Washington-Redmond-16701 NE 80th Street Lease - Redmond Whitehall Associates Inc. and CacheFlow Inc.
REDMOND CORPORATE CENTER LEASE
------------------------------
This LEASE (this "Lease") is made and entered into this 19th day of February,
1997, by and between REDMOND WHITEHALL ASSOCIATES, INC., a Washington General
Partnership ("Landlord") and CASHEFLOW, INC., a Delaware Corporation ("Tenant").
In consideration of the mutual promises and covenants contained in this Lease,
Landlord and Tenant do hereby agree:
Section 1. Fundamental Lease Provisions, Exhibits, Defined Terms.
-----------------------------------------------------
In addition to definitions set forth elsewhere in this Lease and subject to
other provisions of this Lease, the following terms shall have the following
meanings:
(1) Building. Redmond Corporate Center, situated on a portion of the Land,
--------
and with a postal address of 16701 NE 80th Street, Redmond, Washington, 98052.
(2) Premises. Suite number 100, consisting of the area on the first floor(s)
--------
of the Building located as indicated on the floor plan(s) attached hereto as
Exhibit A, including the Tenant Improvements, if any.
(3) Tenant's Percentage. Fifty-one and nine hundredths percent (51.09%) based
-------------------
upon the rentable area of the Premises, which is stipulated for the purposes of
this Lease to be 6,843 rentable square feet, which is based on 6,221 useable
square feet plus a ten percent (10%) common area load factor, compared to the
applicable rentable area of the Building, which is stipulated for the purposes
of this Lease to be 13,395 rentable square feet.
(4) Projected Commencement Date. March 15, 1997 (The actual Commencement Date
---------------------------
shall be established pursuant to Section 3).
(5) Term. Sixty (60) full calendar months, plus any partial month following
----
the Commencement Date, as provided in Section 3.3.
(6) Rate Months Monthly Rental
---- ------ --------------
$18.00/SF/Year 01-24 $10,264.50
$19.00/SF/Year 25-48 $10,834.75
$19.50/SF/Year 49-60 $11,119.88
(7) Additional Rent. All amounts payable by Tenant to Landlord under this
-----------------
Lease, pursuant to Sections 6, 8, 9.8 and 16.
(8) Security Deposit. Eleven Thousand One Hundred Nineteen and 88/100's
-----------------
Dollars ($11,119.88).
(9) Landlord's Address. REDMOND WHITEHALL ASSOCIATES
------------------ 2105 112th Avenue NE Suite 100
Bellevue, Washington 98004
(10) Tenant's Address.
----------------
Prior to Commencement Date: After Commencement Date:
Cacheflow, Inc. Redmond Corporate Center
8563 - 154th Avenue NE 16701 NE 80th Street Suite 100
Redmond, Washington 98052 Redmond, Washington, 98052
(11) Tenant Improvements. The improvements to be made to the Premises by the
-------------------
Tenant pursuant to the Space Description.
1
<PAGE>
(12) Improvements. Improvements constructed by the Tenant pursuant to, and
------------
defined in Section 10 hereof, if any.
(13) Building Standard. The standard of work defined in the Space
-----------------
Description.
(14) Space Description. Exhibit D hereto, as the same may be amended or
-----------------
supplemented in writing by Landlord and Tenant after the date hereof.
(15) Guarantor. Any other Person who hereafter in whole or in part guarantees
---------
Tenant's performance under this Lease.
(16) Person. Individuals, partnerships, firms, associations, corporations
------
and/or any other form of business or legal entity.
(17) Land. The real property described in Exhibit B hereto.
----
(18) Occupant. Any Person, including Tenant, entitled to occupy or use a
--------
portion or portions of the Building under a Lease or other arrangement with
Landlord.
(19) Permitted Use. General offices including computer research and
-------------
development.
(20) Tenant's Broker. Chris Langer of CB Commercial.
---------------
Exhibits. The following Exhibits are attached to this Lease and
--------
incorporated herein by this reference as if fully set forth:
Exhibit A Floor Plan
Exhibit B Legal Description of Land
Exhibit C Rules and Regulations
Exhibit D Space Description
Rider #1 Renewal Option
Rider #2 Cancellation Option
Rider #3 Right of First Refusal
Section 2. Premises and Common Areas.
-------------------------
2.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
--------
Landlord, the interior of the Premises, for the term and subject to and with the
benefit of the covenants and conditions set forth in this Lease. The perimeter
walls, floors and ceiling of the Premises and any space in the Premises used for
shafts, stacks, pipes, conduits, ducts, electrical or other utilities or
Building facilities and the use thereof, as well as access thereto through the
Premises for the purposes of operation, maintenance, decoration, installation,
inspection, repair and replacement, are expressly reserved to Landlord and are
expressly excluded from the Premises leased hereby.
2.2 Common Areas. Landlord shall make available such areas and facilities for
------------
the common use of all tenants of the Building (including, but not limited to
parking areas, driveways, truckways, delivery passages, truck-loading areas,
access roads, walkways and landscaped and planted areas) as Landlord shall
reasonably deem appropriate ("Common Areas"). All elements of the Building not
leased exclusively to Tenant or another tenant of the Building, including the
utility systems up to the boundaries of the Premises, are Common Areas. Landlord
or its agents shall operate, manage, equip, light, repair, replace and maintain
the Common Areas for their intended purposes in such manner as Landlord shall
reasonably, in its sole discretion, determine. Landlord may, from time to time,
change the size, location, nature and use of any Common Area and make
installations therein and to move and remove the same, provided that Tenant's
access to the Premises is not materially reduced. All expenses in connection
with the Common Areas are Operating Costs for the purposes of Section 6 of this
Lease. Tenant and its employees, agents and invitees shall have the non-
exclusive right (in common with other tenants of the Building and Landlord) to
use the Common Areas, subject to any Rules and Regulations adopted pursuant to
Section 9.1 of this Lease. The Rules and Regulations may include the designation
of specific areas in which cars owned by Tenant, its employees and agents must
be parked. Landlord may at any time temporarily close any Common Areas due to
construction, maintenance, repair or changes to any part of the building or
Land. Tenant shall be entitled to use, on a non-reserved basis, a pro rata share
of available parking. Tenant's prorated share of parking shall be determined by
comparing the rentable square feet in the Building and any other adjacent
buildings that will be using the available parking subject to any restrictions
contained in applicable Covenants and Easements of record. Tenant shall not at
any time interfere with the rights of
2
<PAGE>
Landlord or of other tenants of the Building or other adjacent buildings or
invitees of the same to use any of the parking areas.
Section 3. Lease Commencement and Expiration Dates.
---------------------------------------
3.1 Lease Commencement Date. The Commencement Date shall be the earlier of (i)
-----------------------
the date the Tenant Improvements to the Premises, together with the common
facilities for access and service thereto, have been completed in accordance
with the Space Description, subject to punch-list items as described in Section
3.4 which do not materially interfere with Tenant's use and enjoyment of the
Premises ("Substantial Completion"), or (ii) the date Tenant occupies any of the
Premises for any Permitted Uses. If Substantial Completion of the Tenant
Improvements to the Premises is delayed due to any act or omission of Tenant,
including Tenant's failure to perform its obligations under the terms of the
Space Description, the Commencement Date shall be deemed to be the date upon
which substantial completion of the Tenant Improvements would have occurred, but
for such delay. It is understood and agreed that March 15, 1997 is intended by
the parties as the Commencement Date, provided that this Lease is executed and
delivered by Tenant to Landlord no later than February 10, 1997.
3.2 Confirmation of Commencement Date. Landlord shall confirm the
---------------------------------
Commencement Date to Tenant in writing.
3.3 Term. The term of this Lease shall commence on the Commencement Date
----
and continue for the number of full calendar months specified in Section 1(5)
plus any partial calendar month at the beginning of the Term, unless sooner
terminated or extended as provided in this Lease.
3.4 Possession. If Landlord is unable to deliver the Premises or any portion
---------
thereof on or before the Projected Commencement Date, Landlord shall not be
liable for any damage caused thereby, nor shall this Lease thereby become void
or voidable, but in such event, (i) Tenant shall not be liable for payment of
any Rent or Additional Rent until such time as Landlord delivers possession, and
(ii) the Term shall not commence until the Premises are so delivered. In the
event Landlord is unable to deliver the Premises on or before June 30, 1997,
Tenant may terminate the Lease by providing Landlord written notice after June
30, 1997.
Section 4. Rent.
----
4.1 Rent. Commencing on the Commencement Date, Tenant shall pay Landlord at
----
Landlord's Address, or to such other person or place or account as Landlord may
hereafter from time to time designate in writing, the Rent specified in Section
1 (at times referred to herein as "Rent"), and any other charges due under this
Lease, without notice or demand except as otherwise specifically provided in
this Lease and without deduction or offset or abatement or counterclaim. Such
payment shall be made in lawful money of the United States in advance on or
before the Commencement Date and on or before the first (1st) day of each
succeeding month. Rent and any payments for any partial month at the beginning
or end of the term of this Lease shall be prorated based upon the actual number
of days of such month. As partial consideration for the execution of this Lease,
Tenant has paid to Landlord the sum of Ten Thousand Two Hundred Sixty Four and
50/100's Dollars ($10,264.58). Said sum shall be credited toward the payment of
the Rent for the first (1st) month base rent which is due for the Initial
Term. If Tenant fails to comply fully with and perform all of the terms of this
Lease, said sum shall automatically be converted into any additional security
deposit to be disposed of in accordance with the terms in Section 5.
3
<PAGE>
Section 5. Security Deposit.
----------------
As security for the full and faithful performance of every covenant and
condition of this Lease to be performed by Tenant, Tenant has paid the Security
Deposit as set forth in Section 1(8) to Landlord, and Landlord acknowledges
receipt of said Security Deposit. If Tenant shall default with respect to any
covenant or condition of this Lease, including, but not limited to the payment
of Rent or any other amount or change due hereunder, Landlord may apply all or
any part of the Security Deposit to the payment of any sum in default, or any
other sum which Landlord may be required to spend or incur by reason of Tenant's
default, and any other sum which Landlord may in its reasonable discretion deem
necessary to spend or incur on Tenant's behalf or by reason of Tenant's default,
to the extent of the damage. In any such event, Tenant shall within ten (10)
days of demand, deposit with Landlord the amount so applied, expended or
incurred. Only if Tenant shall have fully complied with all of the covenants and
conditions of this Lease and shall have delivered the Premises to Landlord in
the condition required by the terms of this Lease, but not otherwise, the amount
of the Security Deposit then held by Landlord shall be repaid to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest hereunder) within
thirty (30) days after the expiration or sooner termination of this Lease. In
the event of Tenant's default under this Lease, Landlord shall have the right to
retain the Security Deposit to the extent of the damage, in addition to any
and all other rights and remedies at law or in equity available to Landlord.
Tenant shall not assign or encumber the Security Deposit and neither Landlord
nor its successors or assigns shall be bound by any such assignment or
encumbrance. Landlord may commingle the Security Deposit with other funds and
Tenant shall not be entitled to interest or other return thereon.
Section 6. Cost of Operations and Real Estate Taxes.
