Washington-Seattle-1100 Second Avenue Lease - 1100 Second Avenue LP and Amazon.com Inc.
SECOND & SPRING BUILDING
LEASE
LEASE, dated April 17, 1998, between 1100 SECOND AVENUE LIMITED
PARTNERSHIP, a Washington limited partnership ("Landlord"), and AMAZON.COM,
INC., a Delaware corporation ("Tenant").
Landlord and Tenant agree as follows:
1. Premises; Expansion.
1.1 Landlord agrees to lease to Tenant and Tenant agrees to
lease from Landlord approximately 11,358 rentable square feet ("rsf")
(including 10,208 gross square feet of usable area and a load factor of
11.13%, as measured by current BOMA standards for multi-tenant
buildings, in the lower level of the 2nd & Spring Building, 1100 Second
Avenue, Seattle, Washington ("Building"). A legal description of the
property on which such building is situated ("Property") is attached
hereto as Exhibit A. A floor plan showing the approximate location of
the premises on the lower floor of the Building ("Premises") is attached
hereto as Exhibit B. Landlord and Tenant have agreed on the exact usable
area of the Premises for the purpose of calculating the rsf of the
Premises, and such agreed area shall be binding on the parties and be
deemed to be the actual usable area of the Premises without regard to
any subsequent re-measurement of the Premises.
1.2 During the Term, Tenant shall have the right of first
refusal to lease any space in the north half of Floor 1 of the Building,
totaling approximately 12,000 rsf. In the event Landlord is prepared to
accept or has conditionally accepted an offer from any third party to
lease any of such space, Landlord shall so notify Tenant, which notice
shall include a copy of the offered terms. Tenant shall have five
business days after receipt of such notice in which to notify Landlord
of Tenant's exercise of it's right of first refusal as to the affected
portion of the north half of Floor 1, whereupon Tenant shall be bound to
lease such space on the same terms and conditions as are set forth in
the offer (including the lease term in such offer, even if different
from the Term hereunder) , and this Lease shall be amended to include
such space in the Premises and to incorporate such terms and conditions
herein as to such space. The right of first refusal in this Section 1.2
is subject to the rights of Central Puget Sound Regional Transit
Authority ("RTA") as to Floor 1 under its lease of space in the
Building, as amended from time to time. An offer to lease any space in
Floor 1 by the RTA shall not trigger Tenant's rights under this Section
1.2. Landlord shall, however, promptly inform Tenant of the execution of
any lease on Floor 1 to the RTA.
2. Term
2.1 The term of this Lease ("Term") shall commence on the date
of occupancy, or on May 1, 1998, whichever occurs first. In this Lease,
the "Lease Commencement Date" shall be deemed to be May 1, 1998, even if
the Lease actually commences before such date. The parties shall have a
landlord-tenant relationship, however, from and after the date of
execution of this Lease. Tenant shall have access to the Premises and,
to the extent necessary, to the Building generally, from the date of
execution of this Lease, for the purposes of tenant improvements
construction, equipment set-up and move-in activities. Such activities
shall not be deemed "occupancy" for purposes of determining the Rent
Commencement Date, and "occupancy" shall occur when Tenant is conducting
business in the Premises.
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2.2 The Term shall expire on the Expiration Date, which shall be
April 30, 2003 ("Initial Term"), unless extended as provided in this
Lease.
2.3 Tenant shall have the option to extend the Term for one
period of up to 60 months ("Extension"). Tenant shall exercise such
option only by written notice to Landlord on or before nine months
before the Expiration Date, which notice shall include the number of
months of the Extension. All the terms and conditions of this Lease
shall apply during the Extension except for Base Rent, which shall be
adjusted as provided in Section 4.
2.4 In this Lease, unless the context otherwise requires, a
"month" shall be a calendar month, and Month 1 shall begin on the
Commencement Date and end on the last day of the same calendar month.
2.5 Tenant shall have an ongoing right to terminate this Lease,
effective on the second, third, and fourth anniversaries of the Lease
Commencement Date. Such right may be exercised by Tenant only by notice
to Landlord on or before 90 days before the subject such anniversary
date. As a condition of such termination, Tenant shall pay Landlord the
unamortized portion of Landlord's actual payment for seismic upgrades,
as described in Section 3. Such payment shall be amortized for purposes
of this Section 2.5 over 60 months, including interest at the rate of
10% per annum.
3. Tenant Improvements.
3.1 Landlord shall carry out certain seismic upgrades to the
Building, in substantial accordance with the recommendations of Skilling
Ward Magnusson attached hereto as Exhibit C. Landlord shall commence
such upgrades during the first five months of the Term, and thereafter
shall prosecute such work diligently and continuously and in accordance
with all laws and legal requirements. Landlord shall only be obligated
to pay up to $150,000 for the direct third-party cost of such work. Any
additional cost of such work shall be paid by Tenant, as a condition on
Landlord's obligation to complete such work. Landlord's work, ongoing on
the date of this Lease, on the exterior facade of the Building is not
included in such seismic work, and Tenant shall not be responsible for
the cost of such exterior facade work. Landlord shall enter into a
construction contract for the seismic upgrade work ("Construction
Contract") on either a fixed price or guaranteed maximum price basis,
and the Construction Contract shall be subject to Tenant's prior written
approval (such approval not to be unreasonably withheld). Landlord shall
not authorize any change orders or other modifications under the
Construction Contract without Tenant's prior written approval, and
Landlord shall send Tenant copies of all invoices under, and all
material correspondence and documents relating to, the Construction
Contract. Tenant shall pay such excess cost from time to time as it is
incurred, within ten business days of a request for payment from
Landlord setting forth in reasonable detail the basis for such request.
In addition, Landlord shall pay up to $92,192 of the direct third-party
cost incurred by Tenant to install a new electrical vault in the
Building. Tenant shall construct such vault substantially in accordance
with the plans prepared by Sparling Electric, a copy of which has been
furnished to Landlord and Tenant and in accordance with all laws and
legal requirements. Landlord shall pay such cost concurrently with
Tenant's payment of Rent for Month 1 or, if the work is performed later,
upon receipt of Tenant's invoice. Landlord shall not be required to
carry out any other tenant improvements to the Premises for Tenant.
Alterations to the Premises by Tenant shall be subject to Section 11.
3.2 Tenant shall perform various tenant improvements to the
Premises ("Initial Improvements"), including without limitation space
divisions, electrical upgrades to the Building, the installation of a
fire-rated corridor to allow ingress and egress through the southeast
door of the Premises to the outside of the Building (if required by
code), all as
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provided in Tenant's plans for such improvements provided to Landlord
and the City of Seattle ("Tenant Improvement Plans"). Tenant shall carry
out and complete its improvements lien-free, substantially in accordance
with the Tenant Improvements Plans and in accordance with all applicable
laws and legal requirements.
3.3 Concurrently with the execution of this Lease, Tenant and
Landlord are agreeing on a schedule of Tenant's Property, identifying
which general categories of the Initial Improvements shall be deemed
Tenant's trade fixtures. The schedule is attached hereto as Exhibit D.
All Initial Improvements not included on such schedule shall become
Landlord's property upon the expiration or earlier termination of this
Lease; provided, however, that Tenant's personal property and those
improvements which are not permanently attached to the Premises and can
be removed without significant damage and reused shall not become
Landlord's property upon the expiration or earlier termination of this
Lease.
4. Rent.
4.1 Tenant shall pay Rent to Landlord in the form of Base
Monthly Rent, Additional Rent in the form of Operating Expenses, as
provided in Section 7, and any Additional Rent as set forth in elsewhere
in this Lease.
4.2 Base Rent during the Initial Term shall be $8.00 per rsf, or
$7,572 per month.
4.3 Base Rent for the Extension shall be the fair market rental
rate as of the commencement of such Extension, by reference to
comparable space in the Seattle Central Business District, but in no
event less than the Base Rent in effect immediately before such
Extension. "Fair market rent" means the rent per rsf that a willing,
non-equity tenant would pay in a arms-length transaction for comparable
space in a building located in the Seattle Central Business District for
a five-year lease. The comparability of particular other space or rents
shall be determined through a consideration of all reasonably pertinent
factors. Such market rate shall be determined by agreement of the
parties or by appraisal as provided below:
4.3.1 Landlord shall propose a Base Rent for such Extension
within 30 days after Tenant's Extension notice. The parties
shall negotiate in good faith, but If they are unable to agree
upon such Base Rent by 30 days after the delivery of Landlord's
proposal, then either party may elect to cause such Base Rent to
be determined by reference to the appraised fair market rent.
Such election shall be made by such party by notice to the other
party, including in such notice the designation of an appraiser.
The other party may accept such appraiser or designate another
appraiser within 10 days of such notice. If it does not
designate another appraiser in such period, it shall be deemed
to have accepted the first appraiser. If a second appraiser is
designated, the two appraisers shall promptly appoint a third
appraiser. If the two appraisers do not appoint a third
appraiser within ten business days of the appointment of the
second appraiser or acceptance of the first appraiser, either
party may cause the third appraiser to be appointed by the King
County Superior Court.
4.3.2 Each appraiser shall determine the fair market rent
for the Premises for such Extension by reference to all factors
deemed appropriate in his or her professional opinion, and
notify the parties within 20 days of the date of appointment of
the last appraiser of such fair market rent. The Base Rent for
such Extension shall be the fair market monthly rent determined
by the single appraiser
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or, if there are three appraisers, the arithmetic mean of the
two closest fair market monthly rents.
4.3.3 All appraisers under this appraisal provision shall be
independent certified M.A.I. professional appraisers with at
least five years' experience appraising properties in the
Seattle Central Business District or licensed commercial real
estate agents with at least ten years of real estate practice
and at least five years of substantial office leasing practice
in the Seattle Central Business District. If there are three
appraisers, each party shall pay for the cost of its designated
appraiser and 50% of the cost of the third appraiser. If there
is only one appraiser, each party shall pay 50% of the cost of
such appraiser.
4.4 Rent shall be paid in advance, on or before the first day of
each month of the Term.
4.5 Rent shall be paid without prior notice, demand, set off,
counterclaim, deduction or defense and, except as otherwise expressly
provided in this Lease, without abatement or suspension.
4.6 The Rent Commencement Date shall be the Lease Commencement
Date. Rent for any period during the Lease term that is for less than
one month shall be prorated for the actual number of days in such
period.
4.7 All Rent shall be paid to Landlord at the address for
notices set forth in this Lease, in lawful money of the United States of
America, or to such other person or at such other place as Landlord may
from time to time designate in writing.
4.8 Concurrently with the execution of this Lease, Tenant shall
pay to Landlord a security deposit equal to $7,572, the amount of one
month's Rent ("Deposit"). Landlord shall have the right to all or any
part of the Deposit to cure any Default by Tenant under this Lease or to
compensate Landlord for any damage sustained by it resulting from such
Default. In the event of any such application of the Deposit, Tenant
shall, on demand, immediately pay to Landlord the amount necessary to
replenish the Deposit to the amount set forth above. If Tenant is not in
Default at the expiration or termination of this Lease, Landlord shall
return the remaining Deposit to Tenant, less any amounts necessary to
return the Premises to the condition in which the Premises are required
to be surrendered, reasonable wear and tear excepted. Landlord's
obligations with respect to the Deposit are those of a debtor and not a
trustee. Landlord may maintain the Deposit separate from Landlord's
general funds or may commingle the Deposit with other funds of Landlord.
No interest shall accrue for Tenant on the Deposit.
5. Use of Premises.
5.1 Tenant shall use the Premises only for general office
purposes, a data center, and other uses incident to the operation of a
data center.
5.2 The Premises may not be used for any other purpose without
Landlord's written consent which shall not be unreasonably withheld,
conditioned or delayed.
