Washington-Bellevue-13920 Southeast Eastgate Way Lease - Obayashi Corp. and Boeing Co.
SUNSET CORPORATE CAMPUS II
BELLEVUE, WASHINGTON
OFFICE LEASE AGREEMENT
BETWEEN
OBAYASHI CORPORATION
a Japan corporation
Landlord
and
THE BOEING COMPANY
a Delaware corporation
Tenant
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OFFICE LEASE AGREEMENT
Sunset Corporate Campus - Building II
TABLE OF CONTENTS
PAGE
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1. LEASE DATA AND EXHIBITS............................................... 1
1.1 Building........................................................ 1
1.2 Premises........................................................ 1
1.3 Usable Area of the Premises; Rentable Area of the Premises...... 1
1.4 Basic Plans Delivery Date....................................... 2
Final Plans Delivery Date....................................... 2
1.5 Commencement Date............................................... 2
1.6 Lease Term...................................................... 2
1.7 Rent............................................................ 2
1.8 Security Deposit................................................ 2
1.9 Parking......................................................... 2
1.10 Notice Addresses................................................ 3
1.11 Payment Addresses............................................... 3
1.12 Exhibits........................................................ 4
1.13 Tenant's Leasing Broker/Agent................................... 4
2. PREMISES.............................................................. 4
3. COMMENCEMENT AND EXPIRATION DATES..................................... 5
3.1 Commencement Date............................................... 5
3.2 Tenant Obligations.............................................. 5
3.3 Tenant Late Possession and Termination Rights................... 5
3.4 Expiration Date................................................. 6
4. ACCEPTANCE OF PREMISES................................................ 6
5. RENT.................................................................. 7
6. SECURITY DEPOSIT...................................................... 7
7. PARKING............................................................... 7
8. USES.................................................................. 8
9. COMMON AREAS AND FACILITIES........................................... 8
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10. SERVICES AND UTILITIES............................................... 9
10.1 Standard Services.............................................. 9
10.2 Interruption of Services....................................... 9
10.3 Additional Services............................................ 10
11. COSTS OF OPERATIONS AND REAL ESTATE TAXES............................ 10
11.1 Additional Rent................................................ 10
11.2 Definitions.................................................... 10
11.3 Estimated Operating Costs...................................... 14
11.4 Actual Operating Costs......................................... 14
11.5 Records and Adjustments........................................ 14
11.6 Personal Property Taxes........................................ 15
12. CARE OF PREMISES..................................................... 15
13. ACCESS............................................................... 15
14. DAMAGE OR DESTRUCTION................................................ 16
14.1 Damage and Repair.............................................. 16
14.2 Destruction During Last Year of Lease Term..................... 16
14.3 Tenant Improvements............................................ 16
15. WAIVER OF CLAIMS AND SUBROGATION..................................... 16
16. INDEMNIFICATION...................................................... 17
16.1 Tenant Indemnity............................................... 17
16.2 Landlord's Indemnity........................................... 18
17. INSURANCE............................................................ 18
17.1 Liability Insurance............................................ 18
17.2 Property Insurance............................................. 18
17.3 Insurance Policy Requirements.................................. 19
18. ASSIGNMENT AND SUBLETTING............................................ 19
18.1 Assignment or Sublease......................................... 19
18.2 Assignee Obligations........................................... 20
18.3 Sublessee Obligations.......................................... 20
19. SIGNS................................................................ 20
20. LIENS AND INSOLVENCY................................................. 21
20.1 Liens.......................................................... 21
20.2 Insolvency..................................................... 21
20.3 Financial Statements........................................... 21
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21. DEFAULT............................................................... 22
21.1 Cumulative Remedies............................................. 22
21.2 Tenant's Right to Cure.......................................... 22
21.3 Abandonment..................................................... 22
21.4 Landlord's Reentry.............................................. 22
21.5 Reletting the Premises.......................................... 23
21.6 Damages......................................................... 23
21.7 Nonpayment of Additional Rent................................... 23
21.8 Landlord's Default.............................................. 24
22. PRIORITY.............................................................. 24
23. SURRENDER OF POSSESSION............................................... 24
24. REMOVAL OF PROPERTY................................................... 25
25. NON-WAIVER............................................................ 25
26. HOLDOVER.............................................................. 25
27. CONDEMNATION.......................................................... 25
27.1 Entire Taking................................................... 25
27.2 Partial Taking.................................................. 26
27.3 Awards and Damages.............................................. 26
28. NOTICES............................................................... 26
29. COSTS AND ATTORNEYS FEES.............................................. 26
30. LANDLORD'S LIABILITY.................................................. 27
31. ESTOPPEL CERTIFICATES................................................. 27
32. TRANSFER OF LANDLORD'S INTEREST....................................... 27
33. RIGHT TO PERFORM...................................................... 27
34. QUIET ENJOYMENT....................................................... 28
35. HAZARDOUS MATERIALS................................................... 28
35.1 Hazardous Substances Use........................................ 28
35.2 Representation.................................................. 28
35.3 Indemnification................................................. 28
35.4 Definition of "Hazardous Substances"............................ 29
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36. TELECOMMUNICATIONS LINES AND EQUIPMENT............................... 34
36.1 Location of Tenant's Equipment and Landlord Consent............ 34
36.2 Electromagnetic Fields......................................... 35
37. RULES AND REGULATIONS................................................ 35
38. GENERAL.............................................................. 35
38.1 Headings....................................................... 35
38.2 Heirs and Assigns.............................................. 35
38.3 Payment of Brokers............................................. 35
38.4 No Partnership................................................. 36
38.5 Severability................................................... 36
38.6 Overdue Payments............................................... 36
38.7 Force Majeure.................................................. 36
38.8 Right to Change Public Spaces.................................. 36
38.9 Governing Law; Venue........................................... 37
38.10 Building Directory............................................. 37
38.11 Building Name.................................................. 37
38.12 Recordation.................................................... 37
38.13 Time of Performance............................................ 37
38.14 Execution Authority............................................ 37
38.15 Addenda and Exhibits........................................... 37
38.16 Entire Agreement............................................... 37
39. PRECONSTRUCTION EXPANSION OPTIONS.................................... C-1
39.1 Building I Expansion Space..................................... C-1
39.2 Building II Expansion Space.................................... C-1
40. OPTION TO LEASE ADDITIONAL SPACE IN BUILDING I....................... C-2
41. EARLY TERMINATION RIGHT.............................................. C-2
42. OPTION TO RENEW...................................................... C-2
42.1 Terms and Conditions........................................... C-2
42.2 Determination of Rent.......................................... C-3
42.3 Procedure for Rent Arbitration................................. C-3
43. RIGHT OF FIRST OFFER IN THE BUILDING................................. C-4
44. NO RELOCATION........................................................ C-5
45. RIGHT TO REDUCE AREA OF PREMISES..................................... C-5
46. TENANT'S RIGHT TO EARLY ENTRY........................................ C-5
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47. REDOCORATING ALLOWANCE............................................... C-5
48. ADDITIONAL BUILDOUT ALLOWANCE........................................ C-6
49. TENANT'S ANTENNAE AND SATELLITE DISHES............................... C-6
EXHIBIT A - FLOOR PLAN OF PREMISES
EXHIBIT B - TENANT IMPROVEMENTS
EXHIBIT C - ADDENDUM TO LEASE
EXHIBIT D - CERTIFICATE OF LEASE INFORMATION
EXHIBIT E - JANITORIAL SPECIFICATIONS FOR BUILDING
EXHIBIT F - BUILDING SIGNAGE POLICY
EXHIBIT G - BUILDING RULES AND REGULATIONS
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OFFICE LEASE AGREEMENT
Sunset Corporate Campus - Building II
THIS LEASE is dated September 30, 1997, between OBAYASHI CORPORATION, a
Japan corporation ("LANDLORD"), and THE BOEING COMPANY, a Delaware corporation,
acting through its Information, Space and Defense Systems Group ("TENANT").
As parties hereto, Landlord and Tenant agree:
1. LEASE DATA AND EXHIBITS. When used in this Lease, the following terms and
phrases shall have the meanings provided in this Section, unless otherwise
specifically stated in this Lease:
1.1 BUILDING. Building and improvements related thereto located on the
real property described in SECTION 2 hereof, known as Sunset Corporate Campus
Building II ("BUILDING") with an address of 13920 Southeast Eastgate Way,
Bellevue, Washington 98005.
1.2 PREMISES. Consisting of the entire second, third and fourth floors of
the Building, as outlined on the floor plan(s) attached hereto as EXHIBIT A,
including tenant improvements, as described in EXHIBIT B, and any additional
spaces in the Building leased to Tenant pursuant to EXHIBIT C.
1.3 USABLE AREA OF THE PREMISES; RENTABLE AREA OF THE PREMISES. Landlord
and Tenant agree that, for purposes of this Lease, the Usable Area of the
Premises is deemed to be approximately 86,000 square feet and the Rentable Area
of the Premises is deemed to be approximately 89,400 square feet of Rentable
Area, pending completion of the Building and the tenant improvements to the
Premises and subject to the possible expansion of the Premises to include the
additional areas referred to in EXHIBIT C. Upon substantial completion of the
Building and the Premises, the Usable Area of the Premises, Rentable Area of the
Premises, and net rentable area of the Building shall be computed by Landlord
and Landlord and Tenant shall sign a certificate stating the agreed figures. In
the event the Usable Area of the Premises or the Rentable Area of the Premises
or the net rentable area of the Building is altered during the Term, Landlord
may adjust the Usable Area of the Premises, Rentable Area of the Premises and
Tenant's pro rata share (as defined in SECTION 11.2 below) to properly reflect
such event. Landlord and Tenant agree that the overall full-floor load factor
representing the difference between Usable Area of the Premises and the Rentable
Area of the Premises shall not exceed 5.01 percent of the Usable Area of the
Premises. All measurements of "USABLE AREA" and "RENTABLE AREA" shall be made by
Landlord and confirmed by Tenant in writing within sixty(60) days after the
Commencement Date in accordance with the most current standards published by the
Building Owners and Managers Association on the date of such measurements. If
Tenant does not provide such
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confirmation or a written objection to Landlord's measurements within such sixty
(60) day period, Landlord's measurements shall be conclusively deemed accurate.
1.4 BASIC PLANS DELIVERY DATE. See EXHIBIT B.
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FINAL PLANS DELIVERY DATE. See EXHIBIT B.
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1.5 COMMENCEMENT DATE. August 1, 1998, or such earlier or later date as
provided in SECTION 3 below, and as set forth on the Certificate of Lease
Information to be signed by the parties promptly following the Commencement
Date.
1.6 LEASE TERM. Seven years, or as otherwise provided in SECTION 3 below
or in EXHIBIT C.
1.7 RENT. Rent shall be payable monthly in accordance with SECTION 5
below. The Rent for the Initial Lease Term shall be as follows:
Years 1 - 3: $24.00 per square foot of Rentable Area of the Premises per
year
Years 4 & 5: $24.50 per square foot of Rentable Area of the Premises per
year
Years 6 & 7: $26.50 per square foot of Rentable Area of the Premises per
year
1.8 SECURITY DEPOSIT. $ -0-
1.9 PARKING. Tenant shall have the right to four automobile parking stalls
per 1,000 square feet of Usable Area of the Premises allocated as follows: (1)
approximately 69% of the parking stalls shall be located in the underground
parking garage adjacent to the Building ("GARAGE PARKING"); (2) approximately
13% of the stalls shall be located in the executive parking portion of the
underground parking garage located directly beneath Building ("EXECUTIVE
PARKING"); and (3) approximately 18% of the parking stalls shall be located on
the surface parking lots located near the Building ("SURFACE PARKING"). Tenant
may elect to take less parking and may designate whether its Garage, Executive
or Surface Parking is to be so reduced upon thirty (30) days' prior written
notice to Landlord, but Tenant shall not have the right to increase the number
of its initial allocated Garage, Executive or Surface Parking spaces without
Landlord's prior written consent. All stalls shall be on an unassigned self-park
(or executive valet) basis (as designated by Landlord from time to time
consistent with this Section) at the prevailing monthly rates established by
Landlord from time to time in accordance with SECTION 7 below; provided,
however, that for the first three hundred sixty-five (365) days of the Lease
Term, Tenant's parking fees have been included in its Rent, and thereafter
Tenant shall be required to purchase permits to park automobiles, with the rates
for each type of parking stall to be in addition to the Rent amounts stated in
SECTION 1.7 or otherwise referred to in this Lease and fixed until the end of
the first full thirty-six (36) calendar months of the Lease Term as follows:
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Garage Parking $20 per stall per month
Executive Parking $35 per stall per month
Surface Parking No charge
Commencing as of the first day of the thirty-seventh (37th) full calendar month
of the Lease Term, the parking permits shall be purchased at Landlord's
published monthly rates for Buildings I and II in the project in which the
Premises are located from time to time in addition to the Rent amounts stated in
Section 1.7 or otherwise referred to in this Lease; provided, however, such
rates for the fourth year of the Lease Term shall not be increased by more than
Fifteen Dollars ($15) per parking stall per month over the initial rates, and
for each of the fifth through seventh years of the Lease Term shall not be
increased by more than Five Dollars ($5.00) per parking stall per month over
such rates for the immediately preceding year. No charge shall be made for
Surface Parking during the initial seven year Lease Term. Landlord agrees that
the parking rates that are charged to Tenant shall be consistent with the rates
charged by Landlord from time to time to a majority of the other tenants in the
project in which the Building is located (excluding any tenants to which parking
rate concessions are provided during the initial months of their tenancy).
1.10 NOTICE ADDRESSES.
Landlord: Obayashi Corporation
c/o Wright Runstad & Company
13810 S.E. Eastgate Way, Suite 180
Bellevue, Washington 98005
with a copy to: O.C. Real Estate Management, Inc.
420 East Third Street, Suite 600
Los Angeles, CA 90013
Attn: Mr. William H. Cunningham, Jr.
Tenant: The Boeing Company
P.O. Box 3999, M/S 46-26
Seattle, WA 98124-2499
Attn: Real Property
1.11 PAYMENT ADDRESSES.
Landlord: Obayashi Corporation
c/o Wright Runstad & Company
13810 S.E. Eastgate Way, Suite 180
Bellevue, Washington 98005
Tenant: The Boeing Company
P.O. Box 3999, M/S 46-26
Seattle, WA 98124-2499
Attn: Real Property
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1.12 EXHIBITS. The following Exhibits or riders are made a part of this
Lease:
Exhibit A - Floor Plan of Premises
Exhibit B - Tenant Improvements
Exhibit C - Addendum to Lease
Exhibit D - Certificate of Lease Information
Exhibit E - Janitorial Specifications for Building
Exhibit F - Building Signage Policy
Exhibit G - Building Rules and Regulations
1.13 TENANT'S LEASING BROKER/AGENT.
Cushman & Wakefield of Washington, Inc.
