EXHIBIT 10.15
AGREEMENT OF LEASE
This Agreement of Lease (the "Lease"), dated as of the 26th day of _April, 2004,
is by and between SIXTH & VIRGINIA PROPERTIES, a Washington General Partnership,
hereinafter called "Owner", and APTIMUS, INC. a Washington corporation
hereinafter called "Tenant."
1 NONSTANDARD PROVISIONS
The following constitute the nonstandard provisions of this Lease:
a. Premises and Floor(s) of The Westin Building on which Premises are
located: Suite __ on the 32nd floor of the Westin Building as shown on
Exhibit A (the "Premises").
b. Agreed floor area of Premises:
Approximately 4,200 rentable square feet ("RSF") on the 32nd floor
which includes an allowance for core and/or common areas used by
Tenant (the "Total Agreed Floor Area"). Rentable square feet shall be
calculated based on usable square footage, plus a 15.5% load factor,
determined in accordance with Building Owners and Managers Association
International ("BOMA") standards, namely, the "Standard Method for
Xxxxxxxxx Xxxxx Xxxx xx Xxxxxx Xxxxxxxxx XXXX - XXXX X-00.0-0000" (the
"BOMA Standard"). The exact rentable square feet shall be determined
upon completion of the working drawings.
c. Lease Term:
The initial term of this Lease (the "Initial Lease Term") shall be
five (5) years and shall commence on the later of (i) the date Tenant
takes occupancy of the Premises or (ii) the 1st day of June, 2004 (the
"Commencement Date") and end on the 31st day of May, 2009. The Initial
Lease Term may be extended in accordance with the terms of Section
1(r) below.
d. Monthly Base Rent:
The monthly base rent for the Premises (the "Monthly Base Rent"), as
computed on a gross, full serviced basis, shall be one-twelfth of the
following annual rates, on the basis of RSF:
Year 1 $21.75 per RSF
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Year 2 $21.75 per RSF
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Year 3 $22.75 per RSF
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Year 4 $23.75 per RSF
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Year 5 $23.75 per RSF
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"Year 1" of the Initial Lease Term shall be the period from the
Commencement Date to the end of the twelfth (12th) full month after
the Commencement Date.
Notwithstanding anything to the contrary in this Lease, Monthly Base
Rent shall xxxxx in full during the twelfth (12th) full calendar month
of the Initial Lease Term.
e. Rent per day during any occupancy prior to the Commencement Date:
N/A
f. Tenant Improvements; Tenant Improvement Allowance:
Tenant shall receive a tenant improvements allowance in the amount of
Twenty and 00/100 Dollars ($20.00) per RSF. Owner shall construct
certain improvements in the
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Premises with Building standard finishes, based on the plans and
specifications previously approved by Owner and Tenant and attached
hereto as Exhibit B and in accordance with the work letter attached as
Exhibit C.
g. Use permitted on Premises:
General office or use only. Tenant may not devote any material portion
of the Premises to the operation of equipment for external Internet,
communications, telecommunications and similar operations including
the provision of colocation services. ("Data Center Operations")
h. Tenant's and Owner's addresses for notices:
If to Owner:
------------
Sixth & Virginia Properties
Xxx Xxxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Building Manager
If to Tenant:
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Aptimus, Inc.
Xxx Xxxxxx Xxxxxxxx, Xxxxx 0000
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Copy to: Controller
i. Tenant's billing address if other than Premises:
To be provided by Tenant
j. Parking:
During the Initial Lease Term, Owner shall provide Tenant with twelve
(12) unreserved parking passes for automobiles in The Westin Building
Garage. Parking passes shall provide parking between the hours of 7:00
a.m. to 6:00 p.m. Monday through Friday (the "Normal Parking Hours").
Outside of Normal Parking Hours, parking will be on a first come,
first served basis. Tenant acknowledges that parking spaces may not
always be available outside of Normal Parking Hours.
Tenant shall pay in advance the monthly charge established by Owner
for said parking passes, on the same date that monthly rent is due
hereunder. If Tenant fails to pay such charges when due, Owner may (i)
immediately cease to provide the parking passes for which Tenant has
failed to pay, or (ii) continue to provide the parking passes and
require that Tenant pay the monthly parking charge, with interest at
12% per annum, from the date due. Tenant may discontinue future use
and payment for any parking pass upon written notice to Owner. Tenant
shall not be entitled to any rebate for discontinued use of any
parking space prior to the end of the month. During Year 1 of the
Initial Lease Term, the charge for each parking pass shall be One
hundred fifty and 00/100 ($ 150.00) per month (including tax).
Thereafter, at the beginning of Years 2 through 5 during the Initial
Lease Term, and during each year of any Extended Term, the charge for
each parking pass shall increase by three percent (3%), compounded
annually. If after the date hereof, applicable taxes on parking fees
increase, Owner may increase the fees paid by Tenant for parking by an
amount equal to such increase in taxes on parking fees, which occurs
after the date of this Lease. Taxes for which Tenant may be charged in
connection with its use of the Westin Building Garage shall be limited
to parking taxes assessed by applicable governmental authorities.
Parking taxes shall not include real estate taxes or any federal
income tax.
k. Relocation of Premises:
Owner shall have the right to relocate Tenant from the Premises in the
Building to a mutually acceptable location in the Building only on the
following terms and conditions:
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1) The floor area of the replacement premises shall be approximately
the same as the floor area of the Premises and suitable for the
conduct of Tenant's business, in Tenant's sole reasonable
discretion. Monthly Base Rent and Tenant's share of the annual
rent adjustment, if any, shall be adjusted to reflect the Total
Agreed Floor Area of the replacement premises;
2) Owner shall reimburse Tenant for all reasonable expenses incurred
in connection with the relocation;
3) Owner shall give Tenant at least one hundred-twenty (120) days
written notice of relocation; and
4) The replacement premises will consist of all contiguous space
with a comparable floor plan, comparable views and other
comparable amenities as existing in the Premises.
l. Security Deposit:
Concurrently with the execution of this Lease, Tenant shall deliver to
Owner a deposit equal to Fifteen Thousand Two Hundred Twenty-five and
00/100 Dollars ($15,225.00) as security for the performance by Tenant
of every covenant and condition to be performed by Tenant under this
Lease. Upon payment of the said deposit, Owner shall deliver to Tenant
a written receipt therefor. The deposit may be commingled with other
funds of Owner, and Tenant shall not be entitled to interest thereon.
If Tenant shall default with respect to any covenant or condition of
this Lease, including but not limited to the payment of Monthly Base
Rent, additional rent or parking charges, and such default is not
cured after ten (10) days written notice as provided in Section 14,
Owner may apply, but shall not be required to apply whole or any part
of the deposit to the payment of any sum in default, and any other
reasonable amounts which Owner may be required to spend by reason of
Tenant's default. In the event Owner so applies all or any part of the
deposit, Tenant shall replenish the amount so applied within ten (10)
days of Owner's written demand. Should Tenant comply with all of the
covenants and conditions of this Lease, the deposit shall be returned
to Tenant (or, at the option of Owner, to the last assignee of
Tenant's interest in this Lease) at the expiration of the Initial
Lease Term or any Extended Term. If the Owner assigns its interest in
this Lease, Owner shall not be relieved of its obligations to Tenant
hereunder until the security deposit is transferred to Owner's
assignee.
m. Signage:
Owner shall, at its own cost, provide signage to Tenant according to
building standards at the following locations:
1) Main Lobby Directory - Sixth Avenue;
2) Third Floor Lobby Directory- Skybridge entrance from Garage;
3) Elevator Lobby Directory on Premises Floor;
4) Tenant may, at Tenant's sole expense, and upon Owner's written
approval, which approval shall be at Owner's sole discretion,
affix building standard signage adjacent to the doors of the
Premises. No other signage shall be allowed.
n. Holding Over:
If Tenant, with the prior consent of Owner, shall continue its
occupancy of the Premises after the expiration of the Initial Lease
Term, or any Extended Term, the occupancy shall not be deemed to
extend or renew the term of this Lease, and such occupancy shall
constitute a tenancy from month to month, subject to all of the terms
of this Lease, except the term, and except that the Monthly Base Rent
and Additional Rent for each month of continued occupancy shall be not
less than 150% of the Monthly Base Rent and Additional Rent for the
last full month of the Initial Lease Term, or any applicable Extended
Term. Notwithstanding the foregoing sentence to the contrary, if
Tenant has given Owner timely written notice that Tenant desires to
extend the term of this Lease beyond the expiration of the Extended
Term and Tenant and Owner have entered into negotiations regarding the
terms and conditions of such additional extended term, then Tenant
shall not be required to pay
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Monthly Base Rent and Additional Rent at the holdover rate under this
Section 1n, and instead shall continue to pay Monthly Base Rent and
Additional Rent at the rate in effect for the last month of the
Extended Term, provided that (1) Owner shall not be obligated to grant
any extension of this Lease beyond the Extended Term and (2) Owner
shall have the right to terminate any negotiations regarding the
additional extended term upon three (3) days written notice to Tenant
and Tenant shall, as of the expiration of the Extended Term, be deemed
to be a holdover tenant, with a month-to-month tenancy at a rental
rate of 150% of the Monthly Base Rent and Additional Rent for the last
full month of the Extended Term. If Tenant continues its occupancy of
the Premises after the expiration of the Initial Lease Term, or any
applicable Extended Term, without the consent of Owner, in addition to
any remedies available to Owner at law and under this Lease, Tenant
shall be liable for Owner's incidental and consequential damages
sustained by virtue of Tenant's holding over.
o. Square Footage Adjustment:
Owner and Tenant agree that reasonable attempts have been made to
determine the correct square footage of the Premises per the BOMA
Standard. Owner grants Tenant the option to remeasure and challenge
the square footage calculations set forth in Section 1(b) hereof at
Tenant's expense. If Tenant's square footage calculations differ from
the calculations set forth in Section 1(b), Owner will remeasure at
Owner's expense to determine which calculations are correct. Owner and
Tenant agree that any challenge to the square footage calculations
must be completed within one month of the commencement date of this
Lease. After that time, Owner and Tenant each agree to waive any and
all rights, claims, or liabilities against the other pertaining in any
way to the calculation of the square footage of the Premises, or the
amount of rents and other costs in this Lease as they relate to the
square footage of the Premises.
p. Class "A" Entry
The Premises shall have an entryway that is compatible with the nature
and use of the Building. Tenant understands that Owner may elect to
make alterations and improvements to the entry designed to increase
compatibility and security for the Building users. Such alterations
may include procedures for controlling access to the Building.
