Exhibit 10.34
OFFICE LEASE AGREEMENT
This Office Lease Agreement (the "Lease") is made and entered into as of
the 9/th/ day of November, 2001, ("Effective Date") by and between, 1144
Eastlake LLC, a Washington limited liability company ("Landlord"), and
ZymoGenetics, Inc., a Washington corporation ("Tenant").
1. Basic Lease Information.
1.1 "Property" shall mean the building and associated real property
located at 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx and legally
described on Exhibit A-2. "Building" is the structure located on the
Property.
1.2 "Premises" shall mean the entire Rentable Area, as defined below, of
the fifth (5th) floor of the Building as depicted on the floor plan
attached as Exhibit A-1 to this Lease. The "Rentable Area of the
Premises" is approximately fifteen thousand six hundred forty (15,640)
square feet, and the Rentable Area of the Building is approximately
seventy-nine thousand eight hundred sixty-eight (79,868) square feet.
"Rentable Area" shall have the same meaning as set forth in the 1996
"BOMA Standard Method for Measuring Floor Area in Office Buildings"
(American National Standard ANSI/BOMA Z65.1-1996) ("BOMA
Measurement"). As soon as reasonably possible after execution of this
Lease, and in no event later than the Commencement Date, as defined
hereinafter, Landlord, at Landlord's expense, shall have the Rentable
Areas of both the Premises and the Building measured by SPACE LLC,
which shall also be instructed by Landlord to provide copies, in
reasonable detail, of the bases for the final computations of such
Rentable Areas to both Landlord and Tenant. The parties agree to
accept the measurements, as so determined, and to thereafter enter
into a Confirmation Statement to be attached to this Lease setting
forth the agreed Rentable Areas of the Premises and the Building, as
well as the "Tenant's Pro Rata Share," as provided for in Section 1.4,
each of which shall thereafter be adjusted only in the event of an
actual change in the Rentable Area of the Premises, as contemplated in
Section 6 below, or the Building.
1.3 "Base Rent":
Annual Rate
Period Per Square Foot
------ ---------------
Lease Term Months One (1) through Thirty-Six (36) $26.50 per RSF
Lease Term Months Thirty-Seven (37) through Sixty (60) $27.50 per RSF
Lease Term Months Sixty-One (61) through Ninety-Six (96) $29.50 per RSF
Lease Term Months Ninety-Seven (97) through One Hundred Twenty (120) $30.50 per RSF
1.4 "Tenant's Pro Rata Share" is estimated to be twenty percent (20%), but
shall be finally determined and confirmed by the parties in the manner
described in Section 1.2.
1.5 "Term": A period of One Hundred Twenty (120) months. The Term shall
commence on the earlier of (i) the occupancy of the Premises by Tenant
for normal business operations, or February 1, 2002 ("Commencement
Date"), and, unless terminated early in accordance
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November 9, 2001
with this Lease, end One Hundred Twenty (120) months thereafter (the
"Termination Date"). By no later than November 21, 2001, Landlord
shall deliver to Tenant a letter from Landlord's lender on the
Property, KeyBank, N.A., confirming that Landlord has the financial
ability to pay the Tenant Allowance and that the Tenant Allowance will
be available and paid to or for the benefit of Tenant on a percentage-
of-completion basis as the Tenant Improvement work is done.
1.6 Tenant Allowance: Thirty Dollars ($30.00) per square foot of Rentable
Area of the Premises, as more particularly described on Exhibit D.
1.7 Security Deposit: Seventy Four Thousand Two Hundred Ninety Dollars
($74,290) ("Deposit"). The portion of the Deposit equal to the first
full month's Base Rent to become payable hereunder shall be credited
to payment of such first full month's Base Rent with the remainder of
the Deposit held and applied as provided in this Lease.
1.8 "Permitted Use": general business office and uses customarily
incidental thereto.
1.9 "Notice Addresses": Notices shall be sent to the parties at the
following addresses:
Tenant: ZymoGenetics, Inc.
Attn: Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxx. Xxxx
Xxxxxxx, XX 00000
with a copy to: Xxxxxxx Coie LLP
Attn: Xxxxx X. Xxxxxxx
000 - 000/xx/ Xxx. X.X.
Xxxxxxxx, XX 00000
Landlord: 1144 Eastlake LLC
c/o JSH Properties
Attn: Xxxxx Xxxxxx
00000 Xxxxxxxxxx Xxx. Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Rent (defined in Section 4.1) is payable to the order of Landlord at
its notice address, or at such other address as Landlord may specify
from time to time by written notice given in accordance with Section
27.
1.10 "Business Day(s)" are Monday through Friday (and Saturday mornings) of
each week, exclusive of New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day
("Holidays"). Landlord may designate additional Holidays, provided
that the additional Holidays are commonly recognized by other office
buildings in the area where the Property is located.
1.11 "Landlord Work" means the work, if any, that Landlord is obligated to
perform in the Premises pursuant to Exhibit C.
1.12 "Law(s)" means all applicable statutes, codes, ordinances, orders,
rules and regulations of any municipal or governmental entity.
1.13 "Normal Business Hours" for the Property are 7:00 a.m. to 6:30 p.m. on
Business Days and 8:00 A.M. to 12:00 noon on Saturdays.
1.14 "Property" includes the Building and the parcel(s) of land on which it
is located and other improvements serving the Building, if any, and
the parcel(s) of land on which they are located.
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1.15 "Class A" building, or office building, as used in this Lease, shall
mean first-class commercial office buildings of the type which are
located in the South Lake Union area, and which are reasonably
comparable in age and available amenities to the Building which is the
subject of this Lease.
2. Lease Grant.
Landlord leases the Premises to Tenant and Tenant leases the Premises from
Landlord, together with the right in common with others to use any portions of
the Property that are designated by Landlord for the common use of tenants and
others, such as common corridors, elevator foyers, restrooms, vending areas and
lobby areas (the "Common Areas").
3. Possession; Acceptance of Condition of Premises.
3.1 If Tenant occupies the Premises prior to the Commencement Date for the
purpose of completing Tenant's Work or for any other purpose with
Landlord's prior written consent, such early occupancy shall be
subject to all of the terms and conditions of this Lease, but Tenant
will not be obligated to pay Base Rent or a Pro Rata Share of
Expenses, Taxes or Insurance until the Commencement Date. Tenant and
Landlord agree to cooperate with each other in making mutually
acceptable arrangements for early occupancy by Tenant and to cooperate
with Landlord's contractor during the period of any such early
occupancy so as not to interfere with Landlord's ability to complete
Landlord's Work.
3.2 The work on the Premises to be performed by Landlord is described in
Exhibit C ("Landlord's Work"). The parties hereby acknowledge that
Landlord's Work is continuing as of the Effective Date , and that
Tenant may reasonably commence Tenant's Work and installation of
equipment (even though a portion of Landlord's Work may remain to be
completed during Tenant's Work).
Landlord's Work shall be (1) completed in accordance with the plans
and specifications identified on Exhibit C, (2) completed in
accordance with all Laws and governmental requirements, (3)
constructed of all new materials, and (4) free of defects in materials
and workmanship. Landlord shall promptly correct all defects in
Landlord's Work, and all failures of such work to conform to the plans
and specifications for such work which have been agreed upon by
Landlord and Tenant, which defects or non-conformities are discovered
before or within one year after the Commencement Date. Landlord shall
bear all costs of correcting Landlord's Work. Landlord and Tenant
shall each give the other prompt written notice after discovering the
existence of any such defects or nonconformities in Landlord's Work.
3.3 Except as set forth in Section 1.5, Landlord shall not be liable for
nor shall this Lease be affected by any delay in the occurrence of the
Commencement Date because of delays caused to Landlord's Work by
strikes, riots, fire, shortage of required materials, acts of God,
governmental intervention, delays or the like which are not within its
reasonable control.
3.4 Notwithstanding anything to the contrary contained herein, the
Commencement Date shall not be deemed to occur until the following
conditions shall have been satisfied by Landlord:
(1) The utility and other systems servicing the Building and
necessary for the operation of the Building or Tenant's occupancy and
full enjoyment of the Premises (such as elevators, plumbing, heating,
ventilating, air conditioning, electrical and security systems) shall
be completed and in good order and operating condition except for
details
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of construction, decoration and mechanical adjustments which do not
materially interfere with Tenant's use of the Premises;
(2) Landlord shall have obtained a temporary Certificate of
Occupancy for the Building;
(3) The lobby of the Building and the entrances and public
portions (including the garage), stairways, corridors and elevators
(including freight elevators) of the Building, shall have been
finished (except for details of construction, decoration and
mechanical adjustments which do not materially detract from the
appearance of such areas or materially interfere with their use for
normal purposes) and shall be in a clean and orderly condition
affording reasonable access to all portions of the Premises; and
(4) The exterior of the Building (including the installation of
glass therein) shall have been completed except for portions thereof
which in the aggregate do not materially affect Tenant's use of the
Premises, and, in any event, Landlord's Work shall be substantially
complete in all material respects by no later than January 25, 2002.
The occurrence of the Commencement Date prior to the completion in
full of all work required to be performed by Landlord as provided
herein shall not relieve Landlord of its obligation thereafter to
complete the same with due dispatch and in a workmanlike manner.
4. Rent.
4.1 Payments. As consideration for this Lease, Tenant shall pay Landlord,
without any setoff or deduction (except as expressly set forth in this
Lease), the total amount of Base Rent and Additional Rent due for the
Term. "Additional Rent" means all sums (exclusive of Base Rent) that
Tenant is required to pay Landlord. Additional Rent and Base Rent are
sometimes collectively referred to as "Rent". Tenant shall pay and be
liable for all rental, sales and use taxes (but excluding income
taxes), if any, imposed upon or measured by Rent under applicable Law.
Base Rent and recurring monthly charges of Additional Rent shall be
due and payable in advance on the first day of each calendar month
without notice or demand. All other items of Rent shall be due and
payable by Tenant on or before 30 days after billing by Landlord. All
payments of Rent shall be by good and sufficient check or by other
means (such as automatic debit or electronic transfer) acceptable to
Landlord. If Tenant fails to pay any item or installment of Rent
within three (3) business days after such payment is due, Tenant shall
pay Landlord an administration fee equal to five percent (5)% of the
past due Rent. If the Term commences on a day other than the first day
of a calendar month or terminates on a day other than the last day of
a calendar month, the monthly Base Rent and Tenant's Pro Rata Share of
Expenses (defined in Section 4.3) for the month shall be prorated
based on the number of days in such calendar month. Landlord's
acceptance of less than the correct amount of Rent shall be considered
a payment on account of the earliest Rent due. No endorsement or
statement on a check or letter accompanying a check or payment shall
be considered an accord and satisfaction, and either party may accept
the check or payment without prejudice to that party's right to
recover the balance or pursue other available remedies. Tenant's
covenant to pay Rent is independent of every other covenant in this
Lease.