700 Fifth Avenue, Suite 2700
Seattle, WA 98104
Attn: Gary Danklefsen, Senior Director
2. PREMISES. Landlord does hereby lease to Tenant, and Tenant does hereby
lease from Landlord, upon the terms and conditions herein set forth, the
Premises described in SECTION 1.2 above, as shown on EXHIBIT A attached hereto
and incorporated by this reference, together with rights of ingress and egress
over common areas in the Building located on the land ("Land") more particularly
described as:
LOTS 1, 2, 3, 4, 5 AND TRACT A OF SUNSET RIDGE 1-90 CORPORATE CAMPUS,
A BINDING SITE PLAN, AS PER INSTRUMENT RECORDED UNDER KING COUNTY
RECORDING NO. 9012180243;
EXCEPT THAT PORTION CONVEYED TO THE CITY OF BELLEVUE FOR USE AS A
PUBLIC STREET RECORDED UNDER KING COUNTY RECORDING NO 9101280422;
SITUATE IN THE CITY OF BELLEVUE, COUNTY OF KING, STATE OF WASHINGTON.
PARCEL II:
AN UNDIVIDED 40% INTEREST IN:
LOT 3 OF CITY OF BELLEVUE BOUNDARY LINE ADJUSTMENT NO. 90-5248
RECORDED UNDER RECORDING NO. 9012049030;
EXCEPT THAT PORTION CONVEYED TO THE CITY OF BELLEVUE FOR USE AS A
PUBLIC STREET RECORDED UNDER KING COUNTY RECORDING NO. 9101280422;
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SITUATE IN THE CITY OF BELLEVUE, COUNTY OF KING, STATE OF WASHINGTON.
3. COMMENCEMENT AND EXPIRATION DATES.
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3.1 COMMENCEMENT DATE. Provided that the Premises together with common
facilities for access and service thereto have been substantially completed, the
Commencement Date shall be the date specified in Section 1.5 or such earlier or
later date upon which the Premises and common facilities shall be substantially
completed as may be specified in a notice delivered to Tenant at least thirty
(30) days prior to the Commencement Date specified in such notice; or any
earlier date when the Tenant occupies the Premises for Permitted Uses. In the
event the Commencement Date is established as a later or earlier date than the
date provided in Section 1.5 hereof, Landlord shall confirm the same to Tenant
in writing, which Tenant shall promptly acknowledge in writing. Promptly
following the Commencement Date, the parties shall complete, sign and deliver to
each other a Certificate of Lease Information in the form attached as Exhibit D.
For the purposes of this Agreement, "substantial completion" shall be deemed to
have occurred at such time as (a) Tenant is legally permitted to occupy the
Premises under all applicable government regulations, and (b) Landlord has
completed construction of all of the improvements Initially being made by
Landlord to the Premises to the extent required to conform with the standards of
"substantial completion" promulgated by the American Institute of Architects
(General Conditions of the Contract for Construction, MA Document A201), subject
to completion of "punch list" items.
3.2 TENANT OBLIGATIONS. If completion of the Premises is delayed due to
actions of Tenant or its agents, including without limitation the failure of
Tenant or its agents to fulfill any obligation under this Lease or any Exhibit
hereto, such as Tenant's failure to comply with the Plan Delivery Dates in
Exhibit B, then the Lease shall be deemed to have commenced upon the date when
the Premises would have been substantially completed but for such delay by
Tenant. Landlord shall provide Tenant with written notice of any such actions or
failures.
3.3 TENANT LATE POSSESSION AND TERMINATION RIGHTS. Landlord acknowledges
that delays in the substantial completion of the Building or Premises will cause
substantial harm to Tenant and Tenant's business, and that the resulting damages
will be difficult or impossible to measure. Therefore, if, due to delays from
any cause, except to the extent that such delay is caused by the actions or
omissions of Tenant or its agents, the Building or Premises are not so
substantially completed on August 15, 1998 (with the exception of punch list
items) and subject to the delay provisions of this Section, Landlord shall pay
to Tenant One Thousand Dollars ($1,000) per day thereafter commencing on August
16, 1998, to and including September 15, 1998, and Seventy-five Thousand Dollars
($75,000) for each month thereafter that the Premises are unavailable (prorated
at an equal amount per day up to a maximum of Seventy-five Thousand Dollars
($75,000) per month) which the parties agree is a reasonable estimate of
Tenant's damages resulting from such delay. If this Lease is not executed by
Landlord and Tenant on or before September 1, 1997, then the date on which said
liquidated damages commence shall be postponed for one day for every day between
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September 1, 1997, and the date this Lease is signed by Landlord and Tenant;
provided, however, for the purpose of this sentence, the date of Landlord's
signature shall be deemed to be the earlier of the actual date thereof or five
(5) days after Landlord receives a copy of this Lease executed by Tenant. The
above dates upon which said liquidated damages shall be payable shall each be
extended by up to sixty (60) days to the extent substantial completion of the
Premises is delayed for reasons beyond Landlord's control. There is no
acceleration of the date on which liquidated damages commence if this Lease is
signed prior to September 1, 1997. If Landlord has not made the Premises
available for Tenant's occupancy within six (6) months following August 15, 1998
(or such later date as may result from a delay in the execution of this Lease
under the prior sentence) and such six-month delay in the delivery of the
Premises is not due to actions or omissions of Tenant or its agents, then either
party may terminate this Lease by written notice to the other. Tenant shall also
have the right to terminate this Lease by written notice to Landlord any time
prior to the Commencement Date after it receives written notice from Landlord
that Landlord has determined that it will permanently abandon the construction
of the Building prior to substantial completion, whereupon Tenant's rights to
liquidated damages under this Section shall terminate for any period after the
date of Tenant's notice. If Tenant elects not to give such notice, said damages
shall continue until the date this Lease otherwise terminates. The above-
mentioned liquidated damages and the right to terminate this Lease under this
Section shall be Tenant's sole remedies for delayed delivery or failure to
deliver the Premises, and Tenant shall have no other rights or claims hereunder
at law or in equity.
3.4 EXPIRATION DATE. The Lease shall expire at the end of the last day of
the eighty-fourth (84th) full calendar month of the Lease Term unless renewed in
accordance with Section 42 of Exhibit C.
4. ACCEPTANCE OF PREMISES. The acceptance of the Premises by Tenant shall be
deferred until Landlord informs Tenant of the substantial completion of the
Building and Premises. Tenant shall commence its inspection of the Premises as
soon as practicable thereafter. Within fifteen (15) working days "INSPECTION
PERIOD") after Landlord informs Tenant of such completion, Tenant shall make
such inspection of the Premises as Tenant deems appropriate. Except as otherwise
specified by Tenant in writing to Landlord within the Inspection Period and
except for latent defects not reasonably observable by Tenant, Tenant shall be
deemed to have accepted the Premises in their then condition. If, as a result of
such inspection, Tenant discovers minor deviations or variations from the plans
and specifications for Tenant's improvements which adversely affect Tenant's use
of the Premises or which are inconsistent with the standards ordinarily adhered
to by first-class office buildings in Bellevue, Washington, Tenant shall, during
the Inspection Period, notify Landlord of such deviations. Landlord shall
promptly repair all such items. The existence of such items shall not postpone
the Commencement Date of this Lease or the obligation of Tenant to pay Rent.
5. RENT. Tenant shall pay without notice the Rent and Additional Rent (as
defined in Section 11 and Exhibit C below) without demand, deduction or offset
in lawful money of the United States in advance on or before the first day of
each month at Landlord's Payment Address set forth in Section 1.11 hereof, or to
such other party or at such other place as
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Landlord may hereafter from time to time designate in writing. Rent and
Additional Rent for any partial month at the beginning or end of the Lease Term
shall be prorated in proportion to the number of days in such month. The first
payment of Rent shall include any prorated Rent for the period from the
Commencement Date through the first day of the first full month of the Lease
Term.
6. SECURITY DEPOSIT. No security deposit shall be paid by Tenant in connection
with this Lease unless the same is otherwise agreed to by Tenant or its
successor in interest in writing. Landlord may apply all or any part of any
Security Deposit made or hereafter made by Tenant to the payment of any sum in
default or any other sum which Landlord may be required or may in its reasonable
discretion deem necessary to spend or incur by reason of Tenant's default. In
such event, Tenant shall, within five (5) days of written demand therefor by
Landlord, deposit with Landlord the amount so applied. The amount of the
Security Deposit held by Landlord at the expiration or sooner termination of
this Lease and not applied by Landlord under the provisions of this Section
shall be repaid to Tenant within thirty (30) days after the expiration or sooner
termination of this Lease. Landlord shall not be required to keep any Security
Deposit separate from its general funds and Tenant shall not be entitled to any
interest thereon.
7. PARKING. Tenant shall be entitled to parking spaces as provided in SECTION
1.9 above. All parking spaces are leased to Tenant subject to the rules of
Landlord and the garage operator, and laws, codes and regulations set forth by
authorities having jurisdiction over the Building and Premises. In accordance
with state and city requirements to minimize the use of single occupant vehicles
and to generally reduce parking requirements, Tenant shall participate in
Landlord's transportation management program, provided that Tenant shall not be
subject to any obligation or requirement in connection with Landlord's program
which is in addition to any obligation or requirement otherwise imposed on
Tenant by any governmental agency in connection with any commute trip reduction
or similar regulation. Landlord's program may include providing information and
referral service to Tenant and Tenant's employees regarding bus schedules, car
pooling, van pooling, flex-time and job sharing and may include other
transportation management programs as are deemed appropriate by Landlord from
time-to-time. During Normal Business Hours, as defined in SECTION 10 herein,
Landlord shall make available in or near the Building transient parking for
Tenant's clients and guests. Tenant assumes full financial responsibility for
all parking leased to Tenant or Tenant's employees or used by Tenant's clients
or guests. The parking garage shall be secured by a cardkey access system twenty
four (24) hours per day. At Tenant's option, from and after the end of the first
full twelve (12) calendar months of the Lease Term parking costs shall be added
to Additional Rent rather than invoiced separately.
8. USES. The Premises are to be used only for general office purposes,
including extensive computer use and training purposes ("PERMITTED USES"), and
for no other business or purpose without the prior written consent of Landlord,
which consent may be withheld if Landlord determines that any proposed use is
inconsistent with or detrimental to the maintenance and operation of the
Building as a first-class office building in Bellevue, Washington, or is
inconsistent with any public or private restriction on use of the Premises, the
Building or the Land contained in any statute or ordinances or any lease,
mortgage or
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other agreement or instrument by which the Landlord is bound or to which any of
such property is subject. Tenant shall not commit any act that will increase the
then existing cost of insurance on the Building without Landlord's consent.
Tenant shall promptly pay upon demand the amount of any increase in insurance
costs caused by any act or acts of Tenant. Tenant shall not commit or allow to
be committed any waste upon the Premises, or any public or private nuisance or
other act which disturbs the quiet enjoyment of any other tenant in the Building
or which is unlawful or which will cause any substantial noise, vibration, odor,
smoke or fumes. If Landlord and Tenant shall permit smoking in the Premises,
Tenant shall be required to install, at Tenant's sole cost, special tenant
improvements designed to alleviate the spread of smoke outside the Premises,
including extending demising walls from structure to structure and installing a
dedicated exhaust system for the Premises. If Tenant should disturb the quiet
enjoyment of any other tenant in the Building beyond what is customary in a
Class A office building, Tenant shall provide adequate insulation or take other
action as may be necessary to eliminate the disturbance. Tenant shall comply
with all laws relating to its use, occupancy or alteration of the Premises and
shall observe such reasonable rules and regulations (not inconsistent with the
terms of this Lease) as may be adopted and made available to Tenant by Landlord
from time to time for the safety, care and cleanliness of the Premises or the
Building, and for the preservation of good order therein.
9. COMMON AREAS AND FACILITIES. Landlord gives to Tenant and its agents,
employees, contractors and invitees a nonexclusive license to use the common
areas of the Building subject to Landlord's rights to:
9.1 Establish and enforce reasonable rules and regulations for the
maintenance, management, use and operation of the common areas.
9.2 Close any of the common areas to the extent required in the reasonable
opinion of Landlord to prevent a dedication of any of the common areas or the
accrual of any rights of any person or of the public to the common areas.
9.3 Close any of the common areas temporarily for purposes of cleaning,
maintenance, repair, alterations, improvements or additions.
9.4 Designate other property to become part of the common areas.
9.5 Make changes to the common areas, including, without limitation,
changes in the arrangement and/or location of passageways, doors, doorways,
corridors, elevators, stairs, or toilets; provided, however, Landlord shall not
make any change which will prevent access to the Premises or change the
character of the Building from that of a first-class office building in
Bellevue, Washington.
10. SERVICES AND UTILITIES.
10.1 STANDARD SERVICES. Landlord shall furnish the Premises with
electricity for normal office use, including lighting and operation of low power
usage office machines and the power requirements for the Permitted Uses, water
and elevator service at all times during
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the Lease Term. Landlord shall also provide lamp replacement service for
building standard light fixtures, toilet room supplies, window washing at
reasonable intervals, and customary building janitorial service. The current
customary building janitorial specifications are attached as Exhibit E and may
be amended from time to time by Landlord, consistent with maintaining a Class A
office building in Bellevue, Washington. Tenant shall have the right, upon
thirty (30) days' prior written notice to Landlord, to increase or decrease the
scope of janitorial services from time to time, and any resulting increases or
decreases in Landlord's actual costs of such services shall be paid by or
credited to Tenant, respectively; provided, however, Tenant shall not have the
right to obtain such services from any other provider, and any such increased
service shall be within the services Landlord is reasonably able to provide and
any such decreased service shall not impair Tenant's obligation to maintain the
Premises in a condition typically associated with Class A office buildings. No
janitorial service shall be provided Saturdays, Sundays or legal holidays. The
costs of any janitorial or other service provided by Landlord to Tenant which
are in addition to the services ordinarily provided Building tenants shall be
repaid by Tenant as Additional Rent upon receipt of billings therefor.