q. Brokers
Except for Xxxxx Driver & Company (the "Broker"), each party
represents to the other that there are no individuals or entities
entitled to any brokerage commissions or finder's fees in connection
with this transaction, and that if any claims for brokerage
commissions or finder's fees or like payments arise out of or in
connection with this transaction, all such claims shall be defended by
and, if sustained, paid by the party whose alleged actions or
commitments form the basis of such claim. Owner shall be responsible
for paying any fees or commissions due to the Broker.
r. Option to Extend the Lease Term
Provided Tenant is not then in default under this Lease, Tenant may
inform Owner of its desire to extend the term of this Lease for a
period of five (5) years (the "Extended Term") by giving written
notice to Owner ("Tenant's Extension Notice") no earlier than twelve
(12) months and no later than nine (9) months before the expiration of
the Initial Lease Term. Once given, Tenant's Extension Notice shall be
irrevocable. If Tenant's Extension Notice is not timely given, or is
given when Tenant is in default under this Lease, the option to extend
the Initial Lease Term shall terminate. If Tenant's Extension Notice
is timely given, all terms and conditions of this Lease shall also
apply in the Extended Term to the Premises, provided, however, that
Monthly Base Rent for the first year of the Extended Term shall be
adjusted to the then current market rate for new leases of similar
downtown Seattle "Class-A" office space and shall increase by an
amount not to exceed $1.00 per RSF per year each year thereafter
during the Extended Term. The then current market rate shall be
calculated in Owner's reasonable judgment and shall be subject to
payments of additional rent during the Extended Term as provided in
Section 24 below. Owner shall inform Tenant in writing of the
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Monthly Base Rent during the Extended Term within fourteen (14) days
of receipt of Tenant's Extension Notice. Such adjusted Monthly Base
Rent for the Extended Term shall not affect Tenant's obligation to
continue to also pay all other charges, including without limitation
Additional Rent, due under the provisions of this Lease.
s. Tenant's Early Termination Right
Tenant may not terminate this Lease during the first thirty-six (36)
months of the Initial Lease Term. Commencing on the first day of the
thirty-seventh (37th) month of the Initial Lease Term, Tenant shall
have the right to terminate this Lease with respect to the Premises,
upon payment of a termination fee equal to the then current
unamortized portion of all costs of this Lease, which are limited to
the following: agreed and itemized tenant improvement costs,
commissions paid to the Broker and agreed and itemized moving
allowances, all of which are actually incurred by Owner (the
"Termination Fee"). If Tenant elects to terminate this Lease with
respect to the Premises, then Tenant shall deliver to Owner six (6)
months prior written notice of such termination ("Tenant's Termination
Notice") stating the intended termination date (the "Termination
Date"). Within ten (10) days of receipt of Tenant's Termination
Notice, Owner shall calculate the Termination Fee as of the
Termination Date and so inform Tenant in writing ("Owner's Termination
Fee Notice"). Within ten (10) days of receipt of Owner's Termination
Fee Notice, Tenant shall deliver the Termination Fee to Owner. If
Tenant fails to timely deliver the Termination Fee to Owner, then
Tenant's termination right shall be automatically revoked and of no
further force and effect. If Tenant's Termination Notice is timely
delivered and the Termination Fee is timely paid, then on the
Termination Date, this Lease shall terminate and be of no further
force and effect. Notwithstanding the foregoing, Tenant shall not have
any right to terminate this Lease during any Extended Term unless
otherwise agreed by Owner in writing.
t. Tenant's Moving Allowance
Owner agrees to provide Tenant a moving allowance in the amount of Two
and 00/100 Dollars ($2.00) per RSF of the Premises (the "Moving
Allowance"), so that Tenant may move from its existing premises into
the Westin Building. Owner shall credit the Moving Allowance to the
first two (2) installments of Monthly Base Rent due from Tenant
hereunder, and Tenant shall pay to Owner the balance of any Monthly
Base Rent due and owing after crediting the Moving Allowance.
2 EXHIBITS
The following Drawings and Special Provisions are attached hereto as
exhibits and made a part of this Lease:
Exhibit A - Premises Plan
Exhibit B -- Plans and Specifications
Exhibit C - Workletter
Exhibit D - Binding Arbitration Provision
3 PREMISES
Owner hereby leases to Tenant, and Tenant hereby leases from Owner, upon
the terms and conditions herein set forth, those certain Premises described
in Section 1(a) and (b),and shown outlined in red on the standard floor
plan attached hereto as Exhibit A, in that certain "Building" known as the
Westin Building situated in the City of Seattle, County of King, State of
Washington, at Sixth Avenue and Virginia Street, and located on the
following real property:
Lots 11 and 12 (less portion for street), Block 15 of Addition to town
of Seattle, as laid off by Heirs of Xxxxx X. Xxxx, deceased (commonly
known as Heirs of Xxxxx X. Xxxx'x Addition to the City of Seattle), as
per plat recorded in Volume I of plats, page 103, records of King
County, Washington.
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4 RENT
Tenant covenants and agrees to pay to Owner the Monthly Base Rent as set
forth in Section 1(d) to be adjusted as provided elsewhere in this Lease,
in United States currency in advance on or before the first day of each
calendar month during the Initial Lease Term (or the Extended Term, if
applicable), at the office of Owner in Building or at such other place as
Owner may from time to time designate in writing. It is agreed that since
collection of any amount past due imposes an administrative cost on Owner,
in addition to all other sums that may be charged by Owner hereunder,
Tenant shall pay to Owner a sum equal to Ten Cents ($0.10) for every Dollar
not paid within 10 days of the date due. All payments, fees, and/or
consideration payable under this Agreement shall be considered rent unless
specified otherwise. Monthly Base Rent payable for any period of less than
one calendar month shall be pro rated based on the actual number of days in
such period.
5 USE
The Premises may be used only for the purposes set forth in Section 1(g)
and for no other purpose or purposes without the written consent of Owner,
which consent may be granted, conditioned or withheld in the sole
discretion of Owner. Except as may be incidental to Tenant's general office
use, no portion of the Premises shall be used for Data Center Operations.
No use shall be made of Premises, nor act done in or about Premises, which
is unlawful, or which may increase the existing rate of insurance upon the
Building. Owner warrants to Tenant that the permitted use for the Premises
set forth in Section 1(g) will not increase the rate of insurance on the
Building. Tenant shall not commit or allow to be committed any waste upon
the Premises, or any public or private nuisance or other act or thing which
disturbs the quiet enjoyment of any other tenant in the Building, nor shall
Tenant, without the written consent of Owner, use any apparatus, machinery
or device in or about the Premises that shall cause any substantial noise
or vibration. If any of Tenant's office machines and equipment should
disturb the quiet enjoyment of any other tenant in the Building, then
Tenant shall provide adequate insulation or take such other action as may
be necessary to eliminate the disturbance. Tenant shall observe such
reasonable rules and regulations as may be adopted in writing by Owner and
provided to Tenant for the safety, care and cleanliness of the Premises,
Building or other tenants of the Building and the preservation of good
order therein, including without limitation the institution of such
security systems and procedures in the Building as Owner deems necessary or
desirable. Tenant shall have the right to connect via CAT 5 interconnect to
Tenant's collocation company (currently Peer 1 Networks) in the Building,
either on a point to point basis, or in the Building Meet-Me-Rooms, the
manner to be mutually determined, at no additional recurring fee. No other
access or connectivity rights to the Meet-Me-Rooms located in the Building
shall be allowed. The term `Meet Me Room' ("MMR") refers to specific areas
within the Building, in which telecommunication tenants `meet' in order to
connect and transfer traffic from their specific networks and in which
tenants with major bandwidth requirements can interconnect with
telecommunications carriers. There are currently seven (7) MMR's in the
building.
6 POSSESSION
In the event of Owner's inability to deliver possession of the Premises on
the Commencement Date, Owner shall not be liable for any damage caused
thereby, except as otherwise expressly stated herein, nor shall this Lease
become void or voidable, nor shall the Initial Lease Term be extended, but
in such event, no rental shall be payable by Tenant to Owner for the
portion of the Initial Lease Term prior to actual delivery of possession of
the Premises to Tenant.
7 SERVICES PROVIDED BY OWNER
a. Owner shall, at its sole cost and expense, maintain the public and
common areas of the Building, such as lobbies, stairs, landscaping,
corridors and restrooms, together with the Westin Building Garage, and
all structural portions of the Building, including, but not limited
to, roof and foundation as well as common area fire suppression
systems, heating, ventilation, air conditioning, electrical and
mechanical systems, in a first class order and condition, except for
damage occasioned by the act of Tenant. Owner shall be responsible to
maintain the fire suppression systems, heating and ventilation,
electrical and mechanical systems in the Premises. Owner shall
maintain all Building Standard acoustical ceilings, lighting fixtures,
air conditioning grilles, air ducts and temperature controls,
draperies, corridor and demising partitions, and concrete floor ready
for pad and carpet in the Premises. All other improvements to the
Premises, whether installed by Owner or Tenant, shall be maintained by
Tenant. Notwithstanding anything in this
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Section 7a to the contrary, Tenant acknowledges that Owner, at Owner's
sole cost and expense is installing a 4.5-ton HVAC unit in the
Premises (the "Supplemental HVAC Unit") at the request of Tenant.
Owner shall deliver the Supplemental HVAC Unit in good and operable
condition to Tenant's reasonable satisfaction. Tenant shall own said
unit at the end of the Lease. Tenant further acknowledges and agrees
that Tenant, at Tenant's sole cost and expense, shall conduct such
maintenance, service and repair work for the Supplemental HVAC Unit as
necessary to keep the Supplemental HVAC Unit in good working order,
normal wear and tear excepted, in accordance with all applicable codes
and regulations, during the Lease Term and any Extended Term.
b. Owner, at its sole cost, shall furnish the Premises from 7:00 a.m. to
6:00 p.m. Monday through Friday (exclusive of holidays), hereinafter
called "Standard Work Week," with electricity for lighting and the
operating of office machines, heat and air conditioning as may be
reasonably required for the occupation of Premises, and shall provide
elevator service, lighting replacement, toilet room supplies, window
washing with reasonable frequency, and daily janitorial service on the
basis of a Standard Work Week during the times and in the manner that
such janitorial services are customarily furnished in Class A office
buildings in the area.
c. Electrical usage of eight (8) xxxxx per square foot shall be
considered normal. If Tenant's electrical use is either (i) in excess
of an average of 6 xxxxx per square foot at any time or (ii) is for
longer hours than the Standard Work Week (regardless of the amount of
electricity used), then Tenant shall, on demand by Owner, pay for such
excess when the same becomes due and payable to the public utility
furnishing the same. Tenant shall have access to the Premises 24 hours
a day, 365 days a year. Basic Building services necessary for Tenant's
use of the Premises shall be available at all times, provided that if
Tenant needs HVAC services for the office portion of the Premises
after 7:00 p.m. on any day, or at any time on Saturday, it shall
request such services in advance, no later than 4:00 p.m. of a normal
working business day (Saturday not included).
d. Except in the event of Owner's gross negligence or willful misconduct,
Owner shall not be liable for damages, nor shall the rental herein
reserved be abated, for failure to furnish or delay in furnishing any
of the foregoing services, nor shall the failure to furnish any of
such services be construed as an eviction of Tenant or relieve Tenant
from the duty of observing and performing any of the provisions of
this Lease. In addition to the electrical expenses incurred in
accordance with Section 7(c) above, Tenant shall pay for all
reasonable expenses incurred by Owner as a result of Tenant using the
Premises in excess of the Standard Work Week.