----------------------------------------
6.1 Definitions. The following terms shall have the following meanings:
-----------
Operating Costs. Any and all amounts incurred or expended by Landlord in
----------------
connection with the management, maintenance, operation, security or repair of
the Premises or the Building or the Land or all or any portion thereof, or any
improvements, fixtures, or equipment situated thereon or therein including, but
not by way of limitation, the cost of operating, maintaining and repairing
elevators; wages and salaries of all employees engaged in operation, maintenance
or security of the building, including all taxes, insurance and benefits
relating to such employees; insurance costs of every kind and nature; energy
costs, including costs of heating, ventilating, air conditioning and
electricity; water, sewer, gas and other utility costs; the total customary
charges of any agent or independent contractor employed in the repair, care,
operation, management, maintenance or security of the Building or the Land; Real
Property Taxes, as defined below; and any other expenses or charges whether or
not hereinabove described, which in accordance with generally accepted
accounting and management practices would be considered and expense of
maintaining, managing, operating or repairing the Building, excluding or
deducting, as appropriate: (i) initial leasing costs including tenant
improvements and leasing commissions for other tenants; (ii) costs of any
special services rendered to individual tenants (including Tenant) for which a
special charge is collected; and (iii) depreciation or amortization of costs
required to be capitalized in accordance with generally accepted accounting
principles (except Operating Costs shall include amortization, including
interest at the rate incurred by Landlord in connection therewith or, if
Landlord has paid cash, at the Prime Rate of Seattle First National Bank) of
capital improvements made subsequent to the initial development of the Building
which are designed with a reasonable probability of improving the operating
efficiency of the Building or which are required under any governmental laws or
regulations not applicable to the Building at the time it was constructed.
Real Property Taxes. Taxes, charges, assessments (or any installment
-------------------
thereof due during the Fiscal Year) and other impositions, however denominated,
levied from time to time with respect to the Land, the Building, or any
improvements, fixtures and equipment and all other property of Landlord, real or
personal, used directly in the operation of the Building and located in, on or
about the Building; any taxes levied or assessed (or any installment thereof due
during the Fiscal Year) in addition to or in lieu of, in whole or in part, such
taxes; any other tax upon leasing of the Building or rents; any other tax or
surcharge such as, for example, payments to or on account of public transit or
car pooling or environmental facilities; and all costs and expenses
4
<PAGE>
incurred by Landlord in connection with the attempt to reduce any of the
foregoing, whether by negotiation or contest. Real Property Taxes, however,
shall not include any franchise or state income tax, inheritance tax, estate
tax, business and occupation tax, or any other similar tax. Real Property Tax
assessments shall be spread over the longest permitted payment period.
Fiscal Year. The period of January 1 through December 31.
-----------
Operating Costs and Real Estate Taxes Base Amount. Tenant's Square
-------------------------------------------------
Footage as defined in Section 1(3) multiplied by Six and 50/100's Dollars
($6.50). Tenant shall be notified of said amount in writing.
6.2 Additional Rent for Operating Costs. If, in any Fiscal Year, Operating
-----------------------------------
Costs multiplied by Tenant's Percentage is in excess of the Operating Costs Base
Amount, then, in addition to all other amounts due hereunder and as Additional
Rent, Tenant shall pay Landlord the amount of such excess ("Tenant's Share of
Operating Costs"), such payments to be made in accordance with Section 6.3. In
any partial year, Section 6.4.2 of this Lease shall apply.
6.3 Estimated Increases. During December of each Fiscal Year or as soon
-------------------
thereafter as practicable, Landlord shall give Tenant written notice of the
estimated amount payable by Tenant under this Section 6.3 for the following
Fiscal Year. On or before the first (1st) day of each month thereafter, Tenant
shall pay Landlord one-twelfth (1/12th) of such estimated amounts, provided
Landlord may, by written notice to Tenant, revise its estimate whereupon
subsequent payments by Tenant for the remainder of the Fiscal Year shall be
based upon such revised estimate. Within ninety (90) days after the close of
each Fiscal Year during the term of this Lease, or as soon thereafter as
practicable, Landlord shall deliver to Tenant a statement setting forth the
total amount of Tenant's Share of Operating Costs for such Fiscal Year, where
upon there shall be a final adjustment between Landlord and Tenant in connection
with amounts due Landlord under this Section 6.3 and Tenant shall pay Landlord
any amount due Landlord within thirty (30) days of receipt of such statement,
and any amount due Tenant shall be credited to the next accruing amounts due
Landlord pursuant to this Section 6.3 or if the Lease has terminated or expired,
such amount shall be credited against any amounts still due Landlord and the
balance shall be refunded to Tenant.
6.4 Further Adjustments.
-------------------
6.4.2. For the Fiscal Year in which the term of this Lease commences or
expires, Tenant shall pay only that proportion of the amount otherwise payable
under this Section 6 which the number of days of the term of the Lease failing
within such year bears to three hundred sixty-five (365) days, based upon the
estimated amounts due pursuant to Section 6.3 for the Fiscal Year or
commencement or termination.
6.5 Personal Property Taxes. Tenant shall pay, prior to delinquency, all
-----------------------
personal property taxes payable with respect to all property of Tenant located
on or about the Premises or the Building and shall, promptly upon request of
Landlord, provide written proof of such payment to Landlord. As used herein
"property of Tenant" shall include all improvements which are paid for by Tenant
and "personal property taxes" shall include all property taxes assessed against
the property of Tenant, whether assessed as real or personal property. If any
personal property taxes are assessed and taxed with the Building or the Land,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
receipt of a written statement setting forth the amount of such taxes that
Landlord has determined are applicable to Tenant's property.
Section 7. Uses; Hazardous Materials.
-------------------------
7.1 Permitted Uses; Waste. Tenant shall use the Premises only for the
---------------------
Permitted Use as set forth in Section 1(19) and for no other business or purpose
without the prior written consent of Landlord. Tenant shall not commit or allow
to be committed any waste upon the Premises, or any public or private nuisance
or other act or thing which disturbs the quiet enjoyment of any other Occupant
in the Building, or is reasonably expected to injure the reputation of the
Building, or is unlawful.
5
<PAGE>
7.2 Hazardous Materials. Any matter (whether gaseous, liquid or solid) which
-------------------
is designated as a "Hazardous Substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
US4 9601, et seq., or as a Hazardous Substance, Hazardous Household Substance,
------
Moderate Risk Waste or Hazardous Waste under RCW 70.105.010, or which is
regulated by any federal, state, or local law, statute, ordinance or regulation
pertaining to health, industrial hygiene or the environment now or as hereafter
amended. "Hazardous Material" shall not include ordinary household cleaning and
maintenance products, in reasonable quantities as deemed by Landlord in its sole
discretion, which are used with due care and in accordance with the instructions
of the manufacturer of such products in the reasonable and prudent conduct of
Tenant's business on the Premises. Tenant shall not store, use or dispose of any
Hazardous Materials in, on or about the Premises, the Building or the Land.
Tenant shall be solely responsible for and shall defend, indemnify and hold
Landlord, its agents and employees harmless from and against all claims, costs
and liabilities, including attorneys' fees and costs, arising out of or in
connection with Tenant's breach of its obligations contained in this Section
7.2. Tenant shall be solely responsible for and shall defend, indemnify and hold
Landlord, its agents and employees harmless from and against any and all claims,
costs and liabilities, including attorneys' fees and costs, arising out of or in
connection with the removal, cleanup and restoration work and materials
necessary to return the Premises, the Building, the Land and any other property
of whatever nature, to their condition existing prior to the appearance of
Tenant's Hazardous Materials on or about the Premises. Tenant's obligations
under this Section 7.2 shall survive the expiration or other termination of this
Lease.
Section 8. Covenants of Landlord.
---------------------
8.1 Basic Services. Landlord shall repair and maintain the structural portions
--------------
of the Building, including the basic plumbing, air conditioning, heating and
electrical systems installed or furnished by Landlord, unless such maintenance
and repairs are caused in part or in whole by the act, neglect, fault, or
omission by of any duty by the Tenant, its agents, servants, employees, or
invitees, in which case Tenant shall pay to Landlord the reasonable cost of such
maintenance and repairs. Except as provided in Section 11 of this Lease, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury or interference with Tenant's business arising from the making of any
repairs, alterations or improvements in or to any portion of the Building or the
Premises or in or to fixtures, appurtenances and equipment therein. Tenant
waives the right to make repairs at Landlord's expense under any law, statute,
or ordinance now or hereinafter in effect. All costs incurred by Landlord in
complying with this Section 8.1 are Operating Costs for the purposes of Section
6 of this Lease. Landlord shall provide Tenant twenty four (24) hours prior
notice of its intent to access the Premises except in the event of an
emergency.
8.2 Extraordinary Services. Should Tenant require special services from
----------------------
time to time on days or hours other than those specified in the Rules and
Regulations attached as Exhibit C, Landlord shall, upon reasonable advance
notice by Tenant, furnish such additional service and Tenant agrees to pay to
Landlord, concurrently with payment of monthly Rent, as Additional Rent,
Landlord's cost of labor, materials supplied and utilities consumed in providing
such additional service plus reasonable administrative costs. The amount of such
payment and expenses shall be excluded from the determination of Operating
Costs.
8.3 Landlord Not Liable. Landlord does not warrant that any of the services
-------------------
referred to in this Lease, or any other services which Landlord may supply, will
be free from power surge, interruption, curtailment or suspension, Tenant
acknowledging that any one or more of such events or services may be suspended
by reason of accident or repairs, alterations or improvements, or by reason of
causes beyond the reasonable control of Landlord. No interruption, curtailment
or suspension of service shall be deemed an eviction or disturbance of Tenant's
use and possession of the Premises or any part thereof, or render Landlord
liable to Tenant for damages, or relieve Tenant from the full and complete
performance of all of Tenant's obligations under this Lease, nor shall there be
any abatement of Rent or other charges, unless damages are the result of
Landlord's gross negligence or willful misconduct.
Section 9. Covenants of Tenant.
-------------------
Tenant agrees, for itself, its employees, agents and invitees, that it shall:
9.1 Rules and Regulations. Comply with the Rules and Regulations, and such
---------------------
reasonable amendments and additions as from time to time may be adopted by
Landlord to
6
<PAGE>
govern the use, occupancy and operation of the Building (the existing rules and
regulations, as so amended or supplemented from time to time, being the "Rules
and Regulations"). Landlord shall not be responsible to Tenant for the
noncompliance by any other Occupant with any of the Rules and Regulations, and
any failure by Landlord to enforce any Rules and Regulations against either
Tenant or any other Occupant shall not constitute a waiver thereof.
9.2 Landlord's Right of Access. Give Landlord, its agents, employees, lessors
--------------------------
and mortgagees and any other person or persons authorized by Landlord, access to
the Premises at all reasonable times, and at any time in the event of an
emergency, to enable them to inspect, examine, show for lease or sale, and to
make such repairs, additions and alterations to the Premises or the Building, or
to the fixtures, appurtenances or equipment therein, as Landlord may deem
advisable; provided that Landlord shall use reasonable efforts to (i) minimize
any disruption of Tenant's business caused by such access and (ii) provide
Tenant reasonable advance notice when feasible. Landlord shall also be entitled
to install and operate at Tenant's cost a monitoring/metering system in the
Premises to measure the added demands on electrical, heating, ventilating and
air conditioning systems, resulting from Tenant's equipment and lights or from
Tenant's after hours heating, ventilating and air conditioning service
requirements. There shall be no allowance to Tenant or diminution of Rent and no
liability on the part of Landlord by reason of inconvenience, annoyance or
injury to business arising from such right of access or the making of any
repairs, alterations, additions or improvements in or to any portion of the
Building or the Premises, or in or to the fixtures, appurtenances and equipment
thereof.
9.3 Repair. Keep the Premises and all portions thereof in good order and
------
condition, not damage or deface the Premises, Building or Land, make all repairs
to the Premises which are not Landlord's obligation pursuant to Section 8 or
Section 11, repair any damage to the Premises, Building or Land or their
contents caused by the failure of Tenant to comply with its obligations under
this Lease, and any damage to the Premises, Building or Land arising our of
misuse or negligence of Tenant, its employees, agents, invitees or visitors, and
commit no waste in, about or to the Premises, Building, or Land.
9.4 Quit and Remove. Upon the termination of this Lease for any reason, quit
---------------
and deliver up the Premises to Landlord peaceably and quietly in as good order
and condition as the Premises shall be on the Commencement Date or may
thereafter be improved by Landlord or Tenant, reasonable use and wear and
repairs which are Landlord's obligations excepted, and, if Tenant is not in
default under the terms of this Lease, remove Tenant's goods and effects and
those of any other persons claiming under Tenant. Goods and effects not removed
by Tenant at the termination of this Lease (or within 48 hours after a
termination by reason of Tenant's default), shall be considered abandoned and
Landlord may dispose of the same as it deems expedient and for its own account.