From 7:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 12:00 noon
Saturday, excluding New Years' Day, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day ("NORMAL BUSINESS HOURS"), Landlord shall
furnish heat and air conditioning to the Premises. If requested by Tenant,
Landlord shall furnish heat and air conditioning at times other than Normal
Business Hours and the cost of such services, as established by Landlord from
time to time, shall be paid by Tenant as Additional Rent upon receipt of
billings therefor. Tenant shall have control over activation of heat and air
conditioning within the Premises at times other than Normal Business Hours.
During other than Normal Business Hours, Landlord may restrict access to the
Building in accordance with the Building's security system, provided that,
except when precluded for reasons beyond Landlord's reasonable control, Tenant
shall have at all times during the Lease Term (24 hours of all days) reasonable
access to the Premises. Landlord may provide access to the Building during other
than Normal Business Hours by a cardkey access system with control points at the
garage parking entrance, building front entry, and in the three building
elevator cabs.
10.2 INTERRUPTION OF SERVICES. Landlord shall not be liable for any loss,
injury or damage to person or property caused by or resulting from any
variation, interruption, or failure of any utility services due to any cause
beyond Landlord's reasonable control. No temporary interruption or failure of
such services incident to the making of repairs, alterations or improvements, or
due to accident, strike or conditions or events beyond Landlord's reasonable
control shall be deemed an eviction of Tenant or relieve Tenant from any of
Tenant's obligations hereunder, except if the Premises are not served with
electricity, water, elevator service, heating or air conditioning for any reason
within Landlord's reasonable control for a period of more than forty-eight (48)
consecutive hours, Rent shall abate after such forty-eight (48) hour period to
the extent the same causes any portion of the Premises to be unusable by Tenant
for the Permitted Uses until such time as the Premises are again so usable by
Tenant.
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10.3 ADDITIONAL SERVICES. The Building standard mechanical system is
designed to accommodate heating loads generated by lights using up to 1.2 watts
per square foot and equipment using up to 4.9 watts per square foot. Before
installing lights and equipment in the Premises which in the aggregate exceed
such amount, Tenant shall obtain the written permission of Landlord. Landlord
may refuse to grant such permission unless Tenant shall agree to pay the costs
of Landlord for installation of supplementary air conditioning or electrical
systems as necessitated by such equipment or lights.
In addition, Tenant shall in advance, as Additional Rent on the first day of
each month during the Lease Term, pay Landlord the reasonable amount estimated
by Landlord as the cost of furnishing electricity for the operation of such
equipment or lights and the reasonable amount estimated by Landlord as the cost
of operation and maintenance of supplementary air conditioning units
necessitated by Tenant's use of such equipment or lights. The actual additional
costs of such items shall be determined by Landlord and the amount paid by
Tenant as an estimate shall be adjusted in the same manner in which Estimated
Operating Costs are adjusted to Actual Operating Costs, as provided in SECTIONS
11.3 and 11.4, and subject to the obligation of Landlord to maintain and keep
records and the rights of Tenant in connection with audit of such records
provided in SECTION 11.5. Landlord shall be entitled to install and operate at
Landlord's cost a monitoring/metering system in the Premises to measure the
added demands on electrical, heating, ventilation and air conditioning systems
resulting from such equipment and lights and from Tenant's after-hours heating,
ventilation and air conditioning service requirements. Tenant shall comply with
Landlord's reasonable instructions for the use of blinds and thermostats in the
Building.
11. COSTS OF OPERATIONS AND REAL ESTATE TAXES.
11.1 ADDITIONAL RENT. Tenant shall pay as Additional Rent Tenant's Pro Rata
Share of increases in Operating Costs and Taxes over the actual Operating Costs
and Taxes incurred by Landlord for the calendar year 1998 adjusted to reflect a
fully assessed building and a fill calendar year of expenses (the "BASE
AMOUNT").
11.2 DEFINITIONS. For the purposes of this Section, "TAXES" shall mean
taxes and assessments on real and personal property payable during any calendar
year with respect to the Land, the Building and all property of Landlord, real
or personal, used directly in the operation of the Building and located in or on
the Building; and any assessments upon the Land or the Building for off-site
common area costs, together with any taxes levied or assessed in addition to or
in lieu of any such taxes or any tax upon leasing of the Building or the rents
collected (excluding any net income or franchise tax).
"OPERATING COSTS" shall mean all expenses of Landlord for maintaining,
operating and repairing the Land and Building and the personal property used in
connection therewith, including without limitation insurance premiums,
utilities, customary management fees and other expenses which in accordance with
generally accepted accounting and management practices would be considered an
expense of maintaining, operating or repairing the Building; excluding, however:
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(i) costs of any special services rendered to individual tenants for
which a separate charge is collected by Landlord;
(ii) leasing commissions and other expenses, including legal fees
and disbursements, of obtaining Building tenants;
(iii) costs of improvements required to be capitalized in accordance
with generally accepted accounting principles, except Operating Costs shall
include straight-line amortization over their useful life of capital
improvements (A) made subsequent to initial development of the Building which
are designed with a reasonable probability of improving the operating efficiency
of the Building, or (B) which are incurred because of requirements imposed with
respect to the Building under any amendment to any applicable building, health,
safety, fire, personal disabilities, nondiscrimination or similar law or
regulation ("LAW"), or any new Law, or any new interpretation of a Law;
(iv) costs associated with the operation of any fitness center or
any day care or food services provided by Landlord;
(v) attorneys' fees, costs, disbursements, and other expenses
incurred by Landlord or its agents in connection with disputes with and/or
enforcement of any leases with other tenants, other occupants, or prospective
tenants or other occupants of the Building;
(vi) salaries of executives not involved in the day-to-day
management of the Building;
(vii) franchise taxes or income taxes of Landlord;
(viii) except for such costs for which Tenant is responsible under
Section 11.2(iii)(B) above, costs or expenses (including fines, penalties, and
legal fees) incurred due to violation by Landlord, its employees, agents, and/or
contractors, any tenant (other than Tenant) or other occupant of the Building,
of any terms or conditions of this Lease or of the leases of other tenants in
the Building, and/or of any valid, applicable laws, rules, regulations, and
codes of any federal, state, county, municipal, or other government authority
having jurisdiction over the Building that would not have been incurred but for
such violation by Landlord, its employees, agents, and/or contractors, it being
intended that each party shall be responsible for the costs resulting from its
own violation of such leases and laws, rules, regulations, and codes as such
shall pertain to the Building;
(ix) payments of principal, finance charges, interest, or fees on
debt or amortization of any mortgage, deed of trust, or other debt, and rental
payments (or increases in same) under any ground or underlying lease or leases
(except to the extent that the same may be made to pay or reimburse, or may be
measured by, real estate taxes);
(x) any compensation paid to clerks, attendants or other persons in
any commercial concessions operated by Landlord which are not related to the
operation of the Building;
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(xi) advertising and promotional expenditures that are not
required by law;
(xii) expenses incurred for the correction of any latent or patent
defects in the original construction of the improvements in the Premises or
Building made by Landlord, including any such violations of any building, fire,
electrical, mechanical, safety or other code and any violation of the Americans
with Disabilities Act or any state or local law relating to accessibility;
(xiii) management fees assessed against the Additional Allowance or
to the extent they exceed the lesser of (A) the then prevailing market rate for
management fees paid to third parties for managing Class A office buildings in
Bellevue, Washington, outside of the central business district, or (B) five
percent (5%) of the sum of Rent and Additional Rent;
(xiv) costs of repairs, replacements or other work necessitated by
fire, windstorm, or other casualty to the extent covered by the waiver of claims
provision of this Lease set out in Section 15, or the exercise by governmental
authorities of the right of eminent domain;
(xv) "Tenant allowances," "tenant concessions," workletters and
other costs or expenses (including permit, license, and inspection fees)
incurred in completing, fixturing, furnishing, renovating or otherwise
improving, decorating, or redecorating space for tenants or other occupants of
the Building, or vacant, leasable space in the Building, including space
planning/interior design fees for the same;
(xvi) costs resulting directly from the gross negligence or willful
misconduct of Landlord, its employees, agents, and/or contractors;
(xvii) real estate taxes allocable to the leasehold improvements of
other tenants in the Building;
(xviii) except to the extent Tenant would otherwise be responsible
for the amortized costs thereof pursuant to Section 11.2(iii) if the same had
been purchased, rentals or other related expenses, if any, incurred in leasing
air conditioning systems, elevators, or other equipment ordinarily considered to
be of a capital nature, except equipment which is used in providing janitorial
services and which is not affixed to the Building;
(xix) costs or expenses for sculpture, paintings, or other works of
fine art not typically employed in the common areas of Class A office buildings,
including costs incurred with respect to the purchase, ownership, leasing,
showing, promotion, repair, and/or maintenance of same;
(xx) costs of correcting or repairing defects in any equipment or
in replacing defective equipment to the extent that such costs are covered by
warranties of manufacturers, suppliers, or contractors, or are otherwise borne
by parties other than Landlord;
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(xxi) initial costs of interior and exterior landscaping;
(xxii) costs incurred in removing the property of former tenants
and/or other occupants of the Building other than Tenant;
(xxiii) costs of any "tap fees" or one-time lump sum sewer or water
connection fees assessed in connection with the initial construction of the
Building or any other permit fees, mitigation expenses, exactions or other
assessments levied by any governmental authority as a condition to its approval
of such initial construction;
(xxiv) costs or fees relating to the defense of Landlord's title to
or interest in the Building, the Property, or any part thereof;
(xxv) any inequitable allocation of wages, salaries, and other
compensation and benefits of Landlord's employees' and personnel's work on other
projects, including without limitation, those being periodically developed,
managed, and/or operated by Landlord, in addition to the Building and/or the
Property, among all such projects in reasonable proportions to their time spent
in performing services other than in respect of the Property; or
(xxvi) any costs representing payment to an entity related to
Landlord to the extent that such costs are unreasonable and exceed the fair
market price of goods and services supplied by such related entity.
In the event the average occupancy level of the Building for the base year
and/or any subsequent year was or is not 95% or more of full occupancy, then the
Operating Costs for such year shall be proportionately adjusted by Landlord to
reflect those Operating Costs which would have occurred had the Building been
95% occupied during such year. The foregoing adjustment is intended to eliminate
from consideration changes in total Operating Expenses that result solely from
differences in the occupancy level of the Building.
"TENANT'S PRO RATA SHARE" shall mean a percentage determined by dividing
the Rentable Area of the Premises by the Rentable Area of the Building. If the
Rentable Area of the Premises or the Rentable Area of the Building change,
Tenant's pro rata share shall be adjusted accordingly.
"YEAR" shall mean the calendar year.
11.3 ESTIMATED OPERATING COSTS. At the beginning of each year, Landlord
shall furnish Tenant a written statement of estimated Operating Costs and Taxes
for such year; a calculation of the amount, if any, by which such estimated
Operating Costs and Taxes will exceed the Base Amount; and a calculation of
Tenant's Pro Rata Share of any such amount. Tenant shall pay one-twelfth (1/12)
of said Share as Additional Rent for each month during the year. If at any time
during the year Landlord reasonably believes that the actual Operating Costs and
Taxes will vary from such estimated Operating Costs and Taxes by more than five
percent (5%), Landlord may by written notice to Tenant revise the estimate
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for such year, and Additional Rent for the balance of such year shall be paid
based upon such revised estimates.
11.4 ACTUAL OPERATING COSTS. Within ninety (90) days after the end of each
year or as soon thereafter as practicable, Landlord shall deliver to Tenant a
written statement setting forth Tenant's Pro Rata Share of the actual Operating
Costs and Taxes in excess of the Base Amount during the preceding year. If the
actual Operating Costs and Taxes in excess of the Base Amount exceed the
estimates for such amounts paid by Tenant during the year, Tenant shall pay the
amount of such excess to Landlord as Additional Rent within thirty (30) days
after receipt of such statement. If the actual Operating Costs and Taxes in
excess of the Base Amount are less than the amount paid by Tenant to Landlord,
then the amount of such overpayment by Tenant shall be credited against the next
Additional Rent payable by Tenant hereunder.
11.5 RECORDS AND ADJUSTMENTS. Landlord shall keep records showing all
expenditures made in connection with Operating Costs and Taxes for thirty-six
(36) months thereafter, and such records shall be available for inspection by
Tenant at Tenant's sole cost and expense and upon reasonable prior written
notice to Landlord. Any audit of Landlord's records of Operating Costs and Taxes
shall be performed by an accountant approved by Landlord or by a qualified
employee of Tenant, and shall be completed no later than twelve (12) months
following the end of the year audited. Operating Costs and Taxes shall be
prorated for any portion of a year at the beginning or end of the Lease Term.
Notwithstanding this Section, the Rent payable by Tenant shall in no event be
less than the Rent specified in SECTION 1.7 hereof. If such audit indicates that
the amount charged by Landlord is more than one hundred five percent (105%) of
the amount actually payable by Tenant, Landlord shall be responsible for paying
the costs of the audit and Tenant shall be entitled to audit the two (2)
previous years notwithstanding the expiration of the twelve-month period
referred to above in this SECTION 11.5.
11.6 PERSONAL PROPERTY TAXES. Tenant shall pay all Personal Property Taxes
with respect to Tenant's Property located on the Premises or in the Building.
"TENANT'S PROPERTY" shall include all improvements which are paid for by Tenant
and "PERSONAL PROPERTY TAXES" shall include all property taxes assessed against
Tenant's Property, whether assessed as real or personal property.