8 REPAIRS AND ALTERATIONS
a. Premises AS IS. Upon completion of the tenant improvements to Tenant's
reasonable satisfaction, Tenant accepts the Premises "AS IS," and
agrees that the Premises are in a good and tenantable condition.
Tenant shall take reasonable care of the Premises, normal wear and
tear excepted.
b. Tenant Alterations. Tenant shall not remove existing improvements, or
alter or improve the Premises in any way without the prior written
approval and consent of Owner, which consent shall not be unreasonably
withheld, conditioned or delayed. Tenant shall obtain, at Tenant's
sole expense, detailed plans and specifications for any alterations
and improvements to the Premises and submit the same to Owner for
approval. Tenant shall have the right to select the contractor for the
performance of any approved alterations and improvements, subject to
Owner's approval which shall not be unreasonably withheld, conditioned
or delayed. In the event Tenant elects to hire Owner to make the
approved alterations and improvements, Tenant shall pay Owner for such
work within ten (10) days of invoice. In the event Tenant elects to
hire a contractor other than Owner to make the approved alterations
and improvements, Owner shall charge Tenant a fee of 3% of the value
of such contract, net of any governmental fees, assessments and taxes,
for Owner's time in reviewing and coordinating the review of documents
and supervising such alterations and improvements. Tenant shall not
put any curtains, draperies or other hangings on or beside the windows
in the Premises without first obtaining Owner's consent, which will
not be unreasonably withheld, conditioned or delayed.
c. Damage. Tenant shall not make changes to locks on doors or add,
disturb, or in any way change any plumbing or wiring without first
obtaining the written consent of Owner,
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which consent shall not be unreasonably withheld, conditioned or
delayed; provided nothing contained in the foregoing is intended to
apply to any wiring, installation, and maintenance work done by Tenant
to or between its trade fixtures, including desk top computers and
computer server room racks and machinery, if said work does not
require Owner's review and supervision. Subject to the provisions of
Section 12, Tenant shall pay for all damage or injury to the Premises,
Building or Garage or to any other tenant of the Building caused by
Tenant or by any persons who may be in or upon Premises with the
consent of Tenant. Notwithstanding Section 12 below, Tenant shall pay
for the reasonable cost of the repair or replacement of doors or
windows of the Premises that are cracked or broken by Tenant, its
employees, agents, or invitees, normal wear and tear excepted.
d. Owner Alterations. Owner may make any alterations or improvements to
the Premises, Building or Garage which Owner may deem necessary for
the preservation, safety or improvement of the Premises, Building or
Garage; provided that Owner shall use reasonable efforts not to
interfere with or interrupt the conduct of Tenant's business at the
Premises. All alterations, additions and improvements to the Premises,
except trade fixtures installed by Tenant which are removable without
damage to the Premises or Building, shall become the property of
Owner.
e. Code Alterations. Should Owner be required to make changes,
alterations, improvements or additions to the Building or Garage at
any time during the term of this Lease as a result of any law, rule,
code or regulation which becomes effective after the Commencement Date
of this Lease, then Tenant shall pay on demand by Owner, as additional
rent, a monthly charge equal to the total agreed rentable floor area
of the Premises as stated in Section 1(b) divided by 350,000 times 1
and 1/3 percent of the cost of the change, alteration, improvement or
addition. Such Additional Rent shall commence upon substantial
completion of each such change, alteration, improvement or addition
and shall continue through the end of the Initial Lease Term. Tenant
shall not be responsible under this Section 8(e) for any portion of
the cost to correct any latent construction defects in all or any
portion of the Building, or any condition that is, as of the date of
the Commencement Date, not in compliance with existing laws, codes,
rules or regulations.
9 ENTRY AND INSPECTION
Tenant will permit Owner and its agents to enter into and upon the Premises
at all reasonable times for the purpose of inspecting the same or for the
purpose of cleaning, repairing, altering or improving the Premises or
Building and when reasonably necessary may close entrances, doors,
corridors, elevators or other facilities without liability to Tenant by
reason of such closure and without such action by Owner being construed as
a constructive eviction of Tenant or relieving the Tenant from the duty of
observing and performing any of the provisions of this Lease. For purposes
of this Section 9, Owner shall use reasonable efforts not to interfere with
or interrupt the conduct of Tenant's business at the Premises. During the
time period within 270 days prior to the expiration of the Initial Lease
Term, or if applicable, the Extended Term, unless otherwise agreed by
Tenant in each instance, Owner shall have the right to enter the Premises
upon two business days prior notice to Tenant for the purpose of showing
the Premises to prospective tenants.
10 DAMAGE OR DESTRUCTION
a. Damage. If the Premises or Building are damaged by fire, wind, or
other such casualty, the damage shall be repaired by and at the
expense of Owner, provided such repairs (to restore Premises to usable
condition) can be made within sixty (60) days after the occurrence of
such damage without the payment of overtime or other premiums, and
until such repairs are completed, the rent shall be abated in
proportion to the part of Premises which are unusable by Tenant in the
conduct of its business. Notwithstanding anything in this Section 10
to the contrary, there shall be no abatement of rent by reason of any
portion of the Premises being unusable for a period equal to one day
or less.
b. Repairs. If such repairs cannot be made within sixty (60) days, Owner
may, at its option, make them within a reasonable time, and in such
event this Lease shall continue in effect and the rent shall be abated
in the manner provided above. Owner's election to make repairs must be
evidenced by written notice to Tenant within thirty (30) days after
the occurrence of the damage.
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c. Termination. If such repairs cannot be made within one hundred and
eighty (180) days to Tenant's reasonable satisfaction, then either
party may, by written notice to the other, terminate this Lease. A
total destruction of the Building shall automatically terminate this
Lease.
11 ADVERTISING
Tenant shall not inscribe any inscription, post, place, or in any manner
display any sign, notice, picture, placard or poster, or any advertising
matter whatsoever, anywhere in or about Premises or Building at places
visible (either directly or indirectly as an outline or shadow on a glass
pane) from any where outside Premises without first obtaining Owner's
written consent thereto which may be granted or withheld in the sole
discretion of Owner.
12 INDEMNITY, RELEASE, LOSS AND WAIVER OF SUBROGATION AND INSURANCE
a. Indemnification. Tenant shall defend and indemnify Xxxxx Agency Inc.
and Owner, and their agents, employees, officers, directors,
shareholders, members and partners (collectively "Releasees") and hold
Releasees harmless from and against any and all liability, damages,
costs, or expenses, including attorneys' fees, arising from any act,
omission or negligence of Tenant or the officers, contractors,
licensees, agents, servants, employees, guests, invitees, or visitors
of Tenant in or about Building or Garage, or arising from any
accident, injury, or damage, howsoever and by whomsoever caused, to
any person or property, occurring in or about the Premises, Building
or Garage, provided that the foregoing provision shall not be
construed to make Tenant or any of its successors, assigns, officer,
directors, parent company or affiliates responsible for loss, damage,
liability, or expense resulting from damage to property of and
injuries to third parties (including Tenant's employees) to the extent
caused by the gross negligence or willful misconduct of Releasees.
Owner shall not be responsible for providing security and Tenant
hereby releases Owner from any claim for damage or loss of property
that may arise as a result of vandalism, theft, terrorism or other
criminal activity in or about the Building or Garage. Without limiting
the foregoing, if applicable, Tenant shall at all times indemnify
Owner against any and all liability and damage arising out of or
connected with the operation of Tenant's antenna equipment (if any),
to include any and all effects of electromagnetic radiation. Tenant
shall fully insure its antenna installation against all of the perils
named in this Section 12, including, without limitation, such
additional perils as vandalism, malicious mischief, and wind damage.
b. Release and Limitation of Damages. Tenant waives any claims of
recovery against Releasees for any liability for claims or loss
arising out of any act or omission of Releasees or any party for whom
a Releasee is vicariously liable (including any actions that amount to
a breach of this Lease), unless caused by the gross negligence or
willful misconduct of said Releasees or party for whom any such
Releasee is vicariously liable. Except for a breach of Tenant's
obligations under Sections 1(n), 12, 13, 21 and 22 of this Lease and
without waiver of any contribution or similar rights in connection
with defense of third party claims, neither party, or their respective
affiliates or contractors, shall be liable for any indirect,
incidental, special, punitive or consequential damages or for any lost
or imputed profits or revenues or lost data or costs of cover arising
from or related to this agreement, regardless of the legal theory
under which such liability is asserted (e.g. breach of lease,
negligence, gross negligence, recklessness, intentional, etc.) and
regardless of whether a party has been advised of the possibility of
any such liability, loss or damage. It is expressly understood and
agreed that notwithstanding anything in this Lease to the contrary,
and notwithstanding any applicable law to the contrary, the liability
of Owner and Xxxxx Agency Inc. hereunder (including any successor to
Owner) and any recourse by Tenant against Owner (or any of the
partners making up Owner) shall be limited solely and exclusively to
the equity interest of Owner in and to the Premises. To the extent
that Owner is a partnership or limited liability company no general
partner, limited partner or member shall have any personal liability
in connection with this Lease or in connection with Tenant's occupancy
of the Premises or use of the Building, and Tenant hereby expressly
waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Tenant.
c. Subrogation. Owner and Tenant each release the other from
responsibility for, and waive their entire claim of recovery for (i)
any loss or damage to the real or personal property of either located
anywhere in building, arising out of or incident to the occurrence of
any of the perils which may be covered by a fire and lightning
insurance policy, with extended coverage endorsement in common use in
the Seattle locality or (ii)
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loss resulting from business interruption at premises or loss of
rental income from building, arising out of or incident to the
occurrence of any of the perils which may be covered by a business
interruption insurance policy and by the loss of rental income
insurance policy in common use in the Seattle locality. To the extent
that any risks covered by this paragraph are in fact covered by
insurance, tenant and owner shall cause their respective insurance
carriers to consent to such release and waiver and to waive all rights
of subrogation against Releasees.
d. Tenant's Insurance.