4.2 Payment of Tenant's Pro Rata Share of Expenses, Taxes and Insurance.
Tenant shall pay Tenant's Pro Rata Share of the total amount of
Expenses and of Taxes and Insurance for each year during the Term.
Landlord shall annually provide Tenant with a good faith estimate of
the total amount of Expenses and the total amount of Taxes and
Insurance for each calendar year during the Term. On or before the
first day of each month, Tenant shall pay to Landlord a monthly
installment equal to one-twelfth of Tenant's Pro Rata Share of
Landlord's estimate of the total amount of Expenses, plus
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one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of the
total amount of Expenses, plus one-twelfth of Tenant's Pro Rata Share
of Landlord's estimate of the total amount of Taxes and Insurance. If
Landlord determines that its good faith estimate was incorrect by a
material amount, Landlord may provide Tenant with a revised estimate
once per calendar year. After its receipt of the revised estimate,
Tenant's monthly payments shall be based upon the revised estimate. If
Landlord does not provide Tenant with an estimate of the total amount
of Expenses and the total amount of Taxes and Insurance by January 1
of a calendar year, Tenant shall continue to pay monthly installments
based on the previous year's estimate until Landlord provides Tenant
with the new estimate. Upon delivery of the new estimate, an
adjustment shall be made for any month for which Tenant paid monthly
installments based on the previous year's estimate. Tenant shall pay
Landlord the amount of any underpayment within 30 days after receipt
of the new estimate. Any overpayment shall be refunded to Tenant
within 30 days or credited against the next due future installment(s)
of Additional Rent.
By May 1 following the end of each calendar year, Landlord shall
furnish Tenant with a statement of the actual amount of Taxes and
Insurance, and Tenant's Pro Rata Share of the actual amount of Taxes
and Insurance for the prior calendar year. If the estimated amount of
Taxes and Insurance for the prior calendar year is more than the
actual amount of Taxes and Insurance for the prior calendar year,
Landlord shall apply any overpayment by Tenant against Additional Rent
due or next becoming due, provided if the Term expires before the
determination of the overpayment, Landlord shall refund any
overpayment to Tenant after first deducting the amount of Rent due. If
the estimated amount of Taxes and Insurance for the prior calendar
year is less than the actual amount of Taxes and Insurance for such
prior year, Tenant shall pay Landlord, within 30 days after its
receipt of the statement of Taxes and Insurance, any underpayment for
the prior calendar year.
4.3 Expenses Defined. "Expenses" means all costs and expenses incurred by
Landlord in connection with owning, operating, maintaining, repairing,
and managing the Premises as a "Class A office building," as defined
herein, including, but not limited to (1) utilities, including, but
not limited to, utilities and lighting for areas occupied by tenants
as well as Common Areas; (2) maintenance costs for performance of any
Landlord's maintenance and repair obligations hereunder for the
Building located on the Property, Common Areas, Property, including,
but not limited to parking facilities and landscaping, maintaining and
repairing sewer main, ducts, conduits and similar items, fire
protection systems, sprinkler and security alarm systems, elevators,
storm and sanitary drainage systems and other utility and mechanical
systems; materials and services for operation, maintenance or the
security or protection of the Property including any janitorial
services, pest control, HVAC service contracts, any other repair and
maintenance by Landlord; (3) roof and other exterior maintenance; (4)
the amortized cost of capital improvements made to the Property which
are for the purpose of reducing operating expense costs, or which are
required to comply with any laws, rules or regulations of any
governmental authority first enacted after the Commencement Date or a
requirement of Landlord's insurance carrier first enacted after the
Commencement Date; (5) property management fees not exceeding three
and one-half percent (3.5%) of Base Rent (calculated without regard to
the management fee); (6) all sums expended in connection with any
Common Areas for maintenance and repairs, (7) operation, maintenance
and repair of any heating, ventilation and air conditioning system,
including repair of any HVAC components or units as reasonably needed;
(8) the cost of utilities consumed on the Property if paid for by
Landlord; (9) the cost of any governmentally required license, permit,
or inspection for or of the Property (other than those required in
connection with Landlord's Work); (10) replacement or supplemental
directional and other signage other than the initial signage installed
in the Building or on the Property by Landlord as part of Landlord's
Work; and (11) and any other costs and expenses of any other kind
whatsoever which are generally considered expenses in accordance with
generally accepted accounting principles and which are reasonably
incurred by Landlord in connection with owning, operating or
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maintaining the Property and any expense designated by this Lease to
be an Expense. Expenses shall be "net" only and for that purpose shall
be deemed reduced by the amounts of any insurance reimbursement or
other reimbursement received by Landlord in connection with such
expenses.
The following shall not be Expenses: (1) repairs or other work
occasioned by insured casualty except for the deductible portion of
any insured casualty loss; (2) marketing costs including, without
limitation, leasing commissions, attorneys' fees in connection with
the negotiation and preparation of letters, deal memos, letters of
intent, leases, subleases and/or assignments, space planning costs,
tenant improvement costs, and other costs and expenses incurred in
connection with lease, sublease and/or assignment negotiations,
disputes and transactions with present or prospective tenants; (3)
depreciation and amortization; (4) interest on debt or principal
payments to a Lender or rental under a ground lease; (5) costs of
Landlord's general overhead and general and administrative expense;
provided this limitation shall not be construed to limit Landlord's
right to require Tenant to pay as an Expense the property management
fee provided for above; (6) specific costs incurred for the account of
specific tenants only; (7) salaries of officers, executives and
partners of Landlord, and salaries of Building employees to the extent
allocated to properties other than the Property; (8) penalties
incurred as a result of Landlord's negligence, inability or
unwillingness to make payments, or penalties incurred due to the
Building not being in compliance with applicable law; (9) capital
improvements, except as otherwise provided above; (10) the cost of
tenant improvements; (11) costs relating to any parking garage in the
Building (such as utilities, attendants, cashiers and janitorial
services); (12) costs resulting from the correction of any
construction or design defects in all or any portion of the Premises
or Building in connection with any of Landlord's Work; (13) penalties
due to any violation of Law by Landlord; and (14) structural repairs
or replacements.
4.4 Taxes and Insurance Defined. "Taxes" shall mean: (1) all real estate
taxes and other assessments on the Property, including, but not
limited to, assessments for special improvement districts and building
improvement districts, taxes and assessments levied in substitution or
supplementation in whole or in part of any such taxes and assessments
and the Premises' share of any real estate taxes and assessments under
any reciprocal easement agreement, common area agreement or similar
agreement as to the Property; (2) all personal property taxes for
property that is owned by Landlord and used in connection with the
operation, maintenance and repair of the Premises or the Property; and
(3) all reasonable costs and fees incurred in connection with seeking
reductions in any tax liabilities described in (1) and (2), including,
without limitation, any costs incurred by Landlord for compliance,
review and appeal of tax liabilities. Without limitation, Taxes shall
not include any income, capital levy, franchise, capital stock, gift,
estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the
installment and any interest due and payable during that year. For all
other real estate taxes, Taxes for that year shall, at Landlord's
election, include either the amount accrued, assessed or otherwise
imposed for the year or the amount due and payable for that year,
provided that Landlord's election shall be applied consistently
throughout the Term. If a change in Taxes is obtained for any year of
the Term, then Taxes for that year will be retroactively adjusted and
Landlord shall provide Tenant with a credit, if any, based on the
adjustment. "Insurance" shall mean the cost of premiums for any hazard
insurance or liability insurance carried by Landlord, for the benefit
of Landlord or at the expense of Landlord, on or in connection with
the Property.
4.5 After first providing reasonable advance written notice to Landlord,
Tenant or its accountants (so long as such accountant is not
compensated on a contingent fee basis) shall have the right to inspect
and audit Landlord's books and records with respect to this Lease to
verify actual Expenses for the two (2) calendar years immediately
preceding the year in which the inspection is made. Tenant's review
shall be limited to Expenses
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charged to Tenant during the immediately preceding two (2) calendar
years only. The books and records shall be kept in accord with
reasonable accounting principles. If Tenant's audit of the Expenses
reveals an overcharge of more than five percent (5%), Landlord
promptly shall reimburse Tenant for its reasonable out-of-pocket cost
of the audit. Any overcharge or underpayment of Expenses shall be due
from one party to the other within thirty (30) days after the amount
of the overcharge or underpayment has been fixed.
4.6 Deposit. The Deposit (after application of a portion thereof equal to
the first month's Base Rent) shall be security for Tenant's full
performance of Tenant's lease obligations. If Tenant fails to pay rent
or any other charges due from Tenant under this Lease after the
expiration of applicable notice and cure periods, Landlord may elect
to apply the Deposit toward the payment of such default. If Landlord
applies any portion of the Deposit, Tenant shall, on ten (10) days
written notice, deposit cash with Landlord in an amount sufficient to
restore the Deposit to the full amount stated above; Tenant's failure
to do so shall be a default. Landlord may commingle the Deposit with
Landlord's other funds and no interest shall be paid or accrued on the
Deposit. If Tenant performs all of Tenant's lease obligations, the
Deposit (or so much as has not been applied by Landlord) shall be
returned to Tenant (or, at Landlord's option, to the last assignee, if
any, or Tenant's interest under the Lease) within thirty (30) days.
Landlord shall transfer the Deposit to the purchaser of its interest
in the event of sale and Tenant shall look solely to such purchaser
for return of the deposit.
5. Compliance with Laws; Use.
The Premises shall be used only for the Permitted Use and for no other use
whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other occupants of the
Property or unreasonably interferes with the operation of the Premises or the
Property. Tenant shall comply with all Laws, including the Americans with
Disabilities Act, regarding the operation of Tenant's business and the use,
condition, configuration and occupancy of the Premises. Tenant, within 10 days
after receipt, shall provide Landlord with copies of any notices it receives
regarding a violation or alleged violation of any Laws relating to the use,
condition, configuration or occupancy of the Premises. Tenant shall comply with
the rules and regulations of the Property attached as Exhibit B and such other
reasonable rules and regulations adopted by Landlord from time to time. Tenant
shall also cause its agents, contractors, subcontractors, employees, customers,
and subtenants to comply with all rules and regulations. Landlord shall enforce
the rules and regulations uniformly with respect to violations thereof of which
it either has been notified or otherwise has actual knowledge, and shall not
knowingly discriminate against Tenant in Landlord's enforcement of the rules and
regulations.