Tenant shall promptly upon demand reimburse Landlord for any expenses incurred
by Landlord in disposing of such abandoned goods and effects, and Landlord shall
not be liable to Tenant for any net proceeds from such disposal. Landlord will
notify Tenant if any goods or effects have not been removed upon Tenant vacating
Premises.
9.5 Advertising. Not place in or on or about the Premises signs, lettering,
-----------
displays, advertising or pictures which are visible from outside the Premises
(including public corridors) without the prior written approval of Landlord.
9.6 Liens. At its expense, cause to be fully and completely discharged of
-----
record, within ten (10) days of Landlord's demand, any labor or materialman's
lien claim or other lien or claim filed against the Premises or the Building for
work claimed to have been done for, or materials claimed to have been furnished
to, or on behalf of Tenant.
9.7 Comply with Laws. At its expense, comply with all laws, orders, ordinances
----------------
and regulations of federal, state, county and municipal authorities and with any
direction made pursuant to law of any public officer or officers, which shall,
with respect to the Tenant's particular use of the Premises or to any abatement
of nuisance, impose any violation, order or duty upon Landlord or Tenant arising
from Tenant's particular use of the Premises or from conditions which have been
created by or at the instance of Tenant or are required by reason of a breach of
any of Tenant's obligations hereunder.
9.8 Not Invalidate Insurance. Not do or permit to be done any act or thing
------------------------
upon the Premises which will invalidate or be in conflict with the Certificate
of Occupancy or the terms of the property, boiler, sprinkler, water damage or
other insurance policies covering the Building and the fixtures and property
therein or do or permit anything to be done in or upon the Premises or bring or
keep anything therein or use the Premises in a manner which may make insurance
unavailable or increase the premium for insurance upon the Building or on any
Property or equipment located therein. If Landlord's insurance premiums are
increased because of Tenant's failure to comply
7
<PAGE>
with its obligations under this Lease, then Tenant shall pay the cost of any
such increase, as additional rent, immediately upon demand.
9.9 Insurance. At its expense, obtain and carry at all times during the term
---------
of this Lease (i) comprehensive general liability insurance covering the
Premises with combined single limits of at lease One Million Dollars
($1,000,000.00) per person and per occurrence for personal injury (including
bodily injury and death) and broad form property damage having combined single
limits of at least Five Hundred Thousand Dollars ($500,000.00) per person and
per occurrence, or such higher amounts as Landlord may from time to time
reasonably designate by not less than thirty (30) days written notice to Tenant,
for injury to persons (including death) and property arising out of the
ownership, maintenance, use or occupancy of the Premises, and which insurance
shall contain a contractual liability endorsement covering the matters set forth
in Section 10 and Section 13 and shall not contain deductible amounts in excess
of Twenty Five Thousand Dollars ($25,000.00) without Landlord's prior written
consent; and (ii) fire and extended coverage insurance (with endorsements
covering vandalism, malicious mischief, sprinkler leakage, water damage and
business interruption for Tenant's fixtures, trade fixtures and furniture, and
all other property owned or leased by Tenant and located in the Premises or
Building. Such policies shall be written by insurers acceptable to Landlord
having a rating in accordance with Best's Key Rating Guide of A-X or better and
shall name both Landlord and its mortgagees as additional insured, as their
interests may appear, and all such insurers shall agree not to cancel or amend
(including as to scope or amount of coverage) such policies without at least
thirty (30) days prior written notice to Landlord. Each such policy shall also
provide that no act or default of any person other than Landlord or its agent
shall render the policy void as to Landlord or affect Landlord's right to
recover thereon. Tenant shall furnish Landlord with certificates of insurance
evidencing coverage at all times during the term of this Lease. The insurance
required by this Section 9 shall be on an occurrence basis. If Tenant is unable
to obtain said insurance on an occurrence basis, it may be on a claims-made
basis provided that, in addition, Tenant, at Tenant's expense, obtains an
Owner's Protective Policy, issued in the name of Landlord only, which is on an
occurrence basis for the limits required by this Section 9. Any policy required
by this Section 9 shall be written as a primary policy not contributing with and
not in excess of coverage which Landlord may carry.
Section 10. Alterations and Improvements.
----------------------------
Tenant shall not make or install any alteration, installation, addition,
hardware, window treatment, floor covering, fixture or other improvements to the
Premises, or add to, disturb or in any way change any plumbing or wiring,
without in each and every of such cases (Individually and collectively
"Improvements") the prior written consent of Landlord. Landlord's written
consent shall include any requirement to remove said alteration upon expiration
or termination of the lease. Landlord's approval of plans or specifications for
improvements shall not constitute an assumption of the responsibility for the
accuracy or sufficiency of such plans and specifications, or their compliance
with applicable codes, regulations or statutes, which responsibility shall be
solely Tenant's. All such improvements shall be made at Tenant's sole cost and
expense and any contractor or person selected by Tenant to make improvements
must first be approved in writing by Landlord. Landlord may require that the
contractor provide payment and performance bonds. All improvements and all
repairs required to be made by Tenant shall be made in a good and workmanlike
manner and in compliance with all governmental requirements, codes and rating
bureau recommendations, and shall be performed by competent workmen approved in
advance by Landlord. Tenant shall hold Landlord harmless and indemnified from
all injury, loss, claims or damage to any person or property occasioned by, or
in connection with the construction or installation of improvements. Tenant
shall obtain all necessary permits from governmental authorities. Tenant shall
repair any damage and perform any necessary clean-up to the Building or its
contents resulting from any improvements made by Tenant. All Improvements,
temporary or permanent, including wall paneling, built in cabinets, sinks,
doors, floor coverings, or other built in units of any kind, however attached
(except trade fixtures, medical equipment or devices, furniture and equipment
belonging to Tenant which are removable without causing damage to the Building)
or installed by Tenant in, on or about the Premises, shall, upon expiration or
sooner termination of this Lease, become Landlord's property, and remain upon
the Premises, all without compensation, allowance or credit to Tenant provided,
Tenant shall at the expiration or termination of this Lease remove any
improvements placed in the Premises by or on behalf of Tenant and so designated
in the notice. Tenant shall, at Tenant's sole expense, repair any damage to the
Premises or the Building resulting from such removal, and Landlord may require a
payment and performance bond for the work of such removal. If Tenant fails to
remove such designated improvements, they will be deemed to be abandoned by
Tenant and Landlord may remove the same at Tenant's sole cost and expense.
8
<PAGE>
Section 11. Damage or Destruction.
---------------------
If the Premises are rendered partially or totally untenantable by fire or
other casualty, the damage does not occur within the last twelve months of the
then-effective Lease Term, and if the damage is repairable within one hundred
twenty (120) days from the date of the occurrence, then if insurance proceeds
are available to pay the full cost of the repairs, exclusive of deductible,
Landlord shall diligently proceed to repair or restore the basic Building
Structure, Tenant Improvements, and Improvements made or installed by or with
the written approval of Landlord and which are or shall become the Property of
Landlord (except Tenant and not Landlord shall fully and completely repair any
damage to and shall replace the contents of the Premises such as trade fixtures,
furniture, equipment or other Improvements belonging to Tenant); otherwise
Landlord may elect to terminate this Lease. If Landlord elects to repair, the
Rent and Additional Rent shall be abated in the portion that the untenantable
portion of Premises bears to the whole thereof, as reasonably determined by
Landlord, for the period from the date of the casualty to the completion of the
repairs, unless the casualty results from the deliberate and intentional
misconduct of Tenant or its contractors, agents or employees, in which case
there shall be no abatement. If sixty percent (60%) or more of the Building
Rentable Area is destroyed or damaged, then regardless of whether the Premises
are damaged, Landlord may terminate this Lease. Landlord shall advise Tenant of
Landlord's election to repair or terminate and, if it elects to repair, of the
estimated repair period, by giving notice to Tenant thereof within thirty (30)
days after the occurrence, and if Landlord advises Tenant that the repairs to
the Premises will take longer than one hundred twenty (120) days from the
casualty, Tenant shall have the right to terminate this Lease by so advising
Landlord in writing thereof within fifteen (15) days thereafter. In the event of
damage by casualty, Tenant shall, at its sole cost and expense, repair all
damage to its own personal property and to all Improvements that are the
property of Tenant. Landlord shall not be liable to Tenant for damages,
compensation or other sums for inconvenience, loss or business or disruption
arising from any casualty or any repairs to or restoration of any portion of the
Building or Premises.
Section 12. Waiver of Subrogation.
---------------------
It is the intention of the parties that each of them shall insure its real and
personal property and interests therein, including economic interests, as and to
the extent it sees fit. Each of Landlord and Tenant on behalf of its insurers
and itself hereby fully and completely waives and releases and relieves the
other, its agents, partners, officers, directors and employees, from
responsibility for, and waives its entire claim of recovery against the other
for, any loss of or damage hereafter occurring to that party's real or personal
property located anywhere in, on or about the Building or the Land, including
the Building itself, and from any loss of rental income from the Building
resulting therefrom; except, in any of such cases, only to the extent that loss
or damage is caused by the deliberate and intentional wrongdoing or gross
negligence of the other, its agents, partners, officers, directors or employees.
Section 13. Indemnification and Release.
--------------------------
(a) Tenant's Indemnity. Tenant shall, at its expense, indemnify, defend and
------------------
hold harmless from Landlord, its Mortgagees, partners, officers, agents and
employees from and against any and all claims, losses, expenses (including
attorney's fees), fines or penalties, or other liabilities, arising out of or in
connection with the occupancy or use of the Premises, Building or Land by
Tenant, its agents, customers, or employees (including, without limitation, any
work undertaken or contracted for by Tenant, its agents or employees, whether
pursuant to Section 10, and Exhibit to this Lease, or otherwise) unless caused
by Landlord's gross negligence or willful misconduct. The indemnity and hold
harmless provisions of this Section 13 shall survive expiration or termination
of this Lease and shall include, but not be limited to, all claims against
Landlord by any employee or former employee of Tenant, and Tenant thereby waives
all immunity and limitation on liability of any industrial insurance act,
including Title 51 of the Revised Code of Washington as now or hereafter
amended, or other worker's compensation act, disability benefit act, or any
other employee benefit act of any jurisdiction which would otherwise be
applicable in the case of such a claim, but such waiver is not intended and
shall not be construed or interpreted as applying to or benefiting any Person
except Landlord or Tenant. LANDLORD AND TENANT HEREBY CERTIFY AND AGREE THAT
THIS SECTION 13 HAS BEEN FREELY AND MUTUALLY NEGOTIATED.
(b) Release of Certain Claims. Tenant hereby fully and completely waives
-------------------------
and releases all claims against Landlord for any losses or other damages
sustained by Tenant or any Person claiming through Tenant resulting from any
accident or occurrence in or upon the Premises, Building or Land including but
not limited to claims resulting from: any equipment or appurtenances, including
the HVAC system, becoming out of repair; injury done or occasioned by
9
<PAGE>
wind; any defect in or failure of plumbing, heating or air-conditioning
equipment, electric wiring or insulation thereof, any defect in or failure of
gas, water and steam pipes, stairs, railings or walks, broken glass, leaking or
running of any sewer pipe or downspout; the bursting, leaking or running of any
HVAC system, tank, tub, wash stand, water closet, waste pipe, drain or any other
pipe or tank; the escape of steam or hot water, water, snow or ice being upon or
coming through the roof, skylight, trap door, stairs, doorway, show windows,
walks or any other place; the falling of any fixture, plaster, tile or stucco;
or any act, omission, or negligence of co-tenants, licensees, or any other
persons or occupants of the Building or of an adjoining or contiguous Building
or of any tenant or adjacent or contiguous space or property unless caused by
Landlord's gross negligence or willful misconduct.