(1) Property Insurance. Tenant shall procure at Tenant's sole cost
and expense and keep in effect from the date of this Lease and at
all times until the end of the Initial Lease Term, and any
Extended Term, insurance on all critical personal property and
fixtures of Tenant material to Tenant's operations, and all
improvements, additions or alterations made by or for Tenant to
the Premises on a Special Form basis, insuring such property for
the full replacement value of such property.
(2) Liability Insurance. Tenant shall procure at Tenant's sole cost
and expense and keep in effect from the date of this Lease and at
all times until the end of the Initial Lease Term, and any
Extended Term, commercial general liability insurance covering
bodily injury, personal and advertising injury and property
damage liability occurring in or about the Premises or arising
out of the use and occupancy of the Premises and the Building,
and any part of either, and any areas adjacent thereto, and the
business operated by Tenant or by any other occupant of the
Premises. Such insurance shall include contractual liability
coverage insuring all of Tenant's indemnity obligations under
this Lease. Such coverage shall have a minimum combined single
limit of liability of at least Two Million Dollars ($2,000,000),
and a minimum general aggregate limit of Three Million Dollars
($3,000,000). Limits required may be satisfied with the purchase
of Commercial General Liability and Umbrella Liability policies
providing total required limits. All such policies shall be
written to cover all bodily injury (including death), property
damage, fire legal liability, products and completed operations,
medical payments, personal and advertising injury, Hostile Fire
Pollution, and other covered loss, however occasioned, occurring
during the policy term. The policies shall be endorsed to add
Owner and Building Manager and any other party holding an
interest to which this Lease may be subordinated as an additional
insured, and shall provide that such coverage shall be "primary"
and non-contributory with any insurance maintained by the
Additional Insureds. Such coverage shall also include employees
as insureds. All such insurance shall provide for the
severability of interests of insureds, and shall be written on an
"occurrence" basis.
(3) Workers' Compensation and Employers' Liability Insurance. Tenant
shall carry Workers' Compensation Insurance as required by any
applicable laws, throughout the Initial Lease Term at Tenant's
sole cost and expense. Tenant shall also carry Employers'
Liability Insurance in amounts not less than One Million Dollars
($1,000,000) each accident for bodily injury by accident; One
Million Dollars ($1,000,000) policy limit for bodily injury by
disease; and One Million Dollars ($1,000,000) each employee for
bodily injury by disease, throughout the Initial Lease Term, and
any Extended Term, at Tenant's sole cost and expense.
(4) General Insurance Requirements. All insurance policies required
to be carried by Tenant under this Lease shall be written by
companies rated A X or better by A.M. Best's and authorized to do
business in the State of Washington. All coverages described in
this Section 12(d)(1) and (2) shall be endorsed to (i) provide
Owner with thirty (45) days' notice of cancellation, non-renewal,
or change in terms, except 10 days for non-payment of premium;
and (ii) waive all rights of subrogation by the insurance carrier
against the Additional Insureds. Tenant shall deliver to Owner on
or before the commencement date of this Lease, and thereafter
before the expiration dates of the expiring policies, certified
copies of Tenant's insurance policies, or a certificate of
insurance evidencing the same naming Owner, Building Manager and
other interested parties, as additional insured on the commercial
general liability policy and as loss payee on the property
insurance policy with respect to Owner's interest in improvements
and alterations, and issued by the insurer thereunder.
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If Tenant fails to procure the insurance required by this Lease,
or to deliver such policies or certificates, then Owner may, at
Owner's option and in addition to Owner's other remedies in the
event of a default by Tenant hereunder, procure the same for the
account of Tenant, and the cost thereof shall be paid to Owner as
Additional Rent. Tenant shall not have any claim against Owner,
or under any insurance policy carried for the benefit of Owner or
the Building, for loss or damage to Tenant's uninsured personal
property that is uninsured pursuant to Tenant's election as set
forth in Section 12d(1) above. Owner's approval of the
contractors (including subcontractors) for the alterations and
improvements pursuant to Section 8, may include requiring Tenant
to provide Owner with proof that (a) all contractors (including
subcontractors) will have Workers' Compensation Insurance as
required by Washington law and carry adequate liability insurance
on substantially the same terms as required of Tenant under
Section 12(d)(2) and (3) above, including that Owner and Xxxxx
Agency Inc. shall be named as an additional insureds.
13 LIENS AND INSOLVENCY
Tenant shall keep Premises and Building free from any liens or encumbrances
arising out of any work performed by Tenant, materials furnished by Tenant,
or obligations incurred by Tenant. Tenant expressly covenants and agrees
that no liens of mechanics, material men, laborers, architects, artisans,
contractors or subcontractors engaged by or through Tenant, shall be
created against or imposed upon the Premises or the Building. If Owner
becomes aware of any such liens, Owner shall endeavor to give Tenant notice
thereof. In the event any such claims or liens shall be asserted or filed
by any persons, firms or corporations engaged by or through Tenant to
perform labor or professional services or furnish material (collectively,
"mechanics liens"), Tenant shall pay off, or cause the same to be
discharged of record by the posting of a bond in accordance with R.C.W.
60.04.161, within ten (10) days of Owner's written demand, and any failure
by Tenant to do so shall constitute a default and shall give the Owner an
immediate right to terminate this Lease by giving Tenant notice of its
election to do so. Tenant further covenants and agrees that no other lien
of any kind whatsoever arising by or through Tenant shall be created
against or imposed upon Tenant's leasehold interest in the Premises,
including without limitation any leasehold mortgage or leasehold deed of
trust arising by or through Tenant, or any judgment lien filed against
Tenant. In the event any such other liens shall be created or filed, Tenant
shall pay off, or otherwise cause the same to be discharged of record,
within ten (10) days of Owner's written demand, and any failure by Tenant
to do so shall constitute a default and shall give the Owner an immediate
right to terminate this Lease by giving Tenant notice of its election to do
so. Owner shall also have an immediate right to terminate this Lease by
giving Tenant notice of its election to do so, if: (i) Tenant files a
voluntary petition in bankruptcy, or for reorganization under the
bankruptcy laws, or is adjudged a bankrupt by a court of competent
jurisdiction, and such judgment or stay is not dismissed or relieved within
ninety (90) days; (ii) Tenant makes an assignment for the benefit of
creditors, or a receiver is appointed for Tenant's business, and such
receiver is not dismissed within sixty (60) days; or (iii) any proceeding
is instituted by or against Tenant under any state or federal insolvency or
bankruptcy act and any such proceeding, if involuntary, is not stayed or
dismissed within sixty (60) days. No interest in this Lease or estate
hereby created in favor of Tenant shall pass by operation of law under any
such bankruptcy or insolvency act to any person whomsoever without the
prior express written consent of Owner. Any purported transfer in violation
of this Section shall constitute a default by Tenant.
14 TENANT'S DEFAULT AND OWNER'S RE-ENTRY
a. Default. Except for an uncured default under the preceding paragraph
for which immediate right of termination is given to Owner, if Tenant
fails: (i) to make any payment due hereunder, including but not
limited to the payment of Monthly Base Rent, Additional Rent,
installation or recurring fees (plus interest on any past due amounts
at the maximum legal rate from the date due) and such failure
continues for three (3) business days after receipt of written notice
of nonpayment; or (ii) to perform any non -monetary covenant under
this Lease within thirty (30) days after receipt of written notice
from Owner stating the nature of the default, then Owner may re-enter
and take possession of the Premises using all reasonable force to do
so; provided, however, that if the nature of such default other than
for non-payment of rent is such that the same cannot reasonably be
cured within such thirty-day period, Tenant shall not be deemed to be
in default if Tenant shall within such period commence such cure and
thereafter diligently prosecute the same to completion.
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b. Possession and Remedies. Notwithstanding such retaking of possession
by Owner, Tenant's liability for the rent provided herein shall not be
extinguished for the balance of the Initial Lease Term, or, if
applicable, the Extended Term, except to the limited extent provided
in this Section. Upon such re-entry, Owner may elect either (i) to
terminate this Lease, in which event Tenant shall immediately pay to
Owner a sum equal to (x) that by which the then cash value of the
total rent reserved under this Lease for the balance of the Initial
Lease Term, and any Extended Term, exceeds the reasonable rental value
of the Premises for the balance of the then current Lease Term, plus
(y) a termination fee equal to the then current unamortized portion of
all costs of this Lease, including without limitation, tenant
improvement costs, commissions paid to the Broker and moving
allowances; or (ii) without terminating this Lease, to relet all or
any part of the Premises as the agent of and for the account of Tenant
upon such terms and conditions as Owner may deem advisable, in which
event the rents received on such reletting shall be applied first to
the expenses of reletting and collection, including necessary
renovation and alteration of Premises, reasonable attorney's fees and
real estate commissions paid, and thereafter to payment of all sums
due to or to become due Owner hereunder, and if a sufficient sum shall
not be thus realized to pay such sums and other charges, Tenant shall
pay Owner any deficiency monthly, and Owner may bring an action
therefor as such monthly deficiency shall arise. Nothing herein shall
relieve the Owner of its duty to mitigate damages.
c. Tenant's Personal Property. In the event of any such retaking of
possession of Premises by Owner as herein provided, Tenant shall
remove all personal property located thereon and, upon failure to do
so upon demand of Owner, Owner may, in addition to any other remedies
allowed by law, remove and store the same in any such place selected
by Owner, including but not limited to a public warehouse, at the
expense and risk of Tenant. If Tenant shall fail to pay any sums due
hereunder or the cost of storing any such property after it has been
stored for a period of thirty (30) days or more hereunder, Owner may
sell any or all of such property at public or private sale and shall
apply the proceeds of such sale first, to the cost of such sale;
second, to the payment of the charges for storage, if any; and third,
to the payment of any other sums of money which may be due from Tenant
to Owner under the terms of this Lease, and the balance, if any, to
Tenant. If such property in Owner's reasonable opinion has a resale
value of $500 or less, Owner may donate the property to charity or
otherwise dispose of the property as Owner sees fit without the
necessity of a public or private sale. Tenant hereby waives all claims
for damages that may be caused by Owner's lawfully re-entering and
taking possession of Premises or lawfully removing and storing or
selling the property of Tenant as herein provided, and will save Owner
and Xxxxx Agency Inc. harmless from loss, costs, or damages occasioned
thereby, and such lawful re-entry shall not be considered or construed
to be a forcible entry.
15 SURRENDER OF POSSESSION
Upon expiration of the term of this Lease, whether by lapse of time or
otherwise, Tenant shall promptly and peacefully surrender Premises to Owner
broom clean and in good and tenantable condition, reasonable wear and tear
and damage by fire or other casualty excepted. Unless otherwise agreed by
Owner in writing, Tenant shall completely restore the Premises to the
condition existing at the time of delivery of premises to Tenant, including
without limitation, repair of all holes, cuts, removal of all cable and
telecommunications wiring within the Premises, above the ceiling, and in
riser cabinets, and other modifications which were made to permit
installation.
