on operating and managing the
Building or the Park, vis a vis time spent on matters unrelated to operating and
managing the Building or the Park; (f) real estate broker commissions; (g)
attorney's fees, costs and disbursements incurred by Landlord in any dispute
with a Tenant; (h) costs or expenses for which Landlord is reimbursed by an
insurer, condemnor, tenant or otherwise; (i) cost directly resulting from the
gross negligence or willful misconduct of Landlord or its employees, agents
and/or contractors; (j) costs resulting from Landlord's breach of this Lease, or
willful violation of any applicable law or violation of any covenants,
conditions or restrictions governing the Park; (k) "tenant improvements" to any
portion of the Building or Park; (I) costs incurred to bring the Premises for
the Building into compliance with applicable laws, regulations, ordinance or
codes, or to correct construction defects to the Building or the Park, but with
respect to violations of laws, regulations, ordinances or codes, only to the
extent such costs are incurred as a result of a violation that exists as of the
date of the Lease; (m) interest, charges and fees incurred on debt, payments and
mortgages and rent under ground leases owed on the Building or the Park; (n)
costs paid to the operator of a parking concession at the Building or the Park;
(o) advertising or promotional costs; and (p) costs incurred to investigate the
presence of any Hazardous Materials (as defined in Section 4.5), costs that
respond to any claim of Hazardous Materials being present at the Park, costs to
remove any Hazardous Materials from the Park and any judgment or other costs
incurred in connection with any Hazardous Materials releases, except to the
extent caused by the storage, use, disposal or release of the Hazardous
Materials in question by Tenant. Operating Costs also shall not include any
costs or expenses incurred by Landlord in connection with the initial
entitlement, construction or development of the Building pursuant to
governmental agreements, rules, codes, rules or statutes, such as the cost of
child care facilities; traffic mitigation fees; water and sewage connection,
recycling, or housing replacement fees; infrastructure and transportation fees;
costs occasioned by fire, acts of God or other casualty, or by the laws of
eminent domain or art programs. Tenant acknowledges Operating Costs shall
include Tenant's pro rata share of certain costs of maintaining, operating,
repairing, replacing and administering the common areas and facilities in the
Park.
(ii) "Real Property Taxes" shall mean all taxes on the Building, and
Landlord's share of any taxes applicable to the Park (including common areas and
facilities but
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excluding any other buildings in the Park in which Tenant is not an occupant),
and on personal property used in conjunction therewith, including surcharges and
all local governmental or quasi governmental improvement and other assessments
levied with respect to the Building or the Park and all other property used
directly in connection with the operation of the Building or the Park; and any
taxes levied or assessed in addition to or in lieu of, in whole or in part, such
real or personal property taxes, or any other tax upon leasing of the Building
or rents collected therefrom, other than any federal or state income tax,
franchise tax or transfer or excise tax.
3.4 Late Charge; Interest. If Tenant fails to pay any amount due hereunder
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within five (5) days of the due date, a late charge equal to five percent (5%)
of the unpaid amount shall be assessed and be immediately due and payable. In
addition, interest shall accrue on any payment which is more than five (5) days
past due at the rate of five percentage points (5%) per annum in excess of the
prime business lending rate published from time to time in the money rates
column of the Wall Street Journal, calculated from the date the payment was due
to the date of payment. If the Wall Street Journal ceases to quote a prime rate
or similar rate, interest calculated under this Section 3.4 shall be based on
the prime rate or similar rate of the largest United States national bank having
an office in Seattle, Washington. If the foregoing rate exceeds the maximum rate
permitted by applicable law, interest shall accrue at the maximum rate so
permitted by law, from the date due until paid on any amount not paid when due.
Landlord shall have the right to accept rent and all other payments, whether
full or partial, and negotiate checks and payments thereof, without any waiver
of rights, irrespective of any conditions to the contrary sought to be imposed
by Tenant.
SECTION IV - CONDUCT OF BUSINESS
4.1 Use of Premises. Tenant shall use the Premises only for general office
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use, excluding medical or dental office, consistent with the operation of a
first class office building. Tenant shall not use or permit the use of the
Premises for any other business or purpose without Landlord's prior written
consent, which consent Landlord may grant or deny in its sole discretion. Tenant
shall promptly comply with the rules and regulations of the Building and the
Park, as set forth in Exhibit C attached, as the same may be changed from time-
to-time by Landlord upon reasonable notice to Tenant. Tenant shall not permit
any public or private nuisance to occur on the Premises, or any other act or
circumstance which disturbs the quiet enjoyment of any occupant of the Building
or the Park.
4.2 Appearance of Premises. Tenant shall maintain the Premises in a clean,
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orderly and neat fashion to conform with the high standards of the Building and
the Park, permitting no odors to be emitted from the Premises and neither commit
waste nor permit any waste to be committed thereon. Tenant shall not burn any
trash in or about the Premises or permit any accumulation of trash. Tenant shall
store all trash, refuse and waste material so as not to constitute a health or
fire hazard or nuisance, in adequately covered containers which are located
within the Premises which are not visible to the general public or in areas
designated by Landlord.
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4.3 Unlawful Use. Tenant shall not use or permit the Premises or any part
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thereof to be used for any purpose in violation of any municipal, county, state
or federal law, ordinance or regulation, or for any purpose offensive to the
standards of the community of which the Building is a part, or in any manner
which is not in the best interests of the tenants of the Building or the Park.
Tenant shall promptly comply, at its sole cost and expense, with all laws,
ordinances, and regulations now in force or hereafter adopted and with the
requirements of any board of fire underwriters or, similar body relating to or
affecting the condition, use or occupancy of the Premises.
Tenant shall not do or permit anything to be done in or about the Premises,
nor bring or keep anything therein which will increase the existing rate of or
affect any fire or other insurance upon the Building or any of its contents, or
cause a cancellation of any insurance policy covering the Building or any part
thereof or any of its contents. Tenant shall promptly upon demand reimburse
Landlord for any additional premium charged for any such policy by reason of
Tenant's failure to comply with the provisions of this Section.
Notwithstanding anything to the contrary in this Lease at the Commencement
Date the Landlord shall, at its expense, cause the Premises and the Common Areas
to conform to all requirements of any covenants, conditions, restrictions and
encumbrances applicable to the same, all underwriter's requirements, and all
rules, regulations, statutes, ordinances, laws and building codes applicable
thereto. Notwithstanding anything to the contrary in this Lease, Tenant's use of
the Premises for general office purposes is and will be permitted by all
applicable rules, regulations, statutes, ordinances, laws and building codes,
all fire underwriter's requirements and all covenants, conditions, restrictions
and encumbrances applicable to the same.
4.4 Liens and Encumbrances. Tenant shall keep the Premises free and clear
----------------------
of all liens and encumbrances arising or growing out of its use and occupancy of
the Premises. If any lien is filed against the Premises, the Building or the
Park as a result of the acts action or inaction of Tenant, Tenant shall upon
demand post a bond and cause such lien to be removed in accordance with State
law.
4.5 Hazardous Materials. Tenant shall not (either with or without
-------------------
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances or materials within the
Premises, the Building or the Park in violation of any applicable law or
regulation. Tenant shall not allow the storage or use of such substances or
materials in any manner not sanctioned by law or by the highest standards
prevailing in the industry for the storage and use of such substances or
materials, nor allow to be brought into the Project any such materials or
substances except to use in the ordinary course of Tenant's business, and then
only after written notice is given to Landlord of the identity of such
substances or materials. Without limitation, hazardous substance and materials
shall include those substances or materials described in the first sentence of
this Section 4.5, and those described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., any applicable state or local laws and the regulations adopted
under these acts, the Washington Model Toxics Control Act, RCW Chapter
10
70.105D, and asbestos ("Hazardous Materials"). If any lender or governmental
agency should shall ever require testing to ascertain whether or not there has
been any release of Hazardous Materials by Tenant or its employees, agents,
contractors, invitees or licensees anywhere in the Park, then the reasonable
costs thereof shall be reimbursed by Tenant to Landlord upon demand as
additional rent if such requirement applies to the Premises. In addition, Tenant
shall execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's current actual knowledge and belief
regarding the presence of Hazardous Materials on the Premises. In all events,
Tenant shall indemnify Landlord in the manner elsewhere provided in the Lease
from any release of Hazardous Materials caused by Tenant or persons acting under
Tenant. The within covenants shall survive the expiration or earlier termination
of the Lease term. Tenant shall indemnify, defend and hold harmless Landlord
from any and all claims, damages, fines, judgments, penalties, liabilities or
losses (including, without limitation, a decrease in the value of the Premises
or Building, damages caused by loss or restriction of rentable or usable space,
or any damages caused by adverse impact on marketing of the space and any and
all sums paid for settlement of claims, litigation expenses, attorneys' fees,
consulting and expert fees) of whatever kind or nature, known or unknown,
contingent or otherwise, arising during or after the Lease term and arising as a
result of that contamination by Tenant. This indemnification includes, without
limitation, any and all costs incurred because of any investigation of the site
or any cleanup, removal or restoration mandated by federal, state or local
agency or political subdivision. Without limiting the foregoing, if Tenant
causes or permits the presence of any Hazardous Materials on the Premises or the
Building that results in contamination, Tenant shall promptly, at its sole
expense, take any and all necessary actions to return the Premises or Building
to the condition existing prior to the presence of any such Hazardous Materials
on the Premises or Building. Tenant shall first obtain Landlord's approval for
any such remedial action.