Section 14. Eminent Domain.
--------------
If the whole or substantially the whole of the Building or of the Premises
shall be condemned or taken in any manner for any public or quasi-public use or
purpose, including any purchase or other acquisition in lieu of condemnation,
this Lease and the term and estate hereby granted shall cease and terminate as
of the date of taking of possession for such use or purpose. If less than the
whole or substantially the whole of the Building or of the Premises shall be so
condemned or taken, the Landlord (whether or not the Premises be affected) may,
at its option, by notice to Tenant, terminate this Lease and the term and estate
hereby granted as of the date of the taking of possession for such use or
purpose. In the event Landlord does not elect to terminate this Lease, then as
to that portion of the Premises not so taken or condemned, the Rent, and the
Operating Costs Base Amount shall be reduced pro-rata in accordance with the
floor area of the Premises which may be so condemned or taken. Tenant's
Percentage shall be equitably adjusted, and Landlord shall, at its expense,
proceed with reasonable diligence to repair, alter and restore the remaining
part of the Premises to substantially their former condition to the extent that
the same may be reasonably feasible. Landlord shall be entitled to receive the
entire award in any condemnation proceeding, including any award for the value
of any unexpired term of this Lease, and Tenant shall have no claim against
Landlord or against the proceeds of the condemnation (and Tenant shall also
execute and deliver to Landlord such documents, in recordable form, as Landlord
may require to confirm the same) except that Tenant shall have the right to
claim and recover from the condemning authority compensation for Tenant's moving
expenses, business interruption or taking of Tenant's personal property (not
including Tenant's leasehold interest); provided that such damages may be
claimed only if they are separately awarded and not out of or as part of the
damages recoverable by Landlord.
Section 15. Assignment and Subletting.
-------------------------
15.1 Assignment or Sublease. Tenant shall not voluntarily, involuntarily or by
----------------------
operation of law, assign, sell, pledge, transfer, mortgage or encumber this
Lease or any interest therein, or sublet the whole or any part of the Premises
or allow any other person, except the employees, agents or invitees of Tenant to
occupy or use any portion of the Premises (any of which events being a
"Transfer" and any such assignee, purchaser, mortgagee, pledgee or other
transferee being a "Transferee" for purposes of this Section 15) without first
obtaining Landlord's written consent, which shall not be unreasonably withheld
if all of the following conditions precedent are fully and completely satisfied.
(a) The proposed Transferee is at least as credit worthy as Tenant when
Tenant entered into this Lease, and satisfies Landlord's then current credit
standards for tenants of the Building, and in Landlord's option has the
financial strength and stability to perform all obligations under this Lease to
be performed by Tenant as and when they fall due.
10
<PAGE>
(b) The proposed Transferee will use the Premises for a purpose which in
Landlord's opinion (i) is lawful, (ii) is consistent with the permitted use of
the Premises under this Lease, (iii) is consistent with the general character of
business carried on by tenants of a first class office building, (iv) does not
conflict with any exclusive rights or covenants not to compete in favor of any
other tenant or proposed tenant in the Building, (v) will not increase the
likelihood of damage or destruction, (vi) will not increase the rate of wear and
tear to the Premises or common areas, (vii) will not likely cause an increase in
insurance premiums for insurance policies applicable to the Building (unless the
proposed Transferee agrees to pay such additional cost), and (viii) will not
require new tenant improvements incompatible with then existing Building systems
and components.
(c) Tenant pays Landlord's reasonable attorneys' fees and costs incurred
in connection with negotiation, review and processing of the Transfer, plus a
processing fee not to exceed Five Hundred Dollars ($500.00) for each such
request.
(d) Any security deposit paid by Transferee to Tenant in excess of the
Security Deposit held by Landlord will be paid to Landlord as additional
Security Deposit.
(e) At the time of the proposed Transfer, Tenant is not in default under
or in breach of any term, provision or covenant of this Lease.
(f)
(g) The Transfer will not otherwise have or cause a material adverse
impact on Landlord's interests in the Building or the Premises.
Tenant shall have the burden of demonstrating that each of the foregoing
conditions is satisfied. No Transfer shall relieve Tenant of any liability under
this Lease. An assignment or sublease consented to by Landlord shall not be
binding upon Landlord unless the assignee or subtenant delivers to Landlord: (i)
an original executed assignment or sublease; (ii) any collateral agreement; and
(iii) an instrument containing said assignee's or sublessee's assumption of all
of the obligations of Tenant under this Lease, in form and substance
satisfactory to Landlord. The assignee or sublessee's failure to execute such a
covenant shall not waive, release or discharge the assignee or sublessee from
its liability for performance of Tenant's obligations under this Lease.
15.2 Entity Ownership. The cumulative (i.e. in one or more sales or transfers,
----------------
by operation of law or otherwise) transfer of an aggregate of fifty percent
(50%) or more of the voting stock issued and outstanding on the date of this
Lease is executed by Landlord, including by creation or issuance of new stock,
of a corporation which is (i) Tenant, (ii) the corporate assignee of Tenant,
(iii) or any corporation which is a general partner in a general or limited
partnership which is Tenant or assignee of this Lease; or the cumulative (i.e,
in one or more sales or transfers, by operation of law or otherwise) transfer of
an aggregate of fifty percent (50%) or more of the ownership interest in a
general or limited partnership which is Tenant or assignee of Tenant, by which
an aggregate of fifty percent (50%) or more of such ownership interest is vested
in a Person or persons who are not general partners (except as the result of
transfers by gift or inheritance), shall be deemed a Transfer of this Lease and
shall be subject to the provisions of Section 15.1. For the purpose of Section
15.1, any entity which has undergone any of the changes described in the Section
15.3 shall be deemed to be a Transferee excluding any Initial Public Offering
or stock transfer for additional funding.
15.3 Recovery by Landlord. If Tenant at any time desires to Transfer this
--------------------
Lease, it shall give notice (a "Tenant Transfer Notice") to Landlord of its
desire to do so which notice shall state the rent at which it proposes so to
Transfer and shall contain full and complete financial and business information
on its Intended Transferee. In addition to Landlord's rights under Section 15.1,
Landlord may elect by notice to Tenant (a "Landlord's Repossession Notice"),
within forty-five (45) days of receipt of the Tenant Transfer Notice, to
terminate this Lease as to that portion of the Premises subject of Tenant
Transfer Notice. If Landlord exercises such right to terminate, Landlord shall
be entitled to recover possession of the portion of the Premises subject of the
Tenant Transfer Notice on the later of (i) the proposed date for possession by
such Transferee, as
11
<PAGE>
set out in the Tenant Transfer Notice, or (ii) forty-five (45) days after the
date of Landlord's Repossession Notice. All costs incurred by Landlord in
construction improvements, such as doors or partitions, separating the remaining
Premises from the repossessed area of the Premises shall be paid by Tenant
within thirty (30) days of demand. If Landlord does not exercise such right to
terminate, Tenant may thereafter Transfer this Lease or a portion of the
Premises subject thereof, but at a rental not less than that offered to Landlord
in the Tenant Transfer Notice and not later than forty-five (45) days after
delivery of the Tenant Transfer Notice to Landlord, unless a further notice is
given pursuant to this Section, provided (i) Landlord consents thereto pursuant
to Section 15.1, (ii) Tenant delivers to Landlord prior to the effective date
of any such Transfer duplicate originals of any instruments effecting such
Transfer, in form and content satisfactory to Landlord, and (iii) all amounts
received by Tenant from the Transferee in excess of the Rent payable hereunder
for the area of the Premises so Transferred shall belong to and shall
immediately be paid to Landlord as Additional Rent. No action or inaction by
Landlord in connection with its rights under this Section 15.3 shall constitute
or be deemed to constitute an approval of a proposed Transfer for purposes of
Section 15.1 except as specifically set forth in a notice from Landlord to
Tenant.
15.4 Assignee Obligation. Any assignee or purchaser approved by Landlord shall
-------------------
assume all obligations of Tenant and shall be jointly and severally liable with
Tenant for the payment of Rent, Additional Rent and other charges and
performance of all of Tenant's obligations under this Lease. Tenant shall
provide Landlord with full and complete duplicate originals of all instruments
of assignment, sublease or assumption.
Section 16. Insolvency and Default.
----------------------
16.1 Insolvency. The continuing rights granted to Tenant under this Lease are
----------
expressly made conditional upon the Tenant remaining solvent and capable of
meeting the financial and other obligations imposed upon the Tenant under this
Lease at all timed during the Term. Failure of the Tenant to satisfy this
condition shall constitute a default entitling Landlord to cancel and terminate
this Lease as hereinafter provided. Without limitation upon the right of the
Landlord to demonstrate non-compliance by the Tenant with the provisions of this
Section 16.1, Tenant shall be deemed to be in default under this Section 16.1
upon the occurrence of one or more of the following event: (i) any judicial
determination of the insolvency of the Tenant or any Tenant's Guarantor of the
Tenant's obligations hereunder including, without limitation, the entry of an
Order for Relief pursuant to the provisions of the Bankruptcy Code whether
voluntary or involuntary; (ii) appointment of a receiver or a custodian or other
similar officer for any portion of the Tenant's property or the property of any
Tenant's Guarantor; (iii) the assignment for the benefit of creditors of any
portion of the Tenant's property or the property of any Tenant's Guarantor; (iv)
a determination, judicial or otherwise, that the Tenant or any Tenant's
Guarantor is not generally paying its debts as such debts become due; or (v) any
fact, event or circumstance which in the reasonable opinion of Landlord
indicates that the Tenant or Tenant's Guarantor is insolvent or otherwise
incapable of meeting the financial and other obligations imposed upon the Tenant
under this Lease; (provided, however, that if any such action, case or petition
has been commenced against Tenant or any Tenant's Guarantor and the same is
dismissed within a period of sixty (60) days, then the event of default shall be
deemed cured for purposes hereof) whereupon Landlord may elect, by notice to
Tenant, to cancel and terminate this Lease, in which event neither Tenant nor
any person claiming through or under Tenant by virtue of any statute or of an
order of any court shall be entitled to possession or to remain in possession of
the Premises but shall forthwith quit and surrender the same, and Landlord, in
addition to the other rights and remedies Landlord has by virtue of this Lease
or any statute or rule of law, may retain as security for its damages any Rent,
Security Deposit or monies received by Landlord from Tenant or others on behalf
of Tenant not to exceed the actual damage amount as determined by the court.
This Lease is upon the further condition that if a petition for relief under any
chapter of the Bankruptcy Code is filed by or against Tenant or any Tenant's
Guarantor and the trustee or debtor in possession has not cured all defaults
hereunder and assigned or assumed his Lease under the Bankruptcy Code within
sixty (60) days after the entry of the Order for Relief, then this Lease shall
automatically terminate without the necessity of further action by or notice
from either party. In case of termination pursuant to any of the foregoing
provisions of this Section 16.1, Tenant shall indemnify Landlord against all
costs and expenses and loss of Rent and Additional Rent, including, without
limitation, amounts due under Section 16.3.
16.2 Other Defaults. Tenant shall be in default of this Lease if:
--------------
(i) Tenant fails to pay any installment of Rent or Additional Rent or
other charges hereunder when due; or
12
<PAGE>
(ii) Tenant fails to perform any other covenant, term, agreement or
condition of this Lease when such performance becomes due, including but not
limited to compliance with Section 15 of this Lease; or
(iii) Tenant vacates or abandons or ceases to do business in the
Premises.
In the event Tenant fails to timely cure any such default, after notice as set
forth in the last paragraph of this Section 16.2, Landlord may, immediately or
at any time thereafter, elect to terminate this Lease by notice, lawful entry or
otherwise, whereupon Landlord shall be entitled to recover possession of the
Premises from Tenant and those claiming through or under Tenant. Such
termination of this Lease and any repossession of the Premises shall be without
prejudice to any remedies which Landlord might otherwise have for arrears of
Rent or for a prior breach of any of the provisions of this Lease. Landlord and
Tenant agree that a notice by Landlord requesting cure of a pre-existing default
hereunder shall constitute a statutory notice to quit.