16 COSTS AND ATTORNEYS' FEES
If Tenant or Owner shall bring any action for any relief against the other,
declaratory or otherwise, arising out of this Lease, including any suit by
Owner for the recovery of rent or possession of Premises, the losing party
shall pay the successful party a reasonable sum for reasonable attorneys'
fees and expert witness fees in such suit, including fees incurred in
appeals and bankruptcy actions, and such attorneys' fees shall be deemed to
have accrued on the commencement of such action.
17 NON-WAIVER
Waiver by either party of any breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant,
or condition, or of any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Owner shall not be deemed to be a waiver of
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any preceding breach by Tenant of any term, covenant, or condition of this
Lease, other than the failure of Tenant to pay the particular rental so
accepted regardless of Owner's knowledge of such preceding breach at the
time of acceptance of such rent.
18 ASSIGNMENT AND SUBLETTING
a. Owner's Consent. Except as provided in this Section, Tenant shall
neither assign, mortgage, encumber or otherwise transfer this Lease
nor sublet the whole or any part of the Premises without in each case
first obtaining Owner's written consent, which may be withheld at
Owner's sole discretion; provided, however, Owner will not
unreasonably withhold its consent (unless Owner elects to terminate
the Lease, as set forth below) if Tenant's proposed assignee or
subtenant ("Assignee") meets the following conditions:
(1) the use and occupancy of Premises by the Assignee will be
consistent with the operation and maintenance of the Building as
a first-class office building;
(2) the proposed assignment or sublease will not result in a default
by Owner under any financing secured by the Building and will not
otherwise be in conflict with any other Building lease; and
(3) the Assignee (and its guarantors, if any) shall have a tangible
net worth, determined in accordance with accepted accounting
standards, at least equal to the tangible net worth of the Tenant
(and its guarantors, if any) as of the date of this Lease.
b. No Release. Unless otherwise agreed by Owner in writing, no such
assignment, subletting or other transfer shall relieve Tenant of any
liability under this Lease. Consent to any such assignment, subletting
or other transfer shall not operate as a waiver of the necessity for
consent to any subsequent assignment, subletting or transfer. If such
consent is requested, Owner reserves the right to terminate this
Lease, or if consent is requested for subletting less than the entire
Premises, to terminate this Lease with respect to the portion for
which such consent is requested, at the proposed effective date of
such subletting, in which event Owner shall enter into the
relationship of Owner and Tenant with any such subtenant or assignee,
based on the rent (and/or other compensation) and the term agreed to
by such subtenant or assignee and otherwise upon the terms and
conditions of this Lease. Each request for an assignment or subletting
must be accompanied by a Processing Fee equal to $1000.00, in order to
reimburse Owner for expenses, including attorneys' fees, incurred in
connection with such request.
c. Corporations. If Tenant is a corporation, any transfer of this Lease
by: (i) merger, consolidation, or any change in the ownership of, or
power to vote, a majority of its outstanding voting stock, where in
each instance the Assignee has a verifiable tangible net worth,
determined in accordance with accepted accounting standards, at least
equal to the tangible net worth of the Tenant (and its guarantors, if
any) as of the date of this Lease, shall not constitute an assignment
for the purpose of this Section, provided (A) Tenant gives Owner
notice thereof within five (5) business days following the public
announcement of such transaction or series of transactions resulting
in such transfer; (B) Tenant provides Owner with evidence confirming
the net worth of the proposed Assignee (and any guarantors); and (C)
the use and occupancy of Premises by the Assignee will be identical to
Tenant and consistent with the operation and maintenance of the
Building as a Class-A office building; and (ii) dissolution or
liquidation, shall constitute an assignment for the purpose of this
Section.
d. Other Entities. If Tenant is a partnership, limited liability company,
or other entity, any transfer of this Lease by merger, consolidation
or liquidation, dissolution or change in the ownership of a majority
of the ownership interests, shall constitute an assignment for the
purpose of this Section.
e. Profits. If Tenant assigns its interest in this Lease or sublets the
Premises, Tenant shall pay to Owner one-half (1/2) of any profit
received realized by Tenant for such assignment or sublease, whether
such additional consideration is in the form of rent in excess of the
base Rent and/or Additional Rent payable by Tenant under this Lease,
cash payments or otherwise; however, such additional consideration
shall be reduced by any reasonable costs and expenses (including
brokerage fees and tenant improvement costs) incurred by Tenant in
connection with the sublease or assignment.
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f. Assignee Obligations. As a condition to Owner's approval, any
potential assignee otherwise approved by Owner shall assume all
obligations of Tenant under this Lease and, unless otherwise agreed by
Owner in writing, shall be jointly and severally liable with Tenant
for the payment of Rent and performance of all terms, covenants and
conditions of this Lease.
g. Sublessee Obligations. Any sublessee shall assume all obligations of
Tenant as to that portion of the Premises which is subleased and shall
be jointly and severally liable with Tenant for rental and other
payments and performance of all terms, covenants, and conditions of
such approved sublease.
h. Assignment and Subleasing to Affiliates. Notwithstanding the
foregoing, and provided Tenant is not in breach of any term of this
Lease, Tenant shall have the right, without the prior written consent
of Owner and upon at least ten (10) days' prior written notice to
Owner and the delivery of the executed assignment agreement or
sublease and supporting documents as provided below, to assign this
Lease or to sublet all or any portion of the Premises to an Affiliate
(as hereinafter defined); provided, however, no such assignment or
subletting shall relieve Tenant of its obligations to Owner hereunder.
The supporting documents referred to above shall be such documents as
establish to the reasonable satisfaction of the Owner that the
proposed assignee or subtenant is an Affiliate as used herein. The
term "Affiliate" means: (i) a subsidiary, affiliate, parent or other
entity which controls, is controlled by, or is under common control
with, Tenant; (ii) a successor corporation related to Tenant by
merger, consolidation, non-bankruptcy reorganization, or government
action; or (iii) a joint venture in which Tenant is a general partner.
The term "control" means ownership of more than fifty percent (50%) of
the voting rights attributable to the shares of the controlled
company. At a minimum, any such assignment or sublease agreement shall
provide that it is subject to all of the terms and provisions of this
Lease and that the Lease may not be further assigned without the prior
written consent of Owner, and any such sublease shall specify that
such sublease shall not be assigned or the Premises further sublet,
without the prior written consent of Owner.
19 SUCCESSORS
All of the covenants, agreements, terms and conditions contained in this
Lease shall apply to and be binding upon Owner and Tenant and their
respective heirs, executors, administrators, successors and assigns.
20 TAX ON RENTAL
If any governmental authority or unit under any present or future law
effective at any time during the term of this Lease shall in any manner
levy a tax on rentals payable under this Lease or on rentals accruing from
use of the Premises under this Lease, or a tax in any form against Owner
because of or measured by income derived from the leasing or rental of the
Premises, the amount of the next succeeding month's rent following payment
of such tax by Owner shall be increased by an amount equal to such tax paid
by Owner, and for Tenant's default in paying the rent thus revised, Owner
shall have the same remedies as upon failure to pay rent. Tenant shall not
be liable to pay any amount because of income tax of a general nature
applicable to Owner's various interests or sources of income. In the event
that it shall not be lawful for Tenant to pay such tax, the rental payable
to Owner under this Lease shall be revised to net Owner the same net rental
after imposition of any such tax as would have been payable to Owner prior
to the imposition of any such tax.
21 PRIORITY; ESTOPPEL
a. Subordination. This Lease shall be subject and subordinate to any
first mortgage or deed of trust now existing or hereafter affecting
the Building, and to any and all advances to be made thereunder, and
to interest thereon and all modifications, renewals, refinances and
replacements or extensions thereof ("Owner's Mortgage"), provided that
a condition precedent to Tenant's agreement to subordinate this Lease
pursuant to this Section 21 shall be Tenant's receipt of written
assurance by the mortgagee or beneficiary of any deed of trust that in
the event of a foreclosure sale or deed in lieu of foreclosure, for so
long as Tenant is not in default under the terms, covenants and
conditions of this Lease, this Lease shall continue in full force and
effect as a direct lease between the Tenant and Owner or succeeding
owner of the Premises.
b. Foreclosure, Nondisturbance and Attornment. In the event of a
foreclosure under Owner's Mortgage, this Lease shall continue in full
force and effect, Tenant's possession of the Premises shall not be
disturbed provided Tenant is not in default under this Lease beyond
14
all applicable notice and cure periods, and Tenant will attorn to and
recognize the mortgagee or purchaser at a foreclosure sale as Tenant's
Owner for the remainder of the Initial Lease Term, and any Extended
Term. If any mortgagee of the real property and the Building wishes to
have this Lease prior to the lien of its mortgage, then and in such
event, upon such mortgagee notifying Tenant to that effect, this Lease
shall be deemed prior to the lien of such mortgage.
c. Self-Operating. Sections 21(a) and 21(b) are self-operating; provided,
however, Tenant shall promptly execute and deliver any commercially
reasonable document required by Owner or the holder of Owner's
Mortgage necessary to confirm the agreement set forth in Sections
21(a) and 21(b). Such document (a "Subordination, Non-Disturbance and
Attornment Agreement") may also contain, at the option of Owner's
mortgagee, such further assurances by Tenant to Owner's mortgagee as
are reasonable, usual or customary in the commercial lending industry
(e.g., assurances by Tenant to Owner's mortgagee that this Lease shall
not be amended or terminated without its consent, that Tenant shall
provide Owner's mortgagee with notice and opportunity to cure any
default under this Lease by Owner, and that any defaults by Owner
under the Lease shall not be offset against the rent due from Tenant).
d. Estoppel Certificate. Tenant shall, within twenty (20) days after
receiving a written request from Owner, execute and deliver to Owner a
written statement, which may be relied upon Owner and any third-party
with whom Owner is dealing, certifying the following: the accuracy of
the Lease; the commencement date and expiration date of the Lease;
that the Lease is unmodified and in full force and effect, or in full
force and effect as modified, setting forth in detail the date and
nature of the modification; whether to Tenant's knowledge, Tenant is
in default or whether Tenant has any claims or demands against Owner
and, if so, specifying the default, claim or demand; and other correct
and reasonably ascertainable facts which are covered by the terms of
this Lease; and such other reasonable, usual or customary assurances
as may be requested by a third party intending to rely upon the
validity and/or security of this Lease.