Except as previously disclosed to Tenant in writing, to the actual
knowledge of Landlord: (i) no Hazardous Materials are present on the Premises or
the Park or in the soil, surface water or groundwater thereof; (ii) no
underground storage tanks or asbestos containing building materials are present
on the Premises or the Park; and (iii) no proceeding or claim is pending or
threatened regarding the Premises or Park concerning any Hazardous Materials or
pursuant to and environmental law. Landlord has made available to Tenant all
reports and environmental assessments of the Premises or the Park conducted at
the request of or otherwise available to Landlord and Landlord has complied with
all environmental disclosure obligations imposed upon Landlord by applicable law
with respect to this transaction.
4.6 Signs. Tenant shall not erect or place, or permit to be erected or
-----
placed, or maintain any signs of any nature or kind whatsoever on the exterior
walls or windows of the Premises or elsewhere in the Park, except that (1)
Tenant has the nonexclusive right to place one exterior sign on the Building, at
Tenant's sole cost and subject to the other terms of this Section 4.6, and (2)
Tenant shall have the right to place signage on the monument sign east of the
Building on Lake Washington Boulevard, at Tenant's sole cost and subject to the
other terms of this Section 4.6, in the location currently occupied by AT&T
Wireless Services, Inc. when its signage is removed, at the expiration or sooner
termination of its Lease. Tenant agrees to abide
11
by all signing rules and regulations, if any, promulgated by Landlord, and all
signage must comply with all applicable laws and regulations, and must be
acceptable to Landlord. In addition, Landlord agrees to provide Tenant with the
following signage identifying Tenant as an occupant of the. Building in size,
color and style acceptable to Landlord:
a. One (1) Building standard sign on the plaza level lobby directory.
b. One (1) Building standard sign at the main entry to the Premises.
4.7 Generator. During the Lease term, Tenant shall have use of the
---------
generator located near the Building and which currently serves the Premises and
other property. Landlord shall calculate and Tenant shall pay the costs of
operation (including electricity), and routine maintenance and repair of the
generator, in the same manner as Operating Costs are calculated and paid as
provided in this Lease. Tenant acknowledges that the generator currently serves
both the Building and Building IV in the Park. Landlord may allow other tenants
of the Park to use the generator, provided that the costs of operation, routine
maintenance and repair shall be divided equally among the number of tenants
using the generator.
SECTION V - UTILITIES AND OTHER CHARGES
5.1 Utilities and Services.
----------------------
5.1.1 In accordance with Section 3.3 of this Lease, as additional
rent, Tenant shall pay its share of all charges for heat, water, light, gas,
electricity, sewer, garbage, fire protection and any other utilities and/or
services used or consumed on or supplied to the Building and/or the Park,
including the Premises, and not separately metered or charged to Tenant or any
other tenant of the Building or the Park. Tenant shall be solely responsible for
and shall promptly pay when due all charges for telephone and all other charges
which are separately metered or charged to the Premises.
5.1.2 Landlord shall cause the public and common areas of the
Building, such as lobbies, elevators, stairs, corridors and restrooms, to be
maintained in reasonably good order and condition, except for damage occasioned
by any act or omission of Tenant or Tenant's officers, contractors, agents,
invitees, licensees or employees, the repair of which latter damage shall be
paid for by Tenant. Twenty-four (24) hours per day, seven (7) days per week,
Tenant shall have access to the Premises (subject to such Building and Park
security systems and procedures as may be in place from time to time), and
Tenant shall have available to it water and electrical service for lighting and
operation of 110-volt office machines. From 7:00 a.m. to 6:00 p.m. on weekdays
(i.e., Monday through Friday) and 8:00 a.m. to 1:00 p.m. on Saturdays, excluding
legal holidays and holiday weekends (collectively "Normal Business Hours"),
Landlord shall furnish the Premises with heat and air conditioning services. If
requested by Tenant, Landlord shall furnish such services at times other than
Normal Business Hours, and Tenant shall pay for the cost of such after-hours
services at rates established by Landlord from time to time.
12
Landlord will provide janitorial services customary for buildings
comparable to the Building in quality and location, according to the schedule
attached hereto as Exhibit E. If Tenant requires excessive or specialized
janitorial services, Tenant shall promptly pay Landlord the additional costs and
expenses incurred by Landlord in providing such services.
The Building standard mechanical system is designed to accommodate
heating loads generated by lights and equipment using up to 2.5 xxxxx per square
foot. Before installing lights and equipment in the Premises which in the
aggregate exceed such amount, Tenant shall obtain the written permission of
Landlord. Landlord may refuse to grant such permission unless Tenant agrees to
pay the cost of installing supplementary air conditioning units or electrical
systems as necessitated by such equipment or lights. In addition, Tenant shall
pay to Landlord in advance, on the first day of each month during the Lease
term, the amount estimated by Landlord as the cost of furnishing electricity for
the operation of such equipment or lights and the amount estimated by Landlord
as the costs of operation and maintenance of supplementary air conditioning
units or electrical systems as necessitated by Tenant's use of such equipment or
lights. Landlord shall be entitled to install and operate at Tenant's cost a
monitoring/metering system in the Premises to measure the added demands on
electricity, heating, ventilation, and air conditioning systems resulting from
such equipment and lights and from Tenant's after-hours heating, ventilation and
air conditioning service requirements. Tenant shall comply with Landlord's
instructions, rules and regulations for the use of drapes, blinds and
thermostats in the Building.
Landlord shall not be liable for any loss, injury or damage to person
or property caused by or resulting from any variation, interruption, or failure
of such services due to any cause whatsoever, or from failure to make any
repairs or perform any maintenance. No temporary interruption or failure of such
services incident to the making of repairs, alterations or improvements, or due
to accident, strike or conditions or other events beyond Landlord's reasonable
control shall be deemed an eviction of Tenant or to relieve Tenant from any of
Tenant's obligations hereunder or to give Tenant a right of action against
Landlord for damages; provided that in event of any vacation, interruption or
failure of service Landlord shall use its best efforts to restore service to the
Premises and to the Common Areas of the Park as soon as is reasonably possible
under the circumstances.
5.2 Licenses and Taxes. Tenant shall be liable for, and shall pay
------------------
throughout the term of this Lease, all license and excise fees and occupation
taxes covering the business conducted on the Premises and all personal property
taxes levied with respect to all personal property located at the Premises. If
any governmental authority levies a tax or license fee on rents payable under
this Lease or rents accruing from use of the Premises or a tax or license fee in
any form against Landlord or Tenant because of or measured by or based upon
income derived from the leasing or rental thereof (other than a net income tax
on Landlord's income), or a transaction privilege tax, such tax or license fee
shall be paid by Tenant, either directly if required by law, or by reimbursing
Landlord for the amount thereof upon demand.
13
SECTION VI - LETTER OF CREDIT
6.1 Letter of Credit. Within ten (10) days after mutual execution of this
----------------
Lease, Tenant shall cause to be delivered to Landlord an irrevocable,
unconditional, transferable standby letter of credit in the initial sum of
$2,250,000, naming Landlord as beneficiary, issued by a lender acceptable to
Landlord and otherwise acceptable to Landlord in form and content (the "Letter
of Credit"). At least thirty (30) days prior to the expiration of the Letter of
Credit, Tenant shall be obligated to deliver to Landlord a renewal Letter of
Credit satisfying the terms of this Section 6.1. If no such renewal Letter of
Credit is provided, it shall be a material default of this Lease, and no cure
period shall apply to such default. The Letter of Credit shall be governed by
the Uniform Custom and Practices for Documentary Credits, 1993 Revision,
International Chamber of Commerce Publication Number 500.
Provided that Tenant is not then in default under this Lease, the Letter of
Credit may be reduced to the sum of $1,500,000 beginning on September 1, 2002,
and it may be further reduced to $1,000,000 beginning on September 1, 2003. The
Letter of Credit shall remain in place through November 30, 2004. If Tenant
breaches any covenant or condition of this Lease, including but not limited to
the payment of rent or additional rent, and fails to cure such breach within any
cure period provided in this Lease, Landlord may draw on the Letter of Credit
and apply any sums so drawn to reimburse itself for any damages suffered as a
result of Tenant's breach, regardless of whether Landlord has previously taken
any other action against Tenant. Any payment to Landlord from the Letter of
Credit shall not be construed as a payment of liquidated damages for any
default.
If this Lease includes an Additional Term, then during any such Additional
Term the Tenant shall maintain a Letter of Credit satisfying the terms of this
Section 6.1 in the amount of $1,000,000 throughout any such Additional Term.
Tenant may request that Landlord forego the requirement of a Letter of Credit
during any Additional Term, and Landlord may grant or deny this request in
Landlord's discretion.