In case of such termination, Tenant shall indemnify Landlord against all costs
and expenses including the amounts due under Section 16.3 and loss of Rent. This
Lease is upon the further condition that if Tenant shall neglect or fail to
perform or observe any of Tenant's covenants which Tenant has neglected or
failed to perform or observe at least once previously in any 12 month period
(although Tenant shall have cured any such previous breach or breaches after
notice from Landlord, and within the notice period), then Landlord lawfully may,
but shall not be obligated to, immediately or at any time thereafter and without
demand or further notice avail itself of and/or exercise any remedies and/or
avail itself of any benefits permitted by this Section 16 or by law, including
but not limited to termination of this Lease.
With respect to a default occurring under clause (i) of the first sentence of
this Section 16.2, Tenant shall have three (3) days following receipt of notice
to cure from the Landlord within which to cure any such default. With respect to
a default arising under clause (ii) of the first sentence of this Section 16.2,
Tenant shall have thirty (30) days following the receipt of notice to
cure from the Landlord within which to cure any such default; provided, however,
that if the nature of such default other than for non-payment is such that the
same cannot reasonably be cured within such thirty (30) day period, Tenant
shall be deemed to have cured the default if Tenant shall commence such cure
within said 10 day period and thereafter diligently prosecute the same to
completion and shall furnish Landlord with such assurances and indemnities that
Landlord may require to ensure completion thereof and fully and completely
protect Landlord from any loss or liability by reason of any delay. With respect
to a default arising under clause (iii) of the first sentence of this Section
16.2, Landlord shall not be required to provide any notice to cure to Tenant
prior to exercising Landlord's right of termination.
16.3 Expense Recovery. Items of expense for which Tenant shall indemnify
----------------
Landlord shall include but not be limited to all costs and expenses incurred in
collecting amounts due from Tenant under this Lease (including attorneys' fees,
litigation expenses and the like); the unamortized portion of (i) amounts in the
nature of commissions paid by Landlord to leasing agents in connection with this
Lease and (ii) all costs and expenses incurred by Landlord to improve the
Premises pursuant to this Lease and/or the Space Description and (iii) any
additional amount furnished in the nature of an allowance (all of such
amortization to be based upon the assumption that such costs and expenses are
amortized on a straight line basis over the initial Lease Term); any abated
Rent, Additional Rent or concessions which may have been granted Tenant; and all
Landlord's other reasonable expenditures proximately caused by the
termination. All sums due in respect of the foregoing shall be due and payable
immediately upon notice from Landlord that a cost or expense has been incurred
without regard to whether the cost or expense was incurred before or after the
termination of this Lease. In the event proceedings are brought under the
Bankruptcy Code, including proceedings brought by Landlord, which relate in any
way to this Lease including, without limitation, proceedings for the
termination, assumption or assignment thereof or proceedings to secure adequate
protection for Landlord or proceedings involving objections to the allowance of
Landlord's claim (in any of such cases a "Proceeding"), then Landlord shall be
paid in addition to any and all amounts due Landlord pursuant to the terms of
this Lease such further amount as shall be sufficient to cover all costs and
expenses incurred by Landlord with respect to the Proceeding, which costs and
expenses shall include the reasonable compensation costs, expenses,
disbursements and advances of Landlord, its agent and attorneys. This Section
applies only to those items not covered in Section 16.4.
16.4 Damages. Notwithstanding termination of this Lease and re-entry by
-------
Landlord pursuant to Section 16.1 or Section 16.2, the liability of Tenant for
Rent and other charges provided for herein shall not be extinguished for the
balance of the Term, and Landlord shall be entitled to recover from Tenant:
13
<PAGE>
(i) The worth at the time of an award (including interest at the rate set
forth in Section 16.8), of any unpaid Rent which has been earned by Landlord at
the time of termination, plus
(ii) The worth at the time of an award (including interest at the rate
set forth in Section 16.8), of the amount by which the unpaid Rent which would
have been earned after termination until the time of any award exceeds the
amount of loss of Rent that Tenant proves could have been reasonably avoided;
plus
(iii) The worth at the time of an award of the amount by which the
unpaid Rent for the balance of the term of this Lease (as extended, if at all
prior to termination exceeds the amount of such loss of Rent that Tenant proves
could have been reasonably avoided (including interest at the rate set forth in
Section 16.8 from the date of the award until paid). Such worth at the time of
the award shall be computed at the discount rate of the Federal Reserve Bank of
San Francisco, or successor Federal Reserve Bank, on the date of termination.
For the purposes of this calculation only, the last Lease Years' Rent shall be
deemed to be constant for each Lease Year thereafter; plus
(iv) Any other amount necessary to compensate Landlord for all the damage
proximately caused by Tenant's failure to perform Tenant's obligations under
this Lease or which in the ordinary course of things would be likely to result
therefrom, including amounts due and payable pursuant to Section 16.3.
16.5 Non-Termination of Lease. Should Landlord re-enter the Premises pursuant
------------------------
to Section 16.1 or Section 16.2, Landlord may elect, by notice to Tenant, not to
terminate this Lease, in which case Tenant shall indemnify Landlord for the loss
of Rent by a payment at the end of each month during the remaining Term
representing the difference between the Rent which would have been paid in
accordance with this Lease and the rental actually derived from the Premises by
Landlord for such month. Without any previous notice or demand, separate actions
may be maintained by Landlord against Tenant from time to time to recover any
damages which, at the commencement of any action, have then or theretofore
become due and payable to Landlord under this Section 16 without waiting until
the end of the original term of this Lease.
16.6 Reletting. In the event that this Lease shall be terminated as
---------
hereinabove provided or by summary proceedings or otherwise, Landlord may at any
time and from time to time relet the Premises in whole or in part either in its
own name or as agent of Tenant for any period equal to or greater or less than
the remainder of the then current Term of this Lease for any rental which it
may deem reasonable to any tenant it may deem suitable and satisfactory and for
any use and purpose which it may deem appropriate, consistent with the
operation of the Building in a first-class manner. Upon each reletting all
rentals received by Landlord from such reletting shall be applied first to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of such reletting
and of such alterations and repairs; third, to the payment of Rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and applied
in payment of future Rent as the same may become due and payable hereunder. Upon
a reletting of the Premises, Landlord shall not in any event be required to pay
Tenant any surplus of any sums received by the Landlord in excess of the Rent
payable in accordance with this Lease.
16.7 Right of Landlord to Cure Defaults. If Tenant shall default in the
-----------------------------------
observance or performance of any term or covenant on its part to be observed or
performed under or by virtue of any of the terms and provisions in any section
of this Lease, or if Tenant shall fail to pay any sum of money (other than Rent
or other charges) required to be paid by Tenant hereunder, Landlord may, but
shall not be obligated to, and without waiving or releasing Tenant from any
obligations to make any such payment or perform any such other act on Tenant's
part to be made or performed as provided in this Lease, remedy such default for
the account and at the expense of Tenant, immediately and without notice in case
of emergency, or in any other case only upon Tenant's failure to remedy such
default within ten (10) days after Landlord shall have notified Tenant in
writing of such default. If Landlord makes any expenditures or incurs any
obligations for the payment of money in connection with Tenant's default
including, but not limited to, attorneys' fees, in instituting, prosecuting or
defending any action or proceeding, Tenant shall pay to Landlord as Additional
Rent such sums paid or obligations incurred, with interest. Landlord shall have,
in addition to any other right or remedy, the same rights and remedies in the
event of the nonpayment of sums due under this Section as in the case of default
by Tenant in the payment of Rent or Additional Rent.
16.8 Unpaid Sums and Service Charge. Any amounts owing from Tenant to Landlord
------------------------------
under this Lease shall bear interest at the higher of (i) fifteen percent (15%)
per
14
<PAGE>
annum or (ii) three percent (3%) in excess of the rate of interest
announced on the first (1st) day of each month by Seattle First National Bank,
Washington, its successors or assigns, at its prime rate for short term
unsecured loans, calculated from the date due until the date of payment. In
addition, if any payment of Rent, Additional Rent, or other charges, is not paid
within ten (10) days of its due date, Tenant shall pay a late charge equal to
ten percent (10%) of the amount of such overdue payment per month or portion
thereof as liquidated damages for Landlord's extra expense and handling of such
past due account.
16.9 Cumulative Remedies. All remedies provided herein are intended to be
-------------------
cumulative. Landlord's exercise of any right or remedy shall not prevent it from
exercising any other right or remedy provided under this Lease or otherwise
provided by law.
16.10 Repayment of "Free Rent". If this Lease provides for a postponement
------------------------
of any monthly payments, a period of "Free Rent" or other rent concession, such
postponed rent or "Free Rent" is called the "Abated Rent". Tenant shall be
credited with having paid all of the Abated Rent on the expiration of the Lease
Term only if Tenant has fully, faithfully and punctually performed all of
Tenant's obligations hereunder, including the payment of all Rent and Additional
Rent (other than the Abated Rent) and all other monetary obligations and the
surrender of the Premises in the physical condition required by this Lease.
Tenant acknowledges that its right to receive credit for Abated Rent is
absolutely conditioned upon Tenant's full, faithful and punctual performance of
its obligations under this Lease. If Tenant defaults and does not cure within
any applicable grace period, the Abated Rent shall immediately become due and
payable in full and this Lease shall be enforced as if there were no such Rent
Abatement or other rent concession.
Section 17. Quiet Environment. Landlord covenants that upon Tenant's paying
-----------------
Rent, Additional Rent, and all other amounts and charges due hereunder and
observing and performing all the terms, covenants and conditions of this Lease
on its part to be observed and performed, Tenant may peaceably and quietly enjoy
the Premises, subject, however, to the terms and conditions of this Lease.
Section 18. Landlord's Liability.
--------------------
18.1 Notice of Default. Tenant shall give written notice of any failure by
-----------------
Landlord to perform any of its obligations under this Lease to Landlord and to
any ground lessor, mortgagee or beneficiary under any deed of trust encumbering
the Building or Land whose name and address have been furnished to Tenant in
writing. Landlord shall not be in default under this Lease unless Landlord (or
such ground Lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure, Landlord
shall not be in default if such cure is commenced within such thirty (30) day
period and thereafter is diligently pursued to completion. Tenant shall not have
the right to terminate this Lease as a result of Landlord's default or to
perform maintenance or repairs and deduct the cost from amounts payable by
Tenant to Landlord.
18.2 Limitation of Liability. The liability of Landlord to Tenant for any
-----------------------
default by Landlord under this Lease shall be limited to the interest of
Landlord in the Land and Building (and the proceeds thereof). Tenant agrees to
look solely to Landlord's interest in the Land and Building (and the proceeds
thereof) for the recovery of any judgement against Landlord, and Landlord shall
not be personally liable for any such judgement or deficiency after execution
thereon. Notwithstanding the foregoing, however, Landlord shall have personal
liability for insured claims beyond Landlord's interest in the Land and Building
(and the proceeds thereof) but only to the extent of proceeds of Landlord's
liability insurance coverage respecting such claims.
Section 19. Landlord's Interest in Premises.
--------------------------------
19.1 Priority. This Lease shall be subordinate to any first mortgage or a deed
--------
of trust or sale and leaseback used for financing purposes, now existing or
hereafter placed upon the Land, Building or the Premises, created by or at the
instance of Landlord, and to any and all advances to be made thereunder and to
interest thereon and all modifications, renewals, replacements or extensions
thereof (a "Landlord's Mortgage"); this provision shall be self-operative and no
further instrument or subordination shall be required by any Landlord's
mortgagee. Notwithstanding the foregoing, however, Tenant shall execute and
deliver any subordination agreement satisfactory in form and substance to the
holder of a Landlord's Mortgage, but only if any such subordination agreement
shall provide that so long as Tenant is not in default and has cured said
default under this Lease, Tenant shall have the continued enjoyment of the
Premises free from any disturbance or interruption by any holder of Landlord's
Mortgage or any purchaser at a foreclosure or private
15
<PAGE>
sale of the Land, Building, or the Premises as a result of Landlord's default
under a Landlord's Mortgage.