12. CARE OF PREMISES. Landlord shall perform all normal maintenance and repairs
to the Premises which Landlord reasonably determines necessary to maintain the
Premises and the Building as a first-class office building; provided that
Landlord shall not be required to maintain or repair any Tenant's Property or
any appliances (such as water heaters, refrigerators, microwaves and the like)
which are part of the Premises (but the foregoing is not intended to relieve
Landlord from its obligation to maintain electrical and plumbing lines supplying
such appliances to the extent such lines are outside of the Premises). Tenant
shall take good care of the Premises. Tenant shall not make any alterations,
additions or improvements ("ALTERATIONS") in or to the Premises, or make changes
to locks on doors, or add, disturb or in any way change any plumbing or wiring
("CHANGES") without first
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obtaining the written consent of Landlord and, where appropriate, in accordance
with plans and specifications approved by Landlord, provided that Tenant may
make Alterations without obtaining the consent of Landlord so long as (a) the
cost of any such Alteration or any similar Alterations in the aggregate does not
exceed Twenty-five Thousand Dollars ($25,000), (b) the Alteration is not to any
structural component of the Building, (c) the Alteration does not involve any
penetration of any floor, ceiling, or structural or exterior wall or affect the
electrical or HVAC systems in the Building, and (d) Tenant adheres to the
requirements of SECTION 4.4 of EXHIBIT B. Any Alterations or Changes required to
be made to the Premises by any amendment to any Law or any new Law shall be made
at Tenant's sole expense and shall be subject to the prior written consent of
Landlord. In such consent, Landlord shall indicate whether or not such
Alternation or Change is to be restored to its original condition at the
termination of this Lease. Tenant shall reimburse Landlord for any reasonable
sums paid to third parties for examination and approval of architectural or
mechanical plans and specifications of the Alterations and Changes and direct
costs reasonably incurred during any inspection or supervision of the
Alterations or Changes. Subject to SECTIONS 14 and 15, all damages or injury
done to the Premises or Building by Tenant or by any persons who may be in or
upon the Premises or Building with the express or implied consent of Tenant,
including but not limited to the cracking or breaking of any glass of windows
and doors, shall be paid for by Tenant.
13. ACCESS. Tenant shall permit Landlord and its agents to enter into and
upon the Premises at all reasonable times and with at least twenty-four (24)
hours' notice for the purpose of inspecting the same or for the purpose of
cleaning, repairing, altering or improving the Premises or the Building. Upon
reasonable notice, which shall not be less than twenty-four (24) hours, Landlord
shall have the right to enter the Premises for the purpose of showing the
Premises to prospective tenants within nine (9) months prior to the expiration
or sooner termination of the Lease Term. Landlord may enter the Premises
without notice in the event of an emergency.
14. DAMAGE OR DESTRUCTION.
14.1 DAMAGE AND REPAIR. If the Building is damaged by fire or any other
cause to such extent that the cost of restoration, as reasonably estimated by
Landlord, will equal or exceed thirty percent (30%) of the replacement value of
the Building (exclusive of foundations) just prior to the occurrence of the
damage, or if insurance proceeds sufficient for restoration are for any reason
unavailable (except for loss deductibles and provided that Landlord has obtained
and maintained the insurance policies required to be maintained by Landlord
pursuant to this Lease), then Landlord may no later than the sixtieth (60th) day
following the damage, give Tenant a notice of election to terminate this Lease.
In the event of such election, this Lease shall be deemed to terminate on the
third day after the giving of such notice, and Tenant shall surrender possession
of the Premises within a reasonable time thereafter, and the Rent and Additional
Rent shall be apportioned as of the date and to the extent such fire or other
cause materially interferes with Tenant's Permitted Uses of the Premises and any
Rent and Additional Rent paid for any period beyond such date shall be repaid to
Tenant. If the cost of restoration as estimated by Landlord shall amount to less
than thirty percent (30%) of said replacement value of the Building and if the
insurance
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proceeds (plus any loss deductibles) are sufficient for restoration are
available (Landlord having obtained and maintained the insurance policies
required to be maintained by Landlord pursuant to this Lease), Landlord shall
restore the Building and the Premises (with improvements substantially
comparable in quality to the improvements to the Premises originally provided by
Landlord hereunder) with reasonable promptness, subject to delays beyond
Landlord's control and delays in the making of insurance adjustments by
Landlord. To the extent that the Premises are rendered untenantable, the Rent
shall proportionately abate, except in the event such damage resulted from or
was contributed to, directly or indirectly, by the act, fault or neglect of
Tenant, Tenant's officers, contractors, agents, employees, clients, customers or
licensees, in which event Rent shall abate only to the extent Landlord receives
proceeds from any rental income insurance policy to compensate Landlord for loss
of Rent hereunder. No damages, compensation or claim shall be payable by
Landlord for inconvenience, loss of business or annoyance arising from any
repair or restoration of any portion of the Premises or the Building.
14.2 DESTRUCTION DURING LAST YEAR OF LEASE TERM. In case the Building shall
be substantially destroyed by fire or other cause at any time during the last
twelve (12) months of the Lease Term, either Landlord or Tenant may terminate
this Lease upon written notice to the other within sixty (60) days of the date
of such destruction.
14.3 TENANT IMPROVEMENTS. Landlord will not be required to carry insurance
of any kind on any improvements paid for by Tenant, with an allowance or
otherwise, as provided in EXHIBIT B or on Tenant's furniture, furnishings,
fixtures, equipment or appurtenances of Tenant under this Lease and Landlord
shall not be obligated to repair any damage thereto or replace the same.
15. WAIVER OF CLAIMS AND SUBROGATION.
15.1 MUTUAL WAIVER OF CLAIMS. Landlord and Tenant do each herewith and
hereby release and relieve the other, and waive their entire claims of recovery
for loss of or damage to Landlord's or Tenant's property arising out of or
incident to fire, lightning, or any other perils normally included in an "All
Risk" property insurance policy when such property constitutes the Premises or
the Building or is in or about the Premises, Building, or land which the
Building is situated, whether or not such loss or damage is due to the
negligence of Landlord or Tenant, their agents, employees, guests, licensees,
invitees, or contractors.
15.2 MUTUAL WAIVER OF SUBROGATION. Each of Landlord and Tenant shall cause
its insurance carriers to waive all rights of subrogation against the other
party hereto to the extent of Landlord's or Tenant's undertaking set forth in
SECTION 16 entitled "Indemnity" and SECTION 15.1 entitled "Mutual Waiver of
Claims."
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16. INDEMNIFICATION.
16.1 TENANT INDEMNITY. Tenant shall indemnify and hold Landlord harmless
from and against any and all claims or liability for bodily injury to or death
of any person or damage to any property arising out of the use of the Premises
or the Building by Tenant or any sublessee, agent, employee, contractor, invitee
or licensee of Tenant or from the conduct of Tenant's business, or from any
activity, work, or thing done, permitted, or suffered by Tenant in or about the
Premises or the Building, except:
(i) to the extent of claims and liabilities caused by the negligent
acts or omissions of Landlord, its agent or employees; or
(ii) claims and liabilities for property damage addressed in SECTION
15.1 entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees, and expenses
incurred in the defense of any such claim or any action or proceeding brought
thereon and any such liability arising during the Lease Term shall survive the
expiration or termination of this Lease. This indemnity will be applicable to a
claim only if Landlord:
(a) notifies Tenant of the claim or liability in writing within
sixty (60) days after Landlord receives written notice of the claim or
liability;
(b) permits Tenant to defend or settle the claim or liability
(unless Landlord is also obligated to indemnify Tenant under SECTION 16.2) so
long as Tenant promptly undertakes such defense or settlement and pursues the
same in good faith and with due diligence; and
(c) cooperates with Tenant at Tenant's expense in any defense or
settlement of the claim or liability.
16.2 LANDLORD'S INDEMNITY. Landlord shall indemnify and hold Tenant
harmless from and against any and all claims or liability for bodily injury to
or death of any person or damage to any property caused by the negligent or
intentionally wrongful acts of Landlord or any agent, employee, contractor,
invitee or licensee of Landlord, except:
(i) to the extent of claims and liabilities caused by the negligent
acts or omissions of Tenant, its sublessees, agents, employees, contractors,
invitees or licensees; or
(ii) claims and liabilities for property damage addressed in Section
15.1 entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees, and expenses
incurred in the defense of any such claim or any action or proceeding brought
thereon and any such liability arising during the Lease Term shall survive the
expiration or termination of this Lease. This indemnity will be applicable to a
claim only if Tenant:
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(a) notifies Landlord of the claim or liability in writing
within sixty (60) days after Tenant receives written notice of the claim or
liability;
(b) permits Landlord to defend or settle the claim or liability
(unless Tenant is also obligated to indemnify Landlord under SECTION 16.1) so
long as Landlord promptly undertakes such defense or settlement and pursues the
same in good faith and with due diligence; and
(c) cooperates with Landlord at Landlord's expense in any
defense or settlement of the claim or liability.
17. INSURANCE.
17.1 LIABILITY INSURANCE. Tenant, at Tenant's own cost and expense, will
provide and keep in full force and effect during the term of this Lease
commercial general liability insurance with limits of not less than Three
Million Dollars ($3,000,000) per occurrence and Five Million Dollars
($5,000,000) in the aggregate, covering bodily injury to persons, including
death and loss of or damage to real and personal property. Such insurance may be
provided under Tenant's general liability insurance policy. During the term of
this Lease, Landlord shall be named as an additional insured under such
insurance to the extent of Tenant's undertaking set forth in SECTION 16,
entitled "Indemnity." A certificate evidencing such insurance coverage shall be
delivered to Landlord not less than fifteen (15) days prior to the commencement
of the Lease Term or the date when Tenant shall enter into possession, whichever
occurs earlier. Such certificate of insurance will provide for thirty (30) days'
advance written notice to Landlord in the event of cancellation.
17.2 PROPERTY INSURANCE. Tenant shall, throughout the Lease Term and any
renewal hereof, at its own expense, keep and maintain in full force and effect,
what is commonly referred to as "All Risk" or "Special" coverage (excluding
earthquake and flood) on Tenant's leasehold improvements for not less than one
hundred percent (100%) of the replacement value, subject to customary and
reasonable deductibles. Landlord shall, throughout the Lease Term and any
renewal hereof, keep and maintain in full force and effect what is commonly
referred to as "All Risk" or "Special" coverage (including earthquake and flood
to the extent Landlord so elects from time to time) on the Building, exclusive
of Tenant's leasehold improvements, for not less than one hundred percent (100%)
of the replacement value, subject to customary and reasonable loss deductibles.
17.3 INSURANCE POLICY REQUIREMENTS. All insurance required under this
Section shall be with companies rated AX or better by A.M. Best or otherwise
reasonably approved by Landlord or Tenant as the case may be. No insurance
policy required under this Section shall be canceled or reduced in coverage
except after thirty (30) days prior written notice to Landlord or Tenant, as the
case may be.
All policies required under this Section shall be written as primary
policies and not contributing to or in excess of any coverage Landlord, as the
case may be, may choose to maintain.
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18. ASSIGNMENT AND SUBLETTING.
18.1 ASSIGNMENT OR SUBLEASE. Tenant shall not assign, mortgage, encumber or
otherwise transfer this Lease or sublet the whole or any part of the Premises
without in each case first obtaining Landlord's prior written consent. Such
consent shall not be unreasonably withheld or delayed except: (1) Landlord may
withhold its consent if the assignee, subtenant or other transferee will not use
the Premises for office purposes consistent with the maintenance and operation
of a Class A office building or the Building; (2) Landlord may withhold in its
absolute and sole discretion consent to any mortgage, hypothecation, pledge or
other encumbrance of any interest in this Lease or the Premises by Tenant or any
subtenant, whereby this Lease or any interest therein becomes collateral for any
obligation of Tenant; and (3) Landlord may withhold its consent to the extent
Landlord determines necessary to comply with a public or private restriction on
use of the Premises, the Building or the Land contained in any statute or
ordinance or any lease, mortgage, or other agreement or instrument by which the
Landlord is bound or to which any of such property is subject. No such
assignment, sublease or other transfer shall relieve Tenant from any liability
under this Lease. Consent to any such assignment, subletting or transfer shall
not operate as a waiver of the necessity for consent to any subsequent
assignment, subletting or transfer. In lieu of granting any such consent,
Landlord reserves the right to notify Tenant within five (5) days of receipt of
Tenant's request for Landlord's consent that Landlord intends to terminate this
Lease or, in the case of a subletting of less than all the Premises, to
terminate this Lease with respect to such portion of the Premises, as of the
proposed effective date of such subletting or assignment, in which event Tenant
may withdraw its request for consent by so notifying Landlord within five (5)
days of Landlord's notice of intent to terminate, or Tenant may allow Landlord
to terminate this Lease, in which case Landlord may enter into the relationship
of landlord and tenant with such proposed assignee or subtenant (subject to the
agreement of such proposed assignee or subtenant) based upon the Rent and other
compensation and terms agreed to by such subtenant or assignee and otherwise
upon the terms and conditions of this Lease. In connection with each request for
an assignment or subletting, Tenant shall pay $500.00 for the cost of processing
such assignment or subletting, including attorneys' fees, upon demand of
Landlord. Tenant shall provide Landlord with copies of all assignments,
subleases and assumption instruments.
If Tenant is a partnership, conversion of Tenant to a limited liability
company or partnership or to a corporation (or to another entity by which the
parties in Tenant would be relieved of liability to any creditors of Tenant)
shall constitute an assignment for purposes of this Section. The foregoing to
the contrary notwithstanding, Landlord's consent shall not be required for any
sublease or assignment by Tenant to a subsidiary or affiliate of Tenant so long
as such subsidiary's or affiliate's use of the Premises is consistent with the
maintenance and operation of a Class A office building along the Interstate 90
corridor in the City of Bellevue, Washington. A subsidiary or affiliate of
Tenant shall mean an entity which controls, is controlled by or is under common
control with Tenant. No such assignment, sublease or other transfer shall
relieve Tenant from any liability under this Lease.
One-half (1/2) of any sums or other economic consideration received by
Tenant as a result of such assignment or subletting, however denominated under
the assignment or
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sublease, which exceed, in the aggregate, (i) the Rent and Additional Rent
Tenant is obligated to pay Landlord under this Lease over the same period
(prorated to reflect obligations allocable to any portion of the Premises
subleased), plus (ii) any customary real estate brokerage commissions or fees
paid by Tenant to an unrelated licensed broker or agent to procure such
assignment or sublease, shall be paid to Landlord as Additional Rent under this
Lease as and when the same are paid to Tenant without affecting or reducing any
other obligations of Tenant hereunder.
18.2 ASSIGNEE OBLIGATIONS. As a condition to Landlord's approval, any
potential assignee otherwise approved by Landlord shall assume in writing all
obligations of Tenant under this Lease and shall be jointly and severally liable
with Tenant for the payment of Rent and performance of all terms, covenants and
conditions of this Lease.
18.3 SUBLESSEE OBLIGATIONS. Any sublessee shall assume all obligations of
Tenant as to that portion of the Premises which is subleased to such sublessee
and shall be jointly and severally liable with Tenant for rental and other
payments and performance of all terms, covenants, and conditions of this Lease
with respect to such portion of the Premises (but with respect to payment of
rentals and other amounts, such sublessee's obligation shall not exceed its
obligation under the sublease).