5.3 Tenant shall not do or permit anything to be done in or
about the Premises or bring or keep anything therein which will in any
way increase the cost of or cause the cancellation of any fire or other
insurance upon the Building or any part thereof or any of its contents.
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5.4 Tenant shall not do or permit anything to be done in or
about the Premises that will obstruct or interfere with the rights of
other tenants or occupants of the Building or Business Park or injure
them or their property, or use or allow the Premises to be used for any
unlawful purpose or in any way constituting a nuisance.
6. Additional Rent for Operating Expenses.
6.1 Tenant shall pay, as Additional Rent, Tenant's Share, as set
forth below, of Operating Expenses.
6.2 Tenant's Share shall be 9.63%, being the percentage that the
rsf of the occupied Premises (11,358) bears to the rsf of the Building
(117,937).
6.3 "Operating Expenses" means all expenses and charges incurred
by Landlord in the operation of the Building, Property and Common Areas,
as a first-class facility, including without limitation the following
costs by way of illustration: (i) all real property taxes, assessments
and other general or special charges levied during the Term by any
public, governmental or quasi-governmental authority against the real or
personal property included in the Building or the Property, including
without limitation Landlord's personal property used in the maintenance,
repair or operation of the Building or the Property, or any other tax on
the leasing of the Building or on the rents from the Building (other
than any federal, state or local income or franchise tax); (ii) any and
all assessments Landlord must pay for the Building or Property pursuant
to any transportation or any other improvement monitoring or management
plan, or any other covenant, condition or reciprocal easement
agreements; (iii) electricity, gas and similar energy sources, refuse
collection, water, sewer and other utilities services for the Building
and the Property; provided, however, to the extent that any such
services are separately metered to Tenant, Tenant shall pay the actual
separately incurred charges; (iv) all licenses, permits and inspection
fees, market rate property management fees paid to independent or
affiliated contractors or to Landlord, and legal, accounting and other
professional expenses; (v) window washing; (vi) unless otherwise
excluded herein, all costs of improvements or alterations to the
Building, Property and Common Areas required by Laws, to save labor, or
reduce Operating Expenses; (vii) all premiums and deductibles for
liability, property damage, casualty, rental loss, compensation or other
insurance maintained by Landlord for the Building or Property; (viii)
air conditioning, heating, ventilating, elevator maintenance, supplies,
materials, equipment, tools, including the repair and maintenance of the
plumbing, heating, ventilating, air conditioning and electrical systems
of the Building; (ix) maintenance costs, including utilities and payroll
expenses, rental of personal property used in maintenance and all other
upkeep of Common Areas, including landscaping; (x) costs and expenses of
repairs, monitoring, repairing, maintenance, painting, lighting,
cleaning, refuse removal, security and similar items, including
appropriate reserves, (xi) third-party market rate property management
fees and other costs incurred in the management of the Building and
Property (including supplies, wages and salaries of employees used in
the management, operation and maintenance thereof and payroll taxes and
similar governmental charges with respect thereto, and Building
management office rental, if any); (xii) any other expense or charge
whether or not described above that in accordance with generally
accepted accounting and management practices is properly an expense of
maintaining, operating or repairing the Building, Property or Common
Areas.
Operating Expenses shall not include Landlord's costs incurred under
Section 3.1 above or: (i) depreciation on the Building or equipment
therein, (ii) costs (including principal and interest) related to
Landlord's financing, (iii) costs incurred by Landlord for alterations
or additions which are considered capital improvements and replacements
under generally accepted accounting principles, including any
alterations or additions required to be made in
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accordance with the provisions of the Americans With Disabilities Act or
any other applicable law, except (a) costs incurred to reduce or save
Operating Expenses, amortized over the term such savings are reasonably
expected to be realized; provided that the annual amortized cost billed
to Tenant shall not exceed the amount of the annual reduction in
Operating Expenses or savings realized by Tenant as a result of such
costs incurred by Landlord; and (b) costs incurred to retrofit the
Premises to satisfy ADA requirements on account of Tenant's use of the
Premises (which retrofitting shall be Tenant's responsibility and shall
be subject to Section 11); (iv) costs (including permit, license and
inspection fees) incurred in renovating or otherwise improving or
decorating, painting or redecorating space for tenants or other
occupants or vacant space other than normal and ordinary maintenance;
(v) expenses in connection with services or other benefits of a type
which are not provided Tenant but which are provided to another tenant
or occupant; (vi) costs incurred due to violation by Landlord of the
terms and conditions of any other lease, and any costs (including any
costs of compliance), fines or penalties incurred due to violations by
Landlord of any governmental rule or authority unless such costs, fines,
or penalties are incurred by Landlord due to Tenant's failure to perform
any of its obligations under the Lease; (vii) overhead and profit
increment paid to subsidiaries or affiliates of Landlord for supplies or
other materials to the extent that the costs of such supplies or
materials exceed the costs that would have been paid had the supplies or
materials been provided by unaffiliated parties on a competitive basis;
(viii) Landlord's general corporate overhead and general administrative
expenses, except for reimbursement for out of pocket costs for postage,
photocopies, and telephone costs incurred in operating the Building;
(ix) any compensation paid to clerks, attendants or other persons in
commercial concessions (such as parking garage attendants) operated by
Landlord; (x) all items and services for which Tenant reimburses
Landlord or pays third persons or which Landlord provides selectively to
one or more tenants or occupants of the Building (other than Tenant)
without reimbursement; (xii) advertising and promotional expenditures to
market the Building; (xiii) any other expense which, under generally
accepted accounting principles, would not be considered a normal
maintenance or operating expense; (xvii) Landlord's executive salaries;
(xviii) real estate brokers' commissions; (xix) costs or expenses for
which Landlord is entitled to be reimbursed or indemnified, by an
insurer, condemnor, tenant or otherwise; (xx) janitorial expenses; (xxi)
cost of utilities provided to any tenant which uses such utilities in
quantities significantly greater than typical office building tenants;
(xxii) costs for acquiring artwork or other similar Building amenities;
and (xxiii) legal fees in connection with negotiating leases or
collections on, terminations of, or modifications of leases, or
Landlord's financing or sale of the Building. Landlord shall not collect
more than 100% of Operating Expenses and shall not recover any item of
cost more than once.
6.4 Landlord currently estimates that Tenant's Share of
Operating Expenses from and after the Commencement Date through the end
of 1998 will be $7.00 per year, or $6,625 per month. Prior to each
December 1 of the Term beginning December 1, 1998, Landlord shall
furnish Tenant a written statement of the estimated Operating Expenses
for the coming calendar year and the estimated Tenant's Share of
Operating Expenses for the coming year. Landlord may, by written notice
to Tenant, revise its estimate of Tenant's Share of Operating Expenses
from time to time if circumstances make such revision reasonable.
6.5 Tenant shall pay, as Additional Rent, the monthly estimated
Operating Expenses then in effect, and such payment shall be made in the
same manner as Base Monthly Rent.
6.6 Within 90 days after each January 1 during the Term, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a
written statement setting forth the actual Operating Expenses for the
preceding year and Tenant's Share thereof. To the extent
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Tenant's Share of actual Operating Expenses exceeded the estimated
Tenant's Share thereof paid by Tenant, Tenant shall pay Additional Rent
to Landlord within 30 days after receipt of such statement by Tenant. To
the extent Tenant's Share of actual Operating Expenses was less than the
estimated Tenant's Share thereof paid by Tenant, Tenant shall receive a
credit against its next payable Rent or such amount shall otherwise be
refunded to Tenant, as Landlord determines in its discretion.
6.7 Landlord shall keep full and accurate books of account
covering Operating Expenses for at least three years after the delivery
of each annual statement of Operating Expenses. Tenant shall have the
right at Tenant's cost, during Landlord's regular business hours, to
inspect, copy and audit such books of account at a reasonable time on
five days' prior written notice to Landlord. Such right may be exercised
no more than once in any calendar year, and shall not cover periods more
than three years prior to such inspection. Tenant shall furnish Landlord
with a copy of any report or summary prepared by or for Tenant
concerning such inspection. If such inspection discloses that Tenant has
overpaid Operating Expenses by more than 5% of actual Operating Expenses
in any calendar year (other than any calendar year for which Landlord
has not completed its annual reconciliation), Landlord will pay the cost
of correcting accounts and compensate Tenant for any costs reasonably
incurred to inspect, copy or audit the accounts. If Tenant has overpaid
Operating Expenses, Landlord will credit such overpayment to the
installments of Rent next due, or at its election shall pay Tenant the
amount of such overpayment, in either case together with interest at the
rate set forth in Section 31.8. If such inspection discloses that Tenant
has underpaid Operating Expenses, Tenant shall promptly pay Landlord the
amount of such underpayment.
6.8 If this Lease shall expire or otherwise terminate other than
on a December 31, Landlord may in its discretion make a special
determination of Tenant's Share of actual Operating Expenses for the
partial calendar year ending on the date of such expiration or other
termination, or may defer such determination until its usual
reconciliation of Operating Expenses for the Building for the entire
calendar year. The excess actual Tenant's Share for such partial
calendar year shall be paid to Landlord, or the excess estimated
Tenant's Share already paid by Tenant, as the case may be, shall be paid
by Tenant to Landlord or Landlord to Tenant, as the case may be, within
30 days of such determination.
6.9 Landlord shall have the same rights with respect to Tenant's
nonpayment of Tenant's Share of Operating Expenses as required under
this Lease as it has with respect to any other nonpayment of Rent under
this Lease.
7. Repair Responsibility.
7.1 Tenant accepts the Premises AS IS, and as being in good and
sanitary order, condition and repair and suitable for Tenant's intended
use, subject to Landlord's obligations to perform maintenance and repair
under Section 7.5 and to perform seismic upgrades, as described in
Section 3. Tenant shall, at its expense, keep, maintain and preserve the
Premises in good repair, subject to reasonable wear and tear, throughout
the Term, except to the extent this Lease specifically provides
otherwise.
7.2 Tenant shall also pay the cost of any separate heating,
ventilating, and air conditioning system (including computer chilling
equipment) that is exclusive to the computer room to be installed in the
Premises ("HVAC System"), including the cost of a maintenance firm
engaged by Tenant for such purpose.
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7.3 Tenant shall surrender the Premises to Landlord upon the
expiration or sooner termination of this Lease, in good condition and
repair, excluding ordinary wear and tear and damage by casualty or
destruction.
7.4 Subject to Section 3, Landlord shall have no obligation to
alter, remodel, improve, repair, decorate, or paint the Premises, or any
part thereof, in connection with the Initial Improvements. Tenant
affirms that Landlord has made no representations to Tenant about the
condition of the Premises or the Building, except as may be specifically
set forth in this Lease.
7.5 Notwithstanding the above, Landlord shall, at its expense,
repair and maintain the structural portions of the Building which shall
constitute the foundation, bearing and exterior walls, subflooring, and
roof and the plumbing, heating, ventilation, air conditioning, elevator,
and electrical systems serving the Premises (other than the HVAC system
serving, and the electrical systems within and specifically dedicated
to, the computer room). Landlord shall give reasonable advance written
notice to tenant of Landlord's repairs and significant maintenance work,
unless such notice is impractical under the circumstances. Any repair to
be done by Landlord to the Premises under this Lease shall be done
promptly (under the circumstances) after notice by Tenant. In carrying
out such repairs, and in performing the work under Section 3.1, Landlord
shall avoid unnecessary interference with Tenant's use of the Premises.
In the event of damage, destruction or condemnation of the Premises, the
Building or the Property, the provisions of Sections 13 and 14 shall
apply.
7.6 Except as otherwise set forth in this Lease, Tenant waives
the right to make repairs at Landlord's expense under any law, statute,
or ordinance now or hereafter in effect except for costs incurred in an
emergency to prevent imminent harm to life or property.
