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Sample Business ContractsHome: Sample Business Contracts:
PACIFIC MEDICAL CENTER
LEASE AGREEMENT
BETWEEN
WRC.COM TOWER LLC
LANDLORD
AND
AMAZON.COM, INC.
TENANT
<PAGE> 2
LEASE AGREEMENT
PACIFIC MEDICAL CENTER
THIS LEASE made this 31st day of August, 1998 between WRC.COM TOWER
LLC, a Washington limited liability company ("Landlord"), and AMAZON.COM, INC.,
a Delaware corporation ("Tenant").
As parties hereto, Landlord and Tenant agree:
1. LEASE DATA AND EXHIBITS. The following terms as used herein shall
have the meanings provided in this Section 1, unless otherwise specifically
modified by provisions of this Lease:
(a) Building: Known as Pacific Medical Tower, or such other name
as Landlord and Tenant may, pursuant to Section 37(k) below, designate from time
to time, situated on the Land more particularly described in Section 2 hereof,
with an address of 1200 - 12th Avenue S., Seattle, WA 98144.
(b) Premises: Consisting of all of Floors one (1) through twelve
(12) of the Building (excluding approximately 3,532 rentable square feet on
Floor 1) and an entrance lobby with adjacent space totaling approximately 3,590
rentable square feet on the basement floor of the Building, as outlined on the
floor plans attached hereto as Exhibit A-1, including tenant improvements, if
any, as described in Exhibit B and approximately 1,924 usable square feet of
Tower Storage Space on Floor 13.
(c) Tenant's Pro Rata Share: Landlord and Tenant agree that, for
purposes of this Lease, the rentable area of the Premises is deemed to be
184,040 net rentable square feet and Tenant's Pro Rata Share of the Building is
deemed to be 71.5%. Landlord and Tenant have agreed that these figures shall
remain fixed and shall not be subject to any further challenge or adjustment,
provided that the rentable area of the Premises shall be subject to adjustment
upon the occasion of any addition to or deletion from the Premises, and Tenant's
Pro Rata Share of the Building shall also be subject to modification if the size
of the Building is modified. In calculating Tenant's Pro Rata Share for future
adjustments, storage areas shall be excluded in both the calculation of the net
rentable area of the Premises and the net rentable area of the Building.
(d) Basic Plans Delivery Date: See Exhibit B.
(e) Final Plans Delivery Date: See Exhibit B.
(f) Commencement Date: The Commencement Date shall be as
specified in Section 3. The term "Commencement Date" and definitions applicable
thereto are more fully defined in Section 3.
(g) Expiration Date: Midnight on the day immediately preceding
the tenth (10th) annual anniversary of the Commencement Date.
(h) Rent: Rent shall commence (i) on the Commencement Date, as to
the First Phase Floors (defined in Section 3); (ii) the date which is five (5)
days after the date the Second Phase Floors and any Deferred Phase Floors (as
defined in Section 3) are delivered to Tenant pursuant to Section 3, as to each
such phase. If less than all of the First Phase Floors or Second Phase Floors
are delivered as provided in Section 3(i) below, Rent shall commence as to the
portion so delivered five days after Premises Delivery for such floors. Rent is
payable monthly on or before the first day of each month. Rent for each month of
the Lease term shall be one-twelfth (1/12) of the annual rent calculated by
multiplying the applicable rental rate times the number of rentable square feet
within the Premises, as set forth below:
<TABLE>
<CAPTION>
Lease Years Rent Per Net Rentable Square Foot
----------- ---------------------------------
<S> <C>
1 - 5 $17.25
6 - 10 $19.25
</TABLE>
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<PAGE> 3
A Lease Year shall be the annual period commencing on the Commencement
Date and on each subsequent annual anniversary of the Commencement Date.
The above Rent does not apply to the 1,924 usable square feet of storage
space (the "Tower Storage Space") on Floor 13. Rent for the Tower Storage Space
shall be twelve dollars ($12) per usable square foot for the first five (5)
Lease Years, and thirteen dollars ($13) per usable square foot for the second
five (5) Lease Years. Rent on the Tower Storage Space shall be adjusted to
market rates during the Extension Terms (as defined below). Rent for the Tower
Storage Space shall commence upon the Commencement Date.
(i) Security Deposit/Letter of Credit: $35 per square foot for
each net rentable square foot of the Premises in the form of cash, a pledge of
marketable securities or a letter of credit as provided in Section 6 below
(initially $6,441,400, based upon 184,040 net rentable square feet).
(j) Base Year: Intentionally omitted.
(k) Agency Disclosure: At the signing of this Lease Agreement,
the Landlord's Leasing Agent, Wright Runstad & Company, represented Landlord.
The listed Tenant's agent, Ed Curtis, of Washington Partners, represented
Tenant. Each party signing this document confirms that the prior oral and/or
written disclosure of agency was provided to him/her in this transaction. (As
required by WAC 308-124D-040).
(1) Parking: Landlord shall provide and Tenant shall pay for and
have the right to use a total of 267 exclusive parking spaces on the Property,
on the lots north of the Building and in the existing parking garage south of
the Building. Landlord may designate up to 25 of such spaces to be in the
existing parking garage south of the building, and the other parking spaces
shall initially be surface parking on the Property and on the lots north of the
Building. In addition, Landlord shall provide 11 designated short term or
transient parking stalls at no charge for visitors of Tenant in the vicinity of
the Building. The use of such short term or transient parking stalls shall be
governed by the terms of the REA (as defined below) and initially shall be in
the location designated on Exhibit F. If Tenant desires any additional short
term/transient parking stalls, it may utilize its own surface or garage parking
stalls for that purpose. Surface parking rates shall be $75.00 plus applicable
sales/use tax (if any) per stall per month and garage parking rates shall be
$125 plus applicable sales/use tax (if any) per stall per month. Each date on
which Landlord delivers portions of the Premises to Tenant pursuant to Section
3, Tenant shall commence payment for a pro-rata share of the total parking,
based on the ratio the rentable square footage of the delivered floors bears to
the total rentable square footage of the Premises (exclusive of Storage Space).
Tenant shall have the right to choose, on each such delivery date, how many
spaces for each added increment shall be surface parking spaces and how many
shall be parking garage spaces. Payment for parking spaces shall be due with the
payment of rent as provided herein.
The parties acknowledge that Landlord contemplates the
construction of a new parking facility near the Building. If such new parking
facility is constructed, Landlord shall have the right to designate and provide
any or all of the above-mentioned 267 exclusive parking spaces and the 11
designated short term/transient parking spaces in the new parking garage,
provided that Landlord may require Tenant to use parking spaces in the new
garage in lieu of parking spaces on the Property and on the lots north of the
Building only if new development is undertaken on the lots north of the
Building. Parking rates in the new parking facility shall be $125 plus
applicable sales/use tax (if any) per stall per month. However, if Landlord
requires Tenant to use parking spaces in the new parking garage, Tenant shall
also have the right to use any additional parking in the lots north of the
building while available (i.e. until utilized for construction, permanent
building, landscaping or similar purposes) at a rate of $75 per month.
In addition, Landlord reserves the right to provide temporary
replacement parking for some of the surface parking spaces on the lots north of
the Building if a portion of the surface parking area is needed for construction
or construction staging for the development of the new parking garage. Such
temporary replacement parking may be off site, provided that if replacement
parking is more than 1/4 mile from the Premises, Landlord agrees to provide (at
Landlord's expense) shuttle service between the Premises and such off site
parking area.
In the event Tenant exercises its right of first opportunity or right of
first offer set forth below to lease additional space in the Building, and to
the extent additional parking is then available, Tenant shall be obligated to
lease from Landlord an additional 1.5 parking spaces for each 1,000 rentable
space feet of additional space leased by Tenant (rounded to the next whole
number of parking spaces
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<PAGE> 4
and with a credit for any north lot spaces voluntarily taken by Tenant pursuant
to the last sentence of the second paragraph of this subsection while such
spaces are available). Such spaces may be on the Property, in the north lot, the
existing parking garage or the new parking facility, as designated by Landlord.
WRC.Com Development LLC, a Washington limited liability company, an
affiliate of Landlord and the current ground lessee of the lots north of the
Building, hereby joins in this Lease solely for purposes of binding itself to
the provisions of this Lease applicable to parking in the lots north of the
Building for so long as Landlord is required to provide such parking pursuant to
the terms of this Lease.
(m) Notice Addresses:
Landlord: WRC.COM TOWER LLC
1191 Second Avenue, Suite 2000
Seattle, Washington 98101
Attention: Jon Nordby
Tenant: Prior to Commencement Date:
Amazon.Com, Inc.
1516 Second Avenue
Seattle, Washington 98101
Attention: General Counsel
After Commencement Date:
Amazon.Com, Inc.
1200 12th Avenue South
Seattle, Washington 98144
Attention: General Counsel
(n) Payment Address: WRC.COM TOWER LLC
1191 Second Avenue, Suite 2000
Seattle, Washington 98101
(o) Gentle Dental Adjustment. A portion of Floor One of the
Building is currently leased to Gentle Dental Services Corporation ("Gentle
Dental") under Lease Agreement dated August 1, 1997 (the "Gentle Dental Lease").
The Gentle Dental Lease currently covers approximately 3,532 square feet on
Floor 1, with limited options to expand to a total of 7,773 square feet on Floor
1.
Landlord is currently negotiating with Gentle Dental to seek
either (i) an early termination of the Gentle Dental Lease, or (ii) a
termination of the expansion option. All of the figures and calculations set
forth in this Lease are based upon the assumption that the Gentle Dental Lease
continues as to Floor 1 but that the expansion option is terminated.
If Landlord is successful in obtaining an early termination of
the Gentle Dental Lease, the Premises will be expanded to include all of Floor
1, and the other provisions of this Lease based upon the size of the Premises
shall be adjusted accordingly (i.e. Rent, Tenant's Pro Rata Share, Security
Deposit, Allowance, etc.). If Landlord is not successful in obtaining either a
termination of the Gentle Dental Lease or a termination of the expansion option,
the Premises shall not include any portion of the space subject to the Gentle
Dental Lease (including the expansion space) and the other provisions of the
Lease based upon the size of the Premises shall be adjusted accordingly.
(p) Exhibits: The following exhibits or riders are made a part of
this Lease:
Exhibit A- Legal Description of Land
Exhibit A-1 Floor Plan of Premises
Exhibit B - Tenant Improvements
Exhibit C - Addendum to Lease
Exhibit D - Base Building Specifications
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<PAGE> 5
Exhibit E - Subordination, Attornment and
Non-Disturbance Agreement Form
Exhibit F - Location of Transient Parking Spaces
Exhibit G - Projected 1999 Taxes and Operating Costs
Exhibit H - List of Restriction Documents
Exhibit I - Arbitration
Exhibit J - Formula to Determine Landlord's Early
Replacement Cost
Exhibit K - Pet Policy
2. PREMISES: Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, upon the terms and conditions herein set forth, the
Premises described in Section l(b) hereof as shown on the Plans referenced in
Exhibit A-1 attached hereto and incorporated herein. In addition, Tenant shall
also have the aforementioned parking rights and rights of ingress and egress
over common areas in the Building and the land ("Land") more particularly
described on Exhibit A attached hereto, together with the right to use the large
green "Commons" area in the center of the campus of which the Land is a part.
All of Tenant's rights in and over the Land and the Commons shall be subject to
the provisions of that certain Reciprocal Easement Agreement dated of
approximately even date herewith ("REA"), a copy of which Tenant acknowledges
having had the opportunity to review.
Landlord does not own the Building and Land but leases them pursuant to
that certain Tower, and Adjacent Property Lease dated August 26, 1998 (the
"Ground Lease") between Pacific Hospital Preservation and Development Authority,
a Washington public authority ("PMC") as landlord and Landlord as tenant. This
lease is therefore actually a sublease and subject and subordinate to all of the
terms and conditions of the Ground Lease. For convenience, this sublease is
referred to herein as this "Lease." Notwithstanding the foregoing, nothing in
the Ground Lease shall modify or excuse Landlord's obligations to Tenant under
this Lease.