SECTION VII - COMPLETION AND ALTERATIONS
7.1 Delivery of Premises. Landlord shall deliver the Premises to Tenant
--------------------
broom clean, and in good condition and repair, less reasonable wear and tear
from the previous tenant. The electrical, mechanical, I-P/AC, plumbing, elevator
and other systems serving the Premises and the Building shall be in good
condition and repair. Otherwise, the Premises shall be delivered in their
current condition. Landlord shall have no obligation to alter or construct any
tenant improvements on the Premises. Landlord shall provide a tenant improvement
allowance to Tenant in the amount of five dollars ($5.00) per usable square foot
for improvements to be made by Tenant to the Premises at the commencement of the
Lease term. All improvements shall be made by Tenant using contractors approved
by Landlord, and otherwise in accordance with the terms of Section 7.2 below.
The tenant improvement allowance shall be used to reimburse Tenant for hard
construction costs incurred in making improvements to the Premises, including
paint, carpet and interior modifications, provided that no portion of the tenant
improvement allowance shall be used for Tenant's networking or cabling. Tenant
shall submit its request for
14
reimbursement to Landlord, together with written evidence showing eligible costs
incurred by Tenant, and Landlord shall reimburse Tenant for such eligible costs
incurred in compliance with this Lease within twenty (20) days after such
materials are submitted by Landlord to Tenant. Tenant, may at its option, seek
reimbursement from the tenant improvement allowance for improvements made at the
commencement of lease term, or later during the initial five (5) year lease
term; provided, however, that any portion of the initial tenant improvement
allowance not used during the initial five (5) year lease term shall cease to be
eligible for Tenant's reimbursement.
7.2 Alterations by Tenant. Tenant shall not make any alterations,
---------------------
additions or improvements in or to the Premises without first submitting to
Landlord professionally-prepared plans and specifications for such work and
obtaining Landlord's prior written approval thereof. Tenant covenants that it
will cause all such alterations, additions and improvements to be performed at
Tenant's sole cost and expense by Landlord or a contractor approved by Landlord
and in a manner which: (a) is consistent with the Landlord-approved plans and
specifications and any conditions imposed by Landlord in connection therewith;
(b) is in conformity with commercial standards; (c) includes acceptable
insurance coverage for Landlord's benefit; (d) does not affect the structural
integrity of the Building; (e) does not disrupt the business or operations of
adjoining tenants; and (f) does not invalidate or otherwise affect the
construction and systems warranties then in effect with respect to the Park.
With respect to any alterations, additions and improvements made by Landlord for
Tenant, Tenant shall pay Landlord a supervision fee which shall be in an amount
comparable to the fee a third party contractor would charge in connection with a
comparable project. Tenant shall secure all governmental permits and approvals,
as well as comply with all other applicable governmental requirements and
restrictions. All alterations, additions and improvements (expressly including
all light fixtures, heating, ventilation and air conditioning units and floor
coverings) shall be Tenant's property until expiration or earlier termination of
this Lease, and Tenant shall be entitled to all depreciation, amortization or
other fee benefits related thereto during the Lease term; upon expiration or
sooner termination of the Lease term such items shall immediately become the
property of Landlord without any obligation on its part to pay therefor. Tenant
shall remove such improvements on the termination of this Lease unless otherwise
directed by Landlord at the time Landlord approves such improvements. All trade
fixtures, appliances, equipment not affixed to the Premises and other personal
property of Tenant shall remain Tenant's property, and Tenant shall be entitled
to all depreciation thereto. Landlord shall respond to Tenant in writing of its
approval or disapproval of any proposed alteration under this paragraph with
fifteen (15) days following Tenant's written request for approval.
7.3 Nonstructural Alterations. Notwithstanding Section 7.2 above, Tenant
-------------------------
may construct interior, nonstructural alterations, additions and improvements
which do not affect the Building systems (the "Nonstructural Alterations") in
the Premises after prior written notice to Landlord, but without Landlord's
prior written approval, if the cost of such Nonstructural Additions does not
exceed Two Thousand Dollars ($2,000).
15
SECTION VIII - MAINTENANCE OF PREMISES
8.1 Care of Premises. Tenant shall perform routine maintenance of the
----------------
Premises and otherwise keep, the Premises in good order, condition and repair.
Tenant shall reimburse Landlord for all damage done to the Building, the Park or
the Premises occasioned by any act or omission of Tenant or Tenant's officers,
employees, contractors, agents, invitees, licensees or employees, including, but
not limited to, cracking or breaking of glass. If Tenant fails to perform
routine maintenance or to keep the Premises in good order, condition and repair,
Landlord, at its option, may do so, and in such event upon receiving written
statements from Landlord, Tenant shall promptly pay the entire cost thereof as
additional rent. Landlord shall have the right to enter the Premises for such
purposes.
8.2 Repairs by Landlord: Maintenance and Repair Charges. Except for
---------------------------------------------------
repairs which are Tenant's responsibility under Section 8.1 above, all normal
repairs necessary to maintain the Premises and the Building in a reasonable
condition as a first class office building, as determined by Landlord in the
reasonable exercise of its discretion, shall be performed by Landlord and the
costs incurred by Landlord in so doing shall be reimbursed to Landlord as an
Operating Cost in accordance with Section 3.3 above. Except as provided in
Section XII below, there shall be no abatement of rent or additional rent and no
liability to Landlord under any circumstances by reason of any loss of or any
injury to property, lost profits, or for injury to or interference with Tenant's
business arising from the making of or Landlord's failure to make any repairs,
alterations or improvements or reduction of rent arising by reason of Landlord's
making of repairs, alterations or improvements.
8.3 Surrender of Premises. At the expiration or sooner termination of this
---------------------
Lease, Tenant shall return the Premises to Landlord in the same condition it was
in following Tenant's approved alterations made at the commencement of the Lease
term (unless otherwise directed by Landlord under terms of Section 7.2),
reasonable wear and tear, casualty and condemnation excepted. Prior to such
return, Tenant shall remove its trade fixtures and appliances and equipment
which have not been attached to the Premises, and shall restore the Premises to
the condition they were in. prior to the installation of said items. In no event
shall Tenant remove floor coverings; heating, ventilating and air conditioning
equipment; lighting equipment or fixtures; wall coverings; window coverings; or
other operating equipment or decorations unless otherwise directed by Landlord.
Tenant's obligation to perform this covenant shall survive the expiration or
termination of this Lease.
SECTION IX - COMMON AREAS
9.1 Control of Common Areas by Landlord. During the term of this Lease,
-----------------------------------
Tenant and its employees, customers and invitees, shall have the non-exclusive
right to use all entrances, lobbies and other public areas of the Building and
the Park (the "Common Areas"), in common with Landlord, other Building and Park
tenants and their respective employees, customers and invitees, Landlord at all
times shall have the exclusive control and management of the Common Areas and no
diminution of the Common Areas shall be deemed a constructive or actual eviction
16
of Tenant or entitle Tenant to compensation. No diminution of the Common Areas
shall entitle Tenant to an abatement of rent, provided Tenant retains reasonable
use and enjoyment of the Premises. Landlord shall have the right from time to
time to establish, modify and enforce rules and regulations regarding the use of
the Common Areas and the right to change the area, level, location and
arrangement of the Common Areas.
9.2 Parking. One hundred forty-five (145) covered parking stalls in the
-------
Building parking garage have been allocated to the Premises and ninety-six (96)
uncovered parking stalls elsewhere in the Park have been allocated to the
Premises. All of the stalls allocated to the Premises are unreserved and
available on a first come, first served basis. Tenant shall pay for covered
parking stalls at the initial rate of forty dollars ($40) per month, which rate
shall be fixed for the first year of the Lease term. Thereafter, Landlord may
increase the cost of covered parking stalls to the fair market rental value of
such stalls, not to exceed an adjustment in excess of an increase of twenty five
percent (25%) per year, cumulative, beginning the commencement of the second
year during the Lease term. There shall be no charge to Tenant for use of
uncovered parking stalls during the first two (2) years of the Lease term.
Thereafter, Landlord may charge the fair market rental value for uncovered
parking stalls, provided that (i) the initial charge for such stalls shall not
exceed twenty dollars ($20) per stall, (ii) Landlord is charging all tenants in
the Park using uncovered parking stalls (unless Landlord cannot under the terms
of a lease existing as of the mutual execution of this Lease), and (iii) any
increase above the initial charge per parking shall be limited to twenty five
percent (25%) per year, cumulative, during the Lease term. If Tenant exercises
any option to renew this Lease, then the limitations on parking charges which
may be made by Landlord under this Lease shall not apply during any renewal
term, notwithstanding any language in Section 2.6 to the contrary, and Tenant
shall pay for covered and uncovered parking at the then fair market rental rate
during the renewal term. Tenant shall cause its employees and invitees to comply
with such rules and regulations from time-to-time promulgated with respect to
the parking areas of the Building and the Park.