8. Common Areas.
8.1 Landlord shall maintain the Common Areas in good condition
at all times, the cost of which shall constitute an Operating Expense
except as otherwise provided in Section 6.3. Landlord shall have the
right to establish and enforce reasonable rules and regulations
applicable to all tenants concerning the maintenance, management, use,
and operation of the Common areas; and to make changes to the Common
Areas, including without limitation changes in the location of lobbies,
entrances, exits, vehicular parking spaces, parking areas, restrooms and
elevators, or the direction of the flow of traffic, provided that no
such changes shall impair Tenant's access to or use or enjoyment of the
Premises.
8.2 In this lease, "Common Areas," means all parts of the
Building and related land areas and facilities outside the Premises and
the premises leased or available for lease to other tenants, but
constituting a part of the Property, and the common plumbing, sewage,
electrical and telecommunications and data communications systems, pipes
conduits, wires and appurtenant equipment of the Building.
9. Utilities and Services.
9.1 Landlord shall cause to be furnished to the Premises the
following utilities and services, during generally recognized business
hours: electricity for normal lighting and office machines, heat and air
conditioning required in landlord's reasonable judgment in light of the
HVAC equipment existing in the building on the date hereof for the
comfortable use and occupation of the premises, and janitorial services.
Tenant acknowledges that the
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existing HVAC system in the Building is adequate for its needs outside
of the computer room, subject to Landlord's repair obligations under
Section 7. Business hours shall include 7:00 a.m. to 6:00 p.m. Monday
through Friday, and 8:00 a.m. to 1:00 p.m., Saturdays, but legal
holidays excluded. Computer chilling facilities and computer and
telecommunications cabling shall be Tenant's responsibility.
9.2 The provision and use of such utilities and services shall
be in accordance with any applicable rules and regulations under this
Lease. If Tenant requires or utilizes more water or electrical power
than is considered reasonable or normal by Landlord, and if such usage
is not separately metered, Landlord may at its option require Tenant to
pay, as Additional Rent, the cost, as fairly determined by Landlord,
incurred in such extraordinary usage. Landlord shall base any such extra
charges on the actual cost charged by the utility supplier. In addition,
Landlord shall install separate meters in accordance with Section 9.4.
9.3 At Tenant's request, Landlord shall furnish, at Tenant's
expense, heat and air conditioning as described in Section 9.1 outside
of generally recognized business hours, at rates charged by the utility
supplier, and to be paid by Tenant as billed by Landlord.
9.4 Electrical service shall be separately metered to the
Premises, and Tenant shall pay for such use in the same manner as Rent,
or shall pay the cost thereof directly to the service provider. Such
charges shall constitute Additional Rent hereunder.
9.5 Tenant shall have access to the Premises, together with all
utility service, 24 hours per day, 7 days per week. Landlord currently
provides Building security on working weekdays between 10:30 a.m. and
6:00 p.m. At Tenant's request, Landlord shall contract for Building
security service for additional times. The cost of such additional
security services shall be paid directly by Tenant or reimbursed to
Landlord, as Additional Rent. In addition, Tenant shall contract
directly for its own janitorial service.
9.5 In the event of any failure or interruption of utilities and
services for which Landlord is responsible, Landlord shall diligently
attempt to resume service promptly. Landlord understands that the
availability of continuous, 24-hour, year-round utility service is a
material inducement to Tenant entering into this Lease. If the utilities
or services that are required for Tenant's use and occupancy of the
Premises and are the responsibility of Landlord hereunder are
interrupted so that they are provided only intermittently or the
utilities or services altogether cease to be provided to the Premises
for any reason whatsoever, other than the fault of Tenant or causes
beyond the control of Landlord Identified In Section 10.1, for a period
of 72 consecutive hours, Tenant has the right to abate Base Rent from
the first day of the interruption until the interrupted utilities or
services are fully restored. Except as provided in the foregoing
sentence, Tenant shall not be entitled to any abatement or reduction of
Rent by reason of any failure or interruption of utilities or services,
no eviction of Tenant shall result from any such failure or
interruption, and Tenant shall not be relieved from the performance of
any obligation in this Lease because of such failure or interruption.
10. Limits on Landlord's Liability. Landlord's liability in
respect of its obligations under Sections 7, 8 and 9 to repair and
maintain portions of the Premises, Building and Common Areas and to
provide utilities and services (collectively, "Repair and Service
Obligations") is subject to the following limitations:
10.1 Landlord shall not be liable for any failure of Repair and
Service Obligations when such failure is caused by (i) third-party
strikes, lockouts or other labor disturbance or labor dispute of any
character, (ii) governmental regulation, moratorium or other
governmental action, (iii) inability despite the exercise of reasonable
diligence to obtain
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electricity, water or fuel from the providers thereof, (iv) acts of God
or (v) any other cause beyond Landlord's reasonable control.
10.2 Subject to Section 10.1 and 9.5, Landlord shall not be
liable for any failure of Repair and Service Obligations, unless such
failure shall persist for five days after written notice of the need of
such repairs or maintenance or of the interruption of services is given
to Landlord by Tenant, except in an emergency, in which event notice may
be telephonic and the five-day period shall be shortened to one day.
10.3 If maintenance and repairs to the Premises, Building or
Common Areas are caused in whole by the act, neglect, fault, or omission
of any duty by Tenant, its agents, servants, employees, or invitees,
Tenant shall pay to Landlord the costs of such maintenance and repairs,
unless such maintenance and repairs are covered by insurance for which
effective waivers of subrogation under this Lease are then in full force
and effect.
10.4 Except as specifically provided in this Lease, there shall
be no abatement of Rent in any circumstance under this Lease.
10.5 Landlord's maintenance and repairs shall be accomplished
with the least possible amount of interference with the conduct of
Tenant's business and, to the extent practicable, shall be done after
normal business hours. Unless otherwise agreed, all maintenance or
repair work to be performed by Landlord under this Lease shall be
completed promptly but in any event within 24 hours in any emergency (as
defined below) and within 30 days for all other repairs. If the work
cannot be completed within 24 hours or 30 days, as the case may be, it
shall be commenced within the applicable period and prosecuted
continuously and diligently thereafter until completion. "Emergency"
means a situation that (i) threatens the physical well-being of persons
within the Premises, or (ii) materially disrupts the Tenant's use and/or
occupancy of the Premises or any portion thereof.
10.6 Without limiting the generality of this Section, in no
event shall Landlord have any liability for consequential damages
resulting from any act or omission of Landlord in respect of its Repair
and Service Obligations, even if Landlord has been advised of the
possibility of such consequential damages.
11. Alterations and Additions by Tenant. With the prior written
consent of Landlord, Tenant may make at its expense additional improvements or
alterations to the Premises, beyond the Initial Improvements. Any repairs or new
construction by Tenant shall be done in conformity with plans and specifications
approved by Landlord and in conformity with all laws and legal requirements, by
contractors approved by Landlord, and subject to Landlord's reasonable rules and
regulations regarding such construction. All work performed shall be done
lien-free In a workmanlike manner. Landlord may require that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
150% of the estimated cost of any improvements, additions, or alterations in
the Premises. Landlord shall not unreasonably withhold its consent to Tenant's
proposed alterations or improvements if the conditions of this Section 11 are
satisfied. Landlord may, if it so notifies Tenant of the time of initial
consent, require Tenant to remove any improvements or alterations made under
this Section 11 at the expiration or termination of the Term, such removal to
occur at Tenant's expense; and Tenant shall repair all damage to the Premises or
Building occurring as a result of such removal. In the event Tenant fails to
remove any improvements or alterations as required by Landlord or repair any
damage occurring during such removal, Landlord shall be entitled to remove any
improvements or alterations or make such repairs, at Tenant's expense, and shall
further be entitled to draw upon the Deposit. Any approval of Landlord required
under this Section shall not be unreasonably withheld, conditioned or delayed;
provided, however, that If Landlord does not respond to a request for consent
within ten (10) days,
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such consent shall be deemed given. in addition, and notwithstanding anything to
the contrary herein, Tenant may, without Landlord's prior written consent, but
in conformity with all laws and legal requirements and subject to the other
requirements of this Section 11, make alterations in and to the Premises which
consist of data and telephone cabling and wiring, decorations, interior painting
and nonstructural alterations that do not affect Building systems.
12. Insurance; Indemnity.
12.1 Landlord shall not be liable to Tenant, and Tenant hereby
waives all claims against Landlord, for injury or damage to any person
or property in or about the Premises, Building, Property or Common Areas
by or from any cause whatsoever, including without limitation any acts
or omissions of any other tenants, licensees or invitees of the
Building.
12.2 Tenant shall indemnify and defend (using legal counsel
acceptable to Landlord) Landlord and hold Landlord harmless, from and
against any and all loss, cost, damage, liability and expense (including
reasonable attorneys' fees) whatsoever that may arise out of or in
connection with Tenant's occupation, use or improvement of the Premises
or the Building (including without limitation Tenant's access rights
under Section 35 below), or that of its employees, agents, contractors,
or invitees, or Tenant's breach of its obligations under this Lease. To
the extent necessary to fully indemnify Landlord from claims made by
Tenant or its employees, this indemnity constitutes a waiver, as between
Landlord and Tenant only, of Tenant's immunity, if any, under the
Washington Industrial Insurance Act, RCW Title 51. This indemnity shall
survive the expiration or termination of the Term.
12.3 The foregoing exculpation, release and indemnity provisions
shall not apply to the extent the subject claims thereunder were caused
by Landlord's negligence or willful misconduct or by Landlord's failure
to perform its obligations under this Lease. Landlord shall indemnify
and defend (using legal counsel acceptable to Tenant) Tenant and hold
harmless Tenant from claims, suits, actions, or liabilities for personal
injury, death or for loss or damage to property that arises from the
negligence or willful misconduct of Landlord, its employees, agents or
contractors; or from any breach or default by Landlord in the
performance of any of Landlord's obligations under this Lease. However,
in no event shall Landlord have any liability to Tenant for
consequential damages under this lease.
12.4 Tenant shall procure and maintain throughout the Term at
Tenant's expense, the following insurance:
12.4.1 Commercial general public liability insurance,
insuring Tenant against liability arising out of the Lease and
the use, occupancy, or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be in the amount of
not less than $2,500,000 combined single limit for injury to or
death of one or more persons in an occurrence, and for damage to
tangible property (including loss of use) in an occurrence. Such
policy shall insure the operations of independent contractors
and contractual liability (covering the indemnity in Section
12.2) and shall: (i) name Landlord as an additional insured,
(ii) provide a waiver of subrogation endorsements with respect
to Landlord, and (iii) provide that it is primary and
noncontributing with any insurance in force or on behalf of
Landlord.
12.4.2 Standard form property insurance insuring against the
perils of fire, extended coverage, vandalism, malicious
mischief, special extended coverage ("All-Risk") and sprinkler
leakage. This insurance policy shall be upon all personal
property for which Tenant is legally liable or that was
installed at Tenant's expense, and that is located in the
Building or Premises, including without limitation
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the Initial Improvements and all Tenant's furnishings, fixtures,
furniture, fittings, and equipment and all improvements to the
Premises installed by Tenant, in an amount not less than 90% of
the full replacement cost thereof. Such policy shall also
include business interruption coverage, covering direct or
indirect loss of Tenant's earnings attributable to Tenant's
inability to use fully or obtain access to the Premises or
Building, in an amount as will properly reimburse Tenant. Such
policy shall name Landlord and any mortgagees of Landlord as
additional insured parties, as their respective interests may
appear.
12.4.3 Workman's Compensation and Employer's Liability
Insurance (as required by state law).