Tenant shall have access to the Premises 24 hours per day, 365 days per
year. Landlord initially shall provide all Tenant employees assigned to the
Premises, not exceeding fifty-five (55), with door keys and access cards at no
additional costs to Tenant. If reasonably achievable within the design of
Landlord's security system, Landlord will reasonably attempt to program its
security system for the Building in a manner to allow Tenant's employees to
utilize their access cards used at Tenant's headquarters (0000 Xxxxxxxx Xxxxxx
East). If the Premises are subsequently expanded pursuant to the provisions of
Section 6 below, or otherwise, Landlord shall provide Tenant with additional
door keys and access cards at no additional cost to Tenant, and the number of
such additional no-cost keys and cards issued with respect to the additional
Rentable Area of the expanded Premises shall be in the same proportion as the
fifty-five (55) cards issued initially bears to the initial Rentable Area of the
Premises. Landlord may impose a reasonable charge, however, to replace keys
and/or access cards which are lost or damaged, or to issue keys or access cards
in addition to those which Landlord is required to initially provide to Tenant
at no cost pursuant to this Section 5.
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6. 25/th/ Month Expansion; Option to Renew; First Right of Refusal To Lease.
6.1 25/th/ Month Expansion. If, by the twenty-third (23/rd/) full calendar
month following the Commencement Date, Tenant has not leased at least
the entirety of the fourth (4/th/) floor or third (3/rd/) floor of the
Building, whether by exercise of its first right of refusal provided
in Section 6.3 below or by other agreement with Landlord, this Lease
shall be deemed automatically amended to incorporate within the
definition of the Premises the entirety of the fourth (4/th/) floor of
the Building, if then available for lease, or otherwise the entirety
of the third (3/rd/) floor of the Building, if then available for
lease; provided, however, that Tenant shall not be required to lease
either the remaining portion of the third or the fourth floors of the
Building pursuant to this Section 6.1 if only a portion of such
floor(s) is then available for lease. In the event Tenant leases the
third or fourth floor pursuant to this Section 6.1, all of the terms
of this Lease shall apply to such expanded Premises as of the first
(1/st/) day of the twenty-fifth (25/th/) full calendar month following
the Commencement Date, including the agreement to pay Base Rent in the
then applicable amount per square foot of Rentable Area (provided if
such expanded Premises consists of the third (3/rd/) floor and not the
fourth (4/th/) floor, the Base Rent for such newly leased area shall
be two dollars ($2.00) per Rentable Square Foot less than otherwise
applicable) and Tenant's Pro Rata Share shall be adjusted upwards
accordingly. Upon the effective date of such expansion, Tenant shall
be entitled to receive from Landlord a Tenant Allowance of Thirty
Dollars ($30.00) per square foot of Rentable Area contained in such
newly leased area on the same terms and conditions as described in
Exhibit D; Landlord shall pay additional commissions as provided in
Section 31.7 below and Landlord shall not be obligated to provide any
other improvements to the expansion area of the Premises.
6.2 Option to Renew.
6.2.1 Tenant has the option to renew this Lease for up to two (2)
additional terms, each of sixty (60) months, commencing on the
day following expiration of the preceding Term. Tenant shall
exercise the Option to Renew by providing a written notice of
exercise to Landlord no less than two hundred seventy (270)
days prior to the end of the then current term of this Lease
and as provided more specifically below. All of the terms and
conditions of this Lease will remain the same during such
renewal term except for the Base Rent which shall be the fair
market rental value of the Premises as of the commencement of
the renewal term; fair market rental value of the Premises
shall be the amount of rent which a well-informed tenant,
willing, but not obliged to lease the property, would pay, and
which a well-informed landlord, willing, but not obligated to
lease, would accept, taking into consideration all uses to
which the property is adapted and might in reason be applied,
the then market terms being offered in the Lake Union area of
Seattle for space reasonably comparable to the Premises in
size, location, parking availability and quality.
6.2.2 If, after bargaining in good faith for no less than thirty (30)
days, either party determines, by written notice to the other
party, that the parties cannot agree on the amount of the then
fair market rental value of the Premises, then the fair market
rental value shall be established by binding arbitration with a
single arbitrator in accordance with the following procedures.
The arbitrator shall be an MAI real estate appraiser with at
least ten (10) years experience in appraising commercial real
property in the Seattle metropolitan area ("Arbitrator")
selected jointly by the parties; if the parties do not agree as
to the identity of the Arbitrator within twenty (20) days after
the end of the thirty (30) day bargaining period, the then
Presiding Judge of the Superior Court for King County, upon an
appropriate request which either party may make, shall appoint
the Arbitrator. Within ten (10) days of the appointment of the
Arbitrator, the parties each shall submit in
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writing to Arbitrator the amount which they propose be
established as the Base Rent at the commencement of such renewal
term ("Submissions"); such Submissions shall not be disclosed to
the parties by Arbitrator until the Arbitrator has received both
parties' Submission. Each party may include in such Submissions
any information which such party deems relevant or helpful to the
Arbitrator in determining the fair market rental value of the
Premises including costs or benefits which such party or the
other party would enjoy in the event of a renewal of the lease or
amenities and advantages of the Premises and Property not likely
to be available to a party in another location. Arbitrator shall
study such evidence and information in determining such Base
Rent; provided that the Arbitrator's determination of the amount
of such Base Rent shall be confined and strictly limited to
selection, as the more reasonable approximation of the fair
market rental value of the Premises, of the amount stated in the
Submission of Tenant or the Submission of Landlord, and
Arbitrator may not select or declare any third number to be such
Base Rent. Except as to the Parties' Submissions, any other
communication by a party to Arbitrator shall be in writing with a
copy to the other party. Upon completion of his investigation of
such Base Rent, Arbitrator shall, no later than thirty (30) days
after delivery of the Submissions, report in writing to each of
the parties which party's Submission has been selected by him as
the more reasonable approximation of the fair market rental value
of the Premises without requirement of further substantiation or
information. In no event may the new Base Rent be less than the
average Base Rent payable during the last year of the preceding
term. Each party shall pay its own costs of arbitration and one-
half of the Arbitrator's fee.
6.2.3 In the event of any renewal, Landlord shall have no obligation to
make any improvements to the Premises, to provide to Tenant any
funds for any improvement, pay or make any other concessions or
to pay any commission to Tenant's broker. After the exercise of
the option to extend, all references in this Lease to the Term
shall be considered to mean the Term as extended, and all
references to the Termination Date or to the end of the Term
shall be considered to mean the Term as extended.
6.2.4 Tenant's right to exercise the options to renew is subject to the
following conditions precedent:
6.2.4.1 The Lease must be in effect at the time the notice of
exercise is given and on the last day of the term immediately preceding
commencement of the renewal term.
6.2.4.2 Tenant may not be in default beyond applicable notice
and cure periods under any provision of this Lease at the time notice of
exercise is given or on the last day of the term immediately preceding
commencement of the renewal term.
6.2.4.3 At least two hundred seventy (270) days before the last
day of such term, Tenant shall, in writing, have given Landlord notice
irrevocably and unconditionally exercising the option.
Each party shall, at the request of the other, endorse on the original
lease that party's signature or signatures, and date the option was
exercised, and the words "Option Exercised". Alternatively, each party
shall, at the request of the other, execute a memorandum, in recordable
form, acknowledging the fact that the option has been exercised.
6.3 Right of First Refusal. If, during the period ("RFR Period") commencing
on the mutual execution of this Lease and expiring on the last day of the
twenty-fourth (24/th/) full calendar
Page 9
month following the Commencement Date, Landlord receives a letter of
intent or other offer to lease all or a portion of the fourth (4/th/)
floor of the Building which has been accepted in writing by Landlord,
Landlord shall deliver a copy to Tenant, who shall then have ten (10)
business days following receipt to notify Landlord that Tenant elects
to lease the same portion of the Building on the same terms and rental
rate as contained in this Lease, including, without limitation, that
Tenant shall be entitled to receive from Landlord a Tenant Allowance
of Thirty Dollars ($30.00) per square foot of Rentable Area contained
in such newly leased area on the same terms and conditions as
described in Exhibit D, but Landlord shall not be obligated to provide
any other improvements to the expansion area of the Premises; provided
that if Tenant leases only part of the 4/th/ floor by exercising its
right of first refusal, Landlord shall not be obligated to construct a
demising wall or multi-tenant hallway to separate such space from the
remaining Rentable Area of the 4/th/ floor. In addition to the
foregoing, if the terms of the offer include space on other floors in
addition to the fourth floor, Tenant shall be required to lease such
other space as well. If Tenant does not elect to so lease within such
ten (10) business day period, Tenant's preferential right to lease the
area subject to such offer shall lapse and Landlord may lease such
area to the third party free of any further rights of Tenant. In the
event that Landlord leases any portion of the fourth (4/th/) floor to
a third party after Tenant was offered such first right of refusal
which right Tenant did not exercise, Tenant's right of first refusal
with respect to the remainder of the fourth (4/th/) floor shall
thereafter lapse, but Tenant instead shall have the same right of
first refusal in accordance with the above terms as to the third
(3/rd/) floor during the remainder of the RFR Period, unless any
portion of the third (3/rd/) floor was leased to a third party before
Tenant was required to exercise its right of first refusal with
respect to the fourth (4/th/), and in such latter event Tenant shall
not have a right of first refusal with respect to the third (3/rd/)
floor. Tenant shall not have any such preferential right to lease
during the continuation of any default by Tenant under the terms of
this Lease beyond applicable notice and cure periods.
7. Services and Utilities.
7.1 Landlord shall furnish Tenant with the following services: (1) hot and
cold water service for use in the lavatories and kitchen on each floor
on which the Premises are located, and for drinking purposes
(provided, that Landlord shall not be required to provide special
filtration or otherwise provide treatment to the available tap water
in order to make it more desirable to Tenant for drinking or cooking
purposes); (2) heat, ventilation and air conditioning in season during
Normal Business Hours, at such temperatures and in such amounts as are
standard for comparable Class A office buildings or as required by
governmental authority. Tenant, upon such advance notice (which may be
telephonic) as is reasonably required by Landlord, shall have the
right to receive HVAC service during hours other than Normal Business
Hours (Tenant shall pay Landlord's reasonable charge for the
additional service, which charge shall approximate Landlord's actual
expense in providing such additional service); (3) maintenance and
repair of the Premises or Property as described in Section 9.2 and to
fulfill its obligations in Section 4.3.; (4) elevator service; (5)
electricity and other utilities to the Premises for general office
use, in accordance with and subject to the terms and conditions in
Article 10 and Exhibit C; (5) washing of interior and exterior
surfaces of exterior windows with reasonable frequency; and (7) such
other services as Landlord reasonably determines are necessary or
appropriate for the Premises or the Property as a Class A office
building.