Landlord shall cause to be executed, concurrent with full execution of
this Lease, an agreement by PMC acknowledging that this Lease is in compliance
with all requirements of the Ground Lease, and agreeing that, in the event the
Ground Lease is terminated for any reason, this Lease shall become a direct
lease between Tenant and PMC without further action by either party, and
provided only that PMC shall not be liable for (i) any claims against the
Landlord under this Lease accruing prior to the date this Lease becomes a direct
lease between Tenant and PMC, or (ii) any initial construction or allowance
obligations under this Lease.
"Net rentable square feet", "rentable area", and similar terms used
herein when applied to future calculations or adjustments shall mean "Rentable
Area" as defined in BOMA American National Standard Z6.1-1996.
CONSTRUCTION; COMMENCEMENT AND EXPIRATION DATES:
(a) Completion of Construction: Landlord will at its sole cost
and expense proceed in good faith with all due diligence to obtain all permits
and approvals, and complete all work necessary to deliver the Premises with the
Base Building Specifications described in Exhibit D ("Landlord's Work")
completed. Tenant improvements with respect to the Premises ("Tenant
Improvements") shall be constructed pursuant to Tenant's plans for the Premises
approved by Landlord to the extent and in the manner set forth in Exhibit B.
Landlord shall enter into the contract with the Tenant Improvement contractor,
who shall be selected in accordance with the provisions of Exhibit B. Tenant is
aware that its selection of a Tenant Improvements contractor other than the
contractor engaged by Landlord to perform Landlord's Work could cause delays in
completion of the Tenant Improvements.
(b) Payment for Tenant Improvements: Tenant shall receive from
Landlord an allowance ("Allowance") of up to Twenty Five Dollars ($25.00) per
square foot of net rentable area in the Premises (excluding Storage Space) as a
credit against the cost of the Tenant Improvements and paid as follows:
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<PAGE> 6
(i) The Allowance may be applied to all costs of the Tenant
Improvements, including design (architectural and engineering) and construction
fees. The Allowance shall be paid by Landlord upon receipt of invoices for work
actually performed or materials supplied.
(ii) Any portion of the Allowance not used for Tenant
Improvements with respect to the Premises shall not be available or paid to
Tenant.
(iii) All costs of designing and constructing the Tenant
Improvements in excess of the Allowance shall be borne solely by Tenant, except
that Landlord agrees to provide Tenant with an additional allowance of up to Ten
Dollars ($10.00) per rentable square foot, excluding Storage Space (the
"Additional Allowance"), which amount shall be repaid by Tenant in twelve (12)
equal monthly installments as Additional Rent of $1.29 per rentable square foot
per year for ten (10) years for each $ 1.00 of the Additional Allowance per
rentable square foot used by Tenant, prorated for amounts that are not in even
$1.00 increments. For example, if Tenant uses the full $10.00 per rentable
square foot Additional Allowance, Rent shall be increased by $1.29 per rentable
square foot per year for ten (10) years. If Tenant elects to use some or all of
the Additional Allowance, Tenant shall so notify Landlord in writing prior to
commencement of construction of the Tenant Improvements or prior to execution of
a change order that would require use of some or all of the Additional
Allowance.
(iv) If the budgeted cost of designing or constructing the Tenant
Improvements exceeds the sum of the Allowance and the Additional Allowance (if
any), all disbursements of the allowances hereunder for the Tenant Improvements
shall be shared by Landlord and Tenant in proportion to their estimated sharing
of the total costs of the Tenant Improvements. Landlord may adjust that sharing
ratio from time to time if the cost of completing the Tenant Improvements has
increased pursuant to change orders approved by Landlord and Tenant. Amounts
required to be paid by Landlord or Tenant hereunder shall be paid by the
applicable party on a monthly basis no later than the date required under the
construction contract for payment for the costs of the specific Tenant
Improvements. However, in connection with the construction of the Tenant
Improvements, Landlord shall not be required to incur costs in excess of the
Allowance and the Additional Allowance, if any.
(c) Commencement Date: The Commencement Date of this Lease shall be the
date which is five (5) days after the earlier of (i) the date of Premises
Delivery as to the First Phase Floors (defined below) or, if applicable, the
Initial Minimum Delivery as provided in Section 3(i) below, or (ii) the date on
which Premises Delivery as to the First Phase Floors would have occurred but for
Tenant Delays. If the Commencement Date does not occur by the projected First
Phase Projected Delivery Date set forth below, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom except as specifically provided in this Section 3. Landlord
and Tenant shall use their best efforts to achieve Premises Delivery in
accordance with this Section 3 and with Exhibit B attached hereto on the date(s)
specified herein or as soon thereafter as practicable.
(d) Selection of Contractor. The date of Premises Delivery may be
affected by which contractor is selected to construct the Tenant Improvements.
If Tenant selects a contractor other than the contractor engaged by Landlord to
perform Landlord's Work, any delays in Premises Delivery (based upon the
schedule to complete the Tenant Improvements as proposed by the contractor
performing the Landlord's Work in relation to the actual Premises Delivery and
after adjustment for any delay (other than Tenant Delays) that would have been
experienced had Landlord's contractor performed the work) shall constitute a
Tenant Delay. All of the projected Premises Delivery dates are subject to the
delay provisions contained in Section 3 below. The contractor so selected to
construct the Tenant Improvements shall be hereinafter referred to as the
"Tenant Improvement Contractor."
(e) Premises Delivery. As used herein, "Premises Delivery" as to the
First Phase Floors, the Second Phase Floors and any Deferred Phase Floors shall
mean the earlier of (i) the date Tenant first occupies the applicable phase for
any beneficial purpose other than tenant finish work or installation of
utilities, data lines, telephone lines, cabling, wiring, or furniture, fixtures
or other equipment, or (ii) the date of Landlord's delivery of such phase to
Tenant with all Landlord's Work and Tenant Improvements Substantially Complete.
The "First Phase Floors" shall mean the lobby area on Floor 1, all of Floors 6,
7, 8, 9 and 10, Floors 11 and 12 unless Landlord elects to include Floors 11 and
12 in the Second Phase, and that portion of the 3,590 square feet of space on
the basement floor not needed for construction and construction access purposes.
The "Second Phase Floors" shall mean the remaining applicable portion of Floor
1, all of Floors 2 and 4, Floors 11 and 12 if not included in the First Phase,
and Floors 3 and 5 and the remaining applicable portion of the
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<PAGE> 7
basement space unless Landlord elects to include Floors 3 and 5 and the
remaining applicable portion of the basement space as Deferred Phase Floors. The
"Deferred Phase Floors" shall mean Floors 3 and 5 and the remaining applicable
portion of the basement space if Landlord elects to exclude such space from the
Second Phase as provided below.
Landlord may deliver the First Phase Floors to Tenant upon sixty (60)
days prior written notice to Tenant and the Second Phase Floors and any Deferred
Phase Floors upon seventy-five (75) days prior written notice to Tenant for each
such phase, provided (i) Landlord may not deliver the First Phase Floors prior
to April 1, 1999 without the prior approval of Tenant, and (ii) Landlord may not
deliver the Second Phase Floors prior to June 1, 1999 (July 1, 1999 if Landlord
exercises the Deferral Option set forth in subsection (i) below) without the
prior approval of Tenant.
With the 60-day delivery date notice for the First Phase Floors,
Landlord shall advise Tenant in writing whether Floors 11 and 12 will be
included in the First Phase. If Landlord does not include Floors 11 and 12 in
the First Phase, Floors 11 and 12 shall automatically be included in the Second
Phase. With the 75-day delivery date notice for the Second Phase Floors,
Landlord shall advise Tenant in writing whether Floors 3 and 5 and the remaining
applicable basement space will be included in the Second Phase. If Landlord does
not include such space in the Second Phase, such space shall automatically
become the Deferred Phase Floors.
Except as expressly set forth in subsection (i) below, Landlord may
deliver portions of the Premises as to a full phase only, unless Tenant
otherwise agrees in writing.
The event referred to herein as "Substantial Completion" (or the
condition referred to herein as "Substantially Complete") as to a phase shall
mean the event or condition of "substantial completion" as that term is used in
the construction industry, as to all the space in such phase. The date a phase
is Substantially Complete shall be as certified by the architect engaged to
design the Tenant Improvements (the "TI Architect), in the TI Architect's
reasonable opinion, in writing (using AIA Form G704) with a copy to Tenant, and
shall not occur or exist until the applicable governmental building inspector
has checked off the applicable portion of the Premises as Approved for Occupancy
on the Building Inspection Report (as those terms are used by the applicable
inspection entities of the City of Seattle). If either party disputes the date
certified by the TI Architect as the date of Substantial Completion for a
particular phase, it must notify the other party within five (5) days after
receipt of the TI Architect's certification (or within five (5) days of the date
Landlord believes to be the date of Substantial Completion for the applicable
phase, if the Architect will not so certify). As part of the process of
certification of Substantial Completion of a particular phase, Landlord shall
schedule an inspection (on not less than five (5) days prior notice), which
inspection shall be attended by Tenant, Landlord, the TI Architect and the
architect engaged to design the building shell improvements (the "Shell
Architect"). Following such inspection (and as part of the certification of
Substantial Completion), the TI Architect shall prepare a "punchlist" (the
"Construction Punchlist") as such term is used in the construction industry. The
existence of defects of a nature commonly found on a punchlist shall not
postpone Substantial Completion of a particular phase or of the Commencement
Date or result in a delay or abatement of Tenant's obligation to pay Rent or
give rise to a damage claim against Landlord. Landlord shall complete all items
on the Construction Punchlist within thirty (30) days after preparation thereof
or commence completion of those items which are not possible to complete within
thirty (30) days, provided that if the Construction Punchlist is for a phase
that is Substantially Complete prior to Premises Delivery for that phase, and
the item is such that it is most efficiently completed as part of Premises
Delivery or of completion of the Construction Punchlist on a later phase, then
Landlord may complete such Construction Punchlist item within thirty days of
Premises Delivery for such later phase. Tenant shall be entitled, for ten (10)
days following Tenant's commencement of beneficial occupancy of a particular
phase, to request the TI Architect to supplement the initial Construction
Punchlist for such phase with additional Construction Punchlist items, provided
that no new defect caused by Tenant, its employees, agents, contractors,
customers or invitees may be included in or added to the Construction Punchlist.
Landlord shall (i) at or before Premises Delivery provide Tenant with keys and a
keying schedule and with Building systems and safety manuals. Any work required
under the Construction Punchlist shall be paid for, to the extent required, in
the same manner (and by the same party(ies) responsible for payment for the
affected work), provided that the costs paid for by Landlord with respect to the
Tenant Improvements shall in no event exceed the amount of the Allowance and the
Additional Allowance, if any.
With Premises Delivery as to the First Phase Floors, Landlord shall use
reasonable efforts to make available at no additional charge to Tenant for
temporary bicycle parking the temporary storage building adjacent to the
Building. Tenant may use such storage building for bicycle parking only until
Premises Delivery has occurred as to the entire Premises.
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<PAGE> 8
(f) Building Systems and Common Areas. Premises Delivery shall not be
deemed to occur as to a particular phase until the following conditions shall
have been satisfied by Landlord:
(i) The utility and other systems servicing the phase and
necessary for the operation of that phase or Tenant's occupancy and full
enjoyment of that phase (such as elevator service, plumbing, heating,
ventilating, air conditioning, electrical and security systems) shall be in good
order and operating condition except for (A) details of construction, decoration
and mechanical adjustments which do not materially interfere with Tenant's use
of the phase, and (B) any part thereof the non-completion of which shall be due
to Tenant Delay, provided, however, (a) as to Premises Delivery of the phases
before the delivery of the last phase, only those elevators designed in the
Plans as early use elevators (and not all elevators) will be available for
access to such phases (the other elevators will be used for construction of the
other phases), and
(ii) The first floor lobby of the Building and the entrances and
public portions (including the garage and surface parking areas), stairways,
corridors and elevators (but only the early use elevators until Premises
Delivery for the entire Premises) of the Building, shall have been finished
(except for details of construction, decoration and mechanical adjustments which
do not materially detract from the appearance of such areas or materially
interfere with their use for normal purposes) and shall be in a clean and
orderly condition affording reasonable access to all portions of the Premises,
or would be in such condition but for Tenant Delay. However, the freight
elevator will be repaired/replaced only after Premises Delivery for the entire
Premises, and one of the general Building elevators will be used for freight
purposes during such time,
(g) Tenant Delay. As used herein, the term "Tenant Delay" shall mean, as
to any delay experienced by Landlord in its work on the Building or the Tenant
Improvements, (a) any interference or delay caused by occurrences within the
reasonable control of Tenant not otherwise permitted under this Lease (i.e.
permitted Tenant approval and construction processes applied within scheduled
time period shall not be deemed Tenant Delay); (b) any delay caused by Tenant's
failure or refusal to furnish plans, or approve or disapprove plans for the
Tenant Improvements, within the periods set out in Exhibit B; (c) any delay
attributable to changes in or additions to Landlord's plans requested by Tenant
beyond the approval process set forth in Exhibit B; (d) any other delay in acts
of Tenant required under Exhibit B, or (e) selection of a Tenant Improvement
contractor other than the contractor selected by Landlord to perform Landlord's
Work, provided that the foregoing clauses (a) through (e) shall apply only to
the extent that such delay, notwithstanding Landlord's reasonable best efforts
to mitigate the delay, actually delays the date of Premises Delivery. Tenant
Delay shall not include delays caused by revisions to Tenant's Plans to meet
historic preservation requirements as set forth in Section 3(m) below.