12.5 All policies of insurance to be obtained by Tenant
hereunder shall be in a form satisfactory to Landlord and shall be
issued by insurance companies holding a General Policyholder Rating of
"A-" and a Financial Rating of "VII" or better in the most current issue
of Best's Insurance Guide. Tenant shall provide Landlord with
certificates of such insurance. No such policy shall be cancelable or
reducible in coverage except after 30 days' prior written notice to
Landlord. Tenant shall, within ten days prior to the expiration of such
policies, furnish Landlord with renewals or "binders" thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant
as Additional Rent.
12.6 Landlord shall maintain liability and casualty insurance
for the Building and Property adequate in Landlord's judgment to cover
(with commercially reasonable deductibles) the risks customarily insured
against by owners of properties similar to the Building.
12.7 The proceeds of any insurance policies maintained by or for
the benefit of Landlord shall belong to and be paid over to Landlord.
Any interest or right of Tenant in any such proceeds shall be subject to
Landlord's interest and right in such proceeds.
12.8 Anything in this Lease to the contrary notwithstanding,
Tenant and Landlord each waives its entire right of recovery, claims,
actions, or causes of action against the other for loss or damage to the
Premises, Building, or Property or any personal property of such party
therein that is caused by or incident to the perils covered by normal
extended coverage clauses of standard fire insurance policies carried by
the waiving party and in force at the time of damage or loss. Tenant and
Landlord each waives any right of subrogation it may have against the
other party to the extent of recovery under any such insurance, and
shall cause each insurance policy obtained by it to provide that the
insurance company waives all right to recovery by way of subrogation
against the other party in connection with any such loss or damage. If
either Landlord or Tenant is unable to obtain its insurer's permission
to waive any claim against the other party, such party shall promptly
notify the other party of such inability.
12.9 Tenant shall promptly notify Landlord of any casualty or
accident occurring in or about the Premises.
13. Destruction.
13.1 If the Premises or the Building is destroyed by fire,
earthquake, or other casualty to the extent that they are untenantable
in whole or in part and can be rebuilt and restored within 180 days from
the date of destruction, then Landlord shall have the right but not the
obligation to proceed with reasonable diligence to rebuild and restore
the Premises or the Building or such part thereof. In the event of
partial destruction of the Building and/or the Premises, to an extent
not exceeding 25% of the full insurable value
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thereof, and if the damage thereto is such that the Building and/or the
Premises may be repaired, reconstructed or restored within a period of
90 days from the date of such casualty, and if Landlord will receive
insurance proceeds sufficient to cover the cost of such repairs and if
Landlord's lender has not required the application of insurance proceeds
to any indebtedness, the repayment of which is secured by the Property,
then Landlord shall commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease shall continue in
full force and effect.
13.2 Landlord shall within 30 days after such destruction or
injury notify Tenant whether Landlord intends to rebuild. If Landlord
notifies Tenant that Landlord does not intend to rebuild, this Lease
shall terminate upon the date of damage. If repair, reconstruction or
restoration of the Premises cannot be completed within 180 days after
the date of the damage, or if such work is commenced and is not, for any
reason whatsoever, completed within 270 days, then Tenant may, at its
option, terminate this Lease by written notice to Landlord within 20
days after Landlord's notice of its intent to rebuild or 20 days after
expiration of the 270 day period, as the case may be.
13.3 During the period from destruction or damage until
restoration (or termination of this Lease), Rent shall be abated in the
same ratio as that portion of the Premises which is unfit for occupancy
shall bear to the whole Premises.
13.4 Landlord shall not be required to repair any injury or
damage by fire or other cause to, or to make any repairs or replacements
of any panels, decoration, office fixtures, paintings, floor covering,
or any other improvements to the Premises installed by Tenant. Instead,
if Landlord repairs or rebuilds the Premises under this Section 13,
Tenant shall repair or rebuild such Tenant-installed improvements and
other items of property
13.5 Tenant shall not be entitled to any compensation or damages
from Landlord for loss of the use of the whole or any part of the
Premises, the property of Tenant, or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction, or restoration.
14. Condemnation.
14.1 If all or part of the Premises are taken under power of
eminent domain, or sold under the threat of the exercise of said power,
this Lease shall terminate as to the part so taken as of the date the
condemning authority takes possession.
14.2 If more then 25% of the floor area of Premises is taken by
condemnation, Landlord or Tenant may, by written notice to the other
within ten days after notice of such taking, terminate this Lease as to
the remainder of the Premises as of the date the condemning authority
takes possession or Tenant is dispossessed of the Premises, whichever is
earlier.
14.3 If Landlord or Tenant does not so terminate, this Lease
shall remain in effect as to such remainder, except that the Rent shall
be reduced in the proportion that the rentable floor area taken bears to
the original rentable total floor area. However, if circumstances make
abatement based on floor area unreasonable, the Rent shall abate by a
reasonable amount to be determined by Landlord. In the event that
neither Landlord nor Tenant elects to terminate this Lease, Landlord's
responsibility to restore the remainder of the Premises shall be limited
to the amount of any condemnation award allocable to the Premises, as
reasonably determined by Landlord.
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14.4 Any award for the taking of all or part of the Premises
under the power of eminent domain, including payment made under threat
of the exercise of such power, shall be the property of Landlord,
whether made as compensation for diminution in value of the leasehold or
for the taking of the fee or as severance damages. Tenant shall only be
entitled to such compensation as may be separately awarded or
recoverable by Tenant in Tenant's own right for the loss of or damage to
improvements to the Premises installed by Tenant, Tenant's trade
fixtures and removable personal property. Landlord shall not be liable
to Tenant for the loss of the use of all or any part of the Premises
taken by condemnation.
14.5 Landlord shall have the exclusive authority to grant
possession and use to the condemning authority and to negotiate and
settle all issues of just compensation or, in the alternative, to
conduct litigation concerning such issues; provided, however, that
Landlord shall not enter into any settlement of any separate award that
may be made to Tenant as described above without Tenant's prior approval
of such settlement, which approval shall not be unreasonably withheld.
15. Assignment and Subletting.
15.1 Tenant shall not assign this Lease, or sublet the Premises
or any part thereof, either by operation of law or otherwise, or permit
any other party to occupy all or any part of the Premises, without first
obtaining the written consent of Landlord. Landlord shall not
unreasonably withhold its consent to any assignment or sublease proposed
by Tenant in accordance with this Section. Tenant shall propose such
assignment or sublease by written notice to Landlord, and such notice
shall specify an effective date which shall be not less than 30 days
after the date of such notice. This Lease shall not be assignable by
operation of law. Tenant shall further provide to Landlord other
information and creditworthiness materials concerning any proposed
assignee or sublessee as is reasonably requested by Landlord. Any
consent required by Landlord under this Section shall not be
unreasonably withheld, conditioned or delayed.
15.2 Subject to Section 15.5, if Tenant is a corporation, any
transfer of this Lease from Tenant by merger, consolidation, or
liquidation, or any change in the ownership of or power to vote 50% or
more of the outstanding voting stock of Tenant shall constitute an
assignment under this Lease. If Tenant Is a partnership or limited
liability company, any change In the Identity or majority ownership of
partners or members in Tenant serving as general partner or manager or
owning 50% or more of the outstanding economic interests in such entity
shall constitute an assignment under this Lease.
15.3 If Tenant proposes to sublet the entire Premises, Landlord
shall, except as set forth in Section 15.5, have the right to recapture
the Premises. Landlord may exercise such right by notice to Tenant
within 10 days after receipt of Tenant's notice. Such recapture shall
terminate this Lease as to the applicable portion of the Premises
effective on the effective date proposed in Tenant's notice.
15.4 If Landlord elects not to recapture and thereafter elects
to gives its consent to the proposed assignment or sublease, (i)
Landlord may charge Tenant a reasonable sum to reimburse Landlord for
legal and administrative costs incurred in connection with such consent
not to exceed $1,500 in any instance; (ii) In the event of a sublease,
Landlord and Tenant shall share equally in any net rent and other net
proceeds paid to Tenant in excess of the Rent to be paid to Landlord
under this Lease; and (iii) in the event of an assignment or a sublease,
Tenant shall remain liable to Landlord for the performance of all of
Tenant's obligations under this Lease.
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15.5 Notwithstanding any other provision of this Section 15,
Tenant shall be entitled to assign this Lease or sublease all or any
portion of the Premises to any subsidiary of Tenant or to any affiliate
of Tenant (as defined in the Securities Act of 1933), without the prior
consent of Landlord; provided, however, that Tenant shall notify
Landlord of any such assignment or sublease as soon as practicable, and
no such assignment or sublease shall relieve Tenant of its obligations
under this Lease. Notwithstanding any other provision of this Section
15, Landlord hereby consents to an assignment of this Lease, or a
subletting of all or part of the Premises, to (a) any corporation in
whom or with which Tenant may be merged or consolidated, provided that
the net worth of the resulting corporation is at least equal to (i) the
net worth of Tenant on the date hereof, or (ii) the net worth of Tenant
immediately prior to such merger or consolidation, or (b) any entity to
whom Tenant sells all or substantially all of its assets, provided that
such entity expressly assumes all of Tenant's obligations hereunder.
Landlord acknowledges that Tenant is a publicly-owned corporation, and
Landlord agrees that, notwithstanding anything to the contrary in this
Lease, any sales, exchanges or other transfers of stock in Tenant shall
not constitute an assignment of this Lease or require Landlord's
consent.
15.6 In the event of any sale of the Building or Property, or
any assignment of this Lease by Landlord, Landlord shall be relieved of
all liability under this Lease arising out of any act, occurrence, or
omission occurring after sale or assignment provided that Landlord shall
be relieved of liability for the security deposit only if Landlord
transfers the security deposit; and the purchaser or assignee at such
sale or assignment or any subsequent sale or assignment of Lease, the
Property, or Building, shall be deemed without any further agreement to
have assumed all of the obligations of the Landlord under this Lease
accruing after the date of such sale or assignment.
15.7 Subject to the provisions of this Section, this Lease shall
be binding upon and inure to the benefit of the parties, their heirs,
successors and assigns.
16. Default.
16.1 The occurrence of any one or more of the following events
shall constitute a material default and breach of the Lease by Tenant
("Default"):
16.1.1 failure by Tenant to make any payment of Rent
required as and when due, where such failure shall continue
after receipt of five days' written notice from Landlord;
16.1.2 failure by Tenant to observe or perform any of the
covenants, conditions, or provisions of this Lease, other than
the payment of Rent, where such failure shall continue after 30
days' written notice from Landlord provided, however, that if
the nature of Tenant's obligation is such that more than 30 days
are required for performance, Tenant shall not be in default if
Tenant commences performance within 30 days after Landlord's
notice and thereafter completes such performance diligently and
within a reasonable time; or
16.1.3 (i) the making by Tenant of any general assignment or
general arrangement for the benefit of creditors; (ii) the
filing by or against Tenant of a petition in bankruptcy,
including reorganization or arrangement, unless, in the case of
a petition filed against Tenant, the same is dismissed within 30
days; (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease; (iv) the
seizure by any department of any government or any officer
thereof of the business or property of Tenant; and (v)
adjudication that Tenant is bankrupt.
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16.2 Tenant shall notify Landlord promptly of any Default by
Tenant (or event or occurrence which, with the passage of time, the
giving of notice, or both, would become a Default) that by its nature is
not necessarily known to Landlord.
16.3 Landlord shall be in Default if it fails to observe or
perform any of the covenants, conditions, or provisions of this Lease,
where such failure shall continue after 30 days' written notice from
Tenant; provided, however, that if the nature of Landlord's obligation
is such that more than 30 days are required for performance, Landlord
shall not be in Default if Landlord commences performance within 30 days
after Tenant's notice and thereafter completes such performance
diligently and within a reasonable time. Tenant shall copy Landlord's
lender with any such notice of default, if Tenant has been provided with
the name and address of any such lender.