7.2 Tenant's failure to receive or any interruption or termination of,
services due to the application of Laws, the failure of any equipment,
the performance of repairs, improvements or alterations, or the
occurrence of any event or cause beyond the reasonable control of
Landlord (a "Service Failure") shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an
abatement of Rent, nor relieve Tenant from the obligation to fulfill
any covenant or agreement. However, if the Premises, or a material
portion of the Premises, is made untenantable for a period in
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excess of 3 consecutive Business Days as a result of the Service
Failure due to Landlord's negligence or willful misconduct, then
Tenant, as its sole remedy, shall be entitled to receive an abatement
of Rent payable hereunder during the period beginning on the 4th
consecutive Business Day of the Service Failure and ending on the day
the service has been restored. If the entire Premises has not been
rendered untenantable by the Service Failure, the amount of abatement
that Tenant is entitled to receive shall be prorated based upon the
percentage of the Premises rendered untenantable and not used by
Tenant. In no event, however, shall Landlord be liable to Tenant for
any loss or damage, including the theft of Tenant's Property (defined
in Article 15), arising out of or in connection with the failure of
any security services, personnel or equipment not caused by Landlord's
negligence or willful misconduct. If the Premises are so untenantable,
Landlord will use its commercially reasonable best efforts to provide
Tenant with alternative space in the Building until the Premises are
restored.
8. Leasehold Improvements.
All improvements to the Premises other than Tenant's personal property and
trade fixtures (collectively, "Leasehold Improvements") shall be owned by
Landlord and shall remain upon the Premises without compensation to Tenant.
However, Landlord, by written notice to Tenant within 30 days prior to the
Termination Date, may require Tenant to remove, at Tenant's expense: (1) Cable
(defined in Section 9.1) installed by or for the exclusive benefit of Tenant and
located in the Premises or other portions of the Premises or the Property; and
(2) any Leasehold Improvements that are performed by or for the benefit of
Tenant and, in Landlord's reasonable judgment, are of a nature that would
require removal and repair costs that are materially in excess of the removal
and repair costs associated with standard office improvements (collectively
referred to as "Required Removables"). Without limitation, it is agreed that
Required Removables include internal stairways, raised floors, personal baths
and showers, vaults, rolling file systems and structural alterations and
modifications of any type. The Required Removables designated by Landlord shall
be removed by Tenant before the Termination Date. Tenant shall repair damage
caused by the installation or removal of Required Removables. If Tenant fails to
remove any Required Removables or perform related repairs in a timely manner,
Landlord, at Tenant's expense, may remove and dispose of the Required Removables
and perform the required repairs. Tenant, within 30 days after receipt of an
invoice, shall reimburse Landlord for the reasonable costs incurred by Landlord.
Notwithstanding the foregoing, Tenant, at the time it requests approval for a
proposed Alteration (defined in Section 9.3), may request in writing that
Landlord advise Tenant whether the Alteration or any portion of the Alteration
will be designated as a Required Removable. Within 10 days after receipt of
Tenant's request, Landlord shall advise Tenant in writing as to which portions
of the Alteration, if any, will be considered to be Required Removables, and if
Landlord does not respond within such 10 day period, such Alterations will not
be considered Required Removables (and, in such event, Landlord shall not have
the right under the second sentence of this Section 8 to later require Tenant to
remove such Alterations).
9. Repairs and Alterations.
9.1 Tenant's Repair. Except as provided in Sections 4.3 and 9.2, Tenant
shall, at its sole cost and expense, keep the interior, non-structural
portions of the Premises in good condition and repair, reasonable wear
and tear excepted. Tenant's repair obligations include, without
limitation, repairs to: (1) floor covering, if needed due to abnormal
wear and tear; (2) interior partitions; (3) interior doors; (4) the
interior side of demising walls; (5) electronic, phone and data
cabling and related equipment (collectively, "Cable") that is
installed by or for the benefit of Tenant and located in the Premises
and that was not part of or included in Landlord's Work; (6)
supplemental air conditioning units, hot water heaters, plumbing, and
similar facilities serving Tenant exclusively; and (7) Alterations
performed after the Commencement Date by contractors retained by
Tenant, including related HVAC balancing. All work shall be performed
in accordance with the rules and procedures described in Section 9.3
below. If Tenant fails to make any repairs to the
Page 11
Premises for more than 30 days after notice from Landlord (although
notice shall not be required if there is an emergency), Landlord may
make the repairs, and Tenant shall pay the reasonable cost of the
repairs to Landlord within 30 days after receipt of an invoice,
together with an administrative charge in an amount equal to 10% of
the cost of the repairs.
9.2 Landlord's Maintenance and Repair. Landlord shall provide daily
janitorial service to the Premises (exclusive of Saturdays, Sundays
and holidays) including vacuuming, dusting, trash removal and such
regular maintenance as is normally conducted in a comparable Class A
office building in the geographical area of the Premises including but
not limited to window cleaning, pest control and snow shoveling;
provided that janitorial service shall not include shampooing the
carpets, except for the Common Areas. Tenant shall make repairs and
replacements to the Premises, common area, or Property needed because
of any negligent or intentional act or omission of Tenant or Tenant's
agents, employees or invitees, except to the extent that the repairs
or replacements are covered by Landlord's insurance. Except for the
repairs and replacements that Tenant must make under the preceding
sentence and in Section 9.1 regarding Tenant's repairs, Landlord shall
pay for, subject to reimbursement as an Expense if and to the extent
provided in Section 4.3, and make all other repairs and replacements
to the Common Area and Building, and shall maintain the Building in
good condition as a Class A office building, including, but not
limited to, structural parts of the Building, foundations, bearing and
exterior walls (including glass), subflooring and roof (including roof
membrane and skylights), electrical, plumbing and sewage systems,
Cable installed as part of Landlord's Work, gutters and down spouts,
the heating, ventilating and air conditioning system, interior walls,
floors, ceilings, interior and exterior doors and windows and their
appurtenant xxxxx and frames, together with all fixtures, lighting,
appliances, elevators, equipment, and plumbing and utility lines, and
the sidewalks, grounds, landscaping, parking and loading areas. In no
event shall Tenant be entitled to undertake any such maintenance or
repairs, whether at the expense of Tenant or Landlord, and Tenant
hereby waives the benefits of any law now or hereafter in effect which
would otherwise provide Tenant with such right. The Lease and Tenant's
obligation hereunder shall in no way be affected, impaired or excused
because Landlord is unable to fulfill any of its obligations under
this Lease due to fire, earthquake, inclement weather or other acts of
God, acts of the public enemy, riot, insurrection, governmental
regulation of the sales of materials or supplies or the transportation
thereof, strikes or boycotts, shortages of materials or labor, or any
other cause beyond the control of Landlord.
9.3 Alterations. Tenant shall not make alterations, additions or
improvements to the Premises or other portions of the Property after
the Commencement Date which are not part of the initial Tenant's Work
provided for herein (collectively referred to as "Alterations")
without first obtaining the written consent of Landlord in each
instance, which consent shall not be unreasonably withheld or delayed.
If Landlord does not respond to Tenant's request for consent within
ten (10) business days, Landlord shall be deemed to have granted its
consent. However, Landlord's consent shall not be required for any
Alteration that satisfies all of the following criteria (a "Cosmetic
Alteration"): (1) is of a cosmetic nature such as painting,
wallpapering, hanging pictures and installing carpeting; (2) is not
visible from the exterior of the Premises or Property; (3) will not
affect the systems or structure of the Property; and (4) does not
require work to be performed inside the walls or above the ceiling of
the Premises (other than installation of telephone, computer, data
transmission, internet and other telecommunications cables and wires).
However, even though consent is not required, the performance of
Cosmetic Alterations shall be subject to all the other provisions of
this Section 9.3. Prior to starting work, Tenant shall furnish
Landlord with plans and specifications reasonably acceptable to
Landlord; names of contractors reasonably acceptable to Landlord
(provided that Landlord may designate specific contractors with
respect to Property systems); necessary permits and approvals; and
evidence of contractor's and subcontractor's insurance in
Page 12
amounts reasonably required by Landlord. Material changes to the plans
and specifications must also be submitted to Landlord for its
approval, which approval shall not be unreasonably withheld or
delayed. Alterations shall be constructed in a good and workmanlike
manner using materials of a quality that is at least equal to the
quality designated by Landlord as the minimum standard for the
Premises. Landlord may designate reasonable rules, regulations and
procedures for the performance of work in the Premises and, to the
extent reasonably necessary to avoid disruption to the occupants of
the Building, shall have the right to designate the time when
Alterations may be performed. Tenant shall reimburse Landlord within
30 days after receipt of an invoice for reasonable sums paid by
Landlord for third party examination of Tenant's plans for non-
Cosmetic Alterations, provided that no such reimbursement shall be due
with respect to Tenant's initial Alterations in the Premises (or in an
expansion of the Premises under Sections 6.1 or 6.3). Upon completion,
Tenant shall furnish "as-built" plans (except for Cosmetic
Alterations), completion affidavits, full and final waivers of lien
and receipted bills covering all labor and materials. Tenant shall
assure that the Alterations comply with all insurance requirements and
Laws. Landlord's approval of an Alteration shall not be a
representation by Landlord that the Alteration complies with
applicable Laws or will be adequate for Tenant's use.
10. Use of Electrical Services by Tenant.
10.1 Electricity used by Tenant in the Premises shall be paid for by Tenant
through inclusion in Expenses (except as provided in Section 10.2 for
excess usage). Electrical service to the Premises may be furnished by
one or more companies providing electrical generation, transmission
and distribution services, and the cost of electricity may consist of
several different components or separate charges for such services,
such as generation, distribution and stranded cost charges. Landlord
shall have the exclusive right to select any company providing
electrical service to the Premises, to aggregate the electrical
service for the Property and Premises with other buildings, to
purchase electricity through a broker and/or buyers group and to
change the providers and manner of purchasing electricity. In the
event that any other tenant of the Building utilizes such tenant's
premises, or any material portion thereof, for permitted uses which
cause such tenant to use electrical service in excess of that
associated with general office purposes, Landlord shall provide a
separate meter to such tenant and separately charge such tenant for
its electrical service, so that Tenant is not required to pay for any
such excess use of electrical service by another tenant as part of the
Expenses.