SECTION X - INSURANCE AND INDEMNITY
10.1 Indemnification. Landlord shall not be liable for any injury to any
---------------
person, or for any loss of or damage to any property (including property of
Tenant) occurring in or about the Premises from any cause whatsoever, other than
the negligence or intentional misconduct of Landlord or its employees or agents.
Tenant shall indenmify, defend and save Landlord, its officers, agents,
employees and contractors, and other tenants and occupants of the Park, harmless
from all losses, damages, fines, penalties, liabilities and expenses (including
Landlord's personnel and overhead costs and attorneys' fees and other costs
incurred in connection with such claims, regardless of whether claims involve
litigation) resulting from any actual or alleged injury to any person or from
any actual or alleged loss of or damage to any property alleged to be
attributable to Tenant's operation or occupation of the Premises or caused by or
resulting from any act or omission of Tenant or any licensee, assignee, or
concessionaire, or of any officer, agent, employee, guest or invitee of any such
person in or about the Premises, including, but not limited to, the deposit or
release of hazardous or toxic materials or substances or Tenant's breach of its
obligations hereunder. Tenant agrees that the foregoing indemnity specifically
covers
17
actions brought by its own employees. Notwithstanding any of the foregoing, if
losses, liabilities, damages, liens, costs and expenses so arising are caused by
the concurrent negligence of both Landlord and Tenant, their employees, agents,
invitees and licensees, Tenant shall indemnify Landlord only to the extent of
Tenant's own negligence or that of its officers, agents, employees, guests or
invitees. As between Landlord and Tenant, the foregoing indemnity is
specifically and expressly intended to constitute a waiver of Tenant's immunity
under Washington's Industrial Insurance Act, RCW Title 51, for the sole purpose
of and only to the extent necessary to provide Landlord with a full and complete
indemnity from claims made against Landlord by Tenant's employees. The
indemnification provided for in this Section with respect to acts or omissions
during the term of this Lease shall survive termination or expiration of this
Lease. Tenant shall promptly notify Landlord of casualties or accidents
occurring in or about the Premises. LANDLORD AND TENANT ACKNOWLEDGE THAT THE
INDEMNIFICATION PROVISIONS OF THIS SECTION 10.1 WERE SPECIFICALLY NEGOTIATED AND
AGREED UPON BY THEM.
10.2 Insurance. Tenant shall, at its own expense, maintain comprehensive
---------
or commercial general liability insurance with broad form and stop gap
(employer's liability) endorsements in minimum limits of $2,000,000 per
occurrence for property damage or loss and minimum limits of $2,000,000 per
occurrence for personal injuries and death, to indemnify Landlord, Tenant and
any lender designated by Landlord ("Lender") against claims, demands, losses,
damages, liabilities and expenses. Landlord shall have the right to periodically
review the appropriateness of such limits in view of changing industry
conditions and court decisions and to require a reasonable increase in such
limits upon ninety (90) days prior written notice to Tenant. Landlord and Lender
shall be named as additional insureds and shall be furnished with a copy of such
policy or policies of insurance which shall bear an endorsement that the same
shall not be canceled nor materially reduced in coverage or limits without
thirty (30) days prior written notice to Landlord and Lender. During the Lease
term, Tenant shall also maintain at its own expense insurance covering its
furniture, fixtures, equipment and inventory and all improvements which it makes
to the Premises in an amount equal to the full insurable value thereof, against
fire and such other perils as are covered by an all risk policy with plate glass
endorsement, including all glass on the Premises. All insurance required under
this Lease shall (a) be issued by insurance companies authorized to do business
in the State of Washington and having a financial rating of at least A, Class X
status, as rated in the most recent edition of Best's Insurance Reports, or with
companies otherwise acceptable to Landlord; (b) be issued as a primary policy,
or under the blanket policy, not contributing with and not in excess of coverage
which Landlord may carry; (c) in the case of the liability policy, contain a
contractual liability coverage endorsement covering Tenant's indemnification
duty; and (d) with deductibles reasonably approved by Landlord. If Tenant fails
to maintain such insurance, Landlord may do so, and Tenant shall reimburse
Landlord for the full expense thereof upon demand.
During the term of this Lease, Landlord shall maintain special extended
coverage casualty insurance on the Building in the amount of the replacement
cost of the Building, and on such other terms as Landlord deems appropriate.
Landlord may also maintain other insurance coverage for the Building or the
Park, including commercial general liability insurance and loss
18
of rents insurance, in such amounts and on such terms as Landlord's lender may
require or as Landlord shall otherwise deem prudent in the exercise of its
business judgment.
10.3 Increase in Insurance Premiums. Tenant shall not keep, use, sell or
------------------------------
offer for sale in or upon the Premises any article which is prohibited by
Landlord's insurance policy. Tenant shall pay immediately any increase in
Landlord's premiums for insurance during the term of this Lease which results
from Tenant's occupancy or use of the Premises. In determining whether increased
premiums are the result of Tenant's use of the Premises, a schedule, issued by
the organization establishing the insurance rate on the Premises showing the
various components of such rate, shall be conclusive evidence of the several
items and charges which make up the insurance rate on the Premises.
10.4 Waiver of Subrogation. Notwithstanding any other provision in this
---------------------
Lease, neither Landlord nor Tenant shall be liable to the other party or to any
insurance company (by way of subrogation or otherwise) insuring the other party
for any loss or damage to any building, structure or tangible personal property
of the other occurring in or about the Premises, even though such loss or damage
might have been occasioned by the negligence of such party, its agents or
employees, if such loss or damage is covered by insurance benefiting the party
suffering such loss or damage or was required to be covered by insurance under
terms of this Lease. Each party shall cause each insurance policy obtained by it
to contain the waiver of subrogation clause.
SECTION XI- ASSIGNMENT AND SUBLETTING
11.1 Assignment or Sublease. Tenant shall not voluntarily, involuntarily
----------------------
or by operation of law, assign, sell, pledge, transfer, mortgage or encumber
this Lease or any interest therein, or sublet the whole or any part of the
Premises (any of which events being a "Transfer" and any such assignee,
purchaser, mortgagee, pledgee or other transferee being a "Transferee" for
purposes of this Section XI) without first obtaining Landlord's written consent,
which shall not be unreasonably withheld if all of the following conditions
precedent are fully and completely satisfied, but which otherwise may be
withheld by Landlord in its sole discretion:
(a) The proposed Transferee is at least as creditworthy as Tenant
when Tenant entered into this Lease, and satisfies Landlord's then current
credit standards for tenants of the Building and the Park, and in Landlord's
reasonable business judgment has the financial strength and stability to perform
all obligations under this Lease to be performed by Tenant as and when they fall
due.
(b) The proposed Transferee will use the Premises for a purpose which
in Landlord's opinion (i) is lawful, (ii) is consistent with the permitted use
of the Premises under this Lease, (iii) is consistent with the first class
character of business carried on by tenants at the Park does not conflict with
any exclusive rights or covenants not to compete in favor of any other tenant or
proposed tenant in the Building and the Park, (v) will not increase the
likelihood of damage or destruction, (vi) will not increase the rate of wear and
tear to the Premises or common
19
areas, (for example, a tenant who will routinely operate at full capacity
outside of Normal Building Hours, or who has a significantly higher number of
personnel at the Premises per 1,000 rentable square feet than Tenant does upon
its full occupancy of the Premises), (vii) will not likely cause an increase in
insurance premiums for insurance policies applicable to the Building (unless the
proposed Transferee agrees to pay such additional cost), and (viii) will not
require new tenant improvements incompatible with then existing Building
systems.
(c) Tenant pays to Landlord all of Landlord's reasonable attorneys'
fees and costs incurred in connection with negotiation, review and processing of
the Transfer, plus a processing fee of $1,000.
(d) At the time of the proposed Transfer, Tenant is not in default
under or in breach of any term, provision or covenant of this Lease.
(e) In Landlord's reasonable business judgment: (i) the proposed
Transferee must have a first class business reputation, (ii) the proposed
transfer shall not create an undesirable mix of tenants at the Park, and (iii)
the proposed Transferee's business shall not be considered immoral or offensive
by other tenants at the Park.
(f) At least seventy-five percent (75%) for the rentable area of the
Building and the Park is leased to paying tenants, provided that for this
purpose the vacancy that may be created by the expiration of AT&T Wireless
Services, Inc. lease of Building IV at the Park on February 28, 2001 will not be
considered in this calculation.
(g) The Transfer will not otherwise have or cause a material adverse
impact on Landlord's interests in the Park, the Building or the Premises.
No Transfer shall relieve Tenant of any liability under this Lease. Consent to
any Transfer shall not operate as a waiver of the necessity of a consent to any
subsequent Transfer, and the terms of such consent shall be binding upon any
Person holding by, under or through Tenant.