22 CONDEMNATION
If the whole of Premises, or if such portion of either Premises or the
facilities in Building as may be required for the reasonable use of
Premises, shall be taken by virtue of any condemnation or eminent domain
proceeding, or by purchase in lieu thereof, or for public or quasipublic
use, directly or indirectly, this Lease shall automatically terminate as of
the date of such condemnation, or purchase in lieu of condemnation, or as
of the date possession is taken by the condemning authority, whichever is
earlier. Current rent shall be apportioned as of the date of such
termination. In case of a taking of a part of Premises or a portion of the
facilities in Building not required for the reasonable use of Premises,
then this Lease shall continue in full force and effect and the rental
shall be equitably reduced based on the proportion by which the rentable
area of Premises is reduced, such rent reduction to be effective on the
date of such partial taking. No award of any partial or entire taking shall
be apportioned, and Tenant hereby assigns to Owner any award which may be
made in such taking or condemnation together with any and all rights of
Tenant now or hereafter arising in or to the same or any part thereof,
provided, however, that nothing herein shall be deemed to give Owner any
interest in, or to require Tenant to assign to Owner, any entitlement to
Tenant's moving or relocation expenses. Tenant agrees to sign such
documents and take such steps in any condemnation action as may reasonably
be requested by Owner and that may be necessary to implement this Section
22.
23 RESERVED
24 OPERATING EXPENSES
a. Definitions. As used herein, the following terms have the following
respective meanings unless the context otherwise specifies or clearly
requires.
(1) "Base Year Operating Expenses" means Operating Expenses for the
calendar year 2004 (the "Base Year") multiplied by Tenant's
Share.
(2) "Expense Year" means each twelve (12) consecutive month period
commencing January 1 of each year.
(3) "Tenant's Share" means 1.20 % of a given item of Operating
Expenses.
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(4) "Operating Expenses" means all reasonable and necessary expenses,
based on Owner's reasonable business judgment and customary
practices, paid or incurred by Owner for maintaining, operating
and repairing the Building (including the Garage), the real
property, and a fair and reasonable allocation for the personal
property used in conjunction therewith, to the extent not paid
directly by Tenant or any other tenant of the Building, including
but not limited to the following:
A. salaries, and other compensation, including vacation,
holiday, and other paid absences; and welfare, retirement,
and other fringe benefits that are paid to employees,
independent contractors or agents of Owner engaged in the
operation, repair, management, or maintenance of the real
property and/or the Building and Garage;
B. repairs and maintenance of the Building, Garage, and real
property and the cost of supplies, tools, materials, and
equipment for Building and real property repairs and
maintenance;
C. all real property taxes and currently due installments of
assessments, special or otherwise, which are imposed upon
the Building, Garage and the real property, together with
reasonable legal fees, costs, and disbursements incurred for
proceedings to contest, determine, or reduce such taxes or
assessments, but only to the extent such taxes or
assessments are actually reduced;
D. premiums and other charges incurred by Owner for insurance
on the Building and the real property as Owner deems
reasonably necessary, including:
(i) fire insurance, extended coverage insurance, windstorm,
hail, and explosion insurance, and rental interruption
insurance;
(ii) public liability and property damage insurance;
(iii) elevator insurance;
(iv) boiler and machinery insurance; sprinkler leakage,
water damage, water damage legal liability insurance;
burglary, fidelity, and pilferage insurance on
equipment and materials;
(v) other insurance as is customarily carried by operators
of comparable xxxxxx xxxxxxxxx xx xxx Xxxxxxx,
Xxxxxxxxxx xxxx;
E. costs incurred for inspection and servicing, including all
outside maintenance contracts necessary or proper for the
maintenance and security of the Building, Garage and the
real property, such as janitorial and window cleaning,
rubbish removal, exterminating, water treatment, elevator,
electrical, plumbing, and mechanical equipment, and the cost
of materials, tools, supplies, and equipment used for
inspection and servicing;
F. costs incurred for electricity, water, gas, fuel, or other
utilities;
G. payroll taxes, federal taxes, state and local unemployment
taxes, and social security taxes paid for employees;
H. sales, use, and excise taxes on goods and services purchased
by Owner;
I. license, permit, and inspection fees;
J. accounting fees;
K. legal fees, costs, and disbursements but excluding those:
(i) relating to negotiating leases for or regarding
disputes with tenants,
(ii) based upon Owner's negligence or other tortious
conduct,
16
(iii)relating to enforcing any leases except for enforcing
lease provisions for the benefit of the Building
tenants generally, or
L. the cost of any capital expenditures either (i) paid for by
Owner and required by any new (or change in) laws, rules or
regulations of any governmental or quasi-governmental
authority which are enacted after the Commencement Date;
(ii) purchased or incurred as a labor-saving measure or to
affect other economies in the operation or maintenance of
the Building, and Garage (provided the annual amortized cost
does not exceed the actual cost savings realized and such
savings do not redound primarily to the benefit of any
particular tenant); or (iii) the cost of any change made or
required to be made to the Garage, base Building, Building
Systems and/or Building Structure as a result of alterations
to the Premises made by Tenant, except to the extent such
alterations constitute normal and customary business office
improvements (collectively, the "Permitted Capital Items").
Any included capital expenditures described in subsections
(i) and (ii) above shall be amortized over the useful life
of the improvement as reasonably determined by Owner. Any
included capital expenditures described in subsection (iii)
above shall be amortized over the remaining term of this
Lease (including any Extended Term to which Tenant has
committed). Such amortization shall include a fixed annual
interest rate calculated at Bank of America's prime rate
plus two percent (2%) as of the time that the capital
improvement is placed in service. Tenant's Share of the
capital expenditures described in subsection (iii) above
shall include the share that would be paid by any other
tenant in the Building but for the fact that such other
tenant's lease does not provide for reimbursement of such
capital expense; and
M. other costs, including security costs, reasonably necessary
to operate, repair, manage, and maintain the Property in a
first-class manner and condition.
(5) Notwithstanding any thing in the definition of Operating Expenses
to the contrary, Operating Expenses shall not include:
A. Capital expenditures required by (i) Owner's failure to
comply with laws enacted on or before the commencement of
the Lease Term, or (ii) the enactment of subsequent laws
related to upgrading or expanding the sprinkler system for
the Building;
B. Costs incurred by Owner for alterations which are considered
capital improvements or replacements under generally
accepted accounting principles, consistently applied, except
Permitted Capital Items above;
C. Costs incurred by Owner for the repair of damage to the
Building occasioned by fire, windstorm, earthquake, flood or
other casualty or loss in excess of any insurance proceeds
therefore, or by the exercise of eminent domain, and any
costs incurred by Owner for the repair of damage to the
extent that Owner is reimbursed by insurance proceeds;
D. Costs, including permit, license and inspection costs,
incurred with respect to the installation of tenant
improvements made for tenants in the Building or incurred in
renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of
the building;
E. Depreciation, amortization and interest payments, except as
provided herein and except on materials, tools, supplies and
vendor-type equipment purchased by Owner to enable Owner to
supply services Owner might otherwise contract for with a
third party where such depreciation, amortization and
interest payments would otherwise have been included in the
charge for such third party's services, all as determined in
accordance with generally accepted accounting principles,
consistently applied, and when depreciation or amortization
is permitted or required, the item shall be amortized over
its reasonable anticipated useful life;
17
F. Leasing commissions, attorneys' fees, space planning costs,
and other costs and expenses incurred in connection with new
or existing space leases in the Building or with
negotiations or disputes with present or prospective tenants
or other occupants of the Building;
G. Expenses in connection with services or other benefits which
are not offered to Tenant or for which Tenant is charged for
directly but which are not provided to another tenant or
occupant of the Building;
H. Costs incurred by Owner due to the violation by Owner or any
tenant of the terms and conditions of any lease of space in
the Building;
I. Overhead and profit increment paid to Owner or to
subsidiaries or affiliates of Owner for goods and/or
services in the Building to the extent the same exceeds the
costs of such goods and/or services rendered by unaffiliated
third parties on a competitive basis;
J. Interest, principal, points and fees on debts or
amortization on any mortgage or mortgages or any other debt
instrument encumbering the Building or the property on which
the Building stands, and rents payable in connection with
any ground or underlying lease of all or a portion of the
Building or the land on which it is located;
K. Owner's general corporate and administrative overhead not
related to the Building;
L. All items and services for which Tenant or any other tenant
in the Building reimburses Owner (other than through
Tenant's percentage share or any other tenant(s)' percentage
share of operating expenses), or which Owner provides
selectively to one or more tenants (other than Tenant)
without reimbursement;
M. Electric power costs for which any tenant directly contracts
with the local public service company;
N. Services provided and costs incurred in connection with the
operation of any retail restaurant operations in the
Building to the extent such retail costs exceed the costs
for non-retail business offices; provided, however, the
square footage of such retail operations must be included in
the denominator of the fraction utilized to determine
Tenant's percentage share of operating expenses;
O. Tax penalties or interest incurred as a result of Owner's
negligence or inability or unwillingness to make payments or
informational returns when due;
P. All assessments which are not specifically charged to Tenant
because of what Tenant has done, which can be paid by Owner
in installments, shall be paid by Owner in the maximum
number of installments permitted by law and not included as
operating expenses except in the year in which the
assessment installment is actually paid;
Q. Costs for which Owner has been compensated by a management
fee which exceeds the amount of such costs that would have
been charged by Owner from a non-affiliated entity;
R. Taxes allocable to any space in the Building subject to a
triple net lease;
S. Costs arising from latent defects in all or any portion of
the Building;
T. Costs associated with the operation of the business of the
partnership or entity which constitutes Owner as the same
are distinguished from the costs or operation of the
Building, including partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee
(except as the actions of Tenant may be in issue), costs of
selling, syndicating, financing, mortgaging or hypothecating
any of Owner's interest in the
18
Building operation, disputes of Owner with Building
management, or outside fees paid in connection with disputes
with other tenants;
U. Rental concessions or lease buyouts;
V. Estate, inheritance, gift, franchise and income taxes of
Owner;
W. The cost of installing, operating and maintaining any
specialty service or special facility such as a health club,
cafeteria or dining facility; and
X. Amounts received by Owner through proceeds of insurance to
the extent the proceeds are compensation for expenses that
were previously included in Building operating costs charged
to tenants.
b. Additional Rent for Estimated Increases in Operating Expenses. For
each Expense Year after the Base Year during the Lease Term and the
Extended Term, as the case may be, Owner shall furnish to Tenant a
written statement setting forth (1) Tenant's Share of Estimated
Operating Expenses for such Expense Year, and (2) the amount of
Additional Rent payable monthly during such Expense Year, which will
equal one-twelfth (1/12) of the amount, if any, by which Estimated
Operating Expenses allocable to the Premises exceed Base Year
Operating Expenses allocable to the Premises. Owner shall furnish such
written statement to Tenant no later than December 1 of the Lease Year
immediately prior to the Lease Year for which the estimate is
provided. Commencing on the later of (3) January 1, 2005 or (4) the
thirteenth month (13th) month after the Commencement Date, and
continuing for each subsequent month thereafter, Tenant shall pay such
amount to Owner each month during the Expense Year to which the
estimate applies, at the same time and in the same manner as Monthly
Base Rent is payable by Tenant to Owner. If such Estimated Operating
Expenses are furnished after the commencement of the Expense Year but
within the first sixty (60) days of said year, Tenant shall, within
ten (10) days following the date on which the written statement from
Owner is delivered to Tenant, also make a retroactive lump-sum payment
equal to any accrued shortfall. If such Estimated Operating Expenses
are furnished more than sixty (60) days after the commencement of the
Expense Year, Tenant shall, make up any shortfall in equal monthly
installments spread over the number of months less one, that have
passed since the Estimated Operating Expense report was due. If at any
time during an Expense Year, it appears to Owner that Tenant's Share
of Actual Operating Expenses for the Expense Year will vary from
Owner's estimate by more than five percent (5%), Owner shall, upon
written notice to Tenant, revise its estimate for the Expense Year and
Additional Rent payable by Tenant for such Expense Year shall,
following the date of such notice, be based on Owner's revised
estimate.
c. Adjustment for Actual Operating Expenses. Within one hundred twenty
(120) days after the close of each Expense Year during the term
hereof, Owner shall deliver to Tenant a written statement setting
forth the actual Operating Expenses during the preceding Expense Year.