10.2 Tenant's use of electrical service shall not exceed, either in
voltage, rated capacity, use beyond Normal Business Hours or overall
load, that which Landlord reasonably deems to be standard for normal
office use in Class A office buildings. If Tenant requests permission
to consume excess electrical service, Landlord may condition consent
upon conditions that Landlord reasonably elects (including, without
limitation, the installation of utility service upgrades, meters,
submeters, air handlers or cooling units), and the additional usage
(to the extent permitted by Law), installation and maintenance costs
shall be paid by Tenant. Landlord shall have the right, at Landlord's
cost, to separately meter electrical usage for the Premises and to
measure electrical usage by survey or other commonly accepted methods.
11. Entry by Landlord.
Landlord, Landlord's agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Property, including other tenants' premises.
Except in emergencies or to provide janitorial and other Property services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises,
Page 13
which may be given orally. If reasonably necessary for the protection and safety
of Tenant and its employees, Landlord shall have the right to temporarily close
all or a portion of the Premises and/or the Premises to perform repairs,
alterations and additions. However, except in emergencies, Landlord will not
close the Premises or the Premises if the work can reasonably be completed on
weekends and after Normal Business Hours. Entry by Landlord shall not constitute
constructive eviction or entitle Tenant to an abatement or reduction of Rent.
Any entry by Landlord and its agents and employees (including, but not limited
to the janitorial company servicing the Premises), shall be conducted in
compliance with reasonable confidentiality and security measures which may be
required by Tenant (including, but not limited to, an escort by one of Tenant's
employees and execution of confidentiality or nondisclosure agreements) in order
to protect the confidentiality and security of Tenant's business and employees,
and Landlord acknowledges and accepts that Tenant considers the entire Premises
as highly confidential and Landlord would have access to the Premises only if
escorted by one of Tenant's employees.
12. Assignment and Subletting.
12.1 Except in connection with a Permitted Transfer (defined in Section
12.4 below), Tenant shall not assign, sublease, transfer or encumber
any interest in this Lease or allow any third party to use any
portion of the Premises (collectively or individually, a "Transfer")
without the prior written consent of Landlord, which consent shall
not be unreasonably withheld or delayed. Without limitation, it is
agreed that Landlord's consent shall not be considered unreasonably
withheld if: (1) in the event of a proposed assignment, the proposed
transferee's financial condition does not meet Landlord's reasonable
criteria used to select Building tenants having similar leasehold
obligations; (2) the use of the Premises by the proposed transferee
is not substantially the same as Tenant's use of the Premises (3) the
proposed transferee is a governmental agency, or occupant of the
Property with whom Landlord is then negotiating for other space in
the Building; or (4) Tenant is in default after the expiration of the
notice and cure periods in this Lease. Tenant shall not be entitled
to receive monetary damages based upon a claim that Landlord
unreasonably withheld its consent to a proposed Transfer and Tenant's
sole remedy shall be an action to enforce any such provision through
specific performance or declaratory judgment. Any attempted Transfer
in violation of this Article shall, at Landlord's option, be void.
Consent by Landlord to one or more Transfer(s) shall not operate as a
waiver of Landlord's rights to approve any subsequent Transfers. In
no event shall any Transfer or Permitted Transfer release or relieve
Tenant from any obligation under this Lease.
12.2 As part of its request for Landlord's consent to a Transfer, Tenant
shall provide Landlord with financial statements for the proposed
transferee (in the event of a proposed assignment), a complete copy
of the proposed assignment, sublease and other contractual documents
and such other information as Landlord may reasonably request.
Landlord shall, by written notice to Tenant within 15 business days
of its receipt of the required information and documentation, either
consent to the Transfer by the execution of a consent agreement in a
form reasonably designated by Landlord or reasonably refuse to
consent to the Transfer in writing. Tenant shall pay Landlord a
review fee not exceeding $2,500.00 for Landlord's review of any
Permitted Transfer or requested Transfer for its actual reasonable
costs and expenses (including reasonable attorney's fees).
12.3 Tenant shall pay Landlord 50% of all rent and other consideration
which Tenant receives as a result of a Transfer that is in excess of
the Rent payable to Landlord for the portion of the Premises and Term
covered by the Transfer. Tenant shall pay Landlord for Landlord's
share of any excess within 30 days after Tenant's receipt of such
excess consideration. Tenant may deduct from the excess all
reasonable and customary expenses directly incurred by Tenant
attributable to the Transfer (other than Landlord's review fee),
including brokerage fees, legal fees and construction costs. If
Tenant is in Monetary Default (defined in Section 19.1 below),
Landlord may require that all sublease
Page 14
payments be made directly to Landlord, in which case Tenant shall
receive a credit against Rent in the amount of any payments received
(less Landlord's share of any excess).
12.4 Notwithstanding anything to the contrary contained in this Lease,
Tenant may assign its entire interest under this Lease to a successor
to Tenant by purchase, merger, consolidation or reorganization
without the consent of Landlord, provided that all of the following
conditions are satisfied (a "Permitted Transfer"): (1) Tenant is not
in default under this Lease beyond applicable notice and cure
periods; (2) Tenant's successor shall own all or substantially all of
the assets of Tenant; (3) no material change of use of the Premises
occurs; (4) Tenant shall give Landlord written notice at least 15
days prior to the effective date of the proposed purchase, merger,
consolidation or reorganization; and (5) all individuals then
existing as guarantors execute a reaffirmation of the guarantee
provided for by this Lease, if any, which is reasonably satisfactory
in substance and form to Landlord. Tenant's notice to Landlord shall
include information and documentation showing that each of the above
conditions has been satisfied. If requested by Landlord in the event
of an assignment, Tenant's successor shall sign a commercially
reasonable form of assumption agreement. Notwithstanding anything to
the contrary contained in this Lease, Tenant may sublet all or a
portion of the Premises without Landlord's consent to an entity that
qualifies as a permitted transferee under the foregoing provisions
concerning Permitted Transfers, and Tenant may sublet a portion of
the Premises which is less than 50% hereof to any contractors,
vendors or other third parties who may be required by Tenant to work
in conjunction with Tenant at the Premises on a project-specific
basis.
13. Liens.
Tenant shall not permit mechanic's or other liens to be placed upon the
Property, the Premises or Tenant's leasehold interest in connection with any
work or service done or purportedly done by or for benefit of Tenant. If a lien
is so placed, Tenant shall, within 10 days of notice from Landlord of the filing
of the lien, fully discharge the lien by settling the claim which resulted in
the lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law, unless the lien arises out of Landlord's failure to pay the
Tenant Allowance in accordance with Exhibit D (in which event Landlord shall be
responsible for discharging the lien). If Tenant fails to discharge the lien
when Tenant is required to do so, then, in addition to any other right or remedy
of Landlord, Landlord may bond or insure over the lien or otherwise discharge
the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to
bond or insure over the lien or discharge the lien, including, without
limitation, reasonable attorneys' fees (if and to the extent permitted by Law)
within 30 days after receipt of an invoice from Landlord.
14. Indemnity and Waiver of Claims.
14.1 Except to the extent caused by the negligence or willful misconduct
of Landlord or any Landlord Related Parties (defined below), Tenant
shall indemnify, defend and hold Landlord, its trustees, members,
principals, beneficiaries, partners, officers, directors, employees,
Mortgagee(s) (defined in Article 25) and agents ("Landlord Related
Parties") harmless against and from all liabilities, obligations,
damages, penalties, claims, actions, costs, charges and expenses,
including, without limitation, reasonable attorneys' fees and other
professional fees (if and to the extent permitted by Law), which may
be imposed upon, incurred by or asserted against Landlord or any of
the Landlord Related Parties and arising out of or in connection with
any damage or injury occurring in the Premises or any acts or
omissions (including violations of Law) of Tenant, the Tenant Related
Parties (defined below) or any of Tenant's contractors or licensees.
14.2 Except to the extent caused by the negligence or willful misconduct
of Tenant or any Tenant Related Parties (defined below), Landlord
shall indemnify, defend and hold
Page 15
Tenant, its trustees, members, principals, beneficiaries, partners,
officers, directors, employees and agents ("Tenant Related Parties")
harmless against and from all liabilities, obligations, damages,
penalties, claims, actions, costs, charges and expenses, including,
without limitation, reasonable attorneys' fees and other professional
fees (if and to the extent permitted by Law), which may be imposed
upon, incurred by or asserted against Tenant or any of the Tenant
Related Parties and arising out of or in connection with the acts or
omissions (including violations of Law) of Landlord, the Landlord
Related Parties or any of Landlord's contractors.
14.3 Except to the extent such damage or loss results from the negligence
or willful misconduct of Landlord or any Landlord Related Parties,
Landlord and the Landlord Related Parties shall not be liable for,
and Tenant waives, all claims for loss or damage to Tenant's business
or loss, theft or damage to Tenant's Property or the property of any
person claiming by, through or under Tenant resulting from: (1) wind
or weather; (2) the failure of any sprinkler, heating or air-
conditioning equipment, any electric wiring or any gas, water or
steam pipes; (3) the backing up of any pipe or drain; (4) the
bursting, leaking or running of any tank, water closet, drain or
other pipe; (5) water, snow or ice upon or coming through the roof,
skylight, stairs, doorways, windows, walks or any other place upon or
near the Property; (6) any act or omission of any party other than
Landlord or Landlord Related Parties; and (7) any causes not
reasonably within the control of Landlord. Tenant shall insure itself
against such losses under Article 15 below.
15. Insurance.
15.1 By Tenant. Tenant shall carry and maintain the following insurance
("Tenant's Insurance"), at its sole cost and expense: (1) Commercial
General Liability Insurance, written on a claims made basis,
applicable to the Premises and its appurtenances providing a minimum
combined single limit of $2,000,000.00; and (2) All Risk
Property/Business Interruption Insurance, including flood and
earthquake (if available at reasonable cost), written at replacement
cost value and with a replacement cost endorsement covering all of
Tenant's trade fixtures, equipment, furniture and other personal
property within the Premises ("Tenant's Property"). Any company
writing any of Tenant's Insurance shall have an A.M. Best rating of
not less than A-VIII. All Commercial General Liability Insurance
policies shall name Tenant as a named insured and Landlord (or any
successor), as additional insureds. All policies of Tenant's
Insurance shall contain endorsements that the insurer(s) shall give
Landlord and its designees at least 30 days' advance written notice
of any cancellation, termination or lapse of insurance. Tenant shall
provide Landlord with a certificate of insurance evidencing Tenant's
Insurance prior to the earlier to occur of the Commencement Date or
the date Tenant is provided with possession of the Premises for any
reason, and upon renewals at least 15 days prior to the expiration
of the insurance coverage.