11.2 Entity Ownership. The cumulative transfer (i.e. in one or more sales
----------------
or transfers, by operation of law or otherwise) of an aggregate of fifty percent
(50%) or more of the voting stock issued and outstanding on the date of this
Lease is executed by Landlord, including by creation or issuance of new stock of
a corporation which is (i) owned by Tenant, (ii) the corporate assignee of
Tenant, or (iii) any corporation which is a general partner in a general or
limited partnership or member of a limited liability company which is the tenant
or an assignee of the tenant of this Lease; or the cumulative transfer of an
aggregate of fifty percent (50%) or more of the ownership interest in a general
or limited partnership, limited liability company or other entity which is the
tenant or an assignee of the tenant, by which an aggregate of fifty percent
(50%) or more of such ownership interest is vested in a person or persons who
are riot general partners, members or other owners (except as the result of
transfer by gift or inheritance), shall be deemed a Transfer of this Lease and
shall be subject to the provisions of Section 11.1 except that for purposes of
this Section 11.2 only, Section 11.1(f) shall not apply. For the
20
purpose of Section 11.1, any entity which has undergone any of the changes
described in this Section shall be deemed to be a Transferee. Prior to
completing a Transfer as described in this Section 11.2, Tenant shall furnish
to Landlord full and complete financial and business information on the intended
Transferee, and notify Landlord of any change in the use and occupancy of the
Premises that will result from such Transfer. Landlord shall have ten (10)
business days in which to provide Tenant with a written response as to whether
it will approve the Transfer occurring under this Section 11.2, according to the
criteria specified in Section 11.1 above (excluding Section 11.1 (f)). If
Landlord fails to respond to Tenant's request for consent to such a Transfer
within ten (10) business days after Landlord's receipt of all information
reasonably required to be provided by Tenant under this Section 11.2, then
Tenant's proposed transfer shall be deemed approved. The term "voting stock"
means the stock regularly entitled to vote for election of directors of the
corporation; and any stock, however denominated, which is convertible into such
voting stock, shall be treated for purposes of the foregoing as if it were in
fact converted. The two immediately preceding sentences, however, shall not be
applicable to any Tenant corporation the outstanding voting stock of which is
listed on a national securities exchange actively traded "over the counter", or
in connection with the listing of such stock on a national securities exchange.
11.3 Recapture by Landlord. Except as provided below in this Section 11.3,
---------------------
if Tenant at any time desires to Transfer this Lease, it shall give written
notice (a "Tenant Transfer Notice") to Landlord of its desire to do so at least
forty-five (45) days prior to the earliest effective date of any such Transfer.
The Tenant Transfer Notice shall identify specifically the portion of the
Premises that Tenant wishes to Transfer. If Tenant thereafter has a specific
Transfer that it wishes to complete, Tenant shall give a special written notice
(a "Tenant Transfer Specification") to Landlord which notice shall state the
rent at which it proposes so to Transfer and shall contain full and complete
financial and business information on its intended Transferee. In addition to
Landlord's rights under Section 11.1, Landlord may elect by notice to Tenant (a
"Landlord's Repossession Notice"), within ten (10) days of receipt of the Tenant
Transfer Specification, to terminate this Lease as to that portion of the
Premises subject to the Tenant Transfer Specification. If Landlord exercises
such right to terminate, Landlord shall be entitled to recover possession of the
portion of the Premises subject of the Tenant Transfer Specification on the
later of (i) the proposed date for possession by such Transferee, as set out in
the Tenant Transfer Notice, or (ii) forty-five (45) days after the date of
Landlord's Repossession Notice. If Landlord does not exercise such right to
terminate and otherwise approves the transfer, Tenant may thereafter Transfer
this Lease or a portion of the Premises subject thereof, but at a rental not
less than that offered to Landlord in the Tenant Transfer Specification and not
later than forty-five (45) days after delivery of the Tenant Transfer
Specification to Landlord, unless a further notice is given pursuant to this
section, provided (i) Landlord consents thereto pursuant to Section 11.1, (ii)
Tenant delivers to Landlord prior to the effective date of any such Transfer
duplicate originals of any instrument effecting such Transfer, in form and
content satisfactory to Landlord, and (iii) all amounts received by Tenant from
the Transferee for the transfer of the leasehold interest (but excluding
Tenant's personal property and other assets) in excess of the Rent payable
hereunder for the area of the Premises so Transferred shall belong to and shall
immediately be paid to Landlord as Additional Rent. No action or inaction by
Landlord in
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connection with its rights under this Section 11.3 shall constitute or be deemed
to constitute an approval of a proposed Transfer for purposes of Section 11.1
except as specifically set forth in a notice from Landlord to Tenant.
The recapture rights granted under this Section 11.3 shall not apply (i) to any
Transfer under Section 11.2, or (ii) any sublease(s) by Tenant of up to a total
subleased amount of twenty five thousand (25,000) rentable square feet at any
given time (e.g., one floor of the Building).
11.4 Assignee Obligation. Any Transferee other than a subtenant approved
-------------------
by Landlord shall assume all obligations of Tenant and shall be jointly and
severally liable with Tenant for the payment of rent, additional rent and other
charges and performance of all of Tenant's obligations under this Lease. Tenant
shall provide Landlord with full and complete duplicate originals of all
instruments of assignment, sublease or assumption. It shall not be unreasonable
for Landlord to withhold consent to a proposed assignment or sublease because it
wishes to exercise its right to recapture all or part of the Premises under
Section 11.3 hereof, or because (a) the proposed transferee is any governmental
agency, federal, state, local or foreign government or incorporation, (b) the
transfer would cause the Landlord to violate another lease or agreement to which
Landlord is a party or would give a Building tenant the right to cancel its
lease, or (c) the proposed transferee occupies space in the Building or the
Park, is negotiating with Landlord to lease space in the Building or the Park,
or has negotiated with Landlord to lease space in the Building or the Park
during the six (6) months immediately proceeding the notification from Tenant.
11.5 Additional Consideration. If Tenant assigns its interest under this
------------------------
Lease, or sublets all or any portion of the Premises, Tenant shall pay to
Landlord (in addition to minimum rent and all other amounts payable by Tenant
under this Lease) as additional rent, within ten (10) days after receipt, all
rent, bonus rent, assignment fees and other consideration for the demise of the
Premises payable by the assignee or subtenant in excess of (a) the rent
otherwise payable by Tenant from time to time under this Lease, and (b)
reasonable legal fees and leasing commissions incurred by Tenant due to the
sublease or assignment, and (c) out-of-pocket costs incurred by Tenant to pay
the costs of labor and materials paid to third parties for renovations made to
the premises to accommodate the assignee or subtenant.
11.6 Assignment by Landlord. If Landlord sells or otherwise transfers the
----------------------
Building, or if Landlord assigns its interest under this Lease (other than for
security purposes), such purchaser, transferee or assignee thereof shall be
deemed to have assumed Landlord's obligations hereunder, and Landlord shall
thereupon be relieved of all liabilities hereunder, but this Lease shall
otherwise remain in full force and effect.
SECTION XII - DESTRUCTION OF PREMISES
12.1 Partial Destruction. If the Premises are rendered partially
-------------------
untenantable by fire or other insured casualty. and if the damage is repairable
within sixty (60) days from the date of the occurrence (with the repair work and
preparations therefore to be done during regular working
22
hours on regular work days), Landlord shall repair the Premises with due
diligence and the minimum rent shall be abated in the proportion that the
untenantable portion of the Premises bears to the whole thereof for the period
from the date of the casualty to the completion of the repairs. If thirty
percent (30%) or more of the rentable area of the Building is destroyed or
damaged, regardless of whether the Premises are damaged, Landlord may terminate
this Lease as of the date of such damage or destruction by giving notice to
Tenant within thirty (30) days thereafter of the election so to do.
12.2 Total Destruction. If the Premises are completely destroyed by fire
-----------------
or other casualty, or if they are damaged by uninsured casualty, or by insured
casualty to such an extent that the damage cannot be repaired within sixty (60)
days of the occurrence, Landlord shall have the option to restore the Premises
or to terminate this Lease on sixty (60) days written notice, effective as of
any date not more than sixty (60) days after the occurrence. If this Section
becomes applicable, Landlord shall advise Tenant within thirty (30) days after
such casualty whether Landlord elects to restore the Premises or to terminate
this Lease. If Landlord elects to restore the Premises, it shall commence and
prosecute the restoration work with diligence. For the period from the date of
the casualty until completion of the repairs (or the date of termination of this
Lease, if Landlord elects not to restore the Premises), the minimum rent shall
be abated in the same proportion that the untenantable portion of the Premises
bears to the whole thereof. If the Premises are totally damaged or destroyed,
and the repairs to the Premises can not be completed within six (6) months after
the damage or destruction (subject to delays such as force majeure delays which
are beyond Landlord's control), Landlord shall so notify Tenant in writing
within thirty (30) days after the casualty event, and Tenant shall have the
right to terminate this Lease by written notice given to Landlord within thirty
(30) days after receiving Landlord's notice.
12.3 Limitation. Except as otherwise provided in this Lease, Landlord shall not
be liable to Tenant for destruction or damage to any of Tenant's property
including fixtures, equipment or other improvements, or for damages or
compensation for inconvenience, loss of business or disruption arising from
repairs or restoration of any portion of the Building or the Premises.