Landlord shall notify Tenant as soon as reasonably possible when
Landlord becomes aware of an event constituting Tenant Delay. Such notice shall
include a description of the matter constituting Tenant Delay, and Landlord's
good faith estimate of the potential amount of Tenant Delay. Landlord also
agrees to meet and cooperate with Tenant to seek opportunities to minimize
Tenant Delay.
(h) Landlord Delay. As used herein, the term "Landlord Delay" shall mean
(a) any interference or delay caused by occurrences within the reasonable
control of Landlord not otherwise permitted under this Lease, or (b) any delay
caused by Landlord's failure or refusal to either approve or disapprove Tenant's
plan for Tenant Improvements, or to furnish plans, as and within the time
periods specified in Exhibit B hereto, or (c) any delay attributable to changes
in or additions to Landlord's Work or Tenant Improvements requested by Landlord
(including changes under Section 3(m) below) or on account of interference by
Landlord or its contractors, employees or agents, or (d) any delay in Landlord
or Landlord's contractor giving approvals, consents, prices or quotes, or taking
other action with respect to Landlord's Work or Tenant's Improvements, all as
required or contemplated under Exhibit B; provided that the foregoing clauses
(a) through (d) shall apply only to the extent that such delay, notwithstanding
Tenant's reasonable best efforts to mitigate the delay, actually delays the date
of Premises Delivery. Tenant shall notify Landlord as soon as reasonably
possible when Tenant becomes aware of an event constituting Landlord Delay which
notice shall include a description of the matter constituting Landlord Delay and
Tenant's good faith estimate of the potential amount of Landlord Delay.
Landlord shall promptly correct or cause to be corrected all defects in
Landlord's Work and Tenant Improvement work performed by the Tenant Improvement
Contractor, and all failures of such work to conform to the plans and
specifications for such work which have been agreed upon by Landlord and Tenant,
which defects or non-conformities are discovered before or
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<PAGE> 9
within one year after the date upon which Tenant first occupies each phase of
the Premises. Landlord shall bear all costs of correcting Landlord's Work and,
to the extent caused by the act or omission of Landlord, the Tenant
Improvements. Landlord shall cooperate with Tenant, at no additional cost to
Landlord, in establishing warranties within the construction contracts for
Landlord's Work and Tenant Improvements, including such reasonable extended
warranties for items such as roof and HVAC as Tenant may reasonably request.
Landlord and Tenant shall each give the other prompt written notice after
discovering the existence of any such defects or non-conformities in Landlord's
Work and Tenant Improvements.
(i) Projected Delivery Dates; Delay Penalties. Landlord presently
projects issuance of building permits for shell and core renovation to be
September 15, 1998 ("Shell Permit Issuance"). Landlord shall include Tenant's
Representative in all construction and construction scheduling meetings.
The First Phase Floors Projected Delivery Date is sometime in the month
of April, 1999 (with 60 days prior notice as provided in subsection (e) above).
The Second Phase Floors Projected Delivery Date is sometime in the month of
June, 1999 (with 75 days prior written notice as provided in subsection (e)
above). Upon written notice to Tenant on or before December 31, 1998, Landlord
may elect to defer the Second Phase Floors Projected Delay Date to sometime in
the month of July (with 75 days prior written notice as provided in subsection
(e) above) (the "Deferred Option"). The Deferred Phase Floors Projected Delay
Date (if any) shall be within 60 days of delivery of the Second Phase Floors
(with 75 days prior written notice as provided in subsection (C) above).
If Landlord has not achieved Premises Delivery as to the lobby on Floor
1, all of Floors 6, 8, 9 and 10, and that portion of the 3,590 square feet of
space on the basement floor not needed for construction and construction access
purposes (the "Minimum Initial Delivery") on or before May 31, 1999, or if
Landlord has not achieved Premises Delivery as to the remaining applicable
portion of Floor 1 and Floors 2, 4 and 7 (the "Minimum Subsequent Delivery") on
or before July 31, 1999 (August 31, 1999 if Landlord has exercised the Deferral
Option as provided above), or if Landlord has not achieved Premises Delivery as
to all of the remaining Premises by October 31, 1999 (each an "Outside Delivery
Date"), then
(i) Landlord shall use its reasonable best efforts to provide or
secure for Tenant alternative space or expansion space if and to the extent
required by Tenant's inability to obtain holdover rights from its existing
landlords, such space to be within the downtown Seattle area and reasonably
acceptable to Tenant, and Landlord shall pay to the landlord of such alternative
or expansion space (whether such space is provided or secured by Landlord or
through Tenant's own efforts) the differential in base rent and additional rent
required over the amount of base rent and additional rent that Tenant would have
otherwise paid in the Premises had such delay not occurred;
(ii) Landlord shall pay, and shall indemnify, defend and hold
Tenant harmless from and against, any holdover rent premiums or other rent
differential (excluding nominal base rent and any consequential damages payable
to Tenant's current landlords) accruing from and after the date Landlord is
obligated to deliver the completed Premises to Tenant, subject to the extensions
described above; and
(iii) Landlord shall pay all third party costs of a second move,
if required by Tenant, which costs shall include without limitation cabling and
utility installation costs (at a cost not to exceed $3.00 per rentable square
foot for cabling costs) in any alternative or expansion space into which Tenant
moves pending completion of the Premises.
Tenant shall use reasonable efforts to attempt to mitigate
these damages if delays occur for Premises Delivery.
Notwithstanding the foregoing, the Outside Delivery
Deadlines set forth above shall be subject to extension for (i) Tenant Delay,
(ii) scheduled build out delivery, if the good faith estimated schedule to
construct the Tenant Improvements based upon the Final Plans is more than an
average of 10 weeks for each floor in each phase (based upon the staffing
assumptions in the current Project Schedule) (15 weeks as to Floor 2), and (iii)
a delay of up to 4 months caused by Force Majeure, In addition, at any time
prior to February 28, 1999, Landlord may elect upon written notice to Tenant to
extend the Outside Delivery Date for the Minimum Initial Delivery from May 31,
1999 to June 30, 1999, but only if (i) Landlord experiences delays in obtaining
permits and approvals for Landlord's Work and the Tenant Improvements beyond the
number of days set forth in the Project Schedule to obtain such permits and
approvals, and (ii) Landlord reimburses Tenant for 50% of the rent required to
be paid by Tenant to its existing landlord for a one month extension of its
current lease
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in the TRA Building (to June 30, 1999). The Project Schedule shall be the
schedule initialed by Landlord and Tenant simultaneously with the execution of
this Lease.
Notwithstanding the provisions of subsection (e) above, if
Landlord has achieved Premises Delivery as to the Minimum Initial Delivery (but
not the entire First Phase Floors) on or before May 31, 1999 (June 30, 1999 if
extended as provided above), Tenant must take delivery of the Minimum Initial
Delivery on May 31, 1999 (June 30, 1999 if extended), notwithstanding that the
entire First Phase Floors have not been completed. Similarly, if Landlord has
achieved Premises Delivery as to the Minimum Subsequent Delivery on or before
July 31, 1999 (August 31, 1999 if Landlord has exercised the Deferral Option),
Tenant must take delivery of the Minimum Subsequent Delivery on July 31, 1999
(August 31, 1999 if Landlord has exercised the Deferral Option), notwithstanding
that the entire Second Phase Floors have not been completed. If Tenant has been
required to take delivery of the Minimum Subsequent Delivery as provided herein,
Tenant shall not be required to accept delivery of any portion of the remaining
Premises except upon Premises Delivery as to the entire remaining Premises.
(j) Confirmation of Commencement Date: Within ninety (90) days
after Premises Delivery as to the First Phase Floors (or the Minimum Initial
Delivery, if applicable) Landlord and Tenant shall confirm the Commencement Date
in writing.
(k) Expiration Date: This Lease shall expire on the date
specified in Section l(g).
(1) Force Majeure: For purposes of this Lease, Force Majeure
shall mean and include all matters beyond the reasonable control of Landlord
(financial inability excepted), including weather, strikes, lack of labor or
materials, war, insurrection, riots, and other natural disasters, and similar
matters. However, for purposes of calculating the Outside Delivery Dates, Force
Majeure shall not include any delays in obtaining permits and approvals for
Landlord's Work and the Tenant Improvements.
(m) Historic Tax Credit Matters. Tenant acknowledges that
Landlord intends to seek qualification for historic tax credits for all or
portions of Landlord's Work and the Tenant Improvements, and Tenant agrees to
cooperate with the reasonable requests of Landlord with respect thereto.
However, if Landlord requires changes in Tenant's Plans in connection with
seeking qualification for historic tax credits based upon the review of such
plans by the State Office of Archeology and Historic Preservation or the
National Parks Service, (i) Landlord shall reimburse Tenant for the reasonable
costs incurred by Tenant to make such changes (including additional construction
costs, if any, to incorporate such changes into Tenant Improvements), and (ii)
any delays in making such changes shall constitute Landlord Delay, and shall not
be Tenant Delay or constitute Force Majeure hereunder.
4. TERMINATION; CONDITIONS PRECEDENT:
(a) Landlord anticipates that commencement of construction of
Landlord's Work and Tenant Improvements shall occur on or before the date that
is ten (10) weeks after Tenant has delivered to Landlord four (4) sets of Final
Plans for the First Phase Floors, complete and ready for building permit
submission, pursuant to Exhibit B. If, notwithstanding Landlord's reasonable
best efforts (including reasonable efforts to obtain permits, secure financing
and qualify for historic tax credits), Landlord has not commenced construction
of Landlord's Work and the Tenant Improvements by January 31, 1999 (provided,
however, that such date shall be extended for delays due to Tenant Delay), then,
in such event, at its option, either Landlord or Tenant may, by notice in
writing to the other within thirty (30) days thereafter, terminate this Lease
without liability to the other, except as hereinafter provided. Termination
under this Section 4(a) shall be the sole remedy at law or equity of Landlord
and Tenant.
(b) For the purposes of this Lease, "commencement of
construction," "commenced construction," construction has commenced,"
"commencement of construction has occurred" and "commencing construction" shall
mean Landlord has commenced work pursuant to a building permit for work defined
in the construction documents for the renovation of the shell and core of the
Building.
5. RENT AND ADDITIONAL RENT: Tenant shall pay Landlord without notice
the Rent stated in Section 1(h) hereof and Additional Rent as provided in
Section 9 and Section 10 and any other payments due under this Lease without
deduction or offset (except as otherwise set forth in this Lease) in lawful
money of the United States in advance on or before the first day of each month
at
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Landlord's Payment Address set forth in Section 1(n) hereof, or to such other
party or at such other place as Landlord may hereafter from time to time
designate in writing. Rent and Additional Rent for any partial month at the
beginning or end of the Lease term shall be prorated in proportion to the number
of days in such month. All amounts which Tenant assumes or agrees to pay to
Landlord pursuant to this Lease other than Rent shall be deemed Additional Rent
hereunder and, in the event of nonpayment thereof, Landlord shall have all
remedies provided for in the case of nonpayment of Rent.