15.2 By Landlord.
15.2.1 Building and Improvements. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies in the name of
Landlord, with loss payable to Landlord and to any Lender(s),
insuring against loss or damage to the Property with such
commercially reasonable deductible amount as is selected by
Landlord. Such insurance shall be for full replacement cost, as
the same shall exist from time to time, or the amount required by
any Lender(s), but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of
the unique nature or age of the improvements involved, such latter
amount is less than full replacement cost. If the coverage is
available and commercially reasonable, Landlord's policy or
policies may insure against all risks of direct physical loss or
damage (including flood and/or earthquake), including coverage for
any additional costs resulting from debris removal and reasonable
amounts of
Page 16
coverage for the enforcement of any ordinance or law regulating
the reconstruction or replacement of any undamaged sections of the
Premises required to be demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as
the result of a covered loss. Such policies may also contain an
agreed valuation provision in lieu of any co-insurance clause,
waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a
factor selected by the insurer.
15.2.2 Rental Value. Landlord also may obtain and keep in force during
the term of this Lease a policy or policies in the name of
Landlord, with loss payable to Landlord and any lender(s) to
Landlord, insuring the loss of the full rental and other charges
(including Operating Expenses) payable by all tenants of the
Premises to Landlord for one year. Said insurance may provide that
in the event the Lease is terminated by reason of an insured loss,
the period of indemnity for such coverage shall be extended beyond
the date of the completion of repairs or replacement of the
Premises, to provide for one full year's loss of rental revenues
from the date of any such loss. Said insurance shall contain an
agreed valuation provision in lieu of any co-insurance clause, and
the amount of coverage shall be adjusted annually to reflect the
projected payments payable by Tenant for the next 12-month period.
15.2.3 Increases Caused by Tenant. Tenant shall pay for any increase in
the premiums charged to Landlord for the Property or Common Areas
if said increase is caused by Tenant's acts, omissions, use or
occupancy of the Premises.
15.2.4 Liability for Common Areas. Landlord shall carry and maintain with
respect to the Common Areas Commercial General Liability
Insurance, written on a claims made basis, applicable to the
Premises and its appurtenances providing a minimum combined single
limit of $2,000,000.00, which shall name Landlord as a named
insured and Tenant as an additional insured. Upon Tenant's
request, Landlord shall provide Tenant with a certificate of
insurance evidencing such liability insurance.
16. Subrogation.
Notwithstanding anything in this Lease to the contrary, Landlord and Tenant
hereby waive, and shall cause their respective insurance carriers to waive, any
and all rights of recovery, claim, action or causes of action against the other
and their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Property, the
Premises, any additions or improvements to the Property, or Premises, or any
contents thereof, including all rights of recovery, claims, actions or causes of
action arising out of the negligence of Landlord or any Landlord Related Parties
or the negligence of Tenant or any Tenant Related Parties, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.
17. Casualty Damage.
17.1 If all or any part of the Premises is damaged by fire or other
casualty, Tenant shall immediately notify Landlord in writing. During
any period of time that all or a portion of the Premises is rendered
untenantable as a result of a fire or other casualty, the Rent shall
xxxxx for the portion of the Premises that is untenantable and not
used by Tenant. Landlord shall have the right to terminate this Lease
if: (1) the Property or the Premises shall be damaged so that, in
Landlord's reasonable judgment, substantial alteration or
Page 17
reconstruction of the Property not covered by insurance shall be
required (whether or not the Premises has been damaged) and Landlord
is therefore terminating all leases in the Building; (2) Landlord is
not permitted by Law to rebuild the Property or the Premises in
substantially the same form as existed before the fire or casualty
(in which event Tenant may also terminate this Lease); (3) the
Premises have been materially damaged and there is less than 2 years
of the Term remaining on the date of the casualty; (4) any Mortgagee
requires that such insurance proceeds be applied to the payment of
the mortgage debt; or (5) a material uninsured loss to the Property
or the Premises occurs. Landlord may exercise its right to terminate
this Lease by notifying Tenant in writing within 90 days after the
date of the casualty. If Landlord does not terminate this Lease,
Landlord shall commence and proceed with reasonable diligence to
repair and restore the Premises and the Leasehold Improvements
(excluding any Alterations that were performed by Tenant in violation
of this Lease). However, in no event shall Landlord be required to
spend more than the insurance proceeds received by Landlord. Landlord
shall not be liable for any loss or damage to Tenant's Property or to
the business of Tenant resulting in any way from the fire or other
casualty or from the repair and restoration of the damage. Landlord
and Tenant hereby waive the provisions of any Law relating to the
matters addressed in this Article, and agree that their respective
rights for damage to or destruction of the Premises shall be those
specifically provided in this Lease.
17.2 If all or any portion of the Premises shall be made untenantable by
fire or other casualty, Landlord shall, with reasonable promptness,
cause an architect or general contractor selected by Landlord to
provide Landlord and Tenant with a written estimate of the amount of
time required to substantially complete the repair and restoration of
the Premises and make the Premises tenantable again, using standard
working methods ("Completion Estimate"). If the Completion Estimate
indicates that the Premises cannot be made tenantable within 180 days
from the date the repair and restoration is started, then regardless
of anything in Section 17.1 above to the contrary, either party shall
have the right to terminate this Lease by giving written notice to
the other of such election within 10 days after receipt of the
Completion Estimate.
18. Condemnation.
Either party may terminate this Lease if the whole or any material part of
the Premises shall be taken or condemned for any public or quasi-public use
under Law, by eminent domain or private purchase in lieu thereof (a "Taking").
Landlord shall also have the right to terminate this Lease if there is a Taking
of any portion of the Property or the Premises which would leave the remainder
of the Property or the Premises unsuitable for use as an office building in a
manner comparable to the Property's or the Premises' use prior to the Taking. In
order to exercise its right to terminate the Lease, Landlord or Tenant, as the
case may be, must provide written notice of termination to the other within 45
days after the Taking. Any such termination shall be effective as of the date
the physical taking of the Premises or the portion of the Property or the
Premises occurs. If this Lease is not terminated, the Rentable Area of the
Property, the Rentable Area of the Premises, Tenant's Pro Rata Share shall, if
applicable, be appropriately adjusted. In addition, Rent for any portion of the
Premises taken or condemned shall be abated during the unexpired Term of this
Lease effective when the physical taking of the portion of the Premises occurs.
All compensation awarded for a Taking, or sale proceeds, shall be the property
of Landlord, any right to receive compensation or proceeds being expressly
waived by Tenant. However, Tenant may file a separate claim at its sole cost and
expense for Tenant's Property and Tenant's reasonable relocation expenses,
provided the filing of the claim does not diminish the award which would
otherwise be receivable by Landlord.
19. Events of Default.
Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:
Page 18
19.1 Tenant's failure to pay when due all or any portion of the Rent, if
the failure continues for 3 business days after written notice to
Tenant ("Monetary Default").
19.2 Tenant's failure (other than a Monetary Default) to comply with any
term, provision or covenant of this Lease, if the failure is not
cured within 30 days after written notice to Tenant. However, if
Tenant's failure to comply cannot reasonably be cured within 30
days, Tenant shall be allowed additional time as is reasonably
necessary to cure the failure so long as: (1) Tenant commences to
cure the failure within 30 days, and (2) Tenant diligently pursues a
course of action that will cure the failure and bring Tenant back
into compliance with the Lease. However, if Tenant's failure to
comply creates a hazardous condition, the failure must be cured
immediately upon notice to Tenant.
19.3 Tenant or any Guarantor becomes insolvent, makes a transfer in fraud
of creditors or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts when due.
19.4 The leasehold estate is taken by process or operation of Law.
20. Remedies.
20.1 Upon any default, Landlord shall have the right without notice or
demand (except as provided in Article 19) to pursue any of its
rights and remedies at Law or in equity, including any one or more
of the following remedies:
20.1.1 Terminate this Lease, in which case Tenant shall immediately
surrender the Premises to Landlord. If Tenant fails to
surrender the Premises, Landlord may, in compliance with
applicable Law and without prejudice to any other right or
remedy, enter upon and take possession of the Premises and
expel and remove Tenant, Tenant's Property and any party
occupying all or any part of the Premises. Tenant shall pay
Landlord on demand the amount of all past due Rent and other
losses and damages which Landlord may suffer as a result of
Tenant's default, whether by Landlord's inability to relet
the Premises on satisfactory terms or otherwise, including,
without limitation, all Costs of Reletting (defined below)
and any deficiency that may arise from reletting or the
failure to relet the Premises. "Costs of Reletting" shall
include all costs and expenses incurred by Landlord in
reletting or attempting to relet the Premises, including,
without limitation, reasonable legal fees, brokerage
commissions, the cost of alterations and the value of other
concessions or allowances granted to a new tenant.
20.1.2 Terminate Tenant's right to possession of the Premises and,
in compliance with applicable Law, expel and remove Tenant,
Tenant's Property and any parties occupying all or any part
of the Premises. Landlord may (but shall not be obligated
to, except to the extent required by law) relet all or any
part of the Premises, without notice to Tenant, for a term
that may be greater or less than the balance of the Term and
on such conditions (which may include concessions, free rent
and alterations of the Premises) and for such uses as
Landlord in its absolute discretion shall determine.
Landlord may collect and receive all rents and other income
from the reletting. Tenant shall pay Landlord on demand all
past due Rent, all Costs of Reletting and any deficiency
arising from the reletting or failure to relet the Premises.
Landlord shall not be responsible or liable for the failure
to relet all or any part of the Premises or for the failure
to collect any Rent. The re-entry or taking of possession of
the Premises shall not be construed as an election by
Landlord to terminate this Lease unless a written notice of
termination is given to Tenant.
Page 19
20.1.3 In the event that Landlord shall elect to terminate this
Lease under Section 20.1.1, then upon such termination
Tenant shall (if it has not already done so) quit and
surrender the Premises to Landlord and Landlord may recover
from Tenant:
(i) The worth at the time of award of any unpaid
Rent 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 Rent which would have been earned after
termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been
reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid Rent 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 damage proximately caused by Tenant's failure to
perform Tenant's obligations under this Lease or which in
the ordinary course of things would be likely to result
therefrom.
As used in (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest at 12% per annum. As
used in (iii) above, the "worth at the time of award" is
computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of
award plus 1%.