If such costs for any Expense Year exceed the Estimated Operating
Costs paid by Tenant to Owner pursuant to this Section 24 for such
Expense Year, Tenant shall pay the amount of such excess to Owner as
Additional Rent within thirty (30) days after receipt of such
statement by Tenant. If such statement shows such costs to be less
than the amount paid by Tenant to Owner pursuant to this Section 24,
then the amount of such overpayment shall be credited toward the next
monthly rent payable by Tenant or, if this Lease has terminated, shall
be paid to Tenant within thirty (30) days.
d. Determinations. The determination of Operating Expenses and Estimated
Operating Expenses shall be made by Owner in its reasonable business
judgment. If Tenant notifies Owner in writing within three (3) months
after the receipt by Tenant of Owner's statement setting forth the
preceding years' Operating Expenses, then Tenant may review or audit
Owner's books and records pertaining to Operating Expenses. In the
event that the audit results in a request by Tenant for an adjustment
in the rent paid or to be paid, all audit results and work papers
shall be made available to Owner. In the event that any such audit,
conducted in accordance with generally accepted accounting principles,
correctly reveals a discrepancy of four percent (4%) or more between
Owner's statement of the actual Operating Costs for an Expense Year
and the amount of such Operating Expenses determined by such audit,
then if the Operating Expenses were overstated Owner shall reimburse
to Tenant the excess amount paid by Tenant and Owner shall pay for the
reasonable cost of such audit within thirty (30) days. In all other
cases, the costs of the
19
audit shall be borne by Tenant. Any disputes regarding determination
of Additional Rent due under this Section 24 shall be resolved by
binding arbitration as set forth in Exhibit D.
e. End of Term. If this Lease terminates on a day other than the last day
of an Expense Year, then the amount of any adjustment between
Estimated Operating Expenses and Actual Operating Expenses with
respect to the Expense Year in which such termination occurs will be
prorated on the basis which the number of days from the commencement
of such Expense Year to and including such termination date bears to
365, and any amount payable by Owner to Tenant or Tenant to Owner with
respect to such adjustment is payable within thirty (30) days after
delivery of the Statement of Operating Costs with respect to such
Expense Year.
f. Additional Rent. Rent due pursuant to this section shall be Additional
Rent payable by Tenant hereunder, and in the event of nonpayment
thereof, Owner shall have similar rights with respect to such
nonpayment as it has with respect to any other nonpayment of Rent
hereunder.
25 NOTICES
All notices under this Lease shall be in writing and delivered: (a) by
facsimile; (b) by private courier service which provides a receipt; or (c)
by registered or certified mail, postage prepaid, return receipt requested.
All notices shall be deemed to have been given upon the earlier of: (i)
receipt, as evidenced by courier's receipt, certified mail receipt, or
written evidence of completion of facsimile transmission; or (ii) if
mailed, as provided above, the third day following due deposit in the
United States mail. Notices shall be addressed to the other party at the
addresses set forth in Section 1(h), or at such other addresses as either
party may give to the other by notice in writing in accordance with this
Section.
26 ENTIRE AGREEMENT
This Lease together with the Exhibits hereto contains all the covenants and
agreements between Owner and Tenant relating in any way to the use and
occupancy of the Premises, and all other matters set forth in this Lease.
No prior agreements or understandings, whether oral or written, pertaining
to this Lease shall be valid or of any force or effect; and the covenants
and agreements of this Lease may not be altered, modified or added to
except in writing signed by both parties.
27 NAME OF BUILDING
Owner reserves the right in its sole discretion to change the name of
Building from that specified in Section 3.
28 CONSTRUCTION
The titles to Sections of this Lease are not a part of this Lease and shall
have no effect upon the construction or interpretation of any part thereof.
This Lease shall be construed and governed by the law of the State of
Washington.
29 TIME OF ESSENCE
Time is of the essence of this Lease.
30 FORCE MAJEURE
Except for Tenant's obligations of payments due under this Lease, the
executory obligations of parties hereunder shall be excused to the extent,
but only to the extent, delayed or prevented by reason of labor
disturbances or labor disputes of any character, by the inability to secure
fuel, supplies, machinery, equipment or labor after reasonable efforts to
do so, restrictive governmental laws or regulations, riots, insurrection,
war or any other causes beyond the reasonable control of the affected party
hereto and which such party could not by reasonable diligence have avoided
("Force Majeure"). The party directly affected by a Force Majeure shall use
all reasonable efforts to minimize the effects of the same.
31 COMPLIANCE WITH LAWS
Tenant shall at its own cost and expense obtain any and all licenses and
permits necessary for its use and occupancy of the Premises. Tenant shall
comply with all governmental laws,
20
ordinances and regulations applicable to the use of the Premises, and shall
promptly comply with all governmental orders and directives including but
not limited to those regarding the correction, prevention and abatement of
nuisances in or upon, or connected with, the Premises, all at Tenant's sole
expense; provided, however, that Tenant shall not be required to make any
repair to, modification of, or addition to the Building Structure and/or
the Building Systems and/or the real property except and to the extent
required because of Tenant's specific use of all or a portion of the
Premises.
32 HAZARDOUS MATERIALS.
Tenant shall not use, generate, treat, store or dispose of Hazardous
Material on the Premises or common area of the Building or the real
property (the "Common Area") except in accordance with all laws,
ordinances, rules and regulations of all governmental authorities having
jurisdiction over the Premises or Common Area. If Tenant breaches the
obligations stated in the preceding sentence, or if the presence of
Hazardous Material on the Premises or Common Area caused or permitted by
Tenant results in contamination of the Premises or Common Area, then Tenant
shall indemnify, defend and hold Owner harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities, or losses
(including without limitation diminution in value of the Premises or Common
Area, damages for the loss or restriction on the use of rentable or usable
space or of any adverse impact on marketing of space on the Premises or
Common Area, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the Initial
Lease Term, and any Extended Term, as a result of such contamination. This
indemnification of Owner by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
clean-up, remedial removal or restoration work required by any federal,
state or local governmental agency, political subdivision, lender or buyer
because of Hazardous Material present in the soil or groundwater on or
under the Premises or Common Area, diminution in value of the Premises,
damages for the loss or restriction on use of rentable or usable space or
of any amenity of the Premises or Common Area, damages arising from any
adverse impact on marketing of space in the building, and sums paid in
settlement of claims, reasonable attorneys' fees, consultant fees,
laboratory fees and expert fees. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises or Common Area caused or
permitted by Tenant results in any contamination of the Premises or Common
Area, Tenant shall promptly take all actions at its sole expense as are
necessary to return the Premises or Common Area to the condition existing
prior to the contamination of the Premises or Common Area by any such
Hazardous Material; provided, however, Owner's approval of such action
shall first be obtained, which approval shall not be unreasonably withheld.
Tenant will deliver to Owner copies of any documents received from, or sent
by Tenant to, the United States Environmental Protection Agency and/or any
state, county or municipal environmental or health agency concerning the
Tenant's operations on the Premises. As used herein, the term "Hazardous
Material" means any substance which is (i) designated, defined, classified
or regulated as a hazardous substance, hazardous material, hazardous waste,
pollutant or contaminant under any Environmental Law, as currently in
effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon,
including crude oil or any fraction thereof and all petroleum products,
(iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii)
infectious materials or fungi, or (viii) radioactive materials.
"Environmental Law(s)" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601, et seq.,
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections
6901, et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601,
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 5101, et
seq., the Clean Water Act, 33 U.S.C. Sections 1251, et seq., and the
Washington Model Toxics Control Act, Revised Code of Washington Chapter
70.105D, as said laws have been supplemented or amended to date, the
regulations promulgated pursuant to said laws and any other federal, state
or local law, statute, rule, regulation or ordinance which regulates or
proscribes the use, storage, disposal, presence, clean-up, transportation
or release or threatened release into the environment of Hazardous
Material.
33 SURVIVAL OF PROVISIONS UPON TERMINATION OF LEASE.
This Lease shall survive the expiration of the Initial Lease Term (or the
Extended Term, as applicable) to the extent necessary that any term,
covenant or condition of this Lease which requires the performance of
obligations or forbearance of an act by either party hereto after the
termination of this Lease. Such survival shall be to the extent reasonably
necessary to fulfill the intent thereof, or if specified, to the extent of
such specification, as same is reasonably necessary to perform the
obligations and/or forbearance of an act set forth in such term, covenant
or condition.
[Signatures appear on the following page]
21
IN WITNESS WHEREOF, Owner and Tenant have signed this Lease on the dates noted
below.
OWNER:
SIXTH & VIRGINIA PROPERTIES,
a Washington general partnership
By: Xxxxx Properties, Inc., a Washington corporation
Its: Partner
By: ___________________________________
A.M. Xxxxx, Chairman and CEO
Date: _________________________________
TENANT:
APTIMUS, INC.,
a Washington Corporation
By: ______________________________
Printed Name: ____________________
Its: _____________________________
Date: ____________________________
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that A.M. XXXXX is the
person who appeared before me and said person acknowledged that he signed this
instrument, on oath stated that he was authorized to execute the instrument and
acknowledged it as the Chairman and CEO of Xxxxx Properties, Inc., a Washington
corporation, a partner of SIXTH & VIRGINIA PROPERTIES, a Washington general
partnership, to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.