6. SECURITY DEPOSIT/CREDIT DEVICE: The Security Deposit shall be
delivered to Landlord within twenty (20) days following the execution of this
Lease by Tenant and shall be held by Landlord without liability for interest
(except as required by law) and as security for the performance of Tenant's
obligations under this Lease. The Security Deposit shall not be considered an
advance payment of Rent or a measure of Tenant's liability for damages. Landlord
may, from time to time, without prejudice to any other remedy, use all or a
portion of the Security Deposit to make good any arrearage of Rent, to repair
damages to the Premises, to clean the Premises upon termination of this Lease or
otherwise to satisfy any other covenant or obligation of Tenant hereunder.
Following any such application of the Security Deposit, Tenant shall pay to
Landlord on demand the amount so applied in order to restore the Security
Deposit to its original amount. Commencing with the Second Lease Year, and on
the first day of each subsequent Lease Year, and provided that Tenant is not
then in default hereunder, the Security Deposit shall be reduced by $2.50 per
rentable square foot of the Premises until the deposit is reduced to $10.00 per
rentable square foot of the Premises. Any remaining Security Deposit if in cash
may at Tenant's election be applied towards Rent during the last six months of
the term (which if extended as provided in Exhibit C, shall be the last six
months of such extended term). If Tenant is not in default at the termination of
this Lease, after Tenant surrenders the Premises to Landlord in accordance with
this Lease and all amounts due Landlord from Tenant are finally determined and
paid by Tenant or through application of the Security Deposit, the balance of
the Security Deposit remaining after any such application shall be returned to
Tenant. Any assignment of this Lease by Landlord, whether voluntary or through
involuntary assignment or transfer such as bankruptcy or foreclosure, shall
automatically and without further action by either party cause an assignment of
the Security Deposit (whether cash, marketable securities, or a letter of
credit) to the assignee (and the parties shall execute such documents as
necessary to reflect such assignment), and upon the assignee's assumption of
Landlord's obligations under this Lease (including Landlord's obligations with
respect to the Security Deposit), Landlord thereafter shall have no further
liability for the return of such Security Deposit and in such circumstances
Tenant agrees to look solely to such transferee or assignee for the return of
the Security Deposit. Landlord and its successors and assigns shall not be bound
by any actual or attempted assignment or encumbrance of the Security Deposit by
Tenant, provided, however, if Tenant's interest in this Lease has been assigned,
Landlord shall, provided that Landlord has been furnished with a fully executed
copy of the agreement assigning such Security Deposit, return the Security
Deposit to such assignee in accordance with the terms and conditions hereof. If
Landlord returns the Security Deposit to Tenant's assignee as aforesaid,
Landlord will have no further obligation to any party with respect thereto.
Landlord shall not be required to keep the Security Deposit separate from its
other accounts.
At the option of Tenant, Tenant may elect to provide all or any portion
of the Security Deposit in the form of a letter of credit (the "LOC"). The LOC
shall be an irrevocable and unconditional letter of credit, issued by a
financial institution with offices in Seattle, Washington, satisfactory to
Landlord and with a term of at least one year, and drawable by Landlord upon
presentation. Landlord may draw upon the LOC under the same terms and conditions
as Landlord may apply a cash Security Deposit. In addition, Landlord may draw
upon the LOC if Tenant fails to deliver to Landlord no later than thirty (30)
days prior to the expiration date of the existing LOC a renewal or extension of
the LOC for a term of not less than one year. Notwithstanding the foregoing,
and unless a renewal or extension of the LOC has not been delivered to Landlord
within 10 days prior to the expiration date of the existing LOC, Landlord will
give Tenant 3 days prior written notice before drawing upon the LOC.
If Tenant elects to post a LOC, Landlord agrees to reimburse Tenant for
the actual costs incurred by Tenant to obtain the LOC, not to exceed one-half of
one percent of the amount of the LOC. Such reimbursement shall be a one time
expense only, and Tenant shall be responsible for all other costs of obtaining
the LOC, including future renewal fees, if any.
At the option of Tenant, Tenant may elect to provide all or any portion
of the Security Deposit by pledging for the benefit of Landlord marketable
securities with a value equal to the amount then required as the Security
Deposit. The pledge shall be of short to intermediate term fixed income
marketable securities, including money market funds, rated A- or better by
Standard and Poors, or A3 by Moody's Investor Services, from Tenant's corporate
cash investment portfolio. The pledged marketable securities shall be held by a
bank or financial institution mutually approved by Landlord and Tenant as
custodian for Landlord, either in a separate custodian account or as specially
designated
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securities within a larger custodian account. The pledge must be in a form
satisfactory to Landlord and provide Landlord with a perfected first lien
security interest in the pledged securities. The pledge and custodian documents
must also include a direct access authorization which would permit Landlord,
without approval of Tenant, to authorize the sale of the securities and the
withdrawal of the proceeds thereof (not to exceed the amount of the then
required Security Deposit) for application by Landlord on the same terms and
conditions as Landlord could draw on a LOC.
Tenant shall be entitled to retain all interest and other income capital
gains earned or generated by the pledged securities.
At all times, the value of the pledged securities must equal or exceed
the amount of the then required Security Deposit. If the value of the pledged
securities drops below the amount of the then required Security Deposit, Tenant
shall immediately add additional marketable securities to the pledge to increase
the value of the pledged securities to equal or exceed the amount of the then
required Security Deposit, and the failure of Tenant to do so within 3 business
days of a written request from Landlord shall constitute a default hereunder.
Tenant shall have the right to substitute additional marketable
securities for the securities subject to the pledge, provided Landlord obtains a
perfected first lien security interest in the substituted securities prior to
the release of the pledged securities.
The amount of the security deposit/credit device shall be reduced by 50%
of the amount then posted (and the annual reduction amount shall be decreased by
50%) at such time as (i) Tenant has reported positive and increasing cash flow
for four consecutive quarters of no less than $1,250,000 per quarter (for the
purposes of this particular measure, cash flow shall be defined as aggregate
company earnings before income taxes, depreciation and amortization), and (ii)
Tenant has obtained an investment credit rating from Moody's Investor Services
of at least Baa3 or from Standard and Poor's of BBB-. The amount of the security
deposit/credit device shall be reduced to $0 immediately following the point at
which (i) Tenant has reported positive and increasing cash flow for eight
consecutive quarters of no less than $1,250,000 per quarter (again, cash flow
shall be defined as aggregate company earnings before income taxes, depreciation
and amortization), and (ii) Tenant has obtained an upper medium grade credit
rating from Moody's Investor Services of at least A3, or from Standard and
Poor's of A-.
7. PARKING: Use of parking in the garage and adjacent surface parking
lots by Tenant shall be subject to such reasonable non-discriminatory rules and
regulations as Landlord may publish from time to time.
8. USES: The Premises are to be used only for general office purposes, a
data center, and other uses incident thereto ("Permitted Uses"), and for no
other business or purpose without the prior written consent of Landlord, which
consent may be withheld if Landlord, in its reasonable discretion, determines
that any proposed use is inconsistent with or detrimental to the maintenance and
operation of the Building as a first-class office building or is inconsistent
with any restriction on use of the Premises, the Building, or the Land contained
in any lease, mortgage, or other instrument or agreement by which the Landlord
is bound or to which any of such property is subject, all as of the date of full
execution of this Lease ("Restriction Documents"). Governmental laws and
regulations general to the area that are not specific to the Building shall not
be deemed Restriction Documents. Landlord shall list, in Exhibit H, all
Restriction Documents of which it is aware. Landlord warrants to its knowledge,
without independent duty of inquiry or investigation, that there currently are
no Restriction Documents other than those listed on Exhibit H. The provisions of
any Restriction Documents shall not affect, limit or reduce the obligations of
Landlord under this Lease. Tenant shall not commit any act that will increase
the then existing cost of insurance on the Building without Landlord's consent.
Tenant shall promptly pay upon demand the amount of any increase in insurance
costs caused by any act or acts of Tenant other than the permitted uses. Tenant
shall not commit or allow to be committed any waste upon the Premises, or any
public or private nuisance or other act which disturbs the quiet enjoyment of
any other tenant in the Building or which is unlawful. Tenant shall not, without
the written consent of Landlord, use any apparatus, machinery or device in or
about the Premises which will cause any substantial noise, vibration or fumes.
Landlord hereby consents to the installation, periodic testing, and use in an
emergency of Tenant's backup generators or in locations reasonably approved by
Landlord. Tenant shall not permit smoking in the Premises or in any other
location in which smoking is prohibited under the REA; Landlord has designated
all internal portions of the Building as a smoke-free zone. If any of Tenant's
office machines or equipment should materially disturb the quiet enjoyment of
any other tenant in the Building, then Tenant shall provide adequate insulation,
or take other action as may be necessary to eliminate the disturbance. Subject
to Landlord's responsibility with respect to initial delivery of the Premises,
and except as may
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be inconsistent with Landlord's maintenance obligations pursuant to Section 11,
Tenant shall comply with all laws relating to its use or occupancy of the
Premises, including without limitation any laws relating to Tenant's
modification of the Premises, and shall observe such reasonable
non-discriminatory rules and regulations (not inconsistent with the terms of
this Lease) as may be adopted and made available to Tenant by Landlord from time
to time for the safety, care and cleanliness of the Premises or the Building,
and for the preservation of good order therein.
9. SERVICES AND UTILITIES:
(a) Standard Services: Landlord shall maintain or cause to be
maintained in good order and repair and first-class condition the Premises and
the core area of the Building, the structural portions of the Building,
including elevators, plumbing, air conditioning, heating and electrical system,
and the public and common areas of the Building, including lobbies, elevators,
stairs, corridors and restrooms, except for fire and other casualty, including
acts of God, and subject to the provisions of Section 13 pertaining to the
repair or rebuilding of damaged or destroyed property. Landlord shall also
maintain and keep in good order and repair the following in the Building: roof,
all exterior doors, including any exterior plate glass within the Building,
exterior surfaces of the Building (including but not limited to glass, stone and
other material(s)), ventilating systems, elevators, janitor closets, escalators,
telephone and electrical closets, public portions of the Building, balconies,
landscaping, walkways, and, other than Tenant improvements, other interior
portions of the Building above and below grade. Landlord covenants and agrees
that alterations, repairs or additions shall be done with the least amount of
interference to Tenant and with reasonable prior notice to Tenant, and, to the
extent possible, such work shall be done after Normal Business Hours. Nothing
contained herein shall be deemed to excuse or relieve Landlord from any
liability for the negligence or willful misconduct of Landlord, its officers,
agents, servants, employees, contractors, licensees or invitees.
(b) Normal Business Hours: From 7:00 a.m. to 6:00 p.m. on
weekdays and from 8:00 a.m. to 1:00 p.m. on Saturdays, excluding legal holidays
("Normal Business Hours"), Landlord shall furnish to the Premises heat and air
conditioning sufficient to maintain a comfortable interior temperature range
between 69 and 72 degrees Fahrenheit. Landlord shall provide 24-hour per day
HVAC service in the telephone and computer rooms pursuant to final construction
documents; the capacity for which service shall be paid for by Tenant from the
Tenant Allowance described in Exhibit B. If requested by Tenant, Landlord shall
furnish heat and air conditioning at times, other than Normal Business Hours and
the actual cost of such services shall be paid by Tenant as Additional Rent. If
such additional services are reasonably estimated to advance the date on which
the HVAC system requires replacement (i.e. excluding advancement of routine
repairs and component replacements covered by the HVAC maintenance contract or
otherwise passed through to Tenant as Operating Costs), then Landlord shall be
entitled to charge Tenant an amount equal to the present value of Landlord's
Early Replacement Cost, (an example calculation is attached as Exhibit J).
During other than Normal Business Hours, Landlord may restrict access to the
Building in accordance with the Building's security system, provided that Tenant
shall have at all times during the term of this Lease (24 hours of all days)
reasonable access to the Premises. The Normal Business Hours may be modified
from time to time upon the mutual agreement of Landlord and Tenant.
(c) interruption of Services: Landlord shall not be liable for
any loss, injury or damage to person or property caused by or resulting from any
variation, interruption, or failure of any services or facilities provided by
Landlord pursuant to this Lease due to any cause whatsoever, unless such
variation, interruption or failure was due to the negligence or willful
misconduct of Landlord, its officers, agents, servants, employees, contractors,
licensees or invitees. No temporary interruption or failure of such services or
facilities incident to the making of repairs, alterations, or improvements, or
due to accident, strike or conditions or events beyond Landlord's reasonable
control shall be deemed an eviction of Tenant or relieve Tenant from any of
Tenant's obligations hereunder; provided, however, if such interruption or
failure shall continue for five (5) business days, Tenant's Rent hereunder shall
thereafter abate to the extent the Premises are thereby rendered untenantable
for Tenant's normal business operations until such services are restored. In the
case of an interruption or failure due to Landlord's acts or omissions, or where
the restoration thereof is within Landlord's control, and the interruption
continues for more than ten (10) business days, then it shall be treated as an
event of "Damage or Destruction" pursuant to Section 13. Landlord shall use its
best efforts in good faith to respond quickly to any interruption of services
and to minimize any disruption of Tenant's use of the Premises arising from any
interruption or failure of such services or facilities.