20.2 Unless expressly provided in this Lease, the repossession or re-
entering of all or any part of the Premises shall not relieve Tenant
of its liabilities and obligations under the Lease. No right or
remedy of Landlord shall be exclusive of any other right or remedy.
Each right and remedy shall be cumulative and in addition to any
other right and remedy now or subsequently available to Landlord at
Law or in equity. If Landlord declares Tenant to be in default,
Landlord shall be entitled to receive interest on any unpaid item of
Rent at a rate equal to 12% per annum. Forbearance by Landlord to
enforce one or more remedies shall not constitute a waiver of any
default.
21. Landlord's Default; Limitation of Liability.
Landlord's failure to perform or observe any of its obligations under this
Lease or to correct a breach of any warranty or representation made in this
Lease within thirty (30) days after receipt of written notice from Tenant
setting forth in reasonable detail the nature and extent of the failure (or if
more than thirty (30) days is required to cure the breach, Landlord's failure to
begin curing within the thirty (30) day period and diligently prosecute the cure
to completion) shall constitute a default by Landlord. If Landlord commits a
default, Tenant may, without waiving any claim for damages for breach of
agreement or any other rights or remedies it may have under this Lease at law,
at any time thereafter do any of the following:
Provided Tenant has given notice of such default to Landlord's mortgage
lender and reasonable opportunity for said lender to cure the default, Tenant
may cure the default for the account of the Landlord, and any amount paid or any
contractual liability incurred by Tenant in so doing shall be deemed paid or
incurred for the account of Landlord, and Landlord shall reimburse Tenant within
thirty (30) days of demand. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO
TENANT SHALL BE LIMITED
Page 20
TO THE INTEREST OF LANDLORD IN THE PROPERTY AND ANY PROCEEDS THEREOF. TENANT
SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE PROPERTY AND ANY PROCEEDS
THEREOF FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD. NEITHER
LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY
JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD,
TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) (DEFINED IN ARTICLE 25 BELOW)
WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN ARTICLE 25 BELOW) ON
THE PROPERTY, BUILDING OR PREMISES, NOTICE AND REASONABLE TIME TO CURE THE
ALLEGED DEFAULT. IN ADDITION, TENANT ACKNOWLEDGES THAT ANY ENTITY MANAGING THE
PREMISES ON BEHALF OF LANDLORD, OR WHICH EXECUTES THIS LEASE AS AGENT FOR
LANDLORD, IS ACTING SOLELY IN ITS CAPACITY AS AGENT FOR LANDLORD AND SHALL NOT
BE LIABLE FOR ANY OBLIGATIONS, LIABILITIES, LOSSES OR DAMAGES ARISING OUT OF OR
IN CONNECTION WITH THIS LEASE, ALL OF WHICH ARE EXPRESSLY WAIVED BY TENANT,
UNLESS DUE TO THE NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH ENTITY OR AGENT.
22. No Waiver.
Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it constitute an estoppel. Either party's
failure to enforce its rights for a default shall not constitute a waiver of its
rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance or surrender of the Premises.
23. Quiet Enjoyment.
Tenant shall, and may peacefully have, hold and enjoy the Premises, subject
to the terms of this Lease, provided Tenant pays the Rent and fully performs all
of its covenants and agreements. This covenant and all other covenants of
Landlord shall be binding upon Landlord and its successors only during its or
their respective periods of ownership of the Premises, and shall not be a
personal covenant of Landlord or the Landlord Related Parties.
24. Holding Over.
Except for any permitted occupancy by Tenant under Article 8, if Tenant
fails to surrender the Premises at the expiration or earlier termination of this
Lease, occupancy of the Premises after the termination or expiration shall be
that of a tenancy at sufferance. Tenant's occupancy of the Premises during the
holdover shall be subject to all the terms and provisions of this Lease and
Tenant shall pay an amount (on a per month basis without reduction for partial
months during the holdover) equal to 150% of the sum of the Base Rent and
Additional Rent due for the period immediately preceding the holdover. No
holdover by Tenant or payment by Tenant after the expiration or early
termination of this Lease shall be construed to extend the Term or prevent
Landlord from immediate recovery of possession of the Premises by summary
proceedings or otherwise. In addition to the payment of the amounts provided
above, if Landlord is unable to deliver possession of the Premises to a new
tenant, or to perform improvements for a new tenant, as a result of Tenant's
holdover and Tenant fails to vacate the Premises within 15 days after Landlord
notifies Tenant of Landlord's inability to deliver possession, or perform
improvements, Tenant shall be liable to Landlord for all damages, including,
without limitation, consequential damages, that Landlord suffers from the
holdover.
25. Subordination to Mortgages; Estoppel Certificate; Mortgagee Protection.
Subject to the terms of this Section 25, Tenant accepts this Lease subject
and subordinate to any mortgage(s), deed(s) of trust or other lien(s) now or
subsequently arising upon the Premises or the Property, and to renewals,
modifications, refinancings and extensions thereof (collectively referred to as
a
Page 21
"Mortgage"). The party having the benefit of a Mortgage shall be referred to as
a "Mortgagee". This clause shall be self-operative, but upon request from a
Mortgagee, Tenant shall execute and deliver a subordination agreement in favor
of the Mortgagee within ten (10) business days of the request, provided that the
Mortgagee shall agree, in a non-disturbance agreement, to recognize this Lease
in the event of foreclosure if Tenant is not in default at such time subject to
such provisions relating to the disposition or application of insurance or
condemnation proceeds as may be contained in such Mortgagee's loan documents.
Tenant agrees to execute any reasonable documents required to effectuate such
subordination. In lieu of having the Mortgage be superior to this Lease, a
Mortgagee shall have the right at any time to subordinate its Mortgage to this
Lease. If requested by a successor-in-interest to all or a part of Landlord's
interest in the Lease, Tenant shall, without charge, attorn to the successor-in-
interest. Landlord and Tenant shall each, within 10 business days after receipt
of a written request from the other, execute and deliver an estoppel certificate
to those parties as are reasonably requested by the other (including a Mortgagee
or prospective purchaser). The estoppel certificate shall include a statement
certifying that this Lease is unmodified (except as identified in the estoppel
certificate) and in full force and effect, describing the dates to which Rent
and other charges have been paid, representing that, to such party's actual
knowledge, there is no default (or stating the nature of the alleged default)
and indicating other matters with respect to the Lease that may reasonably be
requested.
Tenant agrees to give any mortgagee or deed of trust holder, by certified
mail, a copy of any notice of default served upon the Landlord, provided that
prior to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the addresses of such mortgagee
or deed of trust holder. Tenant further agrees that if Landlord shall have
failed to cure such default within the time provided for in this Lease, then the
mortgagees and/or trust deed holders have an additional thirty (30) days within
which to cure such default or if such default cannot be cured within that time,
then such additional time as may be necessary if within such 30 days any
mortgagee or deed of trust holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings if necessary to affect such cure), in
which event this Lease shall not be terminated if such remedies are being so
diligently pursued.
Landlord represents that Landlord is the sole owner in fee simple of the
Property and that KeyBank, N.A. is the only mortgagee having a lien on the
Property as of the date of execution of this Lease. Landlord shall deliver to
Tenant, in recordable form, a subordination, nondisturbance and attornment
agreement from Mortgagee (the "Nondisturbance Agreement"), in such Mortagee's
customary form which shall be reasonably acceptable to Tenant, providing
substantially the same protections to Tenant as set forth above in this Section,
within twenty (20) days after execution of this Lease. If the Nondisturbance
Agreement is not so delivered, Tenant shall have the right to terminate this
Lease if it is not thereafter delivered within thirty (30) days after the giving
by Tenant to Landlord of written notice of Tenant's intent to terminate as a
result of Landlord's failure to so deliver.
26. Attorneys' Fees.
If either party institutes a suit against the other for violation of or to
enforce any covenant or condition of this Lease, or if either party intervenes
in any suit in which the other is a party to enforce or protect its interest or
rights, the prevailing party shall be entitled to all of its costs and expenses,
including, without limitation, reasonable attorneys' fees.
27. Notice.
If a demand, request, approval, consent or notice (collectively referred to
as a "notice") shall or may be given to either party by the other, the notice
shall be in writing and delivered by hand or sent by registered or certified
mail with return receipt requested, or sent by overnight or same day courier
service at the party's respective Notice Address(es) set forth in Article 1,
except that if Tenant has vacated the Premises (or if the Notice Address for
Tenant is other than the Premises, and Tenant has vacated such
Page 22
address) without providing Landlord a new Notice Address, Landlord may serve
notice in any manner described in this Article or in any other manner permitted
by Law. Each notice shall be deemed to have been received or given on the
earlier to occur of actual delivery or the date on which delivery is refused,
or, if Tenant has vacated the Premises or the other Notice Address of Tenant
without providing a new Notice Address, three (3) days after notice is deposited
in the U.S. mail or with a courier service in the manner described above. Either
party may, at any time, change its Notice Address by giving the other party
written notice of the new address in the manner described in this Article.
28. Excepted Rights.
This Lease does not grant any rights to light or air over or about the
Property or the Premises. Landlord excepts and reserves exclusively to itself
the use of: (1) roofs, (2) telephone, electrical and janitorial closets, (3)
equipment rooms, Property risers or similar areas that are used by Landlord for
the provision of Property services, (4) rights to the land and improvements
below the floor of the Premises, (5) the improvements and air rights above the
Premises, (6) the improvements and air rights outside the demising walls of the
Premises, and (7) the areas within the Premises used for the installation of
utility lines and other installations serving occupants of the Property.
Landlord shall also have the right to make such other changes to the Property
(but not the interior of the Premises) as Landlord deems appropriate, provided
the changes do not materially affect Tenant's ability to use or access the
Premises for the Permitted Use. Landlord shall also have the right (but not the
obligation) to temporarily close the Property if Landlord reasonably determine
that there is an imminent danger of significant damage to the Property or of
personal injury to Landlord's employees or the occupants of the Property. The
circumstances under which Landlord may temporarily close the Property shall
include, without limitation, electrical interruptions, hurricanes and civil
disturbances. A closure of the Property under such circumstances shall not
constitute a constructive eviction nor entitle Tenant to an abatement or
reduction of Rent. Landlord shall have the right at any time, without thereby
creating an actual or constructive eviction or incurring any liability to Tenant
therefor, to change the arrangement or location of such of the following as are
not contained within the Premises or any part thereof (provided such change does
not adversely affect Tenant's use of or access to the Premises): entrances,
passageways, doors and doorways, corridors, stairs, toilets and other like
public service portions of the Property.