16.4 Notwithstanding any provisions in this Lease to the
contrary, if Landlord is in Default under this Lease, Tenant may,
without waiving any claim for damages for breach of agreement or any
other rights or remedies it may have under this Lease at law, at any
time thereafter do any of the following, if applicable under the
circumstances:
(a) Cure the Default for the account of the Landlord, and
any amount reasonably paid or any contractual liability
reasonably incurred by Tenant in so doing shall be deemed paid
or incurred for the account of Landlord, and Landlord shall
reimburse Tenant on demand.
(b) Abate Rent for the portion(s) of the Premises rendered
unusable for Tenant's purposes.
(c) Terminate this Lease if Tenant's use and occupancy of
the Premises or a material portion thereof are prevented or made
dangerous.
(d) If the obligations of Landlord under this Lease are not
performed during the pendency of a bankruptcy or insolvency
proceeding involving the Landlord as the debtor, or following
the rejection of this Lease in accordance with Section 365 of
the United States Bankruptcy Code and the election of Tenant to
remain in possession of the Premises in a bankruptcy or
insolvency proceeding involving the Landlord as the debtor, to
set off against Rent next due and owing under this Lease (i) any
and all damages that it demonstrates to the Bankruptcy Code were
caused by nonperformance of the Landlord's obligations under
this Lease by Landlord, debtor-in-possession, or the bankruptcy
trustee, and (ii) any and all damages caused by the
nonperformance of Landlord's obligations under this Lease
following any rejection of this Lease in accordance with Section
365 of the United States Bankruptcy Code.
Except as specifically provided otherwise above, in no event
shall a default by Landlord under this Lease give rise to any right of
Tenant to terminate this Lease or withhold or offset the payment of Base
Rent or Additional Rent. The obligations of Tenant to pay Base Rent and
Additional Rent shall continue unaffected in all events unless suspended
or terminated pursuant to an express provision of this Lease.
17. Remedies in Default.
17.1 In the event of any Default by Tenant, Landlord may, at any
time without waiving or limiting any other right or remedy, do any one
or more of the following: (i) reenter and take possession of the
Premises, (ii) pursue any remedy allowed by law or equity,
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(iii) terminate this Lease and/or (iv) terminate any options to extend
the Term, if then exercised.
17.2 Whether Landlord has elected to terminate this Lease or not
Tenant shall pay Landlord the cost of recovering possession of the
Premises, the expenses of reletting, and any other costs or damages
arising out of Tenant's Default, including without limitation the costs
of removing persons and property from the Premises, the costs of
preparing or altering the Premises for reletting, broker's commissions,
and attorneys' fees.
17.3 No re-entry or taking possession of the Premises by
Landlord pursuant to this Section or acceptance of Tenant's keys to or
surrender of the Premises shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Tenant,
17.4 Notwithstanding any reentry or termination, the liability
of Tenant for the Rent shall continue for the balance of the Term, and
Tenant shall make good to Landlord any deficiency arising from reletting
the Premises at a lesser rent than the Rent provided for in this Lease.
Tenant shall pay such deficiency each month as the amount thereof is
ascertained by Landlord, provided that Landlord is obligated to exercise
reasonable efforts to mitigate its damages by reletting the Premises,
and Tenant's liability shall be limited to the amount of rent that could
not reasonably have been achieved even if Landlord had mitigated its
damages by reletting the Premises.
18. Access. Landlord acknowledges that the Premises will be a high
security area for Tenant, and that any access to the Premises by Landlord or its
invitees for any purposes under this Lease shall be permitted by Tenant only
after at least twenty-four (24) hour notice (which may be telephonic) from
Landlord (except in the event of an emergency, in which event Landlord shall
endeavor to give advance telephonic notice) and shall be conducted only in the
presence of an escort or employee which shall be provided by Tenant. Landlord
shall also comply with reasonable sign-in procedures and shall provide the name,
affiliation and business purpose of each such visit by Landlord or its invitees.
Landlord may also show the Premises to prospective purchasers or tenants at
reasonable times, provided that Landlord shall not interfere with Tenant's
business operation, provided that Landlord shall cause such persons to comply
with the security measures described above, and Landlord shall identify such
persons by name and affiliation in its notice to Tenant. In the event Tenant
objects to the identity of such person on the basis that it is a direct or
indirect competitor of Tenant, such person shall not have access to the
Premises. Tenant may also require Landlord and any such prospective visitor,
tenant or purchaser to execute a commercially reasonable confidentiality
agreement as a condition of access.
19. Hold-Over Tenancy. If without execution of a new Lease or
written extension Tenant shall hold over after the expiration or termination of
the Term, with Landlord's written consent, Tenant shall be deemed to be
occupying the Premises as a Tenant from month to month, which tenancy may be
terminated as provided by law, unless the parties agree otherwise at the time of
Landlord's consent. If Tenant shall hold over after expiration or termination of
the Term without Landlord's written consent, the Base Monthly Rent payable shall
be 150% of the Base Monthly Rent payable in the last month prior to expiration
or termination of the Term, and Tenant shall continue to pay Additional Rent.
During any such tenancy, Tenant shall continue to be bound by all of the terms,
covenants, and conditions of this Lease, insofar as applicable.
20. Compliance with Law. Tenant shall not use the Premises or permit
anything to be done in or about the Premises which will in any way conflict with
any applicable law, statute, ordinance, or governmental rule or regulation and
any restrictive covenants and obligations created by private contracts which
affect the use and operation of the Premises, Building, or Property, now or
hereafter in force ("Laws"). Landlord represents and warrants to Tenant that (a)
any such
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restrictive covenants and obligations created by private contracts are not
inconsistent with, and do not adversely affect, this Lease, and (b) as of the
date of execution of this Lease, to Landlord's knowledge, the Premises and
Building comply with all laws and can be legally occupied by Tenant for the uses
permitted hereunder. In its use, occupancy and alteration of the Premises,
Tenant shall at its sole cost and expense promptly comply with all Laws,
including without limitation the Americans with Disabilities Act, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the use or occupancy of
the Premises. The judgment of any court of competent jurisdiction, or the
admission of Tenant in any action, whether Landlord be a party thereto or not,
that Tenant has violated any Laws, shall be conclusive of the fact as between
Landlord and Tenant.
21. Rules and Regulations. Tenant shall faithfully observe and
comply with the reasonable rules and regulations that Landlord shall from time
to time promulgate. Landlord reserves the right from time to time to make all
reasonable modifications to such rules and regulations. Additions and
modifications to rules and regulations shall be binding on Tenant 30 days after
delivery of a copy of them to Tenant. Landlord shall not be responsible to
Tenant for the nonperformance of any rules or regulations by any other tenants
or occupants of the Building.
22. Parking. Tenant shall have the right to use, in common with
other tenants and occupants of the Building, one parking stall per entire
multiple of 2,000 rsf then occupied by Tenant (other than storage space), in the
parking facility located within the Building. The parking facility shall be
available for use by all tenants of the Building, their guests and invitees, but
may, at Landlord's election, be designated by Landlord. Tenant shall pay, as
Additional Rent, the market rate charges that Landlord that may establish or
alter for such parking facilities from time to time, for the number of spaces
allocable to Tenant, except to the extent Tenant has agreed to reduce the number
of parking stalls allocated to Tenant by notice to Landlord. As of the date of
this Lease, the monthly parking rate is $180.00.
23. Estoppel Certificates. Tenant shall execute, within 20 days
following Landlord's request, a certificate in such reasonable form as may be
required by Landlord or a prospective purchaser, mortgagee or trust deed
beneficiary, or Landlord's successor after a sale or foreclosure, certifying:
(i) the Commencement Date of this Lease, (ii) that the Lease is unmodified and
in full force and effect, (or if there have been modifications hereto, that this
Lease is in full force and effect, and stating the date and nature of such
modifications); (iii) that there have been no current defaults under this Lease
by either Landlord or Tenant except as specified in Tenant's statement, (iv) the
dates to which the Base Monthly Rent, Additional Rent and other charges have
been paid, and (v) any other information reasonably requested by the requesting
party. Such certificate may be relied upon by Landlord and/or such other
requesting party. Tenant shall use diligent efforts to deliver said statement
promptly upon request and shall deliver such statement within 20 days of
request. In any event, Tenant's failure to deliver said statement within 20 days
of request, shall constitute Tenant's admission of the facts as stated in the
proposed certificate.
24. Subordination. Landlord represents and warrants to Tenant that
it is the sole owner in fee simple of the Building, subject to a deed of trust
in favor of Washington Mutual Bank and various other exceptions (but no other
liens or encumbrances for borrowed money). Tenant agrees that this Lease shall
be subordinate to the lien of any mortgage, deeds of trust, or ground leases now
or hereafter placed against the Property or Building, and to all renewals and
modifications, supplements, consolidations, and extensions thereof.
Notwithstanding the foregoing, Landlord reserves the right, however, to
subordinate or cause to be subordinated any such mortgage, deed of trust or
ground lease to this Lease. Tenant shall have the continued quiet enjoyment of
the Premises free from any disturbance or interruption by any successor to
Landlord's interest existing or first mortgagee or beneficiary of a deed of
trust, or any purchaser at a foreclosure or private sale of the Property as a
result of Landlord's default under such mortgage or deed of trust, so long as
Tenant performs its obligations under this Lease. Upon a foreclosure or
conveyance in lieu of
18
<PAGE> 19
foreclosure under such mortgage or deed of trust, or a termination of such
ground lease, and a demand by Landlord's successor, Tenant shall attorn to and
recognize such successor as Landlord under this Lease. Tenant shall execute and
deliver on request and in the form reasonably requested from time to time by
Landlord or its successor, any instruments reasonably necessary or appropriate
to evidence, effect or confirm such subordination, provided that such
instruments confirm that Tenant's right to quiet enjoyment of the Premises in
accordance with the provisions of this Lease shall not be disturbed. Should
Tenant fail to sign and return any such documents within 10 business days of
request, Tenant shall be in Default. Notwithstanding the foregoing, Landlord
agrees to use diligent efforts to obtain for Tenant's benefit a commercially
reasonable subordination, non-disturbance and attainment agreement from
Washington Mutual Bank within 15 days after mutual execution of this Lease.
25. Removal of Property. On expiration or other termination
of this Lease, Tenant shall remove (i) all personal property of Tenant on the
Premises, including without limitation all Tenant's furnishings, fixtures,
furniture, fittings, data cabling, data wiring and equipment and those items
designated as Tenant's property in the schedule provided for under Section 3 or
as otherwise provided in Section 3.3; (ii) all improvements to the Premises
installed by or at the expense of Tenant other than such improvements as have
become the property of Landlord under this Lease; and (iii) at Landlord's
request, made at the time of initial consent, all non-standard or specialty
improvements made to the Premises by Landlord or Tenant (other than the
electrical vault and the structural frame on the roof for the generator and
computer room HVAC system). Tenant shall repair or reimburse Landlord for the
cost of repairing any damage to the Premises resulting from the installation or
removal of such property of Tenant. All property of Tenant remaining on the
Premises after reentry or termination of this Lease shall be deemed abandoned
and may be removed by Landlord. Landlord may store such property of Tenant in
any place selected by Landlord, including but not limited to a public warehouse,
at the expense and risk of the owner thereof, with the right to sell such stored
property of Tenant without notice to Tenant. The proceeds of such sale shall be
applied first to the cost of such sale, second to the payment of the cost of
removal and storage, if any, and third to the payment of any other amounts that
may then be due from Tenant to Landlord under this Lease, and any balance shall
be paid to Tenant.
26. Personal Property Taxes. Tenant shall pay prior to
delinquency all personal property taxes, if any, payable with respect to all
property of Tenant located on the Premises or the Building and promptly upon
request of Landlord shall provide satisfactory evidence of such payment.