19.2 Estoppel Certificates. Tenant shall, within ten (10) days of demand,
---------------------
execute, acknowledge and deliver to Landlord or its designee a written statement
certifying: (i) the date the Lease Term commenced (the "Commencement Date") or
will commence and the date it expires; (ii) the date Tenant entered into
occupancy of and commenced business operations in the Premises; (iii) the amount
of Base Rent and the date to which Rent has been paid; (iv) that this Lease is
in full force and effect and has not been assigned, modified, supplemented or
amended in any way (or specifying the date and terms of each agreement so
affecting this Lease) and that no part of the Premises has been sublet, or to
the extent such is not the case, a copy of any sublease); (v) that, to the
extent such is the case, this Lease together with the Space Description,
represents the entire agreement between the parties as to the Premises; (vi)
that Landlord is not in default under this Lease (or if such is not the case,
the extent and nature of such default); (vii) that all required advances by
Landlord to Tenant on account of Tenant Improvements have been made (or the
extent that such is not the case); (viii) on the date of such certification
there are no existing defenses or claims which Tenant has against the
enforcement of this Lease by Landlord (or if such is not the case, the extent
and nature of such defenses or claims); (ix) the amount of the Security Deposit
paid to Landlord and (x) any other fact or representation that a mortgagee or
purchaser may reasonably request. It is intended that any such statement
delivered pursuant to this Section 19.2 shall be fully and completely binding
upon Tenant for all purposes of this Lease, may be relied upon by a prospective
purchaser or mortgagee of Landlord's interest, or any assignee of any mortgage
upon Landlord's interest in the Building or the Land. If Tenant shall fail to
respond within ten (10) days of receipt of a written request by Landlord
therefor, Tenant shall be deemed to have given a certificate as above provided
without modification and shall be conclusively deemed to have admitted the
accuracy of any information supplied by Landlord to a prospective purchaser or
mortgagee, that this Lease is in full force and effect, that there are no
uncured defaults in Landlord's performance, that the Security Deposit is as
stated in this Lease and that not more than one month's Rent has been paid in
advance.
19.3 Transfer of Landlord's Interest. In the event of any transfer,
-------------------------------
assignment, sale or foreclosure of Landlord's interest in the Premises, the
Building or the Land, other than a transfer for security purposes only, the
transferor shall automatically be relieved of any and all obligations and
liabilities on the part of Landlord accruing from and after the date of such
transfer and Tenant shall attorn to the transferee, assignee or purchaser, and
will recognize such transferee, assignee or purchaser as Tenant's Landlord under
this Lease. In the event such transferee, assignee or purchaser shall further
transfer its interest as Landlord under this Lease, Tenant covenants and agrees
to attorn to such transferee, assignee or purchaser and to recognize such
transferee, assignee or purchaser as Tenant's Landlord under this Lease. Tenant
agrees within ten (10) days of demand to execute and deliver, at any time and
from time to time, upon the request of Landlord or any mortgagee, or purchaser
of other transferee of Landlord's interest to whom Tenant has previously
attorned, any instrument which may be necessary or appropriate to evidence any
such attornment.
Section 20. Holding Over. If Tenant shall retain possession of the Premises
------------
after termination or expiration of this Lease, then (i) if such retention of the
Premises is without the express or implied consent of Landlord, for each day, or
part thereof the Tenant so retains possession of the Premises, Tenant shall pay
Landlord one hundred fifty percent (150%) the amount of the daily rate of Rent
and Additional Rent and other charges payable by Tenant hereunder during the
calendar month immediately preceding such termination or expiration together
with any damages sustained by Landlord as a result thereof, and (ii) if such
retention of the Premises is with the express or Implied consent of Landlord,
(1) such tenancy shall be from month to month (and in no event from year to year
or any period longer than month to month), and (2) Landlord may terminate any
such month to month tenancy upon thirty (30) days notice to Tenant, and (3)
Tenant shall pay Landlord rental which shall be the greater of either the then
quoted rates for similar space in the Building or one hundred fifty percent
(150%) the monthly Rent and Additional Rent and other charges payable by Tenant
hereunder during the calendar month immediately preceding such termination or
expiration.
Section 21. Miscellaneous Provisions.
------------------------
21.1 Headings. The titles to sections of this Lease and the table of contents
--------
are for convenience only and shall not be considered in construing or
interpreting the scope or intent of this Lease.
16
<PAGE>
21.2 Words. Words or any gender issued in this Lease shall be deemed to
-----
include the other gender or the neuter and words in the singular shall be deemed
to include the plural and the plural to include the singular where the sense
requires. The adverbs "herein", "hereof", "hereunder", "hereto", "hereby",
"hereinafter", and the like, wherever the same appear herein, mean and refer to
this Lease in its entirety and not to any specific section. The term "person"
includes a firm or partnership or corporation. The term "Occupant" shall mean
any person entitled to occupy a portion or portions of the Building under a
lease or other arrangement with Landlord.
21.3 Heirs and Assigns. All of the covenants, agreements, terms and
-----------------
conditions contained in this Lease shall inure to the benefit of and be binding
upon Landlord and Tenant and their respective heirs, executors, administrators,
successors and assigns. If more than one person or entity executes this Lease as
Tenant, the liability of each to pay Rent, and all other costs and charges and
to perform all other obligations hereunder shall be deemed to be joint and
several.
21.4 Non-Waiver. Failure of Landlord to insist, in any one or more
----------
instances, upon strict performance of any term, covenant or condition of this
Lease, or to exercise any option herein contained, shall not be construed as a
waiver, or a relinquishment for the future, of such term, covenant, condition or
option, but the same shall continue and remain in full force and effect. The
receipt by Landlord of Rent with knowledge of a breach of any of the terms,
covenants or conditions of this Lease to be kept or performed by Tenant shall
not be deemed to have been waived and signed by Landlord.
21.5 No Brokers. Tenant represents and warrants to Landlord that it has
----------
not engaged any broker, finder or other person entitled to any commission or fee
in respect of the negotiation, execution or delivery of this Lease, except as
disclosed in Section 1 (20). The provisions of this Section 21.5 shall not apply
to brokers with whom Landlord has a written brokerage agreement.
21.6 Entire Agreement. This Lease and the Space Description contain the
----------------
entire agreement of the parties with respect to the subject matter hereof and no
representations, promises or agreements, oral or otherwise, between the parties
not embodied herein shall be of any force or effect. No provisions of this Lease
or the Space Description may be changed, waived, discharged or terminated
orally, but only by instrument in writing executed by Landlord and Tenant
concurrently with or subsequent to the date of this Lease.
21.7 Severability. Any provision of this Lease which shall prove to be
------------
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof and the remaining provisions hereof shall nevertheless remain
in full force and effect.
21.8 Force Majeure. Time periods for Landlord's or Tenant's performance
-------------
under any provisions of this Lease (except for the payment of money) shall be
extended for periods of time during which the non-performing party's performance
is prevented due to circumstances beyond the party's control, including, without
limitation, strikes, embargoes, governmental regulations, inclement weather and
other acts of God, war or other strife.
21.9 No Accord or Satisfaction. No payment by Tenant or receipt by
---------------------------
Landlord of a lesser amount than the Rent and other charges stipulated herein
shall be deemed to be other than on account of the earliest stipulated Rent or
other charges, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Rent or other charges be deemed an accord
and satisfaction, and Landlord's acceptance of such check or payment shall be
without prejudice to Landlord's right to recover the balance of such rent and
other charges or pursue any other remedy to which it is entitled.
21.10 Governing Law. This Lease shall be construed and governed by the laws
-------------
of the State of Washington.
21.11 Notices. Any demand, request or notice which either party hereto
-------
desires or may be required to make or deliver to the other shall be in writing
and shall be deemed by private courier service (such as Federal Express),
facsimile, or three (3) days after being deposited in the United States mail, in
registered or certified form, return receipt requested, addressed as follows:
17
<PAGE>
To Landlord: REDMOND WHITEHALL ASSOCIATES,
----------- 2105 - 112th Avenue NE #100
Bellevue, WA 98004
Attn: Drew D. Hall
Telephone: (206) 453-4107
Facsimile: (206) 454-0135
To Tenant: CACHEFLOW, INC,
--------- 16701 NE 80th Street #100
Redmond, WA 98052
Telephone: (206) ______________________
Facsimile: (206) ______________________
or to such other address and person as either party may communicate to the other
by like written notice.
21.12 Tax on Rent. The Rent herein is exclusive of any sales, business and
-------------
occupation, gross receipts or other tax based on Rents, or tax on Tenant's
property or tax upon or measured by the number of employees of Tenant, or any
similar tax or charge. If any such tax or charge be hereinafter enacted, and
imposed upon Landlord, Tenant shall pay Landlord the amount thereof concurrently
with each monthly Rent payment. If it shall not be lawful for Tenant so to
reimburse Landlord, the monthly Rent payable to Landlord under this Lease shall
be revised to net Landlord the same net rental after imposition of any such tax
or charge upon Landlord as would have been payable to Landlord prior to the
imposition of such tax or charge. Tenant shall not be liable to reimburse
Landlord for any federal income tax or other income tax of a general nature to
Landlord's Income.
21.13 Right to Change Public Spaces and Building Directory. Landlord
----------------------------------------------------
reserves the right at any time after completion of the Building, without thereby
creating an actual or constructive eviction or incurring any liability to
Tenant, to change the arrangement or location of public areas of the Building
not contained within the Premises or any part thereof, including entrances,
passageways, doors and doorways, corridors, stairs, toilets and other public
service portions of the Building.
21.14 Mortgagee Requirements. Tenant shall within ten (10) days of request
----------------------
by Landlord deliver an executed and acknowledged instrument amending this Lease
in such respects as may be required by any present or future mortgagee, provided
that such amendment does not materially alter or impair Tenant's rights or
remedies under this Lease or increase its rental burdens.
21.15 Time is of the Essence. Tenant's and Landlord's performance of each
------------------------
of Tenant's and Landlord's obligations under this Lease is a condition as well
as a covenant. Tenant's right to continue in possession of the Premises is
conditioned upon such performance. Time is of the essence in the performance of
all covenants and conditions.
21.16 Capacity to Execute. If Tenant is a corporation, each person signing
-------------------
this Lease on behalf of Tenant represents and warrants that he has full
authority to do so and that this Lease binds the corporation. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a certified
copy of a resolution of Tenant's Board of Directors authorizing the execution of
this Lease or other evidence of such authority reasonably acceptable to
Landlord. If Tenant is a partnership, each person or entity signing this Lease
for Tenant represents and warrants that he or it is a general partner of the
Partnership, that he or it has full authority to sign for the Partnership and
that this Lease binds the Partnership and all general partners of the
Partnership. Tenant shall give written notice to Landlord of any general
partner's withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement
of partnership or certificate of limited partnership.
21.17 Cost of Attorneys' Fees. In the event of litigation between the
-----------------------
parties hereto, declaratory or otherwise, for the enforcement of any of the
covenants, terms or conditions of this Lease, the non-prevailing party shall pay
the costs thereof and attorneys' fees reasonably incurred by the prevailing
party as determined by the court, in such suit, at trial and on appeal. The
parties covenant and agree that they intend by this Section 21.17 to compensate
for attorneys' fees actually incurred by the prevailing party to the particular
attorneys involved at such attorneys' then normal hourly rates and that this
Section shall constitute an instruction to the Court that such rate or rates
shall be deemed reasonable.
18
<PAGE>
21.18 Changes. Landlord does not guarantee the continued present status of
-------
light or air over any property adjoining or in the vicinity of the Building. Any
diminution or shutting off of light, air or view by any structure which may be
erected near or adjacent to the Building shall in no way affect this Lease or
impose any liability on Landlord.