(d) Additional Services: The Building mechanical system is
designed to accommodate heating loads generated by lights and equipment using up
to 4.0 watts per square foot (1.2 watts per foot for lights and 2.8 watts per
foot for equipment). Before installing lights and equipment in the Premises
which in the aggregate exceed such amount, Tenant shall obtain the written
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permission of Landlord. Landlord may refuse to grant such permission unless
Tenant shall agree to pay the costs of Landlord for installation of
supplementary air conditioning capacity or electrical systems as necessitated by
such equipment or lights.
(e) Security: Landlord shall provide a security guard in the
Building who will be available to escort Tenant's employees to their vehicle
parked after hours on the surface parking lots adjacent to the Building. In
addition, a card-key security system with an initial one thousand (1,000) cards
shall be installed with card readers at the entrance to the Building and the
elevators by Landlord and paid for as part of Landlord's Work. Card-key readers
beyond the main entrance and the elevators may be installed at Tenant's cost.
All such security services provided by Landlord (except the initial Landlord's
Work) shall be included in Operating Costs, as defined below.
(f) Special Utility Providers. To the extent that the utility
provider for a specified utility (e.g., electricity and fiberoptics) is subject
to competitive selection by Tenant, Landlord or by the owner of the Building,
then so long as (i) Tenant occupies at least seventy percent (70%) of the
Building, (ii) the utility provider and system desired by Tenant will not create
any materially increased risk of damage to Building systems, (iii) Landlord is
entitled at no cost to Landlord to terminate the alternative provider and return
to the original provider at the termination of this Lease, (iv) the physical
installation of equipment by such alternative provider and the technical
specifications related thereto is subject to Landlord's reasonable review and
approval, (v) such alternative provider executes a restoration agreement with
Landlord, and (vi) all of the alternative provider's equipment is installed in
the Premises demised by Tenant, then Tenant shall be entitled to direct the
selection of the utility provider to supply such utility service.
(g) Emergency-Generator. So long as Landlord elects to maintain
the existing emergency generator in the outbuildings adjacent to the Building
(which Landlord may discontinue at any time), Tenant shall have the right to use
such emergency generator in common with the other tenants and uses of the
Building, and the costs to operate and maintain such emergency generator shall
be an Operating Cost hereunder. If Landlord discontinues use of the existing
emergency generator, Tenant may at Tenant's cost install an emergency generator
in the Premises at a location reasonably satisfactory to Landlord.
10. COSTS OF OPERATIONS AND REAL ESTATE TAXES:
(a) Additional Rent: Tenant shall pay as Additional Rent its Pro
Rata Share of Taxes and Operating Costs. Taxes and Operating Costs shall be
determined and shall be payable separately in accordance with the provisions of
this Section 10.
(b) Definitions:
(i) For the purposes of this section, "Taxes" shall mean
taxes and assessments (including special district levies) on real and personal
property payable during any calendar year, based on the actual assessment
period, with respect to the Land, the Building and all property of Landlord,
real or personal, used directly in the operation of the Building and located in
or on the Building, together with any taxes levied or assessed in addition to or
in lieu of any such taxes or any tax upon leasing of the Building or the rents
collected (excluding any net income, estate or franchise tax), but specifically
including statutory leasehold excise tax if required ("Taxes").
(ii) For purposes of this Section, "Operating Costs" or
"Costs" shall mean all reasonable and customary expenses of Landlord for
maintaining, operating and repairing the Building and the personal property used
in connection therewith, including without limitation all costs or expenses
imposed on Landlord pursuant to the REA, insurance premiums, utilities, market
rate management fees for similarly tenanted buildings (not to exceed four
percent (4%) of the Rent and Additional Rent of the entire Building, including
without limitation an imputed fair market rental value of portions of the
Building occupied from time to time by PMC and/or its affiliates) and other
expenses which in accordance with generally accepted accounting and management
practices would be considered an expense of maintaining, operating or repairing
the Building ("Operating Costs" or "Costs"); excluding, however: (I) costs of
any special services rendered to individual tenants for which a separate charge
is collected; (II) leasing commissions and other leasing expenses; (III) costs
of improvements, replacements and repairs required to be capitalized in
accordance with generally accepted accounting principles, except Operating Costs
shall include amortization of capital improvements, replacements and repairs (A)
made subsequent to initial development of the Building which are designed with a
reasonable probability of improving the operating efficiency of the Building, or
providing savings in the cost of operating the Building at least equal to the
amortization charge or, (B) which are reasonably responsive to requirements
imposed with respect to the Building under any amendment to any applicable
building, health, safety, fire, nondiscrimination, or similar law
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or regulation ("law"), or any new law, or any new interpretation of an existing
law ("new interpretation"), which amendment, law or new interpretation is
adopted or arose after the Commencement Date of this Lease (for purposes of this
Lease, a new interpretation shall mean any interpretation, enforcement or
application of a law enacted prior to the Commencement Date that imposes
requirements with respect to the Building that Landlord in the exercise of sound
business judgment and good faith at the time of Landlord's execution of this
Lease would not have deemed applicable to the Building); (IV) executives'
salaries above the grade of Building manager; (V) amounts received by Landlord
through proceeds of insurance to the extent the proceeds are compensation for
expenses which were previously included in Operating Costs hereunder (with
receipts relating to any prior year being the subject of a special
reconciliation); (VI) cost of repair or replacements incurred by reason of fire
or other casualty or by the exercise of the right of eminent domain; (VII)
consulting fees relating to marketing, advertising or promotional efforts, and
other marketing fees, advertising and promotional expenditures; (VIII) legal
fees in connection with the negotiation and preparation of leases of space or
legal fees in connection with the sale of all or any portion of the Building in
which the Premises are located, or an interest therein, or the financing or
refinancing of Landlord's interest in all or any portion of the Building in
which the Premises are located, or in connection with disputes with tenants, and
legal and auditing fees, other than legal and auditing fees reasonably incurred
in connection with the maintenance and operation of all or any portion of such
Building or in connection with the preparation of the statements required
pursuant to additional rent or lease escalation provisions contained in leases
of space in such Building; (IX) depreciation or loan payments; (X) costs
resulting from the correction of any latent construction defects in all or any
portion of the Premises or Building; (XI) penalties due to any violation of law
by Landlord or other tenants; (XII) costs of preparing tenant space for tenant
occupancy; (XIII) except for REA-related expenses, costs allocable to properties
in which Landlord has an interest other than the Building and Land; (XIV)
damages incurred by Landlord for any default, breach, claim, Judgment or
settlement; (XV) structural improvements, replacements or repairs (including
replacements or structural repairs to the roof and foundations); rental on
ground leases or other underlying leases and capital improvements, replacements
or repairs to parking facilities; (XVI) any liabilities, costs or expenses
associated with or incurred in connection with the removal, enclosure,
encapsulation or other handling of asbestos or other hazardous or toxic
materials or substances existing in the Project as of the Commencement Date
(except where required to comply with laws, ordinances, regulations, or codes as
adopted, amended, enacted or reinterpreted subsequent to the Commencement Date)
or brought onto the Project after the Commencement Date by Landlord, its
employees, agents or contractors; (XVII) payments to a person, firm, corporation
or other entity related to Landlord that is in excess of the amount which would
have been paid in the absence of such relationship; (XVIII) cost of acquiring
sculptures, paintings and other art objects; (XIX) charitable or political
contributions. Further, if there is a separate charge to Tenant, other tenants
or the public for parking, then real property taxes associated with the parking
operations shall be excluded from Operating Costs except to the extent such
costs exceed the parking charges collected by Landlord (insurance and
maintenance costs for parking operations shall be paid as provided in subsection
(1) below); and if Tenant pays or provides directly for any service or repair
category within the Premises (such as relamping of fixtures or provision of
janitorial services), then those services or category of repairs (to the extent
provided to other premises in the Building) shall be excluded in calculating
Operating Costs allocable to Tenant. In no event shall Landlord collect more
than 100% of Operating Costs and Taxes from Tenant and other tenants of the
Property.
(iii) "Year" shall mean the calendar year.
(c) Estimated Costs: At least sixty (60) days prior to the
beginning of each Year, Landlord shall furnish Tenant a written statement of
estimated Operating Costs and Taxes for such year and a calculation of Tenant's
Pro Rata Share of the Operating Costs and Taxes. Tenant shall pay one-twelfth
(1/12) of that amount as Additional Rent for each month during the Year. If at
any time during the Year Landlord reasonably believes that the actual Operating
Costs or Taxes will vary from such estimated Operating Costs or Taxes by more
than five percent (5%), Landlord may by written notice to Tenant revise the
estimate for such year, and Additional Rent for the balance of such Year shall
be paid based upon such revised estimates. Landlord and Tenant may also agree
that Tenant will pay certain Operating Costs directly to the provider thereof.
Projected Taxes and Operating Costs for calendar year 1999 are as set forth in
Exhibit G hereto; provided that nothing therein shall be deemed a representation
or warranty as to the items or amounts described therein.
(d) Actual Costs: Within ninety (90) days after the end of each
Year, Landlord shall deliver to Tenant a written statement setting forth
Tenant's Pro Rata Share of the actual Operating Costs and Taxes during the
preceding Year. Landlord shall be entitled to correct such statement to increase
the amounts charged to Tenant only if such correction is made within three (3)
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years after the initial delivery of the statement to Tenant (or such longer
period in the case of increased actual Taxes billed to Landlord by applicable
taxing authorities). If the actual Operating Costs or actual Taxes, or both,
exceed the estimates for each paid by Tenant during the Year, Tenant shall pay
the amount of such excess to Landlord as Additional Rent within thirty (30) days
after receipt of such statement. If the actual Operating Costs or actual Taxes,
or both, are less than the amount paid by Tenant to Landlord, then the amount of
such overpayment by Tenant shall be, at Landlord's option, credited against any
amounts owed by Tenant under this Lease, refunded by check to Tenant (which
shall occur if the reconciliation is after termination of this Lease), or
credited against the next Rent payable by Tenant hereunder. Notwithstanding this
Section 10, the Rent payable by Tenant shall in no event be less than the Rent
specified in Section 1(h) hereof.
(e) Records and Adjustments: Each written statement of actual
costs given by Landlord to Tenant pursuant to Section 10(d) shall be conclusive
and binding upon Tenant unless within six (6) months after the receipt of such
statement Tenant shall notify Landlord in writing that it questions charges
under the statement, specifying the particular respects in which the statement
is questioned. If such disputes shall not have been settled by agreement,
Tenant, within thirty (30) days of receipt of such statement, shall pay
Additional Rent in accordance with the statement, without prejudice to Tenant's
favor. If the dispute shall be determined in Tenant's favor, Landlord shall
forthwith pay to Tenant the amount of Tenant's overpayment of rents resulting
from compliance with the statement. Tenant may, within six (6) months after the
receipt of such statements, upon thirty (30) days prior notice to Landlord,
cause a complete audit to be made of Landlord's records regarding Operating
Costs for the prior Year. If the audit discloses that Operating Costs have been
over-reported to the extent of five percent (5%) or more on an annual basis for
such Year, then (i) Landlord shall pay the reasonable costs of the audit and
actual Operating Costs for that Year shall be adjusted accordingly and (ii)
Tenant shall be entitled to audit the three (3) years prior to the year for
which the adjustment is made to determine whether a similar adjustment is
applicable to such prior years (in which case such prior years shall be
similarly adjusted).
(f) Personal Property Taxes: Tenant shall pay all personal
property taxes with respect to property of Tenant located on the Premises or in
the Building. "Property of Tenant" shall include all improvements which are paid
for by Tenant (other than from the Allowance) and "personal property taxes"
shall include all property taxes assessed against the property of Tenant,
whether assessed as real or personal property.