29. Surrender of Premises.
At the expiration or earlier termination of this Lease or Tenant's right of
possession, Tenant shall remove Tenant's Property (defined in Article 15) from
the Premises, and quit and surrender the Premises to Landlord, broom clean and
otherwise in the condition required by Section 9.1, ordinary wear and tear
excepted. Tenant shall also be required to remove the Required Removables in
accordance with Article 8. If Tenant fails to remove any of Tenant's Property
within 2 days after the termination of this Lease or of Tenant's right to
possession, Landlord, at Tenant's sole cost and expense, shall be entitled (but
not obligated) to remove and store Tenant's Property. Landlord shall not be
responsible for the value, preservation or safekeeping of Tenant's Property.
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred for Tenant's Property. In addition, if Tenant fails to remove Tenant's
Property from the Premises or storage, as the case may be, within 30 days after
written notice, Landlord may deem all or any part of Tenant's Property to be
abandoned, and title to Tenant's Property shall be deemed to be immediately
vested in Landlord.
30. Parking.
30.1 Tenant agrees to further rent from Landlord and Landlord agrees to
rent to Tenant the use, on a non-exclusive basis, of 1.7 parking
stalls in the Building for each one thousand (1,000) square feet of
Rentable Area of the Premises; provided Tenant shall be required to
pay a parking fee for such use which fee shall be subject to change
by Landlord (or Landlord's parking administrator) from time to time,
but which fee shall not exceed the
Page 23
market rate in the Lake Union area of Seattle for reasonably
comparable parking facilities in reasonably comparable buildings. For
the first twenty-four(s) months following the Commencement Date,
Tenant and Landlord agree the fee shall be One Hundred Dollars ($100)
per parking stall per month. Tenant's use of the parking shall be
subject to such reasonable rules and regulations as Landlord may
determine are appropriate.
30.2 Tenant shall cooperate and comply with any legal requirements for the
dissemination of information to commuters and visitors to the
Property to encourage the use of available transportation
alternatives and shall offer incentives to their employees to use
such alternatives and otherwise comply with any governmentally
sponsored traffic management or reduction plan. Landlord shall, at
its cost, install a bicycle parking cage in the parking area.
31. Miscellaneous.
31.1 If Tenant's Premises become equal to at least two (2) full floors of
the Building, Tenant, at Tenant's own expense, may place a ground
level exterior monument sign, not exceeding four (4) feet in height
or width, stating Tenant's name on the Building at the south side of
the Building so long as (i) Tenant has obtained Landlord's prior
written consent for the specific sign and location proposed by Tenant
which consent shall not be unreasonably withheld, (ii) such sign
shall conform to all applicable governmental rules and regulations,
(iii) Tenant maintains such sign in good condition and appearance and
(iv) at the termination of this Lease, Tenant, at Tenant's sole
expense, shall remove such sign and repair any damage caused by such
sign or its removal.
31.2 This Lease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the Laws of
the State of Washington and Landlord and Tenant hereby irrevocably
consent to the jurisdiction and proper venue of such state. If any
term or provision of this Lease shall to any extent be invalid or
unenforceable, the remainder of this Lease shall not be affected, and
each provision of this Lease shall be valid and enforced to the
fullest extent permitted by Law. The headings and titles to the
Articles and Sections of this Lease are for convenience only and
shall have no effect on the interpretation of any part of the Lease.
31.3 Tenant shall not record this Lease without Landlord's prior written
consent, but the parties shall, at the request of either party,
promptly execute a memorandum of this Lease which may be recorded in
the real property records.
31.4 Landlord and Tenant hereby waive any right to trial by jury in any
proceeding based upon a breach of this Lease.
31.5 Whenever a period of time is prescribed for the taking of an action
by Landlord or Tenant, the period of time for the performance of such
action shall be extended by the number of days that the performance
is actually delayed due to strikes, acts of God, shortages of labor
or materials, war, civil disturbances and other causes beyond the
reasonable control of the performing party ("Force Majeure").
However, events of Force Majeure shall not extend any period of time
for the payment of Rent or other sums payable by either party.
31.6 After the Notice Date and the substantial completion of Landlord's
Work, Landlord shall have the right to transfer and assign, in whole,
all of its rights and obligations under this Lease and in the
Premises or the Property referred to herein, and upon such transfer
and transfer of the Deposit, and provided the assignee assumes in
writing all of Landlord's obligations hereunder, Landlord shall be
released from any further obligations hereunder, and Tenant agrees to
look solely to the successor in interest of Landlord for the
performance of such obligations.
Page 24
31.7 Broker.
31.7.1 Tenant represents and warrants to Landlord that it has not
engaged nor dealt with any broker, finder or other person who
would be entitled to any commission or fees for the negotiation,
execution, or delivery of this Lease except for Xxxxxxx Partners
and Colliers International ("Landlord's Broker") and The Staubach
Company ("Tenant's Broker"). Landlord agrees to pay and be
responsible for any commissions owing to Landlord's Broker.
Landlord agrees to pay in full satisfaction of any commission to
Tenant's Broker due from Landlord arising out of this transaction
and lease a commission equal to (i) Five Dollars ($5.00) per
Rentable Square Foot of the Premises, as calculated at the
commencement of this Lease (subject to adjustment if the Rentable
Area of the Premises is re-calculated by the Commencement Date
pursuant to Section 1.2), which commission shall be payable one-
half (1/2) on mutual execution of this Lease and one-half (1/2)
on occupancy of the Premises by Tenant and commencement of
Tenant's obligation to pay Base Rent. In the event that the
Premises are expanded by virtue of the 25th Month Expansion
provided for in Section 6.1 above or by virtue of Tenant's
exercise of its first right of refusal to lease provided for in
Section 6.3 above, Landlord agrees to pay, in full satisfaction
of any additional commission to Tenant's Broker, a commission
equal to (i) Four Dollars ($4.00) per Rentable Square Foot the
expanded portion of the Premises, which commission shall be
payable upon commencement of Tenant's obligation to pay Base Rent
for the expanded portion of the Premises. In the event of any
renewal or extension of this Lease, Landlord shall have no
obligation to pay any commission to Tenant's Broker. Tenant shall
indemnify and hold Landlord harmless against any loss, cost,
liability or expense incurred by Landlord as a result of any
claim asserted by any such broker (other than Tenant's Broker and
Landlord's Broker) on the basis of any arrangements or agreements
made or alleged to have been made by or on behalf of Tenant in
violation of Tenant's warranty in this Section.
31.7.2 Agency Disclosure. At the signing of this Lease, Landlord was
represented by Landlord's Broker. Each party signing this
document confirms that the prior oral and/or written disclosure
of agency was provided to such party in this transaction, as
required by RCW 18.86.030(1)(g). Landlord and Tenant, by their
execution of this Lease, each acknowledge and agree that they
have timely received a pamphlet on the law of real estate agency
as required under RCW 18.86.030(1)(f).
31.8 Tenant covenants, warrants and represents that: (1) each individual
executing, attesting and/or delivering this Lease on behalf of Tenant is
authorized to do so on behalf of Tenant; (2) this Lease is binding upon
Tenant; and (3) Tenant is duly organized and legally existing in the state
of its organization and is qualified to do business in the state in which
the Premises are located. If there is more than one Tenant, or if Tenant
is comprised of more than one party or entity, the obligations imposed
upon Tenant shall be joint and several obligations of all the parties and
entities. Notices, payments and agreements given or made by, with or to
any one person or entity shall be deemed to have been given or made by,
with and to all of them.
31.9 Time is of the essence with respect to Tenant's exercise of any expansion,
renewal or extension rights granted to Tenant. This Lease shall create
only the relationship of landlord and tenant between the parties, and not
a partnership, joint venture or any other relationship. This Lease and the
covenants and conditions in this Lease shall inure only to the benefit of
and be binding only upon Landlord and Tenant and their successors and
permitted assigns.
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31.10 The expiration of the Term, whether by lapse of time or otherwise,
shall not relieve either party of any obligations which accrued
prior to or which may continue to accrue after the expiration or
early termination of this Lease. Without limiting the scope of the
prior sentence, it is agreed that Tenant's obligations under
Sections 4.1, 4.2, 8, 14, 20 and 25 shall survive the expiration or
early termination of this Lease.
31.11 All understandings and agreements previously made between the
parties are superseded by this Lease, and neither party is relying
upon any warranty, statement or representation not contained in this
Lease. This Lease may be modified only by a written agreement signed
by Landlord and Tenant.
31.12 Tenant, within 15 days after request (but not more than once per
year), shall provide Landlord with a current financial statement and
such other information as Landlord may reasonably request in order
to create a "business profile" of Tenant and determine Tenant's
ability to fulfill its obligations under this Lease. Landlord,
however, shall not require Tenant to provide such information unless
Landlord is requested to produce the information in connection with
a proposed financing or sale of the Property. Upon written request
by Tenant, Landlord shall enter into a commercially reasonable
confidentiality agreement covering any confidential information that
is disclosed by Tenant.
31.13 The name of the Property may be changed by Landlord, provided it is
not named after any biotechnical or pharmaceutical company.
31.14 Tenant shall not be deemed to be a third party beneficiary of any
other lease of the Property; Landlord retains the sole right to
determine, in its reasonable discretion, whether to enforce and the
method of enforcement of compliance by other tenants and their
employees with the terms of their respective leases including any
restrictions on use and parking; the existence of any violation of
any lease provision by any other tenant shall not be deemed to be a
violation of this Lease by Landlord.
31.15 Submission of this Lease for examination, even though executed by
Tenant, shall not bind Landlord in any manner, and no Lease or other
obligation on the part of the Landlord shall arise, until this Lease
is executed and delivered by Landlord to Tenant.
32. Entire Agreement.
This Lease and the following exhibits and attachments constitute the entire
agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: Exhibit A-1 (Outline and Location of Premises),
Exhibit A-2 (Legal Description of Property), Exhibit B (Rules and Regulations),
Exhibit C (Landlord Work), Exhibit C-1 (Landlord's Plans and Specifications) and
Exhibit D (Tenant Allowance).
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Landlord and Tenant have executed this Lease as of the day and year first
above written.
LANDLORD:
1144 Eastlake LLC, a Washington limited liability company
By: /s/ Illegible
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Managing Member ,its authorized agent
-----------------------------------
TENANT:
ZymoGenetics, Inc., a Washington corporation
By: /s/ Xxxxxx Xxxxxx
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Name Xxxxxx Xxxxxx
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Title: Sr. VP. Operations
---------------------------------------------------
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