21.19 No Reservation. The submission of this Lease for examination does
--------------
not constitute a reservation or option to Lease the Premises and this Lease
becomes effective as a Lease only upon execution and delivery thereof by
Landlord and Tenant.
21.20 Recording. This Lease shall not be recorded by either party. The
---------
parties shall record a mutually acknowledged notice of the existence of this
Lease in short form stating the identity of the parties, and the duration of the
leasehold.
21.21 Riders. The provisions of Rider 1 through Rider 3 inclusive, attached
------ - -
to this Lease are hereby incorporated by this reference as if fully here set
forth. Capitalized terms in any Rider or Exhibit have the same meaning as set
forth in this Lease. Time is particularly of the essence with respect to the
provisions of every Rider.
IN WITNESS WHEREOF this Lease has been executed as of the day and year set
forth above.
Landlord: REDMOND WHITEHALL ASSOCIATES
a Washington General Partnership
By: /s/ Drew D. Hall 2-26-97
----------------------------------------------
Drew D. Hall Date
Its: Managing Partner
Tenant: CACHEFLOW, INC.
a Delaware Corporation
By: /s/ Joseph J. Pruskowski 2-20-97
----------------------------------------------
Joseph J. Pruskowski Date
Its: President
19
<PAGE>
LANDLORD'S ACKNOWLEDGEMENT
--------------------------
State of Washington )
) ss.
County of King )
I certify that I know or have satisfactory evidence that Drew D. Hall
------------
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Managing Partner of REDMOND WHITEHALL
---------------- -----------------
ASSOCIATES to be the free and voluntary act of such party for the uses and
-----------
purposes mentioned in the instrument.
Dated: 2/26/97
-------------------------------------
/s/ Glenda K. Loveless
------------------------------
(Signature)
[NOTARY PUBLIC APPREARS HERE]
Escrow Officer, Notary Public
-------------------------------
Title
My appointment expires 12/3/97
--------
TENANT'S ACKNOWLEDGEMENT
------------------------
State of Washington )
) ss.
County of King )
I certify that I know or have satisfactory evidence that Joseph J.
---------
Pruskowski is the person who appeared before me, and said persons acknowledged
----------
that they signed this instrument, on oath stated that they were authorized to
execute the instrument and acknowledged it as the President and N/A,
--------- ---
respectively, of Cacheflow, Inc. to be the free and voluntary act of such party
---------------
for the uses and purposes mentioned in the instrument.
Dated: 2/20/97
-------------------------------------
/s/ Steven S. O'Dell
------------------------------
(Signature)
[NOTARY PUBLIC APPREARS HERE]
Notary Public
-------------------------------
Title
My appointment expires 1/23/00
--------
20
<PAGE>
Exhibit A to Lease
------------------
Diagram of floor(s) with approximate location of Premises Marked.
21
<PAGE>
Exhibit B To Lease
------------------
Description of Land
-------------------
LOTS 1 through 9 of 2nd amended site plan for Redmond Office Center, a binding
site plan, as per plat recorded in Volume 159 of Plats, Pages 3 through 5,
Records of King County;
SITUATE in the City of Redmond, County of King, State of Washington;
SUBJECT to those matters set forth in the public records thereof.
22
<PAGE>
Exhibit C to Lease
------------------
RULES AND REGULATIONS
Section 1. Landlord shall have the right to control and operate the Common
Areas in such manner as is reasonable for the benefit of the Occupants
generally. Tenant shall not invite to its Premises, or permit the visit of
persons in such numbers or under such conditions as to interfere with the use
and enjoyment of the Common Areas by other Occupants. No portion of the
sidewalks, doorways, entrances, passages, vestibules, halls, lobbies, corridors,
elevators or stairways in or adjacent to the Building shall be obstructed or
used for any purpose other than the ingress and egress to and from the Premises.
Tenant, its employees or invitees shall not go upon the roof of the Building.
Landlord reserves the right from time to time to reduce, increase, enclose or
otherwise change the size, number, location, layout, and nature of the Common
Areas and facilities, to construct additional buildings and storage, and to
create additional rentable areas through use or enclosure of Common Areas. When
reasonably necessary Landlord may either temporarily or permanently change the
location of, or close entrances, doors, corridors, elevators or other facilities
without liability to Tenant by reason of such closure and without such action by
Landlord being construed as an eviction of Tenant or release of Tenant from the
duty of observing and performing any of the provisions of this Lease so long as
Tenant has reasonable access to the Premises.
Section 2. During such hours as Landlord may from time to time reasonably
determine, Landlord may: (i) require all persons entering or leaving the
Building to identify themselves to a watchman by registration or otherwise and
to establish their right to enter or leave the Premises or the Building; and
(ii) limit entries into and departures from the Building to such one or more
entrances as Landlord shall from time to time designate.
Landlord reserves the right at any time to require that Tenant,
its employees or agents, desiring to take office furniture or equipment or other
similar items from the Building first obtain a pass therefor from Landlord or
such employee or agent of Landlord as Landlord shall from time to time designate
for such purpose. Tenant shall prior to moving furniture or other equipment into
or out of the Building, in all instances first obtain the prior written approval
of Landlord, both as to the time of day and entrance to the Building to be
utilized by Tenant in connection with such move.
Landlord reserves the right to exclude or eject from the
Building all solicitors, canvassers and peddlers, or any person who, in the
judgement of landlord's security officer, agent or employee in charge, is under
the influence of intoxicants or drugs, or any person who shall in any manner due
any illegal act or any act in violation of any of the Rules and Regulations.
Landlord may enact such other security measures as Landlord may
from time to time reasonably determine necessary for the safety and protection
of the Occupants and the Building. In no event shall Landlord be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person.
Section 3. Subject to the terms and conditions of the Lease, Landlord shall
provide heating and air conditioning as reasonably required for reasonable,
comfortable occupancy of the Building and the Premises under normal business
operations. Business Hours mean Monday through Friday from 7:00 a.m. to 8:00
p.m., Saturdays 8:00 a.m. to 1:00 p.m. Sundays and holidays excepted. Wherever
heat generating machines or equipment are used in the Premises which affect the
temperature otherwise maintained by the heating and air conditions systems.
Landlord reserves the right, at its option, to install supplementary air
conditioning equipment in the Premises if such machines or equipment is placing
an above building standard burden on the heating and air conditioning systems.
If supplementary air conditioning equipment is installed, the Tenant shall,
within ten (10) days of invoice, pay Landlord (i) the cost of any such
installation and (ii) the cost of operation and maintenance of such
supplementary equipment at such rates as Landlord may reasonably determine.
The Building is designed to accommodate electrical and heating
loads generated by lights and equipment typically found in a standard office
environment. Tenant shall obtain the prior written consent of Landlord before
installing lights or equipment which will result in the typical standard being
exceeded in any part of the Premises.
Tenant must obtain the written consent of Landlord prior to
using any equipment in the Premises with power requirements in excess of 220
volt single phase 30
23
<PAGE>
amperes. Regardless, of whether such consent has been obtained, Tenant shall,
within ten (10) days of invoice, pay Landlord the cost of electrical systems or
modifications necessitated by such equipment, including installation.
Tenant shall conserve energy, water, heat and air conditioning
and shall cooperate fully with Landlord to assure reasonable and efficient
operation of the heating and air conditioning systems in the Building. Tenant
shall also comply with Landlord's instruction for the use of drapes and
thermostats in the Building.
Section 4. Subject to the terms and conditions of the Lease, Landlord shall
provide routine janitorial service to the Premises and common areas of the
Building five (5) calendar days of each week, excluding holidays, consisting of
routine dusting, vacuum cleaning or dust mopping floors, removing normal trash,
and periodic cleaning of exterior windows, maintaining normal hard surface
floors and cleaning entrance doors of the Premises, according to landlord's work
schedule. Landlord shall not be required to provide janitorial services for
Tenant's Premises where the Permitted Use is for health care or specialized
laboratory uses. All janitorial service in and about the Premises shall be
performed by employees of or service companies approved by Landlord. Landlord
shall have no liability whatsoever to Tenant or any other person for any loss of
or damage to personal property on or about the Premises, however occurring,
including any damage done by a janitor or any other employee or any person.
Janitor service will not be furnished on nights when rooms are occupied after
6:00 p.m. unless, by agreement in writing, service is extended to a later hour
for a specifically designated rooms.
Section 5. All deliveries of large or bulky articles shall be delivered to
and removed from the Premises only via stairways or elevators which have been
properly padded or protected by Tenant. All deliveries of the above-mentioned
items must be scheduled with the Landlord to ensure the elevator used for the
delivery is properly padded. Objects of unusual or extraordinary size or weight
shall not be brought into or removed from the Building without the prior written
consent of Landlord and, where such consent is obtained, shall be brought into
or removed from the Building at the time and place and in the manner and shall
be placed and maintained in such location and position in the Premises as
Landlord may designate. The firm employed to move Tenant's equipment, material,
furniture or other property in or out of the Building must be a professional
mover, reasonably acceptable to landlord and insurance must be sufficient to
cover all personal liability, theft or damage to the Building. All damage to the
Building (including any stairway or elevator) or the Premises by the deliver,
installation, use or removal of freight, furniture, business equipment,
merchandise, safes or other articles shall be paid for by Tenant. Landlord shall
not be responsible for damage to any of Tenant's property delivered to or left
in any receiving area or elsewhere in the Building by any agent, employee or
representative of Landlord as an accommodation to Tenant, Landlord being under
no obligation to accept delivery of, or to move or handle, any property of
Tenant.
Section 6. Tenant shall not place a load upon any floor of the Premises
which exceeds forty-five pounds live load and twenty pounds for partitions per
square foot of floor space. Landlord reserves the right to prescribe the weight
and position of all safes, files and heavy installations which Tenant wishes to
place in the Premises in order to properly distribute the load. Business
machines and mechanical equipment belonging to Tenant which cause noise or
vibration that may be transmitted to the structure of the Building or to any
other Occupant in the Building shall be placed and maintained by Tenant at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.
Section 7. Tenant, Tenant's employees, agents or invitees shall not,
without the prior written consent of Landlord:
7.1 Attach, hang or use any curtain, blind, shade, awning or screen
in connection with any window, door or entrance in the Premises or the Building,
or attach or install any aerials or other projections from the Premises or the
Building.
7.2 Use the name of the Building for any purpose other than that of
Tenant's business address, or use any picture of the Building.
7.3 Alter any lock or install a new or additional lock or any bolt
on any door of the Premises. If Landlord shall give its consent thereto, Tenant
shall in each case furnish Landlord with a key for any such lock, and upon
termination of its tenancy, Tenant shall deliver to Landlord all keys to the
Premises and to all other rooms or offices furnished to Tenant or which Tenant
shall have made. Landlord will provide Tenant with additional keys for any lock
in the Premises upon payment therefor by Tenant.
24
<PAGE>
7.4 Install any security system without Landlord's prior
consent. If Landlord shall give its consent thereto, Tenant shall furnish
Landlord with such passwords or other security devices as are necessary to
furnish Landlord access to the Premises, and upon termination of its tenancy,
Tenant shall deliver to Landlord all security access devices which Tenant shall
have had made.
7.5 Bring or keep in or about the Premises or the Building any
animals, birds or other pals (excepts seeing-eye dogs) or bicycles or other
vehicles, except at such areas as Landlord may designate, temporarily or
otherwise.
7.6 Make or permit to emanate from the Premises or the Building any
objectionable noise or odor, nor use or keep in the Premises or the Building any
inflammable or combustible fluid or material, or in any manner annoy, disturb or
interfere with other Occupants or their employees and invitees.
7.7 Install telegraphic or telephonic connections or other wire
services, or bore or cut for such wires or Instruments incident thereto, unless
Landlord has approved the location and method of installation, introduction and
placement of such wires and instruments.