19. SIGNS. At Tenant's sole cost and expense, Tenant may maintain a single sign
on the exterior of the Building facing Interstate 90 identifying Tenant. The
location, installation and maintenance of the sign shall comply with any and all
applicable codes, laws or regulations, and as well as the Building signage
policy attached hereto as EXHIBIT F as the same may be amended from time to time
by Landlord. Tenant shall be identified in the lobby directory on the main floor
of the Building at Landlord's cost. Tenant shall also have the right, at
Tenant's sole cost and expense to maintain signage identifying Tenant in the
lobby adjacent to the elevators on any floor of the Building occupied
exclusively by Tenant, and on the entrance to the Premises. The allowance
provided in EXHIBIT B may be applied toward the cost of signage allowed under
this Section. Except as provided herein, Tenant shall not place or in any manner
display any sign, graphics, or any advertising matter anywhere in or about the
Premises or the Building at places visible (either directly or indirectly) from
anywhere outside the Premises without first obtaining Landlord's written consent
thereto, such consent to be at Landlord's sole discretion. Tenant shall remove
any and all signs at the expiration or sooner termination of this Lease and
Tenant shall repair any damage to the Premises or the Building caused thereby,
all at Tenant's sole cost and expense. Landlord shall not unreasonably withhold
its consent to normal Tenant identification signs and logos which are consistent
with the Building signage and graphics program.
20. LIENS AND INSOLVENCY.
20.1 LIENS. Tenant shall keep its interest in this Lease and any Tenant's
Property (other than unattached personal property) and the Premises, the Land
and the Building free from any liens arising out of any work performed or
materials ordered or obligations incurred by or on behalf of Tenant and hereby
indemnities and holds Landlord harmless from any liability from any such lien,
including, without limitation, liens arising from any work
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performed pursuant to SECTION 4 of EXHIBIT B hereto. In the event any lien is
filed against the Building, the Land or the Premises by any person claiming by,
through or under Tenant, Tenant shall, upon request of Landlord, at Tenant's
expense immediately either cause such lien to be released of record or at
Landlord's option, furnish to Landlord a bond in form and amount and issued by a
surety reasonably satisfactory to Landlord, indemnifying Landlord, the Land and
the Building against all liability, costs and expenses, including attorneys
fees, which Landlord may incur as a result thereof. Provided that such bond has
been furnished to Landlord, Tenant, at its sole cost and expense and after
written notice to Landlord, may contest, by appropriate proceedings conducted in
good faith and with due diligence, any lien, encumbrance or charge against the
Premises arising from work done or materials provided to or for Tenant, if, and
only if, such proceedings suspend the collection thereof against Landlord,
Tenant and the Premises and neither the Premises, the Building nor the Land nor
any part thereof or interest therein is or will be in any danger of being sold,
forfeited or lost.
20.2 INSOLVENCY. If Tenant becomes insolvent or voluntarily or
involuntarily becomes a debtor or alleged debtor in a bankruptcy proceeding, or
if a receiver, assignee or other liquidating officer is appointed for the
business of Tenant, Landlord at its option may terminate this Lease and Tenant's
right of possession under this Lease and in no event shall this Lease or any
rights or privileges hereunder be an asset of Tenant in any bankruptcy,
insolvency or reorganization proceeding.
20.3 FINANCIAL STATEMENTS. Tenant shall, from time to time during the Lease
Term upon the request of Landlord, submit to Landlord such financial statements
or other financial information as Landlord may reasonably request. Such
statements shall be prepared in accordance with generally accepted accounting
principles consistently applied and, so long as Tenant is in default under this
Lease, shall be audited by an independent certified public accountant at
Tenant's expense not more often than annually. Tenant's obligations under this
Section shall be suspended for so long as Tenant is subject to the reporting
requirements of the Securities Exchange Act of 1934.
21. DEFAULT.
21.1 CUMULATIVE REMEDIES. All rights of Landlord herein enumerated shall be
cumulative, and none shall exclude any other right or remedy allowed by law. In
addition to the other remedies provided in this Lease, Landlord shall be
entitled to restrain by injunction the violation or attempted violation of any
of the covenants, agreements or conditions of this Lease.
21.2 TENANT'S RIGHT TO CURE. Tenant shall have a period of five (5)
business days from the date of written notice from Landlord to Tenant within
which to cure any default in the payment of Rent, Additional Rent or other sums
due hereunder. Tenant shall have a period of fifteen (15) days from the date of
written notice from Landlord to Tenant within which to cure any other default
hereunder which is capable of being cured by Tenant; provided, however, that
with respect to any default capable of being cured by Tenant but which cannot be
cured within such fifteen (15) day period, the default shall not be deemed to
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be uncured if Tenant commences to cure within fifteen (15) days after Landlord's
notice and for so long as Tenant is diligently prosecuting the cure thereof.
21.3 ABANDONMENT. Abandonment means an absence from the Premises of five
(5) consecutive days or more while Tenant is in default or Landlord otherwise
reasonably determines that Tenant has abandoned the Premises and its interest
under this Lease. Abandonment by Tenant shall be considered a default with no
right to cure, allowing Landlord to reenter the Premises under SECTION 21.4. The
Premises shall not be deemed to be abandoned during any period of time when
Tenant is current in the payment of Rent and Additional Rent; provided, however,
during any period in which the Premises are not occupied by Tenant or any
sublessee or assignee of Tenant, Tenant shall be responsible for any additional
costs and insurance premiums incurred by Landlord as a result of such vacancy
and Tenant shall continue to maintain the Premises, including the daily removal
of mail, periodicals and other documents and packages which are delivered to
Tenant at the Premises.
21.4 LANDLORD'S REENTRY. Upon a default under this Lease by Tenant and
expiration of any applicable cure period, Landlord, at its option, may enter the
Premises or any part thereof, and expel, remove or put out Tenant or any other
persons who may be thereon, together with all personal property found therein;
and Landlord may terminate this Lease, or it may from time to time, without
terminating this Lease and as agent of Tenant, relet the Premises or any part
thereof for such term or terms (which may be for a term less than or extending
beyond the Lease Term) and at such rental or rentals and upon such other terms
and conditions as Landlord in its sole discretion may deem advisable, with the
right to repair, remodel and change the Premises, Tenant remaining liable for
any deficiency computed as provided in SECTION 21.5. In the case of any default,
reentry and/or dispossession by summary proceedings or otherwise, all Rent and
Additional Rent shall become due thereupon and be paid up to the time of such
reentry or dispossession, together with such expenses as Landlord may reasonably
incur for attorneys' fees, advertising expenses, brokerage fees and/or putting
the Premises in good order or preparing the same for re-rental, together with
interest thereon as provided in SECTION 38.6 hereof, accruing from the date of
any such expenditure by Landlord.
21.5 RELETTING THE PREMISES. At the option of Landlord, rents received by
Landlord from such reletting shall be applied first to the payment of any
indebtedness from Tenant to Landlord other than Rent and Additional Rent due
hereunder; second, to the payment of reasonable costs and expenses of such
reletting and including, but not limited to, attorneys' fees, advertising fees
and brokerage fees, and to the payment of any repairs, remodeling and changes in
the Premises; third, to the payment of Rent and Additional Rent due and to
become due hereunder, and, if after so applying said Rents there is any
deficiency in the Rent or Additional Rent to be paid by Tenant under this Lease,
Tenant shall pay any deficiency to Landlord monthly on the dates specified
herein and any payment made or suits brought to collect the amount of the
deficiency for any month shall not prejudice in any way the right of Landlord to
collect the deficiency for any subsequent month. Subject to any applicable duty
to mitigate damages imposed by law and all reasonable costs and expenses of
reletting, including, but not limited to, attorneys' fees, advertising fees and
brokerage fees,
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and the costs of any repairs, remodeling and changes in the Premises, the
failure of Landlord to relet the Premises or any part or parts thereof shall not
release or affect Tenant's liability hereunder, nor shall Landlord be liable for
failure to relet, or in the event of reletting, for failure to collect the Rent
thereof, and in no event shall Tenant be entitled to receive any excess of net
Rents collected over sums payable by Tenant to Landlord hereunder. No such
reentry or taking possession of the Premises shall be construed as an election
on Landlord's part to terminate this Lease unless a written notice of such
intention be given to Tenant. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous breach and default. Should Landlord at any time terminate this
Lease by reason of any default, in addition to any other remedy it may have, it
may recover from Tenant the amount of Rent and Additional Rent reserved in this
Lease for the balance of the Lease Term, as it may have been extended, in excess
of the then fair market rental value of the Premises for the same period, plus
all court costs and reasonable attorneys' fees incurred by Landlord in the
collection of the same.
21.6 DAMAGES. Subject to the provisions of SECTIONS 21.4 and 21.5 with
respect to Tenant's liability for unaccrued Rent and Additional Rent, Tenant
shall be liable for all damages incurred by Landlord as a result of Tenant's
default under this Lease, including, without limitation, Tenant's failure to
surrender possession of the Premises upon the expiration or termination of this
Lease, the same to include all costs, expenses, liabilities, commissions and
attorneys' fees for which Landlord becomes obligated to any third party.
21.7 NONPAYMENT OF ADDITIONAL RENT. All costs and expenses which Tenant
assumes or agrees to pay to Landlord pursuant to this Lease shall be deemed
Additional Rent and, in the event of nonpayment thereof, Landlord shall have all
the rights and remedies herein provided for in case of nonpayment of Rent.
21.8 LANDLORD'S DEFAULT. Landlord shall not be in default unless Landlord
fails to perform its obligations under this Lease within a reasonable time, but
in no event later than fifteen (15) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Tenant
in writing and specifying how Landlord has failed to perform such obligations
and the acts required to cure the same; provided, however, that if the nature of
Landlord's obligation is such that more than fifteen (15) days are required for
performance, Landlord shall not be in default if Landlord commences performance
within such fifteen (15) day period and thereafter diligently prosecutes the
same to completion. In no event shall Tenant have the right to terminate this
Lease as a result of Landlord's default and Tenant's remedies shall be limited
to (1) damages and/or (2) an injunction and/or (3) following an additional
fifteen (15) days' written notice to Landlord specifying the alleged defaults
and the actions Tenant intends to undertake, Tenant may cure any Landlord
default which Landlord fails to cure within the time limit set forth in this
Section and said additional fifteen (15) day period so long as such default
results in a material impairment of Tenant's ability to conduct its business at
the Premises or an immediate threat of the lapse of any insurance policy
required to be maintained by Landlord by this Lease. Any sums so expended by
Tenant for the reasonable costs of effecting such cure shall be reimbursed by
Landlord upon demand.
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22. PRIORITY. This Lease shall be subordinate to any first mortgage or deed of
trust (and any other mortgage or deed of trust upon the written election of
Landlord to which the holder of such first mortgage or deed of trust consents)
now existing or hereafter placed upon the Land, the 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 and
replacements or extensions thereof ("LANDLORD'S MORTGAGE"), provided that
the holder of such mortgage or deed of trust and Landlord shall execute in
recordable form a nondisturbance agreement in form reasonably satisfactory to
Tenant and Landlord agrees to obtain such an agreement from any holder of any
such interest existing at the time of execution of this Lease and shall make a
good faith effort to do so within sixty (60) days of the date of execution of
this Lease from any holder of any other interest concurrently with such interest
attaching to the Building. Upon request of such holder, Tenant shall attorn to
the holder of any Landlord's Mortgage or any person or persons purchasing or
otherwise acquiring the Land, Building or Premises at any sale or other
proceeding under any Landlord's Mortgage. Tenant shall properly execute,
acknowledge and deliver documents which the holder of any Landlord's Mortgage
may reasonably require to effectuate the provisions of this Section.
23. SURRENDER OF POSSESSION. Subject to the terms of SECTION 14 relating to
damage and destruction, upon expiration or sooner termination of this Lease,
Tenant shall promptly and peacefully surrender the Premises to Landlord in as
good condition as when received by Tenant from Landlord or as thereafter
improved, except for (i) reasonable use, wear and tear, (ii) damage or
destruction covered by SECTION 14; (iii) matters covered by the waiver of claims
set forth in SECTION 15; and (iv) Alterations and Changes, other than those
which Landlord stated in its written consent were required to be removed at
termination of this Lease.
24. REMOVAL OF PROPERTY. Tenant shall remove all of its moveable personal
property and trade fixtures paid for by Tenant which can be removed without
damage to the Premises at the expiration or sooner termination of this Lease,
and shall pay Landlord any damages for injury to the Premises or Building
resulting from such removal; and all other improvements and additions to the
Premises shall, at Landlord's option, thereupon become the property of Landlord.
25. NON-WAIVER. Waiver by Landlord or Tenant of any term, covenant or condition
herein contained or any breach thereof shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent breach of the same or any
other term, covenant, or condition herein contained. The subsequent acceptance
of Rent or Additional Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular Rent or
Additional Rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent or Additional Rent.
26. HOLDOVER. If Tenant shall, with the written consent of Landlord, hold
over after the expiration of the Lease Term, such tenancy shall be deemed a
month-to-month tenancy
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which may be terminated as provided by applicable law. During such tenancy, and
during any period in which Tenant wrongfully occupies the Premises without
Landlord's consent, Tenant shall be bound by all of the terms, covenants and
conditions herein so far as applicable, except Rent, which shall be equivalent
to one hundred twenty-five percent (125%) of the monthly Rent stated herein for
the immediately preceding month, together with the Additional Rent herein
provided for.
27. CONDEMNATION.
27.1 ENTIRE TAKING. If all of the Premises or such portions of the Building
as may be required for the reasonable use of the Premises are taken by eminent
domain, this Lease shall automatically terminate as of the date title vests in
the condemning authority. In the event of a taking of a material part of but
less than all of the Building, where Landlord shall determine that the remaining
portions of the Building cannot be economically and effectively used by it
(whether on account of physical, economic, aesthetic or other reasons) or where
Landlord determines the Building should be restored in such a way as to
materially alter the Premises, Landlord shall forward a written notice to Tenant
of such determination not more than sixty (60) days after the date of taking.
The Lease Term shall expire upon such date as Landlord shall specify in such
notice but not earlier than sixty (60) days after the date of such notice.