"Personal property taxes" under this Section shall include all property taxes
assessed against the property of Tenant, whether assessed as real or personal
property.
27. Notices. All notices under this Lease shall be in
writing. Notices shall be effective (i) 3 business days after mailed by
certified mail, return receipt requested or(ii) when personally delivered
(including without limitation by messenger service). Either party may change its
address and fax number for notices by notice to the other from time to time. The
parties' addresses for notices are as follows:
19
<PAGE> 20
Landlord Tenant
1 100 Second Avenue Limited Partnership Amazon.com, Inc.
c/o Second Avenue Properties, Inc. 1516 Second Avenue, 4th Floor
Attn: Robert A. Hubbard Seattle, Washington 98101
3533 262nd Ave. S.E. Attn: General Counsel
Issaquah, Washington 98029 fax:__________________________
fax: 206-391-2453
with a copy to: with a copy to:
Phillips McCullough Wilson Hill & Fikso Perkins Coie
Attn: Robert B. Fikso Attn: William L. Green
2025 First Avenue, Suite 1130 1201 Third Avenue, 40' Floor
Seattle, Washington 98121-2100 Seattle, Washington 98101
fax: 206-448-3444 fax: 206-583-8500
28. [Intentionally Omitted.]
29. Hazardous Substances.
29.1 Tenant shall not, without first obtaining Landlord's prior
written approval, generate, release, store, deposit, transport, or
dispose of (collectively "Release") any hazardous substances, sewage,
petroleum products, hazardous materials, toxic substances or any
pollutants or substances, defined as hazardous or toxic in applicable
federal, state and local laws and regulations ("Hazardous Substances")
in, on or about the Premises, except for normal quantities of customary
office products used as intended by the manufacturer (including, but not
limited to, diesel fuel for the emergency generator) and in compliance
with Laws. In the event, and only in the event, Landlord approves such
Release of Hazardous Substances on the Premises, such Release shall
occur safely and in compliance with all applicable Laws.
29.2 Tenant shall indemnify and defend (with counsel approved by
Landlord) Landlord, and hold Landlord harmless, from and against any and
all claims, liabilities, losses, damages, cleanup costs, and expenses
(including reasonable attorneys' fees) arising out of or in any way
relating to the Release by Tenant or any of its agents, representatives,
employees or invitees, or the presence of any Hazardous Substances in,
on or about the Premises occurring as a result of or in connection with
Tenant's use or occupancy of the Premises at any time after the
Commencement Date.
Landlord shall indemnify and defend (with counsel approved by Tenant)
Tenant, and hold Tenant harmless, from and against any and all claims,
liabilities, losses, damages, cleanup costs, and expenses (including
reasonable attorneys' fees) arising out of or in any way relating to the
Release by Landlord or any of its agents, representatives, employees or
invitees, or the presence on the date hereof of any Hazardous Substances
in, on or about the Premises or the Building.
29.3 Landlord shall have the right, subject to Section 18, from
time to time to enter the Premises, Building and Property and inspect
the same for the presence of Hazardous Substances and compliance with
the provisions of this Section upon a reasonable suspicion by Landlord
that there may be Hazardous Substances in the Premises in violation of
Tenant's obligations under this Lease.
20
<PAGE> 21
29.4 The provisions of this Section shall survive the expiration
or termination of this Lease with respect to any occurrences during the
Term.
30. Signs. Tenant shall not place upon or install in windows or
other openings or exterior sides of doors or walls of the Premises any symbols,
drapes, or other materials without the written consent of Landlord. Tenant shall
observe and comply with the requirements of all Laws applicable to signage.
31. General Provisions.
31.1 Attorneys' Fees. In the event of any litigation,
arbitration or other proceeding (including proceedings in bankruptcy and
probate and on appeal) brought to enforce or interpret or other wise
arising under this Lease, the substantially prevailing party therein
shall be entitled to the award of its reasonable attorneys' fees,
witness fees, and court costs incurred therein and in preparation
therefor.
31.2 Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of Washington.
31.3 Cumulative Remedies. No remedy or election under this Lease
shall be deemed exclusive but shall, wherever possible, be cumulative
with all other remedies at law or in equity.
31.4 Exhibits; Addenda. Exhibits and Addenda, if any, affixed to
this Lease are a part of and incorporated into this Lease.
31.5 Interpretation. This Lease has been submitted to the
scrutiny of all parties hereto and their counsel, if desired, and shall
be given a fair and reasonable interpretation in accordance with the
words hereof, without consideration or weight being given to its having
been drafted by any party hereto or its counsel.
31.6 Joint Obligation. If there is more than one Tenant under
this Lease, the obligations hereunder imposed upon Tenants shall be
joint and several.
31.7 Keys. Upon expiration or termination of this Lease, Tenant
shall surrender all keys to the Premises to Landlord at the place then
fixed for payment of Rent and shall inform Landlord of all combination
locks, safes, and vaults, if any, in the Premises.
31.8 Late Charges; Interest. Late payment (i.e., payment not
made within 5 days after its due date) by Tenant to Landlord of Rent or
other sums due under this Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which would be difficult
and impractical to ascertain. Such costs include without limitation
processing and accounting charges and late charges which may be imposed
on Landlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, Tenant shall pay to Landlord as Additional Rent a
late charge equal to three percent of such installment as liquidated
damages for such late payment, other than for time value damages. A
$50.00 charge will be paid by Tenant to Landlord for each returned
check. In addition, any Rent or other sums due under this Lease to
Landlord that is not paid when due shall bear interest at the rate per
annum of two percent over the prime rate in effect at Seafirst Bank,
Main Office (or its successor), on the day such Rent or other sum was
due. The existence or payment of charges and interest under this Section
shall not cure or limit Landlord's remedies for any Default under this
Lease.
21
<PAGE> 22
31.9 Light, Air, and View. Landlord does not guarantee the
continued present status of light, air, or view in, to or from the
Premises.
31.10 Measurements. All measurements of the Premises stated in
this Lease, even if approximations, shall govern and control over any
actual measurement of the Premises. Except as provided otherwise in
Section 1, the Rent provided in this Lease and Tenant's Share shall not
be modified or changed by reason of any measurement or re-measurement of
the Premises that may occur after the date of this Lease, and is agreed
by Landlord and Tenant to constitute the negotiated rent for the
Premises.
31.11 Name. Tenant shall not use the name of the Building for
any purpose other than as an address of the business conducted by the
Tenant in the Premises.
31.12 Prior Agreements; Amendments. This Lease contains all of
the agreements of the parties with respect to any matter covered or
mentioned in this Lease, and no prior agreements or understandings
pertaining to any such matters shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties or their respective
successors in interest. This Lease shall not be effective or binding on
any party until fully executed by both parties hereto.
31.13 Recordation. Tenant shall not record this Lease or a short
form memorandum of this Lease without the prior written consent of
Landlord which shall not be unreasonably withheld.
31.14 Severability. That any provision of this Lease is invalid,
void, or illegal shall in no way affect, impair, or invalidate any other
provision of this Lease and such other provision shall remain in full
force and effect.
31.15 Time. Time is of the essence of this Lease and each of its
provisions.
31.16 Waiver. No provision of this Lease shall be deemed to have
been waived by Landlord unless such waiver is in writing signed by
Landlord's duly authorized representatives. The waiver by either party
of any provision of this Lease shall not be deemed to be a waiver of
such provision or any other provision, in any subsequent instance. The
acceptance of Rent by Landlord shall not be deemed to be a waiver of any
preceding Default or breach by Tenant under this Lease, whether known or
unknown to Landlord, other than the failure of the Tenant to pay the
particular Rent so accepted.
31.17 No Waste. Tenant shall not commit or suffer to be
committed any waste, damage or nuisance in or upon the Premises.
31.18 Quiet Enjoyment. Provided Tenant observes its obligations
under this Lease, its quiet enjoyment of the Premises throughout the
Term shall not be disturbed.
32. Authority of Tenant.
32.1 If Tenant is a corporation, each individual executing this
Lease on behalf of Tenant represents and warrants that (s)he is duly
authorized by all necessary action of the directors of Tenant to execute
and deliver this Lease on behalf of Tenant, and that this Lease is
binding upon Tenant in accordance with its terms.
32.2 If Tenant is a partnership or limited liability company,
each individual executing this Lease on behalf of Tenant represents and
warrants that (s)he is duly authorized in accordance with Tenant's
partnership agreement or limited liability company
22
<PAGE> 23
agreement by all necessary action of the partners or members or managers
of Tenant to execute and deliver this Lease on behalf of Tenant, and,
and that this Lease is binding upon Tenant in accordance with its terms.
33. Commissions. Landlord shall pay the commissions of
Washington Partners, pursuant to a separate letter of agreement between Landlord
and such broker. Each party represents and warrants to the other that it has not
had dealings with any real estate broker or agent other than those identified
above with respect to this Lease that would cause the other party to have any
liability for any commissions or other compensation to such broker or agent, and
that no such broker or agent has asserted any claim or right to any such
commission or other compensation. Such representing party shall defend and
indemnify the other party and hold the other party harmless from and against any
and all loss, cost, liability, damage and expense (including reasonable
attorneys' fees) whatsoever that may arise out of the breach of such
representation and warranty.
34. HVAC; Auxiliary Power Generator. Landlord shall provide
space in the parking garage of the Building and/or on the roof of the Building,
in a location approved by Landlord, sufficient to accommodate the installation
of Tenant's auxiliary generator. Tenant may install such generator at its
expense as part of or after the Initial Improvements work. Tenant may also
install the computer room HVAC System on the roof, together with such structural
support as may be required by Tenant and approved by Landlord consistent with
the terms of this Lease. Landlord makes no representation as to the suitability
of the roof or garage for such generator or HVAC System. The generator and HVAC
System shall be installed and operated in accordance with all laws and legal
requirements.
35. Ingress and Egress for Equipment. Tenant shall have the
right, exercisable from time to time during the first 60 days of the Term, to
use the staircase adjacent to the entrance to the south half of Floor 1 of the
Building, as shown on Exhibit B, for purposes of delivery and removal of
Tenant's equipment that cannot be accommodated in the freight elevator. After
the first 60 days of the Term, Tenant shall use the east elevator in the Floor 2
bank of three elevators (the "East Elevator") for purposes of such delivery and
removal, subject to the following conditions: (a) Tenant's access to the East
Elevator shall be from the Building garage or loading dock area directly to the
common area of Floor 2; (b) Tenant shall remove the East Elevator Door and
deliver and remove Tenant's equipment through the East Elevator shaft; (c)
Tenant shall provide Landlord two weeks' prior written notice of such use of the
East Elevator, which use shall be limited to the hours between 6:00 p.m. Friday
and 6:00 p.m. Sunday; (d) Tenant shall be entitled to use the East Elevator for
removal and delivery of equipment no more than five times during the Term.
Tenant shall promptly repair any damage to the Building, including damage to any
other tenant's premises, the common area, and the East Elevator, caused by the
use of the equipment ingress and egress rights under this Section. -
36. Reimbursement of Landlord. Tenant shall reimburse
Landlord for the amount, up to $3,000, actually incurred by Landlord for
electrical, structural and other studies deemed appropriate by Landlord to
assess, monitor and regulate the effect of Tenant's Initial Improvements on the
operation of the Building generally. Tenant shall make such reimbursement to
Landlord within 30 days of Landlord's request, which request shall include
reasonable evidence of such costs.
23
<PAGE> 24
EXECUTED the day and year above written.
LANDLORD:
1100 SECOND AVENUE LIMITED PARTNERSHIP
By Second Avenue Properties, Inc.,
General Partner
BY /s/ ROBERT A. HUBBARD
---------------------------------------
Robert A. Hubbard, its Vice President
TENANT:
AMAZON.COM, INC.