7.8 Drive spikes, hooks, screws or nails or other devices in the
walls or woodwork (except for hanging small pictures or similar items) or drill
holes in the floor of the Premises.
7.9 Place any boxes, cartons or other rubbish in the corridors or
other public areas of the Building.
7.10 No Tenant will use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible or explosive fluid or material
or chemical substance other than limited quantities of such materials or
substances reasonably necessary for the operation or maintenance of office
equipment or limited quantities of cleaning fluids and solvents required in
Tenant's normal operations in the Premises. Without Landlord's prior written
approval, no Tenant will use any method of heating or air conditioning other
than that supplied by Landlord.
7.11 Not paint, display, inscribe, maintain or affix any sign,
placard, picture, advertisement, name, notice, lettering or direction on any
part of the outside or inside of the Property, or on any part of the inside of
the Premises which can be seen from the outside of the Premises without the
prior consent of Landlord, and then only such name or names or matter and in
such color, size, style, character and material as may be first approved by
Landlord in writing and which complies with all recorded Restrictive Covenants
and Easement for the Building. Landlord shall prescribe the suite number and
identification sign for the Premises (which shall be prepared and installed by
Landlord at Landlord's expense). Landlord reserves the right to remove at
Tenant's expense all matter not so installed or approved without notice to
Tenant.
7.12 Not place anything or allow anything to be placed in the
Premises near the glass of any door, partition, wall or window which may be
unsightly, in Landlord's discretion, from outside the Premises, and Tenant shall
not place or permit to be placed any article of any kind on any window ledge or
on the exterior walls. Blinds, shades, awnings or other forms of inside or
outside window ventilators or similar devices, shall not be placed in or about
the outside windows in the Premises except to the extent, if any, that the
character, shape, color, material and make thereof is first approved by the
Landlord and which complies with any recorded Restrictive Covenant and Easement
for the Building.
7.13 Tenant shall not conduct, permit or advertise any auctions or
sheriffs sales or distress sales in the Premises, Building or Land.
Section 8. Tenant shall be liable for any damage to the fixtures and
systems located in the Building resulting from the abuse or misuse of any nature
or character whatever by Tenant, or Tenant's employees, agents or invitees.
Section 9. Tenant will refer all contractors, contractor's representatives
and installation technicians rendering any service to Tenant, to Landlord's
representative for approval before performance of any work. Notwithstanding such
approval, Landlord shall not be liable in any manner for the work so performed
by Tenant's contractors, contractor's representatives and installation
technicians. This Section shall apply to all work performed in the Building
including installation of telephones, telegraph equipment, electrical devices
and attachments and installations of any nature affecting floors, walls,
woodwork, trim, window, ceilings, equipment or any other part of the Building.
25
<PAGE>
Section 10. Tenant shall give prompt written notice to Landlord of any
accidents to or defects in plumbing, electrical fixtures, heating or air
conditioning systems or other systems or improvements in the Premises or the
Building, to enable Landlord to repair such damage or defects.
Section 11. Landlord shall have the right to keep a passkey and be issued
necessary security codes and devices to the Premises and the right to enter the
Premises for inspection, maintenance, cleaning or repairing and for any other
reasonable purposes.
Section 12. Landlord may change the name and the street address of the
Building, without notice and without liability to any Occupant.
Section 13. Landlord reserves the right from time to time to amend and to
make such further reasonable Rules and Regulations as, in the judgement of the
Landlord, may be necessary or desirable for the safety, care or cleanliness of
the Building or the preservation of good order herein, or the maintenance and
promotion of the high class character and reputation of the Building or for any
other reasonable or desirable purpose. Such further Rules and Regulations and
such amendments shall be binding upon Tenant, effective upon Tenant's receipt
of a copy thereof. Waiver by Landlord of any breach of any Provision of the
Rules and Regulations by any other Occupant shall not be deemed to be a waiver
of such Rules and Regulations as to Tenant or all Occupants.
Section 14. In addition to definitions set forth in these Rules and
Regulations, capitalized terms herein shall have the same meaning as set forth
in the Lease to which this is an Exhibit.
26
<PAGE>
Exhibit D to Lease
------------------
PLANS AND SPACE DESCRIPTION
The Tenant Improvements to be made to the Premises by Landlord shall be of
comparable materials and workmanship to those found in other occupied spaces
within Redmond Corporate Center. Standard interior finishes shall include
quality wall-to-wall carpeting, acoustical ceilings, recessed lighting, painted
GWB walls, oak trimmed windows, solid core doors and high quality hardware.
Landlord will build out the Premises "turnkey" to a mutually agreed upon design
substantially along the lines illustrated on the schematic outline shown on
Exhibit A, subject to Landlord's final pricing of the construction drawings.
Landlord and Tenant acknowledge and agree to Landlord's contribution towards
construction of the tenant improvements outlined in the final construction
drawings and specifications shall not exceed One Hundred Twenty Three Thousand
Five Hundred Sixty Seven and No/100's Dollars ($123,567.00) including space
planning/architectural services, governmental permits, and construction
expenses, but excluding Washington State sales tax.
Should changes occur which increase the cost of completing the mutually agreed
upon Tenant improvements, Tenant shall be responsible for any excess expenses.
Tenant shall reimburse Landlord for any Tenant improvement Expense overages
within ten (10) days from receipt of Landlord's invoice.
Furthermore, any delays in the final design, permitting or construction of the
Tenant Improvements caused by Tenant, Tenant's designers, Tenant's suppliers or
other entities selected by Tenant shall not extend the Commencement Date of the
Lease. Such delays shall include, but are not limited to, change orders incurred
during the construction process as the result of revisions to design, material
selections, equipment selections or other Tenant driven decisions.
27
<PAGE>
Rider #1
RENEWAL OPTION
To the CACHEFLOW, INC.
Redmond Corporate Center Lease
Option Period
-------------
A. Option: Tenant is granted the right to extend the term of this Lease for
------
two (2) separate and consecutive periods of three (3) years (the "Option Term"),
on the terms and conditions set forth herein; provided, that the right to extend
for such Option Term (the "Option") may be exercised only in the event Tenant
has not been in default at any time during the entire term of this Lease and is
not in default either at the time the Option is exercised nor at the time the
Option Term is to commence.
B. Exercise of Option: To exercise the Option described in this Article,
------------------
Tenant must notify Landlord in writing no earlier than three hundred sixty (360)
days and no later than one hundred eighty (180) calendar days prior to the
expiration of the initial Term of this Lease.
C. Continuing Effect: In the event Tenant properly exercises its Option
-----------------
rights as provided herein and the Term of this Lease is extended as provided
herein, all of the terms and conditions of this lease shall apply during the
Option Term, including but not limited to Tenant's obligation to pay rent and
other charges and expenses provided for in the Lease, and provided, that (1) the
Option right exercised by the Tenant in order to extend the Term of the Lease
shall terminate and be of no further force and effect and may not be exercised
again by Tenant; (2) no concession previously granted Tenant by Landlord, if
any, shall be due or payable to Tenant during or with respect to such Option
Term; and (3) rent during the Option Term shall be determined in accordance with
the provisions of subparagraph (D) hereof.
D. Option Rent.
-----------
1. Option Term Base Rent: The Option Term base rent shall be equal to
---------------------
the base rent for the last month of the initial lease term or subsequent
Option Term subject to an adjustment commencing on the first day of the
applicable Option Term. Said adjustments shall be computed as follows: The "All
Items" Consumer Price Index for All Urban Consumers, US City Average (1982-
84=100) published by the United States Department of Labor's Bureau of Labor
Statistics ("CPI") for the thirteenth (13th) month prior to the expiration of
the initial lease term or applicable Option Term shall be referred to as the
"Base Index". The CPI for the month prior to the applicable Adjustment Date
shall be the "Adjustment Index" to compute rent adjustments to commence with
said Adjustment Date. If, as of the applicable Adjustment Date, the Adjustment
Index has increased over the Base Index, then the Rent payable under this Lease
shall, commencing with the applicable Adjustment Date and continuing thereafter
until the next Adjustment Date, be equal to the initial Base Rent or applicable
Option Rent of the Lease multiplied by a fraction, the numerator of which is the
Adjustment Index and the Denominator of which is the Base Index; provided, that
in no event shall the Rent be less than the Rent in effect on the month prior to
the Adjustment Date. If any Index is calculated from a base different from the
base period 1982-84=100, such index shall be converted to such base period by
use of a conversion factor supplied by the Bureau of Labor Statistics. If the
CPI is discontinued or replaced during the Term hereof, such governmental Cost
of Living Index or computation which replaces the CPI shall be used in order to
obtain substantially the same result as would be obtained if the CPI had not
been discontinued or replaced.
28
<PAGE>
Rider #2
CANCELLATION OPTION
CACHEFLOW, INC.
Redmond Corporate Center Lease
Provided that Tenant is not in default under any terms and conditions of this
lease Tenant shall have a one time right to terminate this lease on the last day
of the thirty-sixth (36th) month of the lease term by giving the Landlord at
least one hundred fifty (150) days prior written notice and by paying at the
time of giving such notice a termination fee equal to all unamortized tenant
improvement costs and unamortized brokerage fees. In expressing this option,
Tenant shall forfeit the Security Deposit equal to Eleven Thousand One Hundred
Nineteen and 88/100's Dollars ($11,119.88).
29
<PAGE>
Rider #3
RIGHT OF FIRST REFUSAL
To the CACHEFLOW, INC.
Redmond Corporate Center Lease
2.1 Effective as of the Lease Commencement Date, March 15, 1997, Landlord
grants Tenant a right of first refusal ("Right of First Refusal") on
approximately 2,751 rentable square feet located on the northwest corner of the
second (2nd) floor of the Building.
2.2 Exercise of Right of First Refusal. This Right of First Refusal shall
----------------------------------
be subject to the following terms and conditions:
(a) Landlord shall provide Tenant with a written notice (the "Notice")
at such time as Landlord submits a lease proposal to a third party
(other than the existing Tenant) to lease all or any portion of the RFR
Space, which Notice shall set forth the fact that a lease proposal
covering all or some portion of the RFR Space has been submitted to a
third party and stating the rentable square foot area and location of
the RFR Space subject to such proposal and the date on which lease of
the applicable RFR Space is to commence.
(b) Tenant shall have forty-eight (48) hours (the "Response Period")
from receipt of such Notice within which to elect to take all of the
RFR Space being offered to the third party, which election shall be in
writing and received by Landlord within said Response Period.
(c) Tenant shall pay to Landlord the first month's Rent and additional
Security Deposit for such RFR Space on or before the date Landlord
makes the RFR Space available for Tenant's occupancy at the then
negotiated rental rate.
(d) Failure of Tenant to elect to take all of the RFR Space being
offered to a third party within the Response Period in the manner set
forth above shall be conclusively deemed a waiver of Tenant's Right of
First Refusal with respect to that portion of the RFR Space for lease
to said third party or on the terms and conditions set forth in the
Notice. However, Tenant's Right of First Refusal hereunder shall apply
to any future lease proposal with respect to such RFR Space to any
third party or upon terms different than those stated in the Notice.
(e) Tenant is not in default under this Lease and is in occupancy of
the Premises (i) on the date Tenant elects in writing to exercise this
Right of First Refusal, and (ii) on the date Tenant occupies the RFR
Space.
2.3 If the Right of First Refusal with respect to any RFR Space is
exercised at the time and in the manner as set forth above, Tenant shall take
all of such RFR Space under all of the terms and conditions of this lease,
except Landlord provided tenant improvements and corresponding lease rates, and
such provisions shall automatically be amended to include that portion of the
RFR Space taken commencing on the date set forth in the Landlord's notice given
pursuant to subparagraph 1.2(a) above. Rent payable by Tenant shall be
increased to account for the additional square footage of the RFR Space at the
then mutually agreed upon lease rate for Right of First Refusal Space during the
Lease Term. Tenant's Percentage shall also be increased to account for the
increase in the total rentable square footage leased by Tenant.
30