(g) Contest of Taxes; Substantiation of Taxes: Landlord shall, if
Tenant so requests, take all reasonable action necessary to preserve the right
to contest any Taxes, including paying them under protest, and shall consult
with Tenant, and act in good faith in cooperation with Tenant to contest or seek
recovery of Taxes if and to the extent such action is reasonable. Any payment of
Taxes by Tenant either directly or by way of reimbursement to Landlord pursuant
to any provision of this Lease shall be, whenever such Taxes have not been
directly assessed against Tenant, subject to appropriate substantiation by
Landlord upon the request of Tenant. All costs incurred by Landlord in any such
contest, including attorneys' fees and court costs, shall be considered Taxes
for purposes of this Lease.
(h) Cooperation. Landlord and Tenant acknowledge that, but for
relatively limited spaces within the Building occupied by PMC, the Building is
wholly occupied by Tenant. Landlord acknowledges Tenant's concern that Landlord
will have no economic motive to limit the amount of short term operating costs,
including but not limited to matters such as insurance, security services,
janitorial contracts and roof and HVAC maintenance contracts. Landlord agrees
that, if Tenant so elects and appoints a Tenant Facility Coordinator, Landlord
shall permit the Tenant Facility Coordinator to review (but not disapprove) the
annual budget and to meet with the Tenant Facility Coordinator on a quarterly
basis regarding Operating Costs and the entry into maintenance and service
contracts. Except in an emergency, and with respect to Operating Costs
reasonably controllable by Landlord (i.e., by way of example only and without
limitation, not including Taxes or insurance expenses), Landlord shall not enter
into any unbudgeted contract for more than Ten Thousand Dollars ($10,000)
without prior consultation with (without, however, the necessity of obtaining
the approval of) the Tenant Facility Coordinator. Landlord shall manage the
Building consistent with the efficiencies and economies that are practiced by
experienced and sophisticated property owners in multi-tenant high rise office
buildings in the downtown Seattle area (which, so long as the Building is
managed by Wright Runstad & Company, shall be efficiencies and economies
practiced by Wright Runstad & Company in multi-tenant high-rise office buildings
owned or managed by Wright Runstad & Company in the downtown Seattle area).
Disputes regarding the efficiencies and economies of the management of the
Building shall be subject to arbitration provisions set forth in Exhibit I
attached hereto.
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(i) Gross Up. In the event the Building for any Year was not full
occupied, then the estimated Operating Costs and the actual Operating Costs for
such Year shall be proportionally adjusted by Landlord to reflect those costs
which would have occurred had the Building been fully occupied during such Year,
employing sound accounting and property management principles.
(j) Phase In. Until such time as Premises Delivery has occurred
as to the entire Premises, Tenant's Pro Rata Share shall be adjusted based upon
the net rentable square feet of the Premises then delivered to Tenant (excluding
Storage Space) in relation to the net rentable square feet of the Building
(excluding Storage Space).
(k) Special Rules for Leasehold Excise Taxes. If the leasehold
excise tax under Chapter 82.29A RCW is imposed on the rent payable by Landlord
to PMC under the Ground Lease and if the Ground Lease covers less than the
entire Building, Tenant's Pro Rata Share of such leasehold excise tax shall be
the net rentable area of the Premises (exclusive of Storage Space) in relation
to the net rentable area of the portion of the Building covered by the Ground
Lease (exclusive of Storage Space).
(l) Parking Matters. In addition to the payment of parking fees
as provided herein, Tenant shall reimburse Landlord for Tenant's pro rata share
of (i) the costs to provide insurance for such parking areas (including physical
damage, liability and similar insurance for any parking structures), and (ii)
the costs of routine maintenance and upkeep of such parking areas and structures
(including routine sweeping, cleaning and striping, but excluding capital
repairs and improvements not caused by Tenant). For such purposes, Tenant's pro
rata share shall be based upon the number of parking spaces in the parking areas
or structures designated by exclusive use by Tenant in relation to the total
number of parking spaces within such parking areas or structures.
11. CARE OF PREMISES; ALTERATIONS: Landlord shall perform all normal
maintenance and repairs reasonably determined by Landlord, or as notified by
written notice from Tenant, as necessary to maintain the Premises and the
Building as a first-class office building; provided that Landlord shall not be
required to maintain or repair any property of Tenant or any appliances (such as
refrigerators, water heaters, microwave ovens, and the like) which are part of
the Premises. Landlord shall promptly, upon written notice from Tenant and at
Landlord's sole expense repair or remedy any defect in the Building or Premises
(excluding inadequacies in building systems or similar defect to the extent
created or exacerbated by, or originating from any plans or specifications
provided by, Tenant or it's architects, space planners, contractors or agents)
existing as of the Commencement Date of the Lease and any condition that, as of
the Commencement Date, constituted a violation of applicable law as then
interpreted and enforced. Tenant shall take good care of the Premises.
Tenant shall not make any alterations, additions or improvements
which constitute a structural change to the Building or materially alters the
HVAC system, electrical service or plumbing system ("Alterations") in or to the
Premises, or make changes to wiring affecting Building-wide systems ("Changes")
without first obtaining the written consent of Landlord and, where appropriate,
in accordance with plans and specifications approved by Landlord. Landlord shall
not unreasonably withhold consent to Alterations or Changes to the HVAC system,
electrical system or plumbing system that do not otherwise materially affect
Building systems or increase Operating Costs after Tenant vacates the Premises,
are consistent with sound engineering practices, and do not adversely affect the
leasability of the Premises following termination of this Lease As a condition
to its approval, and only if so stated in writing at the time of such approval,
Landlord may require Tenant to remove any such Alterations or Changes which are
not designed in a normal or standard office configuration upon the expiration or
earlier termination of the Term and to restore the Premises to the condition
they were in prior to such Alterations or Changes, including restoring any
damage resulting from such removal, all at Tenant's expense. Tenant shall
reimburse Landlord for any reasonable out-of-pocket sums expended for
examination and approval of the architectural and mechanical plans and
specifications of the Alterations and Changes (provided that Landlord shall have
given Tenant a good faith estimate of such sums in advance) and direct costs
reasonably incurred during any inspection or supervision of the Alterations or
Changes. All damage or injury done to the Premises or Building by Tenant or by
any persons who may be in or upon the Premises or Building with the express or
implied consent of Tenant, including but not limited to the cracking or breaking
of any glass of windows and doors, shall be paid for by Tenant (except to the
extent inconsistent with the waiver of claims and subrogation rights set forth
in Section 14 below).
Tenant may make nonstructural alterations, additions or
improvements to the interior of the Premises, including wiring within the
Premises, nonstructural partitioning, and painting and redecorating, without the
necessity of obtaining Landlord's consent, provided in all such cases (other
than cabling, painting or decoration solely within the Premises) Tenant shall
give Landlord five (5)
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business days' prior written notice of such modifications. Any such alterations,
additions or improvements shall be installed by Tenant at its sole cost and in
compliance with all laws, orders and regulations of any applicable governing
body and Tenant at its expense shall furnish to Landlord drawings for such work
to enable the Building's record drawings to be updated to reflect such changes.
Notwithstanding any of the foregoing, Tenant is aware that the
Building and Land is listed on the National Register of Historic Places and is
designated a historical landmark by the City of Seattle Landmarks Preservation
Board. As a result, any modifications to the Building exterior or interior may
be subject to certain extraordinary requirements or approvals, as a result of
those designations or otherwise, and Tenant acknowledges that it shall be
Tenant's obligation to obtain those approvals if needed for any alterations or
changes. Landlord shall cooperate with Tenant in obtaining such approvals, but
Landlord shall have no liability if those approvals are not or cannot be
obtained.
12. ACCESS:
Tenant shall permit Landlord and its agents to enter into and
upon the Premises at all reasonable times, on reasonable prior notice, for the
purpose of inspecting the same or for the purpose of cleaning, repairing,
altering or improving the Premises or the Building. Upon reasonable notice, and
subject to Tenant's reasonable consent, Landlord shall have the right to enter
the Premises for the purpose of showing the Premises to prospective tenants
within the period of one hundred eighty (180) days prior to the expiration or
sooner termination of the Lease term. Tenant may install keyed, combination or
cipher locks on interior doors of the Premises. The security system may include,
but not be limited to, pass card door lock systems and camera surveillance
systems. Tenant shall furnish Landlord with a key for any interior locks
installed by Tenant. At the expiration of the Lease, Tenant at its own cost
shall remove all interior locks installed by Tenant and replace all standard
locks removed by Tenant and shall repair any damage resulting therefrom.
Landlord will adhere to reasonable security restrictions and controls of Tenant.
Such restrictions may require Landlord to sign in, wear identification badges
and be accompanied by an authorized employee or agent of Tenant (except in case
of emergency). Tenant and Landlord shall reasonably cooperate in establishing
emergency entry protocols such that Landlord may enter all portions of the
Premises in an emergency in such a way as to accommodate, to the extent
reasonably practical under the circumstances, Tenant's security concerns.
13. DAMAGE OR DESTRUCTION:
(a) Landlord Obligated to Repair: If the Building or the Premises
shall be materially damaged or destroyed by fire or other casualty to the extent
that the cost of restoration, as reasonably estimated by Landlord, will be less
than fifty percent (50%) of the replacement value of the Building (exclusive of
foundations) and Landlord has available insurance proceeds (or a like recovery
of funds) with respect thereto, which together with any deductibles is
sufficient to cover the cost of restoration, and such damage or destruction can
be repaired or replaced under then applicable laws and ordinances, Landlord
shall promptly commence and diligently proceed to repair or replace such damage
or destruction. If Landlord so repairs or replaces such damage the term of this
Lease shall continue, subject, however, to the provisions of Sections 13(c) and
(d).
(b) Landlord Not Obligated to Repair: If the Building or the
Premises shall be materially damaged or destroyed by fire or other casualty and
Section 13(a) is not applicable, Landlord shall not be obligated to, but may
repair or replace such damage. If Landlord elects to repair or replace, and
promptly commences and diligently proceeds to do so, the term of this Lease
shall continue, subject, however, to the provisions of Sections 13(c) and (d).
If Landlord elects not to repair or replace, the term of this Lease shall end
with the occurrence of the damage or destruction and rental and other payments
owing by Tenant hereunder shall be prorated as of such date.
Notwithstanding the foregoing, if Section 13(a) is not applicable
because available insurance proceeds or a like recovery of funds are not
available, Tenant may nevertheless require Landlord to restore such damage or
destruction if Tenant (without reimbursement from Landlord or reduction in Rent)
advances the additional funds necessary to undertake such restoration.
(c) Elections and Determinations: Landlord shall provide Tenant
with written notice of its determination of the extent of the damage and, if
Landlord has the option to repair or rebuild, whether or not Landlord will
repair or rebuild. Such notice shall be delivered within sixty (60) days after
the damage occurs, or as soon thereafter as Landlord determines the availability
of insurance proceeds, but in no event later than ninety (90) days after the
damage occurs. If requested by Tenant, Landlord will exercise diligent efforts
to make decisions and elect options quicker than the 60 to 90 day period
provided herein. If Landlord intends to repair or rebuild, the notice shall also
include an estimated date for completion of rebuilding. If such date is later
than two hundred seventy
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(270) days following the casualty, or if Landlord fails to deliver such notice
within the ninety (90) day period specified above, or if, subject to Force
Majeure and Tenant Delays, Landlord fails to complete (or it becomes reasonably
evident that Landlord will fail to complete) the repairs within seventy five
(75) days after the estimated completion date, then Tenant at its option may
terminate the Lease by providing Landlord with written notice within fifteen
(15) days after expiration of the applicable period (or fifteen (15) days after
it becomes reasonably evident that such deadline will not be achieved).
(d) Repair Duties: In any case described in Sections 13(a) or (b)
where the damage or destruction to the Premises is being repaired or replaced,
Tenant shall repair or replace the Tenant Improvements involved to the extent
legally permissible, and Landlord and Tenant shall share the expense thereof in
the same proportion and same manner as they shared the expenses of the
installation of the original Tenant Improvements. All rebuilding and repair
contemplated by this Section 13 shall be in conformity with this Lease, except
Tenant may elect to change the standards and details of the Tenant Improvements
as it may see fit (so long as the same are not inconsistent with the
requirements of Exhibit B), and Tenant shall bear any additional cost resulting
from such changes.