BY /s/ RICK DALZELL
---------------------------------------
Rick Dalzell ,its CIO/VP
--------------- -------------------
24
<PAGE> 25
STATE OF WASHINGTON )
)ss.
COUNTY OF KING )
On this 17th day of April, 1998, before me, the undersigned, a Notary
Public in and for the State of Washington, personally appeared Robert A.
Hubbard, to me known to be the Vice President of SECOND AVENUE PROPERTIES, INC.,
General Partner of 1100 SECOND AVENUE LIMITED PARTNERSHIP, the limited
partnership that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said corporation and
said limited partnership, for the uses and purposes therein mentioned, and on
oath stated that he/she was authorized to execute the said instrument on behalf
of said corporation and said limited partnership.
WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day and year first
above written.
/s/ STEVE C. HECHMAN
-------------------------------------------------
Name Steve C. Hechman
[SEAL] ---------------------------------------------
NOTARY PUBLIC in and for the State of Washington,
residing at Seattle
--------------------------------------
My commission expires 5/7/01
---------------------------
STATE OF WASHINGTON )
)ss.
COUNTY OF. KING )
On this 17th day of April, 1998, before me, the undersigned, a Notary
Public in and for the State of Washington, personally appeared Rick Dalzell to
me known to be the CIO/VP of AMAZON.COM INC., the corporation that executed the
foregoing instrument, And acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that he/she was authorized to execute the said
instrument on behalf of said corporation.
WITNESS MY HAND AND OFFICIAL SEAL hereto affixed the day year first
above written.
/s/ LAURA LEE ELDER
-------------------------------------------------
Name Laura Lee Elder
NOTARY PUBLIC in and for the State of Washington,
[SEAL]
NOTARY PUBLIC in and for the State of Washington,
residing at MTLK Terrace
--------------------------------------
My commission expires 11/20/01
---------------------------
25
<PAGE> 26
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
The land is located in the county of King, state of Washington, and is described
as follows:
LOTS 1, 4, 5 AND 8, BLOCK 14, ADDITION TO THE TOWN OF SEATTLE, AS LAID
OUT ON THE CLAIMS OF C. D. BOREN AND A.A. DENNY AND H.L. YESLER
(COMMONLY KNOWN AS C.D. BOREN'S ADDITION TO THE CITY OF SEATTLE),
ACCORDING TO THE PLAT THEREOF, RECORDED IN VOLUME 1 OF PLATS, PAGE(S)
25, IN KING COUNTY, WASHINGTON;
EXCEPT THE WESTERLY 12 FEET THEREOF CONDEMNED IN DISTRICT COURT CAUSE
NO. 7097 FOR THE WIDENING OF SECOND AVENUE AS PROVIDED BY ORDINANCE
NUMBER 1107 OF THE CITY OF SEATTLE;
TOGETHER WITH THAT PORTION OF THE VACATED ALLEY ADJOINING, WHICH UPON
VACATION, ATTACHED THERETO BY OPERATION OF LAW.
1
<PAGE> 27
EXHIBIT B
BASEMENT FLOOR PLAN
<PAGE> 28
EXHIBIT C
[SKILLING WARD MAGNUSSON BARKSHIRE INC. LETTERHEAD]
Page 1
INTRODUCTION
Purpose
The purpose of this review is to access, to the extent possible, the
overall structural condition and possible seismic performance of the 1100
Second Avenue Building in Seattle. This assessment includes the review of
the Building's structural condition, based primarily on observation, and
its seismic capability relative to FEMA-178. Handbook for the Seismic
Evaluation of Existing Buildings. Our work has not included an estimate of
the Probable Maximum Loss in the event of a rare earthquake.
This report contains the Scope of Services provided, a discussion of the
Site Investigation and Document Review that was performed, assumptions
regarding the Site Seismic Condition, a section presenting the Building
Description, and a discussion of the Criteria for Seismic Review employed.
The final sections present the Summary of Findings and Recommendations,
including a discussion of regulatory issues and a rough order of magnitude
costs.
Scope of Services
The following services were performed as part of the structural and
seismic review.
1. Visits to the site.
2. Collection and review of existing documentation for both buildings.
3. Review the buildings' overall structural condition.
4. Review the buildings' seismic capability relative to FEMA-178, NEHRP
Handbook for the Seismic Evaluation of Existing Buildings.
5. Development of recommendations, prioritization, and relative costs
for improvements.
6. Preparation of this report, outlining the findings of the above
reviews and noting issues which do not meet the stated standard.
The above scope of services were authorized by an agreement dated June 17,
1997 and signed by Robert Hubbard on June 18.
Limitations
Our professional services have been performed using the degree of care and
skill ordinarily exercised, under similar circumstances, by reputable
structural engineers practicing in this area. No other warranty,
expressed or implied, is made as to the professional advice included in
this report. This report has been prepared for Robert Hubbard and McKensay
Real Estate Services Inc. This report has not been prepared for use by
other parties, and may not contain sufficient information for purposes of
other parties or other users.
<PAGE> 29
Page 2
--------------------------------------------------------------------------------
SITE INVESTIGATION AND DOCUMENT REVIEW
On-site observations were made on June 15 and 26, 1997 to evaluate the
general condition of the buildings and to compare, where possible, as-built
conditions with existing construction documents. These observations were
conducted to the extent that existing conditions were observable without
exploratory demolition or excavation. Our evaluation of the underlying
structure was inferred from the condition of the finishes. No material tests
were conducted. The findings of the site investigation are presented in the
Summary of Findings section.
The drawings available for our review are presented in Table I.
Table I
Drawings Available for Review
<TABLE>
<S> <C> <C> <C>
1906 Architectural Drawings, including 1/23/07 Saunders and
floor plans, elevations and sections. Lawson
Structural Steel Election Drawings. 8/24/06 American
Bridge Co.
1958 Structural Drawings, S1-S15 2/10/58 Peter
Hosmark
1989 Seismic Structural Drawings, S:1 & S;2 7/5/89 TRA
</TABLE>
In most areas, the drawings provided a relatively clear definition of the
structural systems. Also, the site investigations verified that the buildings
appear to comply with the details and notes on the drawings, where conditions
were visible. The most glaring exceptions is in the 1906 Building, where
original drawings were based on a full build-out of eight floors. Only four
floors were constructed at that time and a fifth was added at a later date. No
drawings were available for this addition. Assumptions were made regarding
structural conditions not shown. These assumptions were used to complete the
structural analysis.
Also available for our review was a Identification of the Property, prepared
sometime subsequent to 1995. This document contains relevant legal information
as well as a detailed history of the buildings on the site, including the dates
of significant improvements and changes in ownership. The physical condition of
the buildings was assessed briefly as "average to good" and no significant
deferred maintenance was noted.
Photographs were taken during our site investigation. Selective photographs of
the buildings are included in Appendix A.
<PAGE> 30
Page 3
--------------------------------------------------------------------------------
SITE SEISMIC CONDITIONS
Introduction
The 1100 Second Avenue Building is located in downtown Seattle. The
western portions of the Pacific Northwest have experienced significant
seismic activity in the past 150 years and many large earthquakes in
geologically recent time. It is recognized that the Pacific Northwest
is one of the higher earthquake hazard regions in the United States.
There are three different, although related, source mechanisms that
produce earthquakes in the Pacific Northwest (1) crustal, or shallow,
earthquakes, (2) intraplate earthquakes, and (3) subduation
earthquakes. However, when compared to coastal California, the
seismicity of the Pacific Northwest is not as well understood with
regard to fault locations, activity, and recurrence intervals. A more
in-depth discussion regarding earthquake source mechanisms and hazard
terminology can be found in Appendix B.
Seismicity at the Site
As described above, 1100 Second Avenue is located in one of the higher
earthquake hazard regions in the United States. The earthquake ground
motion associated with an event that is expected to occur every 475
years was used to assess the likely performance of the buildings. In
terms of probability, this earthquake ground motion has a 10 percent
probability of exceedance in 50 years. This ground motion is also
consistent with the earthquake ground motion used in the design of new
buildings (as defined in the 1994 Uniform Building code) and the
evaluation of existing buildings (as defined in FEMA-178). Finally,
this ground motion is often referred to as the Design Basis Earthquake
(DBE) and can be generated on any of the known seismic sources
described above. Although the DBE for a source is defined as that level
of ground motion that, on average, is expected to occur once every 475
years, it may actually occur more or less often. Also, it is not the
strongest ground motion which could ever occur at the site. It is,
however, a reasonable estimate of the strongest shaking likely to occur
during the buildings' lives.
The ground motion parameters used to review the buildings' seismic
capability, relative in FEMA-178, are presented in table II. These
ground motion parameters are based on the latest research performed by
the United States Geological Survey (USGS). The USGS is nearing
completion of their periodical updates -- the parameters presented
below reflect these results.
<TABLE>
<CAPTION>
Table II
Ground Motion Parameters
------------------------------------------------------------------------
------------------------------------------------------------------------
<S> <C> <C>
Peak Ground Acceleration (PGA) .030g FEMA-178 Review
------------------------------------------------------------------------
Maximum Shaking Intensity (MMI) VIII PML Estimate
------------------------------------------------------------------------
</TABLE>
<PAGE> 31
Page 4
--------------------------------------------------------------------------------
BUILDING DESCRIPTION
The 1100 Second Avenue Building is composed of two smaller buildings constructed
at vastly different times. The buildings were constructed against one another
and in the 1980s, mechanical connections were constructed reinforcing the
linkage between the structures. For this reason, analysis of seismic performance
assumed that the buildings would act as one.
1906 Building (Baillargeon Building)
The southern half of the block was constructed in 1906-07, a half century
before the northern half of the block. The building is five stories tall
and rectangular, about 108 feet by 120 feet. It occupies a hillside site,
sloping downward from east to west between the alley and Second Avenue. The
structure is composed of structural steel columns, beams and purlins
supporting a concrete floor slab. Concrete is also cast around the steel
members to serve as fire resistance. Foundation support is provided by a
steel grillage that cast in concrete.
The building was designed, at that time, to be eight stories tall. Initial
construction, however, stopped at four floors, with one additional floor
added probably before the adjacent portion of the structure was constructed
in 1958. No drawings of the fifth floor addition were available for our
review. Architectural finish is composed primarily of terra cotta tiles and
these are supported by an infill brick and clay die system.
Resistance to wind and seismic forces is provided by a moment frame along
the street and alley elevations and a braced frame against the party
wall. These methods, while providing some nominal resistance to lateral
loads, were not designed with earthquakes in mind.
1958 Building (National Bank of Commerce Annex)
In 1958, a five-story building was constructed immediately north of the
existing Baillargeon Building. This building has a similar size and siting
to its neighbor.
This building is also steel. It supports gravity loads using structural
steel columns, beams, and purlins. These, in turn support concrete floor
slabs. Foundation support is provided by spread footings.
Lateral support, in this case, is provided by cast-in-place concrete
exterior walls. These either act as moment frames composed of deep beams
and wide columns, or as shear walls. The walls are cast around the
underlying steel frame, consequently they do not support any vertical
loading. Along the Second Avenue facade, the walls are reduced to a moment
frame of conventional sizes. Since the Seattle Building Code at the time
included some earthquake provisions, this building was designed with these
forces in mind.
The building is sheathed in terra cotta like its neighbor, but the
underlying support is provided by the concrete walls rather than brick or
clay tile.
<PAGE> 32
Page 5
--------------------------------------------------------------------------------
CRITERIA FOR SEISMIC REVIEW
To ascertain the buildings, probable seismic performance, FEMA-178 is used as
the primary methodology. A brief discussion regarding Seismic Evaluation of
Existing Buildings, followed by a discussion of the Background of FEMA-178, is
presented below.