27.2 PARTIAL TAKING. Subject to the provisions of the preceding Section
27.1, in case of taking of a part of the Premises, or a portion of the Building
not required for the reasonable use of the Premises, then this Lease shall
continue in full force and effect and the Rent shall be equitably reduced based
on the proportion by which the floor area of the Premises is reduced, such Rent
reduction to be effective as of the date title to such portion vests in the
condemning authority. If a portion of the Premises shall be so taken which
renders the remainder of the Premises unsuitable for continued occupancy by
Tenant under this Lease, Tenant may terminate this Lease by written notice to
Landlord no later than sixty (60) days after the date of such taking and the
Lease Term shall expire upon such date as Tenant shall specify in such notice
not later than sixty (60) days after the date of such notice.
27.3 AWARDS AND DAMAGES. Landlord reserves all rights to damages to the
Premises for any partial, constructive, or entire taking by eminent domain, and
Tenant hereby assigns to Landlord any right Tenant may have to such damages or
award. Tenant shall make no claim against Landlord or the condemning authority
for damages for termination of the leasehold interest or interference with
Tenant's business. Tenant shall have the right, however, to claim and recover
from the condemning authority compensation for any loss to which Tenant may be
put for Tenant's moving expenses, business interruption or taking of Tenant's
personal property and leasehold improvements paid for by Tenant (not including
Tenant's leasehold interest) provided that such damages may be claimed only if
they are awarded separately in the eminent domain proceedings and not out of or
as part of the damages recoverable by Landlord.
28. NOTICES. All notices under this Lease shall be in writing and delivered in
person or sent by registered or certified mail, postage prepaid, to Landlord and
to Tenant at the
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Notice Addresses provided in SECTION 1.10 (provided that after the Commencement
Date any such notice to Landlord may be mailed or delivered by hand to
Landlord's principal office in the Building) and to the holder of any mortgage
or deed of trust at such place as such holder shall specify to Tenant in
writing; or such other addresses as may from time to time be designated by any
such party in writing. Notices mailed as aforesaid shall be deemed given on the
date of such mailing. Either party may change its address for notices by giving
the other thirty (30) days' advance notice thereof by the means above described.
29. COSTS AND ATTORNEYS FEES. If Tenant or Landlord shall bring any action for
any relief against the other, declaratory or otherwise, arising out of this
Lease, including any suit by Landlord for the recovery of Rent, Additional Rent
or other payments hereunder or possession of the Premises, each party shall, and
hereby does, to the extent permitted by law, waive trial by jury and the losing
party shall pay the prevailing party a reasonable sum for attorneys fees in such
suit, at trial and on appeal, and such attorneys fees shall be deemed to have
accrued on the commencement of such action. Such fees and costs shall include
those incurred in any insolvency, bankruptcy, probate, arbitration, mediation or
other proceedings and include the adjudication of issues particularly related to
any such proceeding.
30. LANDLORD'S LIABILITY. Anything in this Lease to the contrary
notwithstanding, covenants, undertakings and agreements herein made on the part
of Landlord are made and intended not as personal covenants, undertakings and
agreements for the purpose of binding Landlord personally or the assets of
Landlord except Landlord's interest in the Premises and Building (including the
proceeds of any insurance policy and any condemnation awards to the extent such
proceeds or awards are riot used to repair or restore any damage to any portion
of the project in which the Building is located caused by the insured loss or
condemnation, or any sale of the Premises and/or Building), but are made and
intended for the purpose of binding only the Landlord's interest in the Premises
and Building (and proceeds as stated above), as the same may from time to time
be encumbered. No personal liability or personal responsibility is assumed by,
nor shall at any time be asserted or enforceable against Landlord or its
partners or their respective heirs, legal representatives, successors or assigns
on account of the Lease or on account of any covenant, undertaking or agreement
of Landlord in this Lease contained.
31. ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon written
request of Landlord, execute, acknowledge and deliver to Landlord or its
designee a written statement stating: The date this Lease was executed and the
date it expires; the date the Lease Term commenced and the date Tenant accepted
the Premises; the amount of minimum monthly Rent and the date to which such Rent
has been paid; and certifying to the extent true: That this Lease is in full
force and effect; that all conditions under this Lease to be performed by the
Landlord have been satisfied; that there are no claims, defenses or offsets
which the Tenant has against the enforcement of this Lease; that no Rent has
been paid more than one month in advance; and such other matters as Landlord may
reasonably request. Any such statement delivered pursuant to this Section may be
relied upon by a prospective purchaser of Landlord's interest or holder of any
mortgage upon Landlord's interest in the Building. If Tenant shall fail to
respond within twenty (20) days of receipt by Tenant of a
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written request by Landlord as herein provided, Tenant shall be deemed to have
given such certificate as above provided without modification and shall be
deemed to have admitted the accuracy of any information supplied by Landlord to
a prospective purchaser or mortgagee and to have certified 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 the Lease, and that not
more than one month's Rent has been paid in advance.
32. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfers of
Landlord's interest in the Premises or in the Building, other than a transfer
for security purposes only, the transferor shall be automatically relieved of
any and all obligations and liabilities on the part of Landlord accruing from
and after the date of such transfer and such transferee shall have no obligation
or liability with respect to any matter occurring or arising prior to the date
of such transfer. Tenant agrees to attorn to the transferee.
33. RIGHT TO PERFORM. If Tenant shall fail to pay any sum of money required to
be paid by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue for ten (10) days after
notice thereof by Landlord, Landlord may, but shall not be obligated so to do,
and without waiving or releasing Tenant from any obligations of Tenant, make
such payment or perform any such other act on Tenant's part to be made or
performed as provided in this Lease. Landlord shall have (in addition to any
other right or remedy of Landlord) 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.
34. QUIET ENJOYMENT. Landlord warrants to Tenant that Landlord holds sufficient
title to Buildings I and II to execute and perform its obligations under this
Lease and Tenant shall have the right to the peaceable and quiet use and
enjoyment of the Premises subject to the provisions of this Lease, as long as
Tenant is not in default hereunder. Landlord shall require other tenants in the
Building to agree not to disturb Tenant beyond what is customary in a Class A
office building.
35. HAZARDOUS MATERIALS.
35.1 HAZARDOUS SUBSTANCES USE. Any and all use, storage, release, handling,
transportation, treatment or storage by Tenant of Hazardous Substances on the
Leased Premises shall be carried out in compliance with all applicable federal,
state and local laws, ordinances and regulations. Tenant shall not use, handle
or store any Hazardous Substances on the Premises or within the project in which
the Building is located under any circumstances, except in accordance with all
laws, to the extent such Hazardous Substances and the quantities thereof are
reasonably necessary for the conduct of Tenant's business at the Premises and
the same are properly disposed of off site in the ordinary course.
35.2 REPRESENTATION. Landlord hereby represents and warrants that to the
best of Landlord's knowledge, but with Landlord having no obligation to have
made any independent study or investigation, and except as identified in the
Report of Independent Cleanup of Petroleum-stained Soil prepared by Hart
Crowser, Job No. J-2372-04, dated May 8, 1991, or
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otherwise disclosed to Tenant in writing prior to Tenant's execution of this
Lease (i) there have been no releases of Hazardous Substances from the Premises,
the Building, or the land on which the Building is situated in violation of any
applicable law; (ii) no Hazardous Substances have been used, generated, treated,
stored, or disposed of at the Premises, the Building, or the land on which the
Building is situated in violation of any applicable law; and (iii) no claim of
liability relating to the presence of Hazardous Substances in violation of any
applicable law at the Premises, the Building, or the land on which the Building
is situated has been made or is threatened by any governmental agency or other
third party For the purposes hereof, "Landlord's knowledge" shall mean only the
current, actual knowledge of William H. Cunningham, Jr., which individual is
hereby confirmed by Landlord as having been Landlord's principal internal
representative with respect to the construction of the Building.
35.3 INDEMNIFICATION. Tenant shall indemnify, defend, and hold harmless
Landlord from any and all damages, losses, costs and attorneys' fees and all
claims of liability asserted against Landlord by a third party, including
without limitation any agency or instrumentality of the federal, state, or local
government, for bodily injury, including death of a person, physical damage to
or loss of use or value of any property, or the costs or expenses of any cleanup
activities (remediation or removal) to the extent required by applicable law,
arising out of or relating to the release of a Hazardous Substance on or about
the project in which the Building is located by Tenant, its sublessees, agents,
employees, invitees, licensees and contractors.
Landlord shall indemnify, defend, and hold harmless Tenant from any and all
damages, losses, costs and attorneys' fees and all claims of liability asserted
against Tenant by a third party, including without limitation any agency or
instrumentality of the federal, state, or local government, for bodily injury,
including death of a person, physical damage to or loss of use or value of
property, or the costs or expenses if any cleanup activities (remediation or
removal) to the extent required by applicable law, arising out of or relating to
the release of a Hazardous Substance on or about the project in which the
Building is located by Landlord, its agents, employees, invitees, licensees and
contractors (excluding any tenants).
35.4 DEFINITION OF "HAZARDOUS SUBSTANCES." For purposes of this Lease, the
term "Hazardous Substances" shall mean any dangerous waste, hazardous waste, or
hazardous substance as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. (S)(S) 9601, et
--
seq.) or the Resource Conservation and Recovery Act as amended (42 U.S.C. (S)(S)
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6901, et seq.); the Washington Model Toxics Control Act as amended (RCW Ch. 70.
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105D); or the Washington Hazardous Waste Management Act as amended (RCW Ch.
709.105).
36. TELECOMMUNICATIONS LINES AND EQUIPMENT.
36.1 LOCATION OF TENANT'S EQUIPMENT AND LANDLORD CONSENT.
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36.1.1 (a) Tenant may install, maintain, replace, remove and use
communications or computer wires, cables and related devices (collectively, the
"Lines") at the Building in or serving the Premises only with Landlord's prior
written consent, which consent may not be unreasonably withheld. Tenant shall
locate all electronic telecommunications equipment within the Premises and shall
coordinate the location of all Lines with Landlord. Any request for consent
shall contain detailed plans, drawings and specifications identifying all work
to be performed, the time schedule for completion of the work, and the identity
of the entity that will perform the proposed work (which entity shall be subject
to Landlord's approval, which shall not be unreasonably withheld). Landlord
shall have a reasonable time in which to evaluate the request after it is
submitted by Tenant.
36.1.2 In granting its consent Landlord may consider the following
factors, among others, in making its determination: (A) whether or not the
proposed work will interfere with the use of any other then existing or proposed
lines at the Building; (B) whether or not an acceptable number of spare lines
and space for additional lines can be maintained for existing and future
occupants of the Building; and (C) whether the work or resulting Lines would
adversely affect the Land, Building or any space in the Building.
36.1.3 Landlord's approval of, or requirements concerning, the
Lines or any equipment related thereto, the plans, specifications or designs
related thereto, the contractor or subcontractor, or the work performed
hereunder, shall not be deemed a warranty as to the adequacy thereof, and
Landlord hereby disclaims any responsibility or liability for the same, nor
shall Landlord's consent be deemed a recommendation regarding what may or may
not be adequate or appropriate for Tenant's business purposes.
36.1.4 If Landlord consents to Tenant's proposal, Tenant shall pay
all of Tenant's and Landlord's third party costs in connection therewith
(including all costs related to new Lines) and shall use, maintain and operate
the Lines and related equipment in accordance with and subject to all laws
governing the Lines and equipment and at Tenant's sole risk and expense. As soon
as the work in completed, Tenant shall submit as-built drawings to Landlord.
36.1.5 Landlord reserves the right to require that Tenant, at
Tenant's expense, remove any Lines that are installed by Tenant upon the
expiration or termination of this Lease.
36.2 ELECTROMAGNETIC FIELDS. If Tenant at any time uses any equipment that
may create an electromagnetic field exceeding the normal insulation ratings of
ordinary twisted pair riser cable or cause radiation higher than normal
background radiation, Landlord reserves the right to require Tenant to
appropriately insulate the Lines therefor (including riser cables) to prevent
such excessive electromagnetic fields or radiation.
36.3 OTHER TENANTS. Landlord shall ensure that other tenants of the
Building are subject to restrictions that afford Tenant similar assurances
regarding the avoidance of interference with Tenant's Lines as are provided to
Landlord by this Section 36.
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37. RULES AND REGULATIONS. Tenant agrees to abide by all reasonable rules and
regulations for the Building imposed by Landlord as the same may be changed from
time to time upon reasonable notice to Tenant to the extent such rules and
regulations do not conflict with the terms and conditions of this Lease,
materially interfere with Tenant's use or quiet enjoyment of the Premises, or
materially increase Tenant's cost of occupancy and use of the Premises. The
current Building rules and regulations are set forth in Exhibit G attached. The
Building rules and regulations are imposed for the cleanliness, good appearance,
property maintenance and good order and reasonable use of the Premises and the
Building, and as may be necessary for the enjoyment of the Building by all
tenants and their clients, customers and employees. Landlord shall not be liable
for the failure of any other tenant, its agents or employees, to conform to the
rules and regulations.
38. GENERAL.
38.1 HEADINGS. Titles to Sections of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.
38.2 HEIRS AND ASSIGNS. All of the covenants, agreements, terms and
conditions contained in this Lease shall inure to and be binding upon the
Landlord and Tenant and their respective heirs, executors, administrators,
successors and assigns.
38.3 PAYMENT OF BROKERS. Landlord shall pay the commissions due those real
estate brokers or agents named in Section 1.13. If Tenant has dealt with any
other person or real estate broker with respect to leasing or renting space in
the Building, Tenant shall be solely responsible for the payment of any fee due
said person or firm and Tenant shall indemnify and hold Landlord harmless
against any liability in respect thereto, including Landlord's attorneys' fees
and costs in defense of any such claim.
38.4 NO PARTNERSHIP. This Lease shall not be construed as establishing a
partnership or joint venture between Landlord and Tenant, and neither party
shall be liable for the debts or obligations of the other, except to the extent
specifically and expressly agreed to herein. Except as provided herein, neither
party hereto may make any representation or create any liability on behalf of
the other, and no rights in any third party shall arise by virtue of these
presents.
38.5 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.