(e) Abatement of Rent: During the period between the occurrence
of any loss, damage or destruction referred to in this Section 13 and the
completion of repair or reconstruction of such loss or damage, this Lease shall
continue in full force and effect (except as provided above), but payment of
rent and other charges payable by Tenant hereunder for the space affected by
such loss, damage or destruction shall be abated during such period of repair or
reconstruction in fair and just proportion to the portion of the Premises for
which normal and usual utilization by Tenant is made impractical.
(f) Repair or Reconstruction After Loss Which is Not Material:
Landlord shall be obligated to promptly commence and shall thereafter diligently
proceed to repair any damage or destruction to the Building which is not
material or is required or elected to be repaired hereunder.
(g) Destruction During Last Year of Term: In case the Building
shall be materially destroyed by fire or other cause at any time during the last
twelve months of the term of this Lease, either Landlord or Tenant may terminate
this Lease upon written notice to the other party hereto given within sixty (60)
days of the date of such destruction.
(h) Tenant Property: Landlord will not carry insurance of any
kind on Tenant's furniture, furnishings, fixtures, equipment, or appurtenances
of Tenant under this Lease and Landlord shall not be obligated to repair any
damage thereto or replace the same.
(i) Earthquake. In the event of damage or destruction caused by
earthquake, and even if Landlord maintains earthquake insurance pursuant to the
provisions of Section 16 below, Tenant may elect to contribute Tenant's share of
the deductible applicable to such damage or destruction only to the amount of
the deductible applicable to other insured losses. If Tenant only elects to
contribute a portion of the deductible for earthquake damage or destruction, and
if Landlord does not elect to contribute the rest of such deductible, such
damage or destruction shall be treated as damage or destruction for which
sufficient insurance proceeds are not available for repair or restoration of
such damage or destruction.
14. WAIVER OF SUBROGATION AND CONSEQUENTIAL DAMAGES:
Notwithstanding any other provisions of the Lease, whether a loss or damage is
due to the negligence of either Landlord or Tenant, their agents or employees,
or any other cause, Landlord and Tenant do each hereby release and relieve the
other, their agents or employees, from responsibility for, and waive their
entire claim of recovery for (a) any loss or damage to the real or personal
property of either located anywhere in the Building or on the Land, including
the Building itself, arising out of or incident to the occurrence of any of the
perils that are covered by the insurance policies actually carried by the party
or the insurance policy required under this Lease to be carried by the party;
and (b) any loss resulting from business interruption at the Premises or loss
of rental income from the Building, arising out of or incident to the occurrence
of any of the perils which are covered by a business interruption insurance
policy or loss of rental income insurance policy held by Landlord or Tenant.
Each party shall cause its insurance carriers to consent to the foregoing waiver
of rights of subrogation against the other party.
15. INDEMNIFICATION:
(a) Tenant shall indemnify, defend and hold Landlord harmless
from and against liabilities, damages, losses, claims, and expenses, including
reasonable attorneys fees, arising from any
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act or negligence of Tenant or its officers, contractors, licensees, agents,
employees, clients or customers in or about the Building or Premises or arising
from any breach or default under this Lease by Tenant. The foregoing provisions
shall not be construed to make Tenant responsible for loss, damage, liability or
expense resulting from injuries to third parties caused by the negligence or
willful misconduct of Landlord, or its officers, contractors, licensees, agents,
employees, clients or customers or other tenants of the Building.
(b) Landlord shall indemnify, defend and hold Tenant harmless
from and against all liabilities, damages, losses, claims, and expenses,
including reasonable attorneys' fees arising from any act or negligence of
Landlord or its officers, contractors, licensees, agents, employees, clients, or
customers in or about the Building or Premises, or arising from any breach or
default under this Lease by Landlord. Landlord shall not be liable for any act
or neglect of Tenant or any other tenant or occupant of the Building or any
third parties. In no event shall Landlord be liable to Tenant for any damage to
the Premises or for any loss, damage or injury to any property therein or
thereon occasioned by bursting, rupture, leakage or overflow of any plumbing or
other pipes (including, without limitation, water, steam and/or refrigerant
lines), sprinklers, tanks, drains, drinking fountains or washstands or other
similar cause in, above, upon or about the Premises or the Building, unless due
to the negligence or willful misconduct of Landlord or its officers,
contractors, licensees, agents, employees, clients or customers.
16. INSURANCE:
(a) Liability Insurance: Tenant shall, throughout the term of
this Lease and any renewal hereof, at its own expense, keep and maintain in full
force and effect, a policy of commercial general liability (occurrence form)
insurance, including contractual liability insuring Tenant's activities upon, in
or about the Premises or the Building, against claims of bodily injury or death
or property damage or loss with a combined single limit of not less than Three
Million Dollars ($3,000,000) per occurrence and Five Million Dollars
($5,000,000) in the aggregate. Landlord and the Building manager shall be named
as additional insureds.
(b) Property Insurance: Tenant shall, throughout the term of this
Lease and any renewal thereof, at its own expense, keep and maintain in full
force and effect, what is commonly referred to as "All Risk" or "Special"
coverage insurance (excluding earthquake and flood) on its furniture, fixtures
and equipment in an amount not less than one hundred percent (100%) of the
replacement value thereof with a coinsurance waiver.
(c) Insurance Policy Requirements: All insurance required under
this Section 16 shall be with companies rated AX or better by A.M. Best or
otherwise reasonably approved by Landlord. No insurance policy required under
this Section 16 shall be canceled or reduced in coverage except after forty-five
(45) days prior written notice to Landlord, except after ten (10) days prior
written notice to Landlord in the case of non-payment of premium.
(d) Certificate of Insurance; Tenant shall deliver to Landlord
prior to the Commencement Date, and from time to time thereafter, copies of
policies of such insurance or certificates evidencing the existence and amounts
of same and evidencing Landlord and the Building manager as additional insureds
thereunder. In no event shall the limits of any insurance policy required under
this Section 16 be considered as limiting the liability of Tenant under this
Lease.
(e) Primary Policies: All policies required under Section 16(a)
and (b) shall be written as primary policies and not contributing to or in
excess of any coverage Landlord or Building manager may choose to maintain.
(f) Landlord's Insurance: Landlord shall procure and maintain
commercial general liability insurance covering claims with respect to injuries
or damages to persons or property sustained in, on or about the Building and the
appurtenances thereto, including the sidewalks and alleyways adjacent thereto,
with limits of liability no less than five million dollars ($5,000,000) combined
single limit per occurrence and in the aggregate. Such limits may be achieved
through the use of umbrella liability insurance otherwise meeting the
requirements of this Section 16(f).
Landlord will procure and maintain physical damage insurance
covering all real property located on or in, or constituting a part of, the
Building in an amount equal to at least one hundred percent (100%) of
replacement value of all such property with a coinsurance waiver and with
coverage for compliance with changed code requirements. Such insurance shall
afford coverage for damages resulting from (i) perils covered by what is
commonly referred to as "all risk" coverage insurance (but excluding earthquake
and flood), and (ii) boilers and machinery coverage as appropriate for apparatus
located in the Building. If Landlord does not otherwise maintain earthquake
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insurance on the Building, Landlord shall consider the reasonable requests of
Tenant to maintain such insurance, provided all premiums for such insurance
constitute an Operating Cost hereunder.
(h) Tenant-Funded Improvements. In the event Tenant constructs
improvements within the Premises or incurs costs to construct the PacMed
Improvements in excess of the allowances provided for herein, Tenant may at
Tenant's sole cost obtain insurance with respect to such improvements. At the
request of Tenant, and to the extent such coverage is available, Landlord will
add such Tenant-funded improvements to Landlord's physical damages insurance and
will designate Tenant as the loss payee thereof, provided (i) Tenant provides
Landlord and/or Landlord's insurer with such evidence as may be required
regarding the costs of the Tenant-funded improvements, and (ii) Tenant reimburse
Landlord for the additional insurance costs to add the Tenant-funded
improvements to Landlord's physical damage insurance policies.
(g) Deductibles: All insurance carried by Landlord and Tenant pursuant
to this Section 16 shall provide for deductible amounts consistent with
standards then customary in the Seattle office building market for the type and
amount of coverage. In the event of an insured loss, the party responsible for
repair shall pay the deductible (provided that deductibles paid by Landlord
shall be includable as Operating Costs).
(h) Tenant-Funded Improvements. In the event Tenant constructs
improvements within the Premises or incurs costs to construct the PacMed
Improvements in excess of the allowances provided for herein, Tenant may at
Tenant's sole cost obtain insurance with respect to such improvements. At the
request of Tenant, and to the extent such coverage is available, Landlord will
add such Tenant-funded improvements to Landlord's physical damage insurance and
will designate Tenant as the loss payee as to such Tenant-funded improvements,
provided (i) Tenant provides Landlord and/or Landlord's insurer with such
evidence as may be required regarding the costs of the Tenant-funded
improvements, and (ii) Tenant reimburses Landlord for the additional insurance
costs to add the Tenant-funded improvements to Landlord's physical damage
insurance policies.
17. ASSIGNMENT AND SUBLETTING:
(a) Assignment or Sublease: Except as set forth in Section 17(c),
Tenant shall not assign, mortgage, encumber or otherwise transfer this Lease nor
sublet the whole or any part of the Premises without in each case first
obtaining Landlord's prior written consent. Subject to Section 17(b), below,
such consent shall not be unreasonably withheld or delayed, except: (i) Landlord
may withhold its consent if in Landlord's reasonable judgment occupancy by any
proposed assignee, subtenant, or other transferee (A) would materially interfere
with the maintenance and operation of a first-class office building due to the
nature of the proposed occupant's business or manner of conducting business or
its experience or reputation in the community; or (B) is likely to cause
disturbance to the normal use and occupancy of the Building for tenants other
than Tenant; (ii) Landlord may withhold in its absolute and sole discretion
consent to any mortgage, hypothecation, pledge, or other encumbrance of any
interest in this Lease or the Premises by Tenant or any subtenant; (iii)
Landlord may withhold its consent to the extent it deems necessary to comply
with any restriction on use of the Premises, the Building, or the Land contained
in any applicable laws or in any lease, mortgage, or other agreement or
instrument by which the Landlord is bound or to which any of such property is
subject all as existing as of the date of full execution of this Lease.
No such assignment, subletting or other transfer shall relieve Tenant of
any liability under this Lease. Consent to any such assignment, subletting or
transfer shall not operate as a waiver of the necessity for consent to any
subsequent assignment, subletting or transfer. Each request for an assignment or
subletting must be accompanied by a Processing Fee of $500 in order to reimburse
Landlord for expenses, including attorneys fees, incurred in connection with
such request ("Processing Fee"). Tenant shall provide Landlord with copies of
all assignments, subleases and assumption instruments.
(b) Landlord Right to Terminate Portion of Lease: If Tenant intends
to assign this Lease or sublease all or any portion of the Premises for the
remainder of the Term of this Lease other than a permitted transfer pursuant to
Subsection 17(c), Landlord reserves the right to recapture the space and
terminate this Lease, or if consent is requested for subletting less than the
entire Premises for the remainder of the Term of this Lease, to terminate this
Lease with respect to the portion for which such consent is requested, provided
that Landlord shall notify Tenant in writing ("Recapture Notice") of its intent
to recapture the space within ten business (10) days after receipt of written
notification of Tenant's intent to market space for sublease or assignment. In
the event of any such recapture, Landlord shall pay all costs of segregating the
recaptured space from the Premises, and all terms of this lease dependent on the
Rentable Square Footage of the Premises (including but not limited to Rent and
Tenant's Share of Operating Costs) shall be recomputed to reflect such
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recapture. If Landlord provides a timely Recapture Notice, Tenant shall have the
right within ten business (10) days thereafter to rescind its request for
consent, in which case the Recapture Notice shall be null and void and of no
further force or effect and Tenant shall have no right to market the space for
assignment or sublease hereunder. In addition, upon sublease or assignment, if
Landlord has not elected to recapture such space, Tenant shall pay Landlord, as
Additional Rent, fifty percent (50%) of the amount by which all sums received
under the sublease or assignment exceed the total of (i) the Rent and Additional
Rent due under this Lease plus (ii) reasonable market rate leasing commissions,
legal fees, design fees and tenant improvement costs incurred by Tenant with
respect to the sublease or assignment. Tenant shall provide Landlord copies of
all sublease or assignment documentation as soon as reasonably possible.