SECTION XIII - EMINENT DOMAIN
13.1 Total Taking. If all of the Premises are taken by eminent domain,
------------
this Lease shall terminate as of the date Tenant is required to vacate the
Premises and all rentals shall be paid to that date. The term "eminent domain"
shall include the taking or damaging of property by, through or under any
governmental or statutory authority, and any purchase or acquisition in lieu
thereof, whether the damaging or taking is by government or any other person.
13.2 Partial Taking. If a taking of any part of the Premises by eminent
--------------
domain renders the remainder thereof unusable for the business of Tenant, in the
reasonable judgment of Landlord, this Lease may, at the option of either party,
be terminated by written notice given to the other party not more than thirty
(30) days after Landlord receives notice (and provides Tenant
23
written notice) of the taking, and such termination shall be effective as of the
date when Tenant is required to vacate the portion of the Premises so taken. If
this Lease is so terminated, all rent shall be paid to the date of termination.
Whenever any portion of the Premises is taken by eminent domain and this Lease
is not terminated, Landlord shall at its expense proceed with all reasonable
dispatch to restore, to the extent of available proceeds and to the extent it is
reasonably prudent to do so, the remainder of the Premises to the condition it
was in immediately prior to such taking, and Tenant shall at its expense proceed
with all reasonable dispatch to restore its fixtures, furniture, furnishings,
floor covering and equipment to the same condition they were in immediately
prior to such taking. The minimum rent payable hereunder shall be reduced from
the date Tenant is required to partially vacate the Premises in the same
proportion that the area taken bears to the total area of the Premises prior to
taking.
13.3 Damages. Landlord reserves all right to the entire damage award or
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payment for any taking by eminent domain or a transfer in lieu thereof, and
Tenant waives all claim whatsoever against Landlord for damages for termination
of its leasehold interest in the Premises or for interference with its business
as a result of such taking. Tenant hereby grants and assigns to Landlord any
right Tenant may now have or hereafter acquire to such damages and agrees to
execute and deliver such further instruments of assignment as Landlord may from
time to time request; however, Tenant shall have the right to claim from the
condemning authority all compensation that may be recoverable by Tenant on
account of any loss incurred by Tenant in removing Tenant's furniture, trade
fixtures, equipment and moving expenses to the extent such damages are awarded
separately in the eminent domain proceeding and not as part of Landlord's
damages.
SECTION XIV - DEFAULT OF TENANT
14.1 Defaults.
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14.1.1 Time is of the essence of this Lease. Tenant shall be in
default under this Lease if: (i) Tenant violates or breaches or fails to keep or
perform any covenant, term or condition of this Lease (herein a "Breach") and
fails to cure within any applicable cure period; (ii) Tenant or any guarantor of
Tenant's obligations under this Lease (a "Guarantor") files or is the subject of
a petition in bankruptcy; (iii) a trustee or receiver is appointed for Tenant's
or any Guarantor's assets; (iv) Tenant or any Guarantor makes an assignment for
the benefit of creditors; or (v) Tenant vacates or abandons the Premises. If the
Breach under (i) above is the nonpayment of rent, additional rent or any other
sum payable by Tenant under this Lease, Tenant shall not be in default until
five (5) days after written notice of such non-payment. If the Breach under (i)
above is something other than nonpayment of rent, additional rent or any other
sum payable by Tenant under this Lease before Tenant shall be in default, Tenant
shall have thirty (30) days following receipt of written notice from Landlord to
cure the Breach; provided, if the nature of the Breach is such that the same
cannot reasonably be cured within such thirty (30) day period, the cure period
shall be extended for so long as may be reasonably necessary to cure the Breach
so long as Tenant commences the cure within the initial thirty (30) day period,
thereafter diligently prosecutes the cure to completion in good faith, and
furnishes Landlord with such
24
assurances and indemnities as Landlord may reasonably require to insure
completion thereof and fully and completely protect Landlord from any loss or
liability resulting from any such default or any delay by Tenant in curing the
Breach. The foregoing notices and cure periods shall include but not be in
addition to any notices and cure periods otherwise required by RCW 59.12, as now
or hereafter amended, or any legislation in substitution thereof.
14.1.2 If a Breach is not cured within the applicable cure period, if
any, Landlord shall have the following rights and remedies, at its option which
shall not be exclusive, but shall be cumulative and in addition and supplemental
to any and all other rights and/or remedies that Landlord may have at law or if
equity: (1) to declare the term hereof ended and to reenter the Premises and
take possession thereof and remove all persons therefrom, and Tenant shall have
no further claim thereon or hereunder; (2) without declaring this Lease
terminated, to reenter the Premises and occupy the whole or any part thereof for
and on account of Tenant and to collect any unpaid rentals and other charges,
which have become payable, or which may thereafter become payable; or (3) even
though it may have reentered the Premises, to thereafter elect to terminate this
Lease and all of the rights of Tenant in or to the Premises. If Landlord
reenters the Premises under option (2) above, Landlord shall not be deemed to
have terminated this Lease or the liability of Tenant to pay any rental or other
charges thereafter accruing, or to have terminated Tenant's liability for
damages under any of the provisions hereof, by any such reentry or by any
action, in unlawful detainer or otherwise, to obtain possession of the Premises,
unless Landlord shall have notified Tenant in writing that it has so elected to
terminate this Lease, and Tenant further covenants that the service by Landlord
of any notice pursuant to the unlawful detainer statutes and the surrender of
possession pursuant to such notice shall not (unless Landlord elects to the
contrary at the time of or at any time subsequent to the serving of such notices
and such election is evidenced by written notice to Tenant) be deemed to be a
termination of this Lease. In the event of any entry or taking possession of the
Premises, Landlord shall have the right, but not the obligation, to remove
therefrom all or any part of the personal property located therein and may place
the same in storage at a public warehouse at the expense and risk of Tenant.
14.1.3 If Landlord elects to terminate this Lease pursuant to the
provisions of options (1) or (3) in Section 14.1.2 above, Landlord may recover
from Tenant as damages the following: (i) the worth at the time of award of any
unpaid rental which had been earned at the time of such termination; plus (ii)
the worth at the time of award of the amount by which the unpaid rental which
would have been earned after termination until the time of award exceeds the
amount of such rental loss Tenant proves could have been reasonably avoided;
plus (iii) the worth, at the time of award of the amount by which the unpaid
rental for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform its obligations under this Lease,
including, but not limited, any costs or expenses incurred by Landlord in (1)
retaking possession of the Premises, including reasonable attorneys' fees
therefor, (2) maintaining or preserving the Premises after such default, (3)
preparing the Premises for reletting to a new tenant, including repairs or
alterations to the Premises for such reletting, (4) leasing commissions, and (5)
any
25
other costs necessary or appropriate to relet the Premises; plus (v) at
Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by the laws of the State of
Washington; plus (vi) the total value at the time of the award of all of the
concessions granted to Tenant at the time of signing this Lease, prorated based
on the remainder of the initial term of the Lease. Notwithstanding the
foregoing, Landlord shall not be entitled to any duplicative damage awards. As
used in items (i) and (ii) above, the "worth at the time of award" is computed
by allowing interest at the interest rate specified in Section 3.4 hereof. As
used in item (iii) above, the "worth at the time of award" is computed by using
a discount rate of six percent (6%).
14.1.4 For all purposes of this Section 14.1 only, the term "rental"
shall be deemed to be the minimum rent and all additional rent and other sums
required to be paid by Tenant pursuant to the terms of this Lease. All such
sums, other than the minimum rent, shall, for the purpose of calculating any
amount due under the provisions of subparagraph (iii) above, be computed on the
basis of the average monthly amount thereof accruing during the immediately
preceding twelve (12) month period, except that if it becomes necessary to
compute such rental before such a twelve (12) month period has occurred then
such rental shall be computed on the basis of the average monthly amount hereof
accruing during such shorter period.
14.2 Lega1 Expenses. If either party consults an attorney in order to
--------------
enforce this Lease the prevailing party shall be entitled to reimbursement from
the non-prevailing party for the prevailing, party's reasonable costs and
attorneys' fee, whether such costs and attorneys' fees are incurred with or
without litigation, in a bankruptcy court or on appeal.
14.3 Remedies Cumulative; Waiver. Landlord's remedies hereunder are
---------------------------
cumulative, and Landlord's exercise of any right or remedy due to a default or
breach by Tenant shall not be deemed a waiver of, or alter, affect or prejudice
any other right or remedy which Landlord may have under this Lease or by law.
Neither the acceptance of rent nor any other acts or omissions of Landlord at
any time or times after the happening of any event authorizing the cancellation
or forfeiture of this Lease shall operate as a waiver of any past or future
violation, breach or failure to keep or perform any covenant, agreement, term or
condition hereof or to deprive Landlord of its right to cancel or forfeit this
Lease, upon the written notice provided for herein, at any time that cause for
cancellation or forfeiture may exist, or be construed so as at any future time
to stop Landlord from promptly exercising any other option, right or remedy that
it may have under any term or provision of this Lease.