38.6 OVERDUE PAYMENTS. Tenant acknowledges that a late payment of Rent or
other sums due hereunder will cause Landlord to incur costs not contemplated by
this Lease. Such costs may include, but not be limited to, processing and
accounting charges, and penalties imposed by terms of any contracts, mortgages
or deeds of trust covering the Building. Therefore, in the event Tenant shall
fail to pay any Rent, Additional Rent or other sums payable by Tenant under this
Lease for five (5) days after such amount is due, then
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Tenant shall pay Landlord, as Additional Rent, a late charge ("LATE CHARGE")
equal to five percent (5%) of such amount owing, but not in excess of the
highest rate permitted by law. In addition to any Late Charges which may be
incurred hereunder, any Rent, Additional Rent or other sums payable by Tenant
under this Lease which are more than thirty (30) days past due, shall bear
interest at a rate equal to eighteen percent (18%) per annum but not in excess
of the highest lawful rate permitted under applicable laws, calculated from the
original due date thereof to the date of payment, provided, however, the minimum
overdue fee shall be One Hundred Dollars ($100). In addition, if payments are
received by check or draft from Tenant, and two (2) or more of such checks or
drafts are dishonored by the bank or other financial institution they were drawn
upon in any twelve (12) month period, Landlord may thereafter require all Rent
and other payments due hereunder from Tenant to Landlord to be made by bank
cashiers or bank certified check or other similar means of payment and Landlord
shall not be required to accept any checks or drafts of Tenant which do not
comply with such requirements.
38.7 FORCE MAJEURE. Except for the payment of Rent, Additional Rent or
other sums payable by Tenant, time periods for Tenant's or Landlord's
performance under any provisions of this Lease shall be extended for periods of
time during which Tenant's or Landlord's performance is prevented due to
circumstances beyond Tenant's or Landlord's reasonable control.
38.8 RIGHT TO CHANGE PUBLIC SPACES. With the consent of Tenant, which
consent shall not be unreasonably delayed, conditioned or withheld, Landlord
shall have the right at any time after the completion of the Building, without
thereby creating an actual or constructive eviction or incurring any liability
to Tenant therefor, to change the arrangement or location of such of the
following as are not contained within the Premises or any part thereof:
entrances, passageways, doors and doorways, corridors, stairs, toilets and other
like public service portions of the Building. Nevertheless, in no event shall
Landlord diminish any service, change the arrangement or location of the
elevators serving the Premises, make any change which shall diminish the area of
the Premises, or make any change which shall change the character of the
Building from that of a first-class office building in Bellevue, Washington.
38.9 GOVERNING LAW; VENUE. This Lease shall be governed by and construed
in accordance with the laws of the State of Washington. The venue of any action
brought to interpret or enforce any of the terms of this Lease or otherwise
adjudicate the rights and liabilities of the parties hereto shall be laid in the
Superior Court of the State of Washington located in the county in which the
Property is located.
38.10 BUILDING DIRECTORY. Landlord shall maintain in the lobby of the
Building a directory which shall include the name of Tenant and any other names
reasonably requested by Tenant in proportion to the number of listings given to
comparable tenants of the Building.
38.11 BUILDING NAME. The Building will be known by such name as Landlord
may designate from time to time, but except for Obayashi Corporation or
Prudential Insurance
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Company, Landlord agrees that it shall not name the Building or the project in
which it is located after or in a way that identifies any particular company or
its type of business.
38.12 RECORDATION. Neither Landlord nor Tenant shall record this Lease or
any memorandum or short form of this Lease.
38.13 TIME OF PERFORMANCE. Time is of the essence of this Lease and each
of its provisions.
38.14 EXECUTION AUTHORITY. Each party to this Lease shall provide to the
other party upon request reasonable evidence of the authority of the person
executing this Lease on its behalf.
38.15 ADDENDA AND EXHIBITS. All addenda and exhibits attached to this
Lease are incorporated herein by this reference.
38.16 ENTIRE AGREEMENT. This Lease contains all covenants and agreements
between Landlord and Tenant relating in any manner to the leasing, use and
occupancy of the Premises, to Tenant's use of the Building and other matters set
forth in this Lease. No prior agreements or understanding pertaining to the same
shall be valid or of any force or effect and the covenants and agreements of
this Lease shall not be altered, modified or added to except in writing signed
by Landlord and Tenant.
IN WITNESS WHEREOF this Lease has been executed as of the day and year
first above set forth.
LANDLORD: OBAYASHI CORPORATION,
a Japan corporation
Date: October 10, 1997 By: /s/ Yukio Kanai
----------------
Printed Name: Yukio Kanai
-----------
Its: Attorney-in-fact
----------------
TENANT: THE BOEING COMPANY,
a Delaware corporation
Date: October 1, 1997 By: /s/ Alan R. Bjorklund
----------------------
Printed Name: Alan R. Bjorklund
-----------------
Its: Director ISDS Group Facilities
------------------------------
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LANDLORD ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On October 14, 1997, before me, the undersigned, a Notary in and for said
State, personally appeared Yukio Kanai, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument, the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Evelyn R. Chavez
--------------------
Notary Public in and for said State
[STAMP APPEARS HERE]
Name (Print): Evelyn R. Chavez
----------------
Residing at Los Angeles
-----------
My appointment expires: 1/8/99
------
TENANT ACKNOWLEDGMENT
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
THIS IS TO CERTIFY that on this 1st day of October, 1997, before me, the
undersigned, a notary public in and for the state of Washington, duly
commissioned and sworn, personally appeared A.R. Bjorklund, to me known to be
the Director, ISDS Facilities of THE BOEING COMPANY, the Delaware corporation
that executed the within and foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said corporation for the
uses and purposes therein mentioned, and on oath stated that (s)he was
authorized to execute said instrument, and that the seal affixed, if any, is the
corporate seal of said corporation.
WITNESS my hand and official seal the day and year in this certificate
first above written.
Signature: /s/ Craig W. Brandt
-------------------
Name (Print): Craig W. Brandt
---------------
SEAL APPEARS HERE
NOTARY PUBLIC in and for the State of
Washington, residing at Issaquah
My appointment expires: 8/15/99
-------
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EXHIBIT A
[FLOOR 2 PLAN APPEARS HERE]
A-1
<PAGE>
[FLOOR 3 PLAN APPEARS HERE]
A-2
<PAGE>
[FLOOR 4 PLAN APPEARS HERE]
A-3
<PAGE>
EXHIBIT B
TO
SUNSET CORPORATE CAMPUS II
OFFICE LEASE AGREEMENT
TENANT IMPROVEMENTS
1. IMPROVEMENTS PROVIDED BY LANDLORD
The Building shall be the same construction type, with the same safety
ratings and the same general exterior appearance, as the Sunset Corporate Campus
I building, including similar lobby finishes and a single bank of three
elevators. More specifically, the Building will be constructed in accordance
with the plans and specifications (ZGF Job No. 20169-32) prepared by Zimmer
Gunsul Frasca Partnership, as Landlord's architect.
Landlord agrees to provide the following improvements in the Premises:
1.1 Completed Public and/or Core Areas as outlined in EXHIBIT A,
finished in accordance with all applicable codes, including the Americans with
Disabilities Act, and the plans and specifications for the Building.
1.1.1 Plumbing: Men's restrooms, women's restrooms, and drinking
fountains installed in accordance with the plans and specifications for the
Building.
1.1.2 Electrical: Total electrical service for each floor shall
include two electrical closets, each with 38, 20-ampere, single-pole, 120-volt
circuits.
1.1.3 Transformers: If Tenant requests that they be included with
the improvements made pursuant to this Section, and in order to provide to the
Premises in Building II capacity for eight (8) watts per square foot of power at
the convenience outlets (i.e., the 120/208 volt circuits), Landlord shall
install a second transformer (the "UPGRADE TRANSFORMERS") on each of floors two,
three and four of Building II. The Upgrade Transformers shall be provided and
connected to the power buss at Landlord's expense. The first transformers on
floors two, three and four of Building II shall be provided to and including the
panel pursuant to the shell and core drawings. All work on the load side of the
Upgrade Transformers will be Tenant's responsibility.
1.1.4 Security System: A card key access system with control
points at the garage parking entrance, the Building's front entry and in the
three elevator cabs, with an ability for Tenant to monitor after-hours use and
which is expandable to include monitoring of Tenant's entry and interior doors.
1.2 Tenant's Unimproved Area as outlined in EXHIBIT A to be completed as
outlined in items 1.2.1 through 1.2.9 below:
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1.2.1 Walls: Core walls pre-taped to be finished under tenant
improvements. Columns and perimeter walls covered with gypsum wallboard ready
for tape and paint.
1.2.2 Floor: Prepared to receive carpet. Floor loading capacities:
80 pounds per square foot miscellaneous live load; 20 pounds per square foot
movable partition load, for a total of 100 pounds per square foot live load.
1.2.3 Mechanical - Primary System: Includes cooling duct
distribution loop installed through terminal VAV boxes and thermostats in
ceiling plenum for building standard layout and quantities (15 per floor). The
building standard mechanical system is designed to accommodate heating loads
generated by lights (1.2 watts per square foot) and electrical equipment (4.9
watts per square foot) up to 6.1 watts per square foot. If Tenant's design or
use of the Premises results in concentrated electrical loads in excess of 6.1
watts per square foot (e.g., data processing areas, conference rooms and machine
rooms) and/or Tenant's design or use of the Premises extends beyond Normal
Business Hours, then the cost of any additional engineering design and
installation of mechanical equipment and/or controls required to handle such
excess shall be part of the cost borne by Tenant pursuant to SECTION 2 of this
EXHIBIT B.
1.2.4 Mechanical - Secondary System: Supplemental cooling capacity
is available in the main VAV units and can be accessed by Tenant for a fee. The
system is sized at 20 tons per floor.
1.2.5 Plumbing: Three waste and vent risers to accommodate waste
from sinks and dishwashers.
1.2.6 Fire Sprinklers: Primary distribution loop with turned-down
finished heads per code, minimum number required to get shell and core sign-off.
1.2.7 Electrical: Electrical conduit and junction boxes
distributed throughout using building standard layout and quantities.
1.2.8 Ceiling: Building standard suspended ceiling grid system
installed in a 4' x 4' pattern.
1.2.9 Window Coverings: Levelor blinds installed at all exterior
windows. The items to be completed in Tenant's Unimproved Area do not include
light fixtures.
2. TENANT IMPROVEMENTS AND LANDLORD'S ALLOWANCE
2.1 Design and construction of all improvements in the Premises beyond
those listed in SECTION 1 of this EXHIBIT B shall be provided at Tenant's cost
and shall include, but not be limited to: to the extent not included in Section
1 of this Exhibit B, any modifications
B-2
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and/or additions to the tenant improvements itemized in SECTION 1.2 above, all
space planning, mechanical drawings, a general contractor's fee (not to exceed
5% of the total price of all tenant improvements), architectural, engineering
and construction design and drawings, partitions (including one-half (1/2) the
cost of any public corridor or demising partition on a multi-tenant floor
enclosing the Tenant's Unimproved Area), doors, door frames, hardware, paint,
wall coverings, base, ceilings, lights, mechanical distribution, diffusers,
thermostats, sprinkler distribution, sprinkler heads, emergency speakers, fire
extinguishers and cabinets, telephone and electrical outlets, light switches,
window coverings, floor coverings, all applicable permit fees and sales tax.
Landlord shall submit to Tenant all prices deemed acceptable to Landlord for the
principal components of Tenant's improvements and a brief description of how
those prices were obtained. Except for Landlord's general contractor and
architect, Tenant shall have the right, within five (5) business days after such
prices are so disclosed, to require that the components identified by Tenant
shall be competitively bid by Landlord among not less than three (3) contractors
or suppliers which are in the business of providing similar labor or materials
in the Bellevue, Washington office market. Landlord shall select the lowest of
such bids unless otherwise agreed to by Tenant, which agreement shall not be
unreasonably withheld or delayed. If Tenant fails to request such bidding
process within the aforementioned five (5) business day period, Landlord shall
procure the items at the prices it identified to Tenant.
2.2 In addition to the cost for improvements constructed during shell and
core as specified in SECTION 1.2 above, Landlord shall provide Tenant a tenant
improvement allowance of $25.00 per square foot of the Rentable Area of the
Premises to be credited against the cost of the permitting, drawings, design,
services, materials and labor, and all sales taxes thereon, for the improvements
provided pursuant to SECTION 2.1 of this EXHIBIT B and Tenant's signage (the
"IMPROVEMENT ALLOWANCE"). Tenant agrees that a minimum of $22.00 per square foot
of Rentable Area of the Premises shall be spent on its tenant improvements
within the Premises. Landlord agrees that any portion of the Improvement
Allowance, up to a maximum of $3.00 per square foot of Rentable Area of the
Premises, which is not expended shall be credited to Tenant against sums due
under this Lease.
Landlord agrees to provide Tenant an additional improvement allowance (the
"ADDITIONAL ALLOWANCE") of up to $5.00 per square foot of Usable Area of the
Premises. Any amounts provided to Tenant as an Additional Allowance shall be
repaid to Landlord by Tenant as Additional Rent in accordance with SECTION 48 of
EXHIBIT C to the Lease.
Neither the Improvement Allowance nor the Additional Allowance will be applied
to the common area rest rooms, janitorial closets, electrical rooms or telephone
closets, which shall all be finished at Landlord's expense under SECTION 1.1 of
this EXHIBIT B.
3. DESIGN OF TENANT IMPROVEMENTS
Tenant shall prepare with Tenant's staff, or Tenant shall retain the services of
a qualified office planner approved by Landlord to prepare, the necessary
drawings for Basic Plans and supply the information necessary to complete the
Working Drawings and Engineering Drawings referred to in SECTION 3.2 of this
EXHIBIT B for construction of the tenant
B-3
<PAGE>
improvements in Tenant's Unimproved Area. All Tenant's plans shall be subject to
approval of Landlord in accordance with SECTION 3.3 of this EXHIBIT B.
Tenant's office planner shall ensure that the work shown on Tenant's plans is
compatible with the basic Building plans and that necessary basic Building
modifications are included in Tenant's plans. Such modifications shall be
subject to the Landlord's approval.
On or before the indicated dates, Tenant shall supply Landlord with one (1)
reproducible copy and five (5) black line prints of the following Tenant Plans:
3.1 BASIC PLANS DELIVERY DATE: October 14, 1997.
The Basic Plans due on this date shall be signed by Tenant and include:
Architectural Floor Plans: These shall be fully dimensioned floor plans showing
partition layout. The Basic Plans must state if there will be any equipment that
will require special plumbing, electrical or other special mechanical systems,
area(s) subject to above-normal floor loads, special openings in the floor, or
other major or special features.