(c) Permitted Transfers: Notwithstanding anything herein to the
contrary, Landlord hereby consents to an assignment of this Lease, or a
subletting of all or part of the Premises, to (i) the parent of Tenant or to a
wholly owned subsidiary of Tenant or of such parent, (ii) any corporation in
whom or with which Tenant may be merged or consolidated, or (iii) any entity to
whom Tenant sells all or substantially all of its assets, provided that in each
such instance such entity expressly assumes all of Tenant's obligations
hereunder and has a net worth at least equal to the net worth of Tenant
immediately prior to such assignment or transaction. With respect to the
transactions described in Subsections (i) and (ii) above, such net worth may be
on a consolidated basis with Tenant's affiliated entity. Landlord acknowledges
that Tenant is a publicly owned corporation and that the transfer of all or any
portion of the ownership of stock in Tenant shall not be deemed an assignment of
this Lease. In addition, Landlord hereby consents to occupancy (by sublease or
Tenant granted license) of portions of the Premises (not to exceed ten percent
in the aggregate) by persons or entities with whom Tenant is pursuing a joint
venture or cooperative business undertaking, provided that Tenant shall provide
reasonable prior notice to Landlord of the identity of each such permitted
occupant.
(d) Assignee Obligations: As a condition to Landlord's approval, any
potential assignee otherwise approved by Landlord shall assume in writing all
obligations of Tenant under this Lease and shall be liable to Landlord for
rental and other payments and performance of all terms, covenants and conditions
of this Lease.
(e) Sublessee Obligations: Any sublessee shall assume all
obligations of Tenant as to that portion of the Premises which is subleased.
18. SIGNS: Landlord shall cooperate with Tenant to allow Tenant to place
signage displaying Tenant's and/or corporate logo on the exterior of the
Building. All such signage shall be subject to applicable laws and codes,
including any historical designation requirements imposed on the Building, and
shall also be subject to Landlord's consent, such consent not to be unreasonably
withheld. Any such consent by Landlord shall be upon the understanding and
condition that Tenant shall remove the same at the expiration or sooner
termination of this Lease and Tenant shall repair any damage to the Premises or
the Building caused thereby. Signage other than building standard elevator lobby
directory signage is at Tenant's sole expense.
19. LIENS AND INSOLVENCY:
(a) Liens: Tenant shall keep its interest in this Lease, the
Premises, the Land and the Building free from any liens arising out of any work
performed and materials ordered or obligations incurred by or on behalf of
Tenant and hereby indemnifies, defends and holds Landlord harmless from any
liability from any such lien. In the event any lien is filed against the
Building, the Land or the Premises by any person claiming by, through or under
Tenant, Tenant shall, upon request of Landlord and at Tenant's expense, cause
such lien to be released of record within ten (10) days or furnish to Landlord a
bond, in form and amount and issued by a surety reasonably satisfactory to
Landlord, indemnifying Landlord, the Land and the Building against all
liability, costs and expenses, including attorneys fees, which Landlord may
incur as a result thereof. Provided that such bond has been furnished to
Landlord, Tenant, at its sole cost and expense and after written notice to
Landlord, may contest, by appropriate proceedings conducted in good faith and
with due diligence, any lien, encumbrance or charge against the Premises arising
from work done or materials provided to or for Tenant, if, and only if, such
proceedings suspend the collection thereof against Landlord, Tenant and the
Premises and neither the Premises, the Building nor the Land nor any part
thereof or interest therein is or will be in any danger of being sold, forfeited
or lost.
(b) Insolvency: If Tenant becomes insolvent or voluntarily or
involuntarily bankrupt, or if a receiver, assignee or other liquidating officer
is appointed for the business of Tenant (and not discharged within ninety (90)
days with respect to an involuntary proceeding), Landlord at its option may
terminate this Lease and Tenant's right of possession under this Lease and in no
event
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shall this Lease or any rights or privileges hereunder be an asset of Tenant in
any bankruptcy, insolvency or reorganization proceeding.
20. DEFAULT:
(a) Cumulative Remedies: All rights of Landlord and Tenant herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law. In addition to the other remedies provided in this Lease,
Landlord and Tenant shall be entitled to restrain by injunction the violation or
threatened violation of any of the covenants, agreements or conditions of
this Lease.
(b) Tenant's Right to Cure: Tenant shall have a period of three (3)
business days from the date of written notice from Landlord to Tenant within
which to cure any default in the payment of Rent, Additional Rent and other sums
due hereunder. Tenant shall have a period of thirty (30) days from the date of
written notice from Landlord to Tenant within which to cure any other default
hereunder; provided, however, that with respect to any such default capable of
being cured by Tenant which cannot be cured within thirty (30) days, the default
shall not be deemed to be uncured if Tenant commences to cure within thirty (30)
days and for so long as Tenant is diligently pursuing the cure thereof.
(c) Abandonment: Abandonment shall be defined as an absence from the
Premises of thirty (30) days or more while Tenant is in monetary default. Any
abandonment by Tenant shall be considered a default with no right to cure,
allowing Landlord to re-enter the Premises as hereinafter set forth.
(d) Landlord's Reentry: Upon abandonment or an uncured default of
this Lease by Tenant, Landlord, in addition to any other rights or remedies it
may have, at its option, may enter the Premises or any part thereof, and expel,
remove or put out Tenant or any other persons who may be thereon, together with
all personal property found therein; and Landlord may terminate this Lease, or
it may from time to time, without terminating this Lease, relet the Premises or
any part thereof for such term or terms (which may be for a term less than or
extending beyond the term hereof) and at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion may deem
advisable, with the right to repair, renovate, remodel, redecorate, alter and
change the Premises, Tenant remaining liable for any deficiency computed as
hereinafter set forth. In the case of any default, reentry and/or dispossession
all Rent and Additional Rent shall become due thereupon, together with such
expenses as Landlord may reasonably incur for attorneys fees, advertising
expenses, brokerage fees and/or putting the Premises in good order or preparing
the same for rerental, together with interest thereon as provided in Section
37(f) hereof, accruing from the date of any such expenditure by Landlord. No
such re-entry or taking possession of the Premises shall be construed as an
election on Landlord's part to terminate this Lease unless a written notice of
such intention be given to Tenant.
(e) Reletting the Premises: At the option of Landlord, rents
received by Landlord from such reletting shall be applied first to the payment
of any indebtedness from Tenant to Landlord other than Rent and Additional Rent
due hereunder; second, to the payment of any costs and expenses of such
reletting and including, but not limited to, attorneys fees, advertising fees
and brokerage fees, and to the payment of any repairs, renovations, remodeling,
redecoration, alterations and changes in the Premises (provided that in the
event of a reletting for more than the remaining balance of the Lease Term, such
costs shall be amortized over the term of the relet lease and only that portion
chargeable to the Lease shall be charged to Tenant); third, to the payment of
Rent and Additional Rent due and to become due hereunder, and, if after so
applying said Rents there is any deficiency in the Rent or Additional Rent to be
paid by Tenant under this Lease, Tenant shall pay any deficiency to Landlord
monthly on the dates specified herein. Any payment made or suits brought to
collect the amount of the deficiency for any month shall not prejudice in any
way the right of Landlord to collect the deficiency for any subsequent month.
The failure of Landlord to relet the Premises or any part or parts thereof shall
not release or affect Tenant's liability hereunder, nor shall Landlord be liable
for failure to relet, or in the event of reletting, for failure to collect the
Rent thereof, and in no event shall Tenant be entitled to receive any excess of
net Rents collected over sums payable by Tenant to Landlord hereunder.
Notwithstanding any such reletting without termination, Landlord may at any time
elect to terminate this Lease for such previous breach and default. Should
Landlord terminate this Lease by reason of any default, in addition to any other
remedy it may have, it may recover from Tenant the then present value of Rent
and Additional Rent reserved in this Lease for the balance of the Term, as it
may have been extended, over the then fair market rental value of the Premises
for the same period, plus all court costs and attorneys fees incurred by
Landlord in the collection of the same.
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(f) Landlord's Default. Landlord's failure to perform or observe
any of its obligations under this Lease or to correct a breach of any warranty
or representation made in this Lease within thirty (30) days after receipt of
written notice from Tenant setting forth in reasonable detail the nature and
extent of the failure referencing pertinent Lease provisions or if more than
thirty (30) days is required to cure the breach, Landlord's failure to begin
curing within the thirty (30) day period and diligently prosecute the cure to
completion, shall constitute a default.
(g) Tenant's Remedies. If Landlord commits a default that materially
affects Tenant's use of the Premises, and Tenant has provided simultaneous
written notice thereof to Landlord's mortgagee (if any and if Tenant has notice
thereof) and Landlord (and/or Landlord's mortgagee if any) has failed to
commence to cure such default within the period specified in Section 20(f) or
such shorter time as is commercially reasonable in the case of an emergency
threatening imminent harm to persons or property, Tenant may, without waiving
any claim for damages for breach of agreement, thereafter cure the default for
the account of the Landlord, which cure shall be preceded by an additional
notice given at least three (3) days prior to such cure to Landlord and
Landlord's mortgagee that Tenant plans to undertake the cure, and the reasonable
cost of such cure shall be deemed paid or incurred for the account of Landlord,
and Landlord shall reimburse Tenant for Tenant's out-of-pocket expenditures paid
to third parties to effectuate such cure, such reimbursement to be within thirty
(30) days after completion of the cure and invoice to Landlord showing the costs
of cure. If Landlord disputes either the necessity of the cure or the cost
thereof, the matter shall be settled by arbitration administered by the American
Arbitration Association in accordance with its rules before a single arbitrator
of the American Arbitration Association sitting in Seattle, Washington. The
arbitrator shall be a person having experience and knowledge about commercial
leasing and property management. The arbitration shall be held within sixty (60)
days of Landlord notifying Tenant it disputes Tenant's cure. The costs of the
arbitrator shall be shared equally by the parties. The prevailing party shall be
entitled to an award of reasonable attorney's fees. The arbitrator's award shall
be final and binding on the parties. Except as otherwise specifically permitted
in this Lease, Tenant hereby waives any right it may have at law or under equity
to abate or offset Rent or additional rent for any reason.
(h) Mitigation. In the case of default by either party, the
non-defaulting party shall take reasonable measures in mitigation thereof,
provided that, in any challenge to the reasonableness of such mitigation, the
mitigating measure shall be presumed reasonable, and the party challenging the
reasonableness of the mitigation shall have the burden of showing that the
mitigating measure (such as Landlord's reletting for a different term in, the
case of a Tenant default) was not reasonable in the circumstances. For purposes
of this Lease, reasonable efforts to mitigate damages by reletting shall mean
that Landlord shall market the Premises as it would any other vacant space in
the Building.
21. PRIORITY: Tenant agrees that this Lease shall be subordinate to any
first mortgage or deed of trust hereafter placed upon Landlord's interest in the
Premises or the Building and to any and all advances to be made thereunder and
to interest thereon and all renewals, replacements, or extensions thereof
("Landlord's Mortgage"); provided, however, that the subordination of this Lease
and the estate hereby granted to Landlord's Mortgage shall be upon the condition
that the holder of Landlord's Mortgage ("Holder") shall execute and deliver to
Tenant, and fully perform and abide by the terms of, an instrument in recordable
form and reasonably satisfactory to Tenant ("Nondisturbance Agreement")
providing that so long as conditions do not exist entitling Landlord to
terminate this Lease under the provisions of Section 20 (including the
expiration of all periods to cure):
(a) This Lease and the estate hereby created shall not be
terminated;
(b) Nether Tenant nor any subtenant or assigns of Tenant shall be
joined by the Holder of Landlord's Mortgage in any foreclosure proceedings;
(c) Tenant's possession or enjoyment or the Premises shall not be
interfered with by or in any foreclosure, bankruptcy, reorganization action,
sale or other action or proceeding instituted under or in connection with such
Landlord's Mortgage, it being the express intention of Landlord, the Holder of
Landlord's Mortgage and Tenant that Tenant shall not be disturbed in its
possession and use of the Premises under this Lease for any reason other than
the termination of this Lease in accordance with its terms; and
(d) If the interest of Landlord under this Lease shall be
transferred, then upon the assumption by the transferee of all obligations under
this Lease accruing from and af |