Seismic Evaluation of Existing Buildings
Evaluation of an existing building for potential damage from an earthquake
requires balancing structural engineering, economic, Life Safety, and
policy concerns. No code currently exists as a benchmark for an earthquake
assessment. Consequently, priorities regarding loss of life and/or
building damage in the event of an earthquake must be developed.
The desired level of risk-reduction determines the philosophy of the
earthquake assessment. There are a number of earthquake assessment
philosophies representing various performance goals. Our seismic review
of the buildings is based on the Life Safety Philosophy of FEMA-178.
Background of FEMA-178
The purpose of FEMA-178 is to provide guidance in the review of a
building's response to earthquake based on a Life Safety Philosophy. The
intent is to prevent collapse and allow buildings to be safely existed.
Life safety is the primary concern; reoccupancy and damage to the building
are not a consideration under this philosophy.
FEMA-178. NEHRP Handbook for the Seismic Evaluation of Existing Buildings.
Is a standard assessment philosophy developed by the Building Seismic
Safety Council (BSSC) for the Federal Emergency Management Agency (FEMA).
The philosophy follows two basic courses. The first is an empirical
evaluation of building elements based on historic evidence regarding
hazards. The second is an evaluation of the building using earthquake
forces that the building is intended to resist. An expert panel developed
these forces to be consistent with a Life Safety Philosophy.
A building does not meet the Life Safety objective of this handbook if any
of the following events occur during an earthquake:
o The entire building collapses.
o Any portions of the building collapse.
o The components of the building fail and fall.
o The exit and entry routes are blocked, preventing evacuation and
restate of the occupants.
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The approach used by FEMA-178 and the UBC, with respect to development of
the seismic forces on the buildings, is very similar. However, the
acceptance criteria is, necessarily, different since FEMA-178 is an
evaluation document whereas the UBC is a design document. A brief
discussion regarding the FEMA-178 approach is presented below.
FEMA-178 Approach
The FEMA-178 approach is based on a pre-arranged set of checklists for
common building types designed to identify flaws and weaknesses. The
checklist is a collection of positive evaluation statements describing
building characteristics that are essential if the failures observed from
past earthquakes are to be avoided. True statements identify conditions
that are acceptable and false statements identify conditions that need
further investigation. These checklists were completed as part of this
review.
The basic approach of FEMA-178 is to select a Response Modification Factor,
R, for the structure. The 1906 and 1958 buildings are joined structurally
and thus, a single response factor of 6.0 (Non-load bearing shear walls)
was chosen for both. This factor combined with building weight (14,200,000
and 10,600,000 pounds respectively), local seismic forces (.25g), gives a
lateral force of 1,444 kbps.
This force was used to test each of the principal components of the
existing lateral force resisting system.
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SUMMARY OF FINDINGS
Introduction
The scope of work for this report includes a review of both the
existing structural condition of the building as well as an analysis of
its potential seismic capabilities. Generally, the structure at 1100
Second Avenue, both the 1906 and 1958 buildings, appear to be in good
condition. No significant deficiencies, which would reduce the
capabilities of the existing structure to handle either gravity or
lateral loads, were noted during our two visits to the site.
Earthquake forces are resisted in different ways by each of the
buildings on the site; however, the buildings were not only constructed
against one another, but were connected in the 1989 renovation
completed by TRA. Consequently, our findings below are based on an
assessment of the structures together.
Since the buildings are not likely to behave individually in seismic
events, the recommendations for remediation are based on considering
1100 Second Avenue as a unit. For the most part, considering the
buildings together has positive consequences for both the types and
costs of remediation suggested.
Condition Survey Findings
1100 Second Avenue has remained, for the most part, a fully-functioning
office building during the entirety of its life. As a result, it has
been both well-maintained and apparently repaired as necessary.
Condition issues noted during our visit to the site were minor and no
deterioration of the capability of the structure was noted.
Minor deterioration associated with roof leaks, now apparently
repaired, was noted. This leakage was noted primarily in the penthouse
and other service areas of the building. In addition, some minor
deterioration of the cladding was noted immediately under the bridge
which connects the 1100 Second Avenue and 1111 Third Avenue buildings.
In neither case was structural deterioration noted. The cause of damage
in each incidence is water and in the case of the bricks beneath the
bridge, the damage is apparently associated with poor drainage off the
sides of the bridge walls.
Seismic Review Findings
As noted previously, both the 1906 and 1958 structures collect and
resist seismic forces in different ways. The 1906 structure uses a
combination of moment frames which take the form of rivited beams and
columns along the primary faces of the building, along with a braced
frame at the party wall between the 1906 and 1958 buildings. The 1958
structure uses a non gravity-load-bearing concrete shear wall system
to resist lateral loads. As a consequence, the 1958 Building is much
stiffer and thus more likely to collect loads for both buildings. This
is particularly true given the connection made in the TRA renovation in
the 1980s.
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1906 Building
The 1906 structure, if taken alone, has a significant number of deficiencies
from the perspective of FEMA 178. While noted separately here, the deficiencies
should be seen in light of the fact that the two buildings will behave together
and many of the deficiencies noted in the structure will be mitigated at least
in part by strengthening the 1958 building. Deficiencies noted in FEMA 178 for
the 1906 structure include:
1. Torsion.
2. High drift ratios, particularly along the south elevation.
3. Brick infills, not isolated from the supporting steel structure.
4. Column splices not detailed and located in a moment region, approximately
one foot off the floor line.
5. Poor moment connection capabilities.
6. Poor partial continuity at the connection of beams and columns.
7. Probable height/thickness ratios along the alley walls.
8. Soft story along Second Avenue.
The 1906 structure also has several positive attributes which should be noted
here. These include:
1. The original design allowed three additional stories over the number of
floors presently on the site and, consequently, the structure has
relatively strong columns when compared with beam strengths.
2. The fact that the structure is constructed of steel and has significant
over-capacity in its columns, means that regardless of the significant
deficiencies noted in the FEMA 178 analysis, the building probably does not
present a collapse hazard.
1958 Building
The structure constructed in 1958 consists of a steel frame supporting all
gravity loads, but lateral forces are resisted by concrete shear walls along
each elevation of the building. These walls are extraordinarily stiff,
especially when compared with the moment frames used in the 1906 Building.
Consequently, our analysis considered a significant portion of the load
developed in the 1906 Building as being resisted by the shear wall in the 1958
Building. Generally, these walls prove capable of resisting even these higher
loads. Weaknesses noted in this structure, are limited to both a soft and weak
story along Second Avenue, and a few minor detailing deficiencies associated
with stirrups and ties in the shear wall/frames.
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The arrangement of columns and spandrel beams along Second Avenue is safe
because of the higher floor-to-floor height between the first and second
floors, as opposed to subsequent floors. It is also weak because the
columns have significantly less cross-sectional area than the columns
above. The short column deficiencies are also created at this elevation
because of a mid-height spandrel beam between floors one and two. This
mid-height spandrel beam creates a short column immediately above it,
which is likely incapable of resisting the deformation requirements of
any significant seismic event.
RECOMMENDATIONS
Regulatory Issues
Buildings in the City of Seattle do not require mandatory seismic
retrofits, unless a significant remodel is planned or the building is
subjected to a change in use. Given that neither are planned for this
structure, it is unlikely that any of the following recommendations would
be required by the City of Seattle. However, should a change of use, for
instance from office to residential, be planned or if significant moneys
are planned to remodel mechanical, electrical, or other architectural
improvements to the structure, a seismic rehabilitation component will
need to be considered for the structures.
Seismic Renovation
The two buildings that make up 1100 Second Avenue, when taken together,
compensate for many of each other's deficiencies. The deficiencies which
remain, however, are significant and should be considered to provide a
building which is seismically life safe. These deficiencies are:
1. The soft/weak story along Second Avenue.
2. Inadequate resistance in the transverse (east-west) direction at the
south elevation of the 1906 Building.
The deficiencies noted above, particularly in the 1906 Building, can be
mitigated using the same methods used to mitigate the deficiencies noted
above, provided that the buildings remain connected. Once again, we
believe the connection made by TRA in the 1980s is adequate to carry
seismic loads between the buildings.
Our recommendations include providing a soft story brace, preferably in
the 1958 Building, against the Second Avenue elevation. This brace would
be between floors one and two. It is certainly possible to locate this
brace in-board a bay from the Second Avenue elevation, but the loads
coming from above, proceeding down the corporate elevation along Second
Avenue, could most easily be collected and carried by braces and/or shear
walls located against that elevation. In addition, the column strength
which exists in this area is sufficient to allow the installation of
braces or walls without any significant improvements to the existing
column or foundation structure.
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Mitigation of the second deficiency, weakness in the transverse direction
along the south elevation, can be accomplished by installing a brace or
shear wall against the southern elevation of the 1906 Building or within
one bay. The brace must be oriented in the east-west direction and, again,
there is significant overstrength available in the existing columns, so
the columns should be used to connect the braces. Using this technique, it
is, again, unlikely that any significant column strengthening improvements
or footing improvements would be required.
The only other deficiency of note is the relatively high height/thickness
ratio along the alley wall of the 1906 Building. This deficiency can be
corrected by strong-backing, either using concrete or light gauge steel.
However, given its location against the alley, it is less likely to impose
a life safety threat. Consequently, it would not have the priority of the
other two mitigation techniques.
The above recommendations for braces along Second Avenue in the southern
elevation, should be taken together and constructed at the same time. They
can be constructed separately, but if one is constructed and the other
left out, significant deficiencies would remain within the structure.
A rough cost estimate for the structural costs of the three
recommendations is $130,000. This figure includes approximately $50,000
for the Second Avenue soft story brace, $69,000 for the brace along the
southern elevation, and $11,000 to brace the brick walls along the eastern
elevation of the 1906 Building.
This cost includes the structure only and does not include demolition of
architectural finishes or the reinstallation the existing architectural
features of the building. It also presumes a nominal contract overhead and
profit figure as well as a 20% contingency. It does not include any of the
soft costs associated with either management, taxes, or fees usually
associated with contractions of this type.
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EXHIBIT D
Tenant's Fixtures, General Categories:
-- Raised computer room floor and all its attendant parts.
-- Computer room fire suppression system and its parts.
-- Our security system and its parts and hardware.
-- Our generator and its attendant parts, including but not limited to its
fuel tank, pumping system and automatic transfer switch.
-- All our major power regulation and distribution systems, including but
not limited to our interruptible power supply systems and power
distribution units.
-- Our HVAC systems, including but not limited to all cooling units,
drycoolers, motors and pumps.
-- Equipment racks and cabling equipment, including but not limited to
any equipment racks and cable trays that may be bolted to the floor or
elsewhere for seismic purposes, as well as patch panels, connectors and
cabling fixtures.
-- Any major electrical systems and/or parts that are dedicated to our
data center space, including but not limited to switchgear and
transformers.
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EXHIBIT D
SCHEDULE OF TENANT'S PROPERTY
Tenant's Fixtures, General Categories:
- Raised computer room floor and all its attendant parts.
- Computer room fire suppression system and its parts.
- Our security system and its parts and hardware.
- Our generator and its attendant parts, including but not limited to its
fuel tank, pumping system and automatic transfer switch.
- All our major power regulation and distribution systems, including but not
limited to our uninterruptible power supply systems and power distribution
units.
- Our HVAC systems, including but not limited to all cooling units,
drycoolers, motors and pumps.
- Equipment racks and cabling equipment, including but not limited to any
equipment racks and cable trays that may be bolted to the floor or
elsewhere for seismic purposes, as well as patch panels, connectors and
cabling fixtures.
- Any major electrical systems and/or parts that are dedicated to our data
center space, including but not limited to switchgear and transformers,
located within the rentable area.
1