SECTION XV - ACCESS BY LANDLORD; DEFAULT OF LANDLORD
15.1 Right of Entry. Landlord and its agents shall have the right to enter
--------------
the Premises at any time upon reasonable prior notice to Tenant of not less than
twenty-four (24) hours (except in cases of emergency), to examine the same, to
show them to prospective purchasers, lenders or (during the last nine (9) months
of the Lease term) tenants, to make such alterations, repairs, improvements or
additions as Landlord may deem necessary or desirable: provided, in an
26
emergency or perceived emergency or to provide normal services (such as
janitorial service) to the Premises, no advance notice shall be required. If
Tenant is not personally present to permit entry and an entry is necessary in an
emergency, Landlord may enter the same by master key or may forcibly enter the
same, without rendering Landlord liable therefor. Nothing contained herein shall
be construed to impose upon Landlord any duty of repair except as specifically
provided for herein. Tenant shall not change the locks to the Premises without
first advising Landlord thereof and providing Landlord with evidence that the
new lock is keyed to Landlord's master key system for the Park. Landlord shall
abide by any security procedures designed to protect Tenant's proprietary or
confidential information and processes in exercising its right of entry.
15.2 Excavation. If Landlord authorizes an excavation upon land adjacent
----------
to the Premises, Tenant shall permit the person doing the excavation to enter
the Premises for the purpose of doing such work as Landlord deems necessary to
preserve the walls of the Building from injury or damage and to support the same
by proper foundations, without any claim for damage or indemnification against
Landlord or diminution or abatement of rent.
15.3 Default of Landlord. If Landlord defaults in the performance of any
-------------------
covenant required to be performed by Landlord, Tenant may serve upon Landlord a
written notice specifying the default. If Landlord does not remedy the default
within thirty (30) days following receipt thereof or, in the case of a default
which takes more than thirty (30) days to cure, if Landlord has not commenced to
remedy the same within thirty (30) days following receipt thereof, Tenant may,
after expiration of the notice period specified in Section 18.1 hereof, cure the
default on Landlord's behalf and the costs incurred by Tenant in so doing shall
be paid by Landlord to Tenant within thirty (30) days after Tenant's giving
Landlord written notice of the amounts so incurred, together with reasonable
supporting information or documentation.
SECTION XVI - SURRENDER OF PREMISES
16.1 Surrender of Possession. Tenant shall promptly yield and deliver to
-----------------------
Landlord possession of the Premises upon the expiration or earlier termination
of this Lease in the condition they were required to be maintained hereunder
(subject to the removals required or permitted hereunder). Landlord may place
and maintain a "For Rent" sign in conspicuous places on the Premises for sixty
(60) days prior to the expiration or earlier termination of this Lease.
16.2 Holding Over. Any holding over by Tenant after the expiration of the
------------
term hereof with Landlord's consent shall be construed as a tenancy from month
to month on the terms and conditions set forth herein, except as otherwise
agreed by the parties, which tenancy may be terminated by either party upon
thirty (30) days written notice to the other party. Any holding over by Tenant
after the expiration of the term hereof without Landlord's consent shall be
deemed to be a tenancy at will, terminable at any time by Landlord at a rental
rate equal to two (2) times the rental rate in effect on the date of such
expiration of the Lease term, prorated on a daily basis, and otherwise on the
terms, covenants and conditions of this Lease to the extent applicable.
27
SECTION XVII - QUIET ENJOYMENT
17.1 Landlord's Covenant. Tenant, upon fully complying with and promptly
-------------------
performing all of the terms, covenants and conditions of this Lease on its part
to be performed, shall have and quietly enjoy the Premises for the term set
forth herein, if its performance of such terms, covenants and conditions
continues for such period, subject, however, to matters of record on the date
hereof and to those matters to which this Lease may be subsequently
subordinated.
SECTION XVIII - MISCELLANEOUS
18.1 Notices. Any notices required in accordance with any of the
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provisions herein shall be in writing and delivered or mailed by registered or
certified mail to the Landlord do JSH Properties, Inc., 00000 X.X. Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, Attention: Property Manager; to Tenant at
the Premises; or to such other address as a party shall from time to time advise
the other party by a written notice given in accordance with this Section 18.1.
If Tenant is a partnership or joint enterprise, any notice required or permitted
hereunder may be given by or to any one partner thereof with the same force and
effect as if given by or to all thereof. A notice shall be deemed received two
(2) days after the postmark affixed on the envelope by the United States Post
Office.
18.2 Successors or Assigns. All of the terms, conditions, covenants and
---------------------
agreements of this Lease shall extend to and be binding upon Landlord, Tenant
and, subject to the terms of Section XI hereof, their respective heirs,
administrators, executors, successors and permitted assigns, and upon any person
or persons coming into ownership or possession of any interest in the Premises
by operation of law or otherwise, and shall be construed as covenants running
with the land.
18.3 Insolvency. If a petition is filed under the Bankruptcy Act or other
----------
law to have Tenant reorganized, dissolved or liquidated, or if a trustee or
receiver is appointed for Tenant's assets under the Bankruptcy Act or other law
or if a proceeding commenced to foreclose any mortgage or any other lien on
Tenant's interest in the Premises or on personal property kept or maintained
thereon, or if Tenant makes an assignment for the benefit of creditors, then
Tenant shall be deemed in default hereunder.
18.4 Tenant Defined. The word "Tenant" as used herein shall mean each and
--------------
every person, partnership or corporation who is mentioned as Tenant herein or
who executes this Lease as Tenant. If there shall be more than one Tenant, they
shall all be bound jointly and severally by the terms, covenants and agreements
herein.
18.5 Brokers' Commissions. Landlord will pay a commission to Xxxxx Xxxxxxx
--------------------
of Xxxxxx, Xxxxxxx & Xxxxxx, Inc., who represented the Landlord in this
transaction ("Landlord's Broker") in accordance with a separate agreement
between Landlord and Landlord's Broker. Tenant agrees to indemnify and hold
Landlord harmless from all liabilities and claims for
28
brokerage commissions or finder's fees growing out of agreements which Tenant
has made with persons or entities other than Landlord's Broker or Tenant's
Broker. Landlord's Broker shall share the commission with Xxxxx Xxxxxx of
Colliers International ("Tenant's Broker"), who represented the Tenant on this
transaction, according to an agreement between Landlord's Broker and Tenant's
Broker.
18.6 Partial Invalidity. If any term, covenant or condition of this Lease
------------------
or the application thereof to any person or circumstance is, to any extent,
invalid or unenforceable, the remainder of this Lease, or the application of
such term, covenant or condition to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition of this Lease shall be valid and be enforced to
the fullest extent permitted by law.
18.7 Recording. Neither Landlord or Tenant shall record this Lease or any
---------
memorandum hereof.
18.8 Subordination; Notice to Lender: Attornment.
-------------------------------------------
18.8.1 Unless otherwise designated by Landlord, this Lease shall be
subordinate to all existing or future mortgages and deeds of trust on the Park,
and to any extensions, renewals or replacements thereof; however, Tenant's
possession of the Premises pursuant to this Lease may not be disturbed by any
such mortgagee so long as Tenant is not in default under this Lease. Within
twenty (20) days of Landlord's request therefor Tenant shall execute and deliver
all instruments or certificates which Landlord or Lender may deem necessary or
appropriate to reflect such subordination of this Lease. Within twenty (20) days
of Landlord's request therefor, Tenant shall promptly execute and deliver to
third parties designated by Landlord an estoppel certificate or letter in the
form requested by Landlord or its lender that correctly recites the facts with
respect to the existence, terms and status of this Lease. Tenant agrees to
attorn to Landlord's successor following any foreclosure sale or transfer in
lieu thereof.
18.8.2 Tenant shall, within ten (10) days of demand, execute,
acknowledge and deliver to Landlord or its designee a written statement
certifying: (i) the date the Lease term commenced or will commence and the date
it expires; (ii) the date Tenant entered into occupancy of and commenced
business operations in the Premises; (iii) the amount of Base Rent and the date
to which Rent has been paid; (iv) that this Lease is in full force and effect
and has not been assigned, modified, supplemented or amended in any way (or
specifying the date and terms of each agreement so affecting this Lease) and
that no part of the Premises has been sublet (or to the extent such is not the
case, a copy of any sublease); (v) that, to the extent such is the case, this
Lease represents the entire agreement between the parties as to the Premises;
(vi) that Landlord is not in default under this Lease (or is such is not the
case, the extent and nature of such default); (vii) that all required advanced
by Landlord to Tenant on account of tenant improvements have been made (or the
extent that such is not the case); (viii) on the date of such certification
there are no existing defenses or claims which Tenant has against the
enforcement of this Lease by Landlord (or if such is not the case, the extent
and nature of such defenses or claims); (ix) the
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amount of the Security Deposit paid to Landlord; and (x) any other fact or
representation that a mortgagee or purchaser may reasonably request. It is
intended that any such statement delivered pursuant to this Section 18.8.2 shall
be fully and completely binding upon Tenant for all purposes of this Lease, may
be relied upon by a prospective purchaser or mortgagee of Landlord's interest,
or any assignee of any mortgage upon Landlord's interest in the Building or the
Land. If Tenant shall fail to respond within ten (10) days of receipt of a
written request by Landlord therefor, Tenant shall be deemed to have given a
certificate as above provided without modification and shall be conclusively
deemed to have admitted the accuracy of any information supplied by Landlord to
a prospective purchaser or mortgagee, that this Lease is full force and effect,
that there are no uncured defaults in Landlord's performance, that the Security
Deposit is as stated in this Lease and that not more than one month's Rent has
been paid in advance.