Dated: _____________
______________________________________
Print Name: Xxxxxxxx X. Xxxxxxxx
NOTARY PUBLIC in and for the State of
Washington, residing at Seattle
My commission expires: ____/____/_____
22
EXHIBIT A
TO
AGREEMENT OF LEASE
Floor Plan of Premises
A-1
EXHIBIT B
TO
AGREEMENT OF LEASE
Plans and Specifications
B-1
EXHIBIT C
TO
AGREEMENT OF LEASE
Work Letter
-----------
This Workletter is attached to and a part of that certain lease between
SIXTH & VIRGINIA PROPERTIES, a Washington general partnership ("Owner") and
APTIMUS, INC. a Washington corporation ("Tenant"). The purpose of this
Workletter is to set forth how the tenant improvements to the Premises are to be
constructed and designed, who will be responsible for constructing and designing
the tenant improvements, and who will pay for the tenant improvements. Owner and
Tenant agree as follows:
1. Defined Terms. Unless the context otherwise requires, terms used in this
workletter shall have the same meaning as such terms have in the Lease. The
following capitalized terms shall have the meaning set forth below:
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which United States national banks in Seattle, Washington are authorized or
required by law to be closed for business.
"CONTRACTOR" means the contractor selected and agreed to by Owner and
Tenant for purposes of completing the Tenant Improvements.
"COST OF WORK" means all costs of completing the Work, including the
Contractor's fees and profits, sales taxes, insurance premiums, permit
fees, the cost of demolishing existing improvements and all other costs
incurred by Owner or Tenant in connection with the design and construction
of the Tenant Improvements.
"PLANS AND SPECIFICATIONS" means Exhibit B of the Lease, which shall detail
all specifications necessary to construct the Tenant Improvements to the
Premises, which shall include all improvements to be provided for under
this workletter.
"READY FOR OCCUPANCY" or "SUBSTANTIAL COMPLETION" means complete to the
extent Tenant may reasonably use and occupy the Premises for the purpose
for which the same were intended, subject to minor details of construction,
decoration and mechanical adjustments that remain to be completed by Owner.
"TENANT IMPROVEMENTS" means those certain improvements to the Premises
described in the Exhibit B to the Lease, as the same may be modified
pursuant to Paragraph 5 below including labor and materials that are
utilized directly or indirectly in altering, repairing, improving, adding
to, modifying or otherwise changing the Premises but not included under
"Shell Condition" below.
"TENANT IMPROVEMENT ALLOWANCE" means the amount of $90,000.00, which Owner
agrees to contribute towards payment for the Cost of the Work.
"TENANT'S REPRESENTATIVE" means the individual designated by Tenant as its
tenant improvement representative in accordance with Paragraph 7 of this
Workletter.
"WORK" means design, permitting and construction of the Tenant Improvements
in accordance with the Plans and Specifications.
2. Construction of Tenant Improvements. Promptly after Owner and Tenant have
reached agreement on the Plans and Specifications, Owner will cause
Contractor to submit an estimate (the "Estimate") of the Cost of Work to be
approved by Owner and Tenant. If Tenant fails to disapprove the Estimate
within three (3) Business Days, then the Estimate will be deemed approved
by Tenant. Owner will then enter into a construction contract with
Contractor and will cause the Tenant Improvements to be constructed in
accordance with the Plans and Specifications, as the same may be revised in
accordance with Paragraph 5 below. If the Estimate details a Cost of Work
(as reasonably determined by Owner and approved by Tenant) in excess of the
amount of the Tenant Improvement Allowance, then Tenant, within ten (10)
days after receiving the Estimate, shall pay the amount of the difference
(the "Tenant Payment") to Owner. The Tenant Payment may be commingled with
other funds of Owner and Tenant shall not be entitled to earn interest
thereon. The Tenant Payment shall be applied to the cost of the
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Tenant Improvements only after the Tenant Improvement Allowance has been
fully expended in payment of the Tenant Improvements. Owner shall provide
Tenant a monthly written accounting of the Tenant Payment. The balance, if
any, of the Tenant Payment remaining following Substantial Completion shall
be returned to Tenant within ten (10) days after written demand therefor by
Tenant. Contractor shall obtain all necessary permits, licenses and
approvals including building permits, from such governmental authorities
for the construction of the Tenant Improvements. Tenant's Representative
shall have reasonable access to the construction in progress and scheduled
meetings with the contractor and Owner's representative.
3. Acceptance of the Premises. Owner will notify Tenant when the Tenant
Improvements are Ready for Occupancy. Within three (3) Business Days after
receiving such notice, and prior to move-in of any furniture, fixtures or
equipment of Tenant, and again not more than twelve (12) Business Days
after Tenant occupies the Premises, Tenant shall inspect the Premises for
any deficiencies in the Work. A "punchlist" of all deficiencies in the Work
shall be prepared and agreed upon by both Owner and Tenant. Owner will
correct defective items stated in the punchlist which are the
responsibility of Owner or the Contractor. If Tenant does not so provide
Owner with a punchlist prior to occupying the Premises or within twenty
(20) days thereafter, Tenant shall be deemed to have accepted the Premises
and the Tenant Improvements in their then present condition. The existence
of minor punchlist items shall not postpone the Commencement Date of the
Lease or result in a delay or abatement of Tenant's obligation to pay
Monthly Base Rent or Additional Rent or give rise to a damage claim against
Owner. Owner agrees to complete all punchlist items which are Owner's or
the Contractor's responsibility within forty five (45) days after receiving
the punchlist (or longer if reasonably necessary).
4. Completion and Rental Commencement Date. Notwithstanding the Commencement
Date set forth in Section 1 of the Lease, Tenant's obligation for the
payment of Monthly Base Rent under the Lease shall not commence until the
Premises are Ready for Occupancy; however, if Substantial Completion of the
Work is delayed as a result of delays caused by Tenant, then Tenant's
obligation to pay Monthly Base Rent under the Lease, and the Initial Lease
Term, shall commence on the date the Tenant Improvements would have been
Ready for Occupancy except for the delays caused by Tenant, as reasonably
determined by Owner and the Contractor.
5. Changes in Work. Tenant shall be responsible for paying for any additional
costs in the Work resulting from changes in the Work requested by Tenant
but only to the extent such changes cause the actual cost of the Work to
exceed the Tenant Improvement Allowance.
6. Early Entry. With Owner's prior written approval, Tenant and/or Tenant's
contractors may enter into the Premises prior to the Premises being Ready
for Occupancy for purposes of cable, telephone and furniture installation;
provided that such entry or work does not interfere with the construction
of the Tenant Improvements by Contractor. No payment of Monthly Base Rent
or Additional Rent shall be required of Tenant for the aforesaid entry or
entries by Tenant prior to the Substantial Completion of the Tenant
Improvements. Tenant hereby indemnifies and shall hold harmless Owner its
officers, directors, agents, employees and contractors from and against all
claims, damages losses, expenses for bodily injury or property damage,
including attorneys' fees, arising out of or resulting from Tenant's early
entry into the Premises prior to their being Ready for Occupancy pursuant
to this Paragraph 6, including any expenses incurred by Owner for delays in
the completion of the Work caused by such early entry, and for any damages
to the Work caused by Tenant and Tenant's contractor prior to the Premises
being Ready for Occupancy.
7. Tenant Improvement Representative. Prior to the commencement of the Work,
Tenant shall designate in writing one individual who shall be Tenant's
Representative during the Work. Owner and Contractor shall be entitled to
rely on the decisions of Tenant's Representative regarding the Work (and
the decisions of Tenant's Representative shall be binding upon Tenant)
until Owner and Contractor have received written notice from Tenant that
such person's authority has been revoked. Tenant hereby designates Xxxxx
Xxxxxx as its Tenant Representative.
8. Additional Provisions. This Workletter and the exhibits attached hereto, if
any, set forth the entire agreement of Owner and Tenant with respect to the
completion of the Work. Neither this Workletter nor any of the provisions
contained in this Workletter may be
C-2
changed or waived, except by a written instrument signed by both parties.
Except as otherwise provided in this Workletter, any costs or expenses
which Tenant is required by pay under this Workletter (such as additional
construction costs due to changes in the Work) shall be due and payable in
full upon Substantial Completion of the Work, and the presentation to
Tenant of a written statement setting forth the amounts due from Tenant. To
the extent any of the terms or conditions of this Workletter conflict with
any of the terms or conditions of the Lease, this Workletter shall control.
EXHIBIT D
TO
AGREEMENT OF LEASE
Binding Arbitration Provision
This Exhibit shall govern those disputes expressly directed to binding
arbitration pursuant to this Exhibit by the terms of the Lease. This exhibit
shall not govern any other disputes between the parties arising under this
Lease. The procedures to control Binding Arbitration shall be as follows:
(a) Arbitrator. Within ninety (90) days after delivery of written notice
("Notice of Dispute") of the existence and nature of any dispute given by any
party to the other party, and unless otherwise provided herein in any specific
instance, the parties shall agree upon an arbitrator in the Seattle, Washington
area who has at no time ever represented or acted on behalf of either of the
parties to act as Arbitrator.
(b) Duty. Consistent with the provisions of this Exhibit, the Arbitrator
shall diligently utilize his or her utmost skill to hear and decide the outcome
and resolution of the dispute or disagreement as promptly as possible, but in
any event on or before the expiration of thirty (30) days after the appointment
of the Arbitrator. The Arbitrator shall not have any liability whatsoever for
any acts or omissions performed or omitted in good faith pursuant to the
provisions of this Exhibit.
(c) Authority. The Arbitrator shall (i) enforce and interpret the rights
and obligations set forth in the Lease to the extent not prohibited by law, (ii)
fix and establish any and all rules as it shall consider appropriate in its sole
and absolute discretion to govern the proceedings before it, including any and
all rules of discovery, procedure and/or evidence, and (iii) make and issue any
and all orders, final or otherwise, and any and all awards, as a court of
competent jurisdiction sitting at law or in equity could make and issue.
(d) Appeal. The decision of the Arbitrator shall be final and binding, may
be confirmed and entered by any court of competent jurisdiction at the request
of any party and may not be appealed to any court of competent jurisdiction or
otherwise except upon a claim of fraud on the part of the Arbitrator, or on the
basis of a mistake as to the applicable law. The Arbitrator shall retain
jurisdiction over any dispute until its award has been implemented, and judgment
on any such award may be entered in any court having appropriate jurisdiction.
(e) Compensation. The Arbitrator shall be compensated at a fair and
reasonable rate for any and all services rendered under this Exhibit, plus
reimbursement for any and all expenses incurred in connection with the rendering
of such services, payable in full promptly upon conclusion of the proceedings.
Such compensation and reimbursement shall be borne by the non-prevailing party;
to the extent one exists, as determined by the Arbitrator in its sole and
absolute discretion.
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