18.8.3 Notwithstanding anything to the contrary in this Lease,
Landlord shall not be in default under any provision of this Lease unless
written notice specifying such default is given to Landlord and to any lender
who has been identified to Tenant in writing as a party to whom notice must be
sent. Any lender of Landlord entitled to notice pursuant to the preceding
sentence shall have the right to cure any default on behalf of Landlord within
the later of (a) thirty (30) days after receipt of such notice, or (b) thirty
(30) days after the expiration of any cure period provided to Landlord pursuant
to this Lease; provided, if such default cannot reasonably be cured within such
thirty (30) day period, Landlord's lender shall be entitled to such additional
time as may be reasonably necessary to cure the default, if within the thirty
(30) day period the lender commences and thereafter diligently pursues the
actions necessary for the lender to cure such default by Landlord (including, if
possession of the Premises is necessary to cure the default, commencing such
judicial or non-judicial proceedings as may be necessary for lender or a
receiver to take possession of the Premises). So long as a lender is diligently
taking the actions reasonably necessary for it to cure Landlord's default,
Tenant shall not exercise its remedies for Landlord's default under this Lease.
18.8.4 Upon mutual execution of this Lease, Landlord shall use its
best efforts to obtain from the lender holding a deed of trust lien encumbering
the Premises a subordination, attornment and nondisturbance agreement regarding
this Lease on the standard form used by such deed of trust beneficiary with such
changes thereto as are reasonably satisfactory to Tenant and to the deed of
trust beneficiary ("SAND"). Landlord shall use its best efforts to obtain an
SAND from any lender acquiring an interest in the Premises after mutual
execution of this Lease.
18.9 Financial Statements. Within ten (10) days after Landlord's request
--------------------
therefor, but not more frequently than four (4) times per year, and subject to a
nondisclosure covenant to be signed by Landlord and any recipient of such
information with respect to the information conveyed, Tenant shall deliver t&
Landlord such current financial statements regarding Tenant as Landlord may
reasonably request. Tenant shall certify the accuracy of such statements.
Landlord may make the financial statements available to potential lenders or
purchasers, but shall otherwise preserve their confidentiality except in
connection with legal proceedings between the parties or as otherwise directed
by court rule or order.
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18.10 Liability of Landlord. Tenant shall look solely to Landlord's
---------------------
interests in the Building (including without limitation the rents, issues and
profits from the Building) for the satisfaction of any judgment or decree
against Landlord based upon any default under this Lease, and no other property
or assets of the Landlord (or its partners) shall be subject to levy, execution
or other enforcement procedures for satisfaction of any such judgment or decree.
18.11 Force Majeure. Landlord shall not be deemed in default hereof nor
-------------
liable for damages arising from its failure to perform its duties or obligations
hereunder if such is due to causes beyond its reasonable control, including, but
not limited to, acts of God, acts of civil or military authorities, fires,
floods, windstorms. earthquakes, strikes or other labor disturbances, civil
commotion or war.
18.12 Transportation Management Program; Recycling. Tenant shall cooperate
--------------------------------------------
with Landlord in meeting the objectives and complying with the terms and
conditions of any transportation management plan applicable to the Building or
the Park. Landlord will provide Tenant with a copy of any such transportation
management plan now or hereafter in effect. In addition, Tenant will cooperate
with and participate in any and all recycling programs now or hereafter in place
with respect to the Building or the Park.
18.13 Cure Right of Landlord. All covenants and agreements to be kept or
----------------------
performed under Tenant under any of the terms of this Lease shall be performed
by Tenant at Tenant's sole cost and expense and without any abatement of rent.
If Tenant shall fail to pay any sum of money, other than rent, required to be
paid by hereunder or shall fail to perform any other act on its part to be
performed hereunder, Landlord may, but shall not be obligated to, and without
waiving any default of Tenant or rights or remedies of Landlord or releasing
Tenant from any obligations of Tenant hereunder, make any such payment or
perform any such other act on Tenant's part to be made or performed as in this
Lease provided.
All sums so paid by Landlord and all necessary incidental costs,
together with the interest thereon at the default rate as provided in Section
3.4 from the date of such payment by Landlord, shall be paid to Landlord
forthwith on demand, and Landlord shall have (in addition to any other right or
remedy of Landlord) the same rights and remedies in the event of nonpayment
thereof by Tenant as in the case of default by Tenant and the nonpayment of
rent.
18.14 Name of Building. Landlord may adapt or change the name or address
----------------
or identity of the Building or any part thereof or the Park (or any part
thereof) including roof signs, ground level and lobby signage and any other
Building or Park identification.
18.15 Tax on Rent. The Rent herein is exclusive of any sales, business and
-----------
occupation, gross receipts or other tax based on Rents, or tax on Tenant's
property or tax upon or measured by the number of employees of Tenant, or any
similar tax or charge. If any such tax or charge be hereinafter enacted, and
imposed upon Landlord. Tenant shall pay Landlord the amount thereof concurrently
with each monthly Rent payment. If it shall not be lawful for Tenant so to
reimburse Landlord, the monthly Rent payable to Landlord under this Lease shall
be revised to
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net Landlord the same net rental after imposition of any such tax or charge upon
Landlord as would have been payable to Landlord prior to the imposition of such
tax or charge. Tenant shall not be liable to reimburse Landlord for any federal
income tax or other income tax of a general nature applicable to Landlord's
income.
18.16 Light, Air and View. Landlord does not guarantee the continued
-------------------
present status of light or air over any property adjoining or in the vicinity of
the Building or the Park. Any diminution or shutting off of light, air or view
by any structure which may be erected near or adjacent to the Building or the
Park shall in no way affect this Lease or impose any liability on Landlord.
SECTION XIX - EXECUTION OF LEASE
19.1 Execution by Landlord and Tenant: Approval of Lender. Landlord shall
----------------------------------------------------
not be deemed to have made an offer to Tenant by furnishing Tenant with a copy
of this Lease with particulars inserted. No contractual or other rights shall
exist or be created between Landlord and Tenant until all parties hereto have
executed this Lease and, until it has been approved in writing by Lender and
fully executed copies have been delivered to Landlord and Tenant. Tenant agrees
to make such changes herein as may be requested by Lender so long as such do not
increase amounts due from Tenant hereunder or otherwise materially alter its
rights hereunder.
SECTION XX - ENTIRE AGREEMENT - APPLICABLE LAW
20.1 Entire Agreement - Applicable Law. This Lease and the Exhibits
---------------------------------
attached hereto, and by this reference incorporated herein, set forth the entire
agreement of Landlord and Tenant concerning the Premises, and there are no other
agreements or understanding, oral or written, between Landlord and Tenant
concerning the Premises. Any subsequent modification or amendment of this Lease
shall be binding upon Landlord and Tenant only if reduced to writing and signed
by them. This Lease shall be governed by, and construed in accordance with the
laws of the State of Washington.
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DATED as of the day and year first written above.
LANDLORD:
THE PLAZA AT YARROW BAY, LLC,
a Washington limited liability company
By: HAL Realty 111, Inc., Manager
By: /s/ Xxxx Xxxxxxx
------------------------
Its: Vice President and CEO
-----------------------
TENANT:
XxxxXxxxxx.xxx, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------
Its: Assistant Secretary
------------------------
33
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 21st day of May, 1999, before me, a Notary Public in and for the State
---- ---
of Washington, duly commissioned and sworn, personally appeared Xxxx Xxxxxxx, to
me known to be the Vice President of HAL Realty III, Inc., Manager of THE PLAZA
AT YARROW BAY LLC, the limited liability company named in and which executed the
foregoing instrument; and he acknowledged to me that he signed the same as the
free and voluntary act and deed of said limited liability company for the uses
and purposes therein mentioned.
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgment is the person whose true signature
appears on this document.
WITNESS my hand and official seal the day and year in this certificate above
written.
/s/ Xxxx X. XxXxxxxx
---------------------
Signature
/s/ Xxxx X. XxXxxxxx
---------------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at Kirkland
--------
My commission expires 12/04/02
--------
34
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 19th day of May, 1999, before me, a Notary Public in and for the
---- ---
State of Washington, duly commissioned and sworn, personally appeared Xxxxx
-----
Xxxxxxxxxx, to me known to be the Assistant Secretary of XxxxXxxxxx.xxx, Inc.,
---------- -------------------
the corporation named in and which executed the foregoing instrument; and he
acknowledged to me that he signed the same as the free and voluntary act and
deed of said partnership for the uses and purposes therein mentioned.
I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.
WITNESS my hand and official seal the day and year in this certificate
above written.
[SEAL] /s/ Xxx Xxxx
----------------------------
Signature
Xxx Xxxx
----------------------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at Seattle.
--------
My commission expires 11/28/2000.
-----------
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