3.2 WORKING DRAWINGS DELIVERY DATE: November 28, 1997.
On this date, Tenant's office planner shall produce four (4) sets of Full
Working Drawings for construction from the Basic Plans using a computing system
compatible with AUTOCAD, which system shall be approved by Landlord for
compatibility with the other Building drawings. The four (4) sets of Working
Drawings due on this date shall be signed by the Tenant and include all items in
the Basic Plans referenced in SECTION 3.1 above plus the following additional
information:
3.2.1 Electrical and Telephone Outlets: Locate all power and
telephone requirements: Dimension the position from a corner and give height
above concrete slab for all critically located outlets. Identify all dedicated
circuits and identify all power outlets greater than 120 volts.
3.2.2 Reflected Ceiling Plan: Lighting layout showing location and
type of all Building Standard and special lighting fixtures.
3.2.3 Furniture Layout: Layout showing furniture location so that
Landlord's engineer can review the location of all light fixtures.
3.2.4 Room Layout: Layout identifying each room with a number and
each door with a number.
3.2.5 Special Equipment: Location and specification of the
equipment identified in Section 3.1 above.
B-4
<PAGE>
Landlord's engineers shall prepare plumbing, electrical, heating, air
conditioning and structural plans ("ENGINEERING DRAWINGS") for Tenant's
improvements based on the signed Working Drawings.
3.3 FINAL PLANS REVIEW DATE: December 31, 1997
On this date, Tenant's office planner shall deliver to Landlord and Tenant for
review and approval four (4) complete sets of Final Plans which will incorporate
the Working Drawings referenced in SECTION 3.2 above, plus the following
additional information:
3.3.1 Millwork Details: These drawings shall be in final form with
Tenant's office planner's title block in the lower right hand corner of the
drawing, and shall include construction details of all cabinets, paneling, trim,
bookcases, and door and jamb details for non-Building Standard doors and jambs.
3.3.2 Electric and Telephone Suppliers: For the equipment used in
the power and telephone outlets which require dedicated circuits and/or which
require greater than 120 volts, identify the type of equipment, the
manufacturer's name and the manufacturer's model number, and submit a brochure
for each piece of equipment. Also identify the manufacturer's name of the
telephone system to be used and the power requirements, size, and location of
its processing equipment.
3.3.3 Keying Schedules and Hardware Information: This information
shall be in final form and include a Keying Schedule indicating which doors are
locked and which key(s) open each lock, plus an "X" on the side of the door
where the key will be inserted if a keyed door. Complete specifications for all
non-Building Standard hardware will also be provided.
3.3.4 Room Finish and Color Schedule: This information shall be in
final form and include locations and specifications for all wall finishes, floor
covering and base for each room.
3.3.5 Construction Notes and Specifications: Complete
specifications for every item included except those specified by the Landlord.
3.4 FINAL PLANS DELIVERY DATE: January 16, 1998.
The four (4) sets of Final Plans approved by Landlord and Tenant and due on this
date shall include all the Final Plans referenced in Section 3.3 above. Final
Plans are to be signed by Tenant and delivered to Landlord by the Final Plans
Delivery Date. Landlord shall return one (1) signed set to Tenant for Tenant's
records. Landlord will incorporate Engineering Drawings with Tenant's Final
Plans for transmittal to the Landlord's Contractor.
Tenant shall be responsible for delays and additional costs in completion of
Tenant's work caused by changes made to any of Tenant's Plans after the
specified Plan Delivery Date or
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<PAGE>
by delays in delivery of special materials requiring long lead times. Tenant
shall further be responsible for such delays as provided in SECTION 3.2 of the
Lease.
4. CONSTRUCTION OF TENANT IMPROVEMENTS
4.1 AUTHORIZATION TO PROCEED: Upon completion of the Final Plans and at
the request of Tenant, Landlord shall provide to Tenant written notice of the
price for improvements beyond those listed in SECTION 1 of this EXHIBIT B and a
copy of all bids received by all subcontractors and Landlord shall disclose to
Tenant the full schedule of values upon the commencement of Tenant's
improvements. Within five (5) business days of receipt of such notice, Tenant
shall give Landlord written authorization to complete the Premises in accordance
with such Final Plans. Tenant may in such authorization delete any or all items
of extra cost; however, if Landlord deems these changes to be extensive, at its
option, Landlord may refuse to accept the authorization to proceed until all
changes have been incorporated in the Final Plans signed by Tenant and written
acceptance of the revised price has been received by Landlord from Tenant. In
the absence of such written authorization to proceed, Landlord shall not be
obligated to commence work on the Premises and Tenant shall be responsible for
any increase in the costs of the Tenant's improvements due to any resulting
delay in completion of the Premises and as provided in SECTION 3.2 of the Lease.
4.2 PAYMENTS: Landlord's contractor shall complete Tenant's improvements
in accordance with Tenant's approved Final Plans. Landlord shall prepare a
construction budget for Tenant's improvements containing line items for each
major component of subconstruction as is customary in the industry. Landlord
shall monitor the actual costs of each of such components and all change orders
thereto and require its contractor to retain copies of all invoices. Until
substantial completion of Tenant's improvements, Tenant shall have continuous
reasonable access to Landlord's and its general contractor's books and records
relating to the actual costs of constructing Tenant's improvements and may cause
the same to be audited at Tenant's expense. Landlord's contractor shall meet
with Tenant monthly upon Tenant's request to review the costs paid to date and
to compare the same with Landlord's budget. Landlord shall pay the bills for the
design, permits, services, labor and materials therefor and all sales taxes
thereon up to the amount of the Improvement Allowance, Additional Allowance and
any sums which are in addition to the same directly to the parties entitled
thereto when due. Final billing for all such payments shall be rendered and
payable by Tenant within thirty (30) days after acceptance of the Premises by
Tenant in accordance with the terms of the Lease.
4.3 FINAL PLANS AND MODIFICATIONS: If Tenant shall request any change,
Tenant shall request such change in writing to Landlord and such request shall
be accompanied by all plans and specifications necessary to show and explain
changes from the approved Final Plans. After receiving this information,
Landlord shall give Tenant a written price for the cost of engineering and
design services to incorporate the change in Tenant's Final Plans. If Tenant
approves such price in writing, Landlord shall have such Final Plans changes
made and Tenant shall pay Landlord for this cost as part of the billing referred
to in SECTION 4.2 of this Exhibit. Promptly upon completion of such changes in
the Final Plans, Landlord shall
B-6
<PAGE>
notify Tenant in writing of the costs, if any, which shall be chargeable or
credited to Tenant for such change, addition or deletion. The cost for such
changes, including additions or deletions, whether chargeable or credited to
Tenant, shall include a Landlord coordination fee equal to ten percent (10%) of
up to Twenty-five Thousand Dollars ($25,000) of the cost of such change and five
percent (5%) of the cost of such change above Twenty-five Thousand Dollars
($25,000). In the absence of such notice, Landlord shall proceed in accordance
with the previously approved Final Plans before such change, addition or
deletion was requested. In accordance with SECTION 3.2 of the Lease, Tenant
shall be responsible for any resulting delay in completion of the Premises due
to modification of Final Plans. Tenant shall also be responsible for any
demolition work required as a result of the change.
4.4 IMPROVEMENTS CONSTRUCTED BY TENANT: If Landlord permits any work to be
performed in connection with Tenant improvements on the Premises by Tenant or
Tenant's contractor:
4.4.1 Such work shall proceed upon Landlord's written approval of
(i) Tenant's contractor, (ii) public liability and property damage insurance
carried by Tenant's contractor (such insurance shall be in combined single
limits not less that Five Hundred Thousand Dollars ($500,000) per occurrence and
shall name Landlord and Landlord's property manager as additional insureds),
(iii) detailed plans and specifications for such work, and (iv) the amount to be
paid by Tenant to Landlord for the services still provided by Landlord's
contractor.
4.4.2 All work shall be done in conformity with a valid building
permit when required, a copy of which shall be furnished to Landlord before such
work is commenced, and in any case, all such work shall be performed in
accordance with all applicable governmental regulations. Notwithstanding any
failure by Landlord to object to any such work, Landlord shall have no
responsibility for Tenant's failure to meet all applicable regulations.
4.4.3 For all work by Tenant or Tenant's contractor that has an
aggregate cost in excess of One Hundred Thousand Dollars ($100,000), Tenant
shall use its best efforts to ensure that at least one union general contractor
is given a reasonable opportunity to act in that capacity, or if Tenant or a
non-union general contractor acts in that capacity, Tenant shall use its best
efforts to ensure that at least one union subcontractor is given a reasonable
opportunity to provide the labor and materials for each principal trade group.
Said cost condition shall be calculated by reference to the aggregate costs of
any particular alteration or remodeling project. The foregoing requirements
shall not apply to Tenant's periodic painting or recarpeting or installation of
movable work stations, network cabling and telephone systems, or to any other
similar items after receiving Landlord's written consent.
4.4.4 All work by Tenant or Tenant's contractor shall be scheduled
through Landlord, and Landlord shall make commercially reasonable efforts to
allow Tenant's entry upon the Premises for the purposes of coordinating and
constructing its improvements.
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4.4.5 Tenant or Tenant's contractor shall arrange for necessary
utility, hoisting and elevator service with Landlord's contractor and shall pay
such reasonable charges for such services as may be charged by Landlord's
contractor Landlord shall cause its contractor to be reasonably available to
Tenant for such purposes. This will be included in the general conditions of
SUBSECTION 4.4.1 above.
4.4.6 Tenant shall promptly reimburse Landlord for costs incurred
by Landlord due to faulty work done by Tenant or its contractors, or by reason
of any delays caused by such work, or by reason of inadequate clean-up.
4.4.7 Prior to commencement of any work on the Premises by Tenant
or Tenant's contractor, Tenant or Tenant's contractor shall enter into an
indemnity agreement and a lien priority agreement satisfactory to Landlord
indemnifying and holding harmless Landlord and Landlord's contractors for any
liability, losses or damages directly or indirectly from lien claims affecting
the land, the Building or the Premises arising out of Tenant's or Tenant's
contractor's work or that of subcontractors or suppliers, and subordinating any
such liens to the liens of construction and permanent financing for the
Building.
4.4.8 Landlord shall have the right to post a notice or notices in
conspicuous places in or about the Premises announcing its non-responsibility
for the work being performed therein.
4.5 TENANT'S ENTRY TO PREMISES: Tenant's entry to the Premises for any
purpose, including without limitation, inspection or performance of Tenant
construction by Tenant's agents, prior to the Commencement Date as specified in
SECTION 3.1 of the Lease shall be scheduled in advance with Landlord and shall
be subject to all the terms and conditions of the Lease, except the payment of
Rent. Tenant's entry shall mean entry by Tenant, its officers, contractors,
office planner, licensees, agents, servants, employees, guests, invitees, or
visitors.
4.6 TENANT'S TELEPHONE: Tenant is responsible for Tenant's telephone
service. Tenant shall select Tenant's telephone system and shall coordinate its
installation with Landlord.
4.7 PARTIES' COOPERATION: Landlord and Tenant agree to cooperate with each
other and their respective contractors and suppliers prior to and during the
course of the construction of the Building and the Premises. Landlord shall
provide Tenant with a brief summary of the status of construction of the
Building and Premises upon request, which request may be made monthly or at such
other times as is reasonably warranted by a change in the construction schedule.
Each party shall promptly notify the other in writing of any anticipated delays
in construction, change order requests, or a change in any principal contractors
or suppliers. Subject to compliance with reasonable safety precautions and the
avoidance of interference with construction, Tenant shall have access to the
Building site at all reasonable times to monitor the progress of construction
and Landlord shall respond promptly to Tenant's inquiries about the status of
construction or any perceived failure of the Tenant's improvements to adhere to
the construction schedule or to conform to the approved
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plans or specifications or the requirements of this Lease. Tenant shall assume
all risk of property damage and personal injury (including death) resulting from
its and its agents' entries onto the Building site and shall defend, indemnify,
reimburse and hold Landlord harmless from and against all claims, losses,
expenses, damages and liabilities, including attorneys' fees, related thereto.
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EXHIBIT C
TO
SUNSET CORPORATE CAMPUS II
OFFICE LEASE AGREEMENT
ADDENDUM TO LEASE
The following terms and conditions are part of that certain Office Lease
Agreement dated September 30, 1997, between OBAYASHI CORPORATION, a Japan
corporation ("LANDLORD"), and THE BOEING COMPANY, a Delaware corporation acting
through its Information, Space and Defense System Group ("TENANT") and are
incorporated into such Lease as if fully set forth in the body thereof:
39. PRECONSTRUCTION EXPANSION OPTIONS: On or before the ninetieth (90th) day
after the full execution of this Lease, Landlord shall give Tenant the option to
lease additional space in either Building I or the Building in accordance with
either SECTION 39.1 or 39.2.
39.1 BUILDING I EXPANSION SPACE. If, within ninety (90) days following
execution of the Lease, Silicon Graphics, the existing tenant of 10,656 rentable
square feet on the third floor of Building I, notifies Landlord that it will
vacate that space upon the completion of and its relocation to Building II, then
Tenant may lease that space under a separate lease on substantially the same
terms and conditions contained in this Lease, with the exception that the tenant
improvement allowance will be $8 per rentable square foot, and the parking shall
be that available in or near Building I. Landlord shall give Tenant notice of
the availability of the space promptly upon receiving notice of the existing
tenant's decision to remain in or vacate the space. Tenant must notify Landlord
of its election to exercise this option within ten (10) business days after
Landlord notifies Tenant that the space is available. Failure to give such
notice to Landlord within the time allowed shall constitute a rejection of the
space and extinguish the options contained in this Section. The parties agree to
promptly sign a lease for such space within twenty (20) business days following
Tenant's notice to Landlord exercising this option.
39.2 BUILDING II EXPANSION SPACE. If within ninety (90) days following full
execution of this Lease, Landlord gives the Tenant notice that the expansion
space in Building I referred to in Section 39.1 will not be available, then
Tenant may lease approximately 11,000 square feet of Usable Area on the first
floor of the Building, which additional space shall be added to and become part
of the Premises under this Lease. Tenant must notify Landlord of its election to
exercise this option within ten (10) business days after Landlord notifies
Tenant that the space is available. Failure to give such notice to Landlord
within the time allowed shall constitute a rejection of the space and extinguish
the options contained in this Section. The parties agree to so amend this Lease
within twenty (20) business days following Tenant's notice to Landlord
exercising this option. All of the terms and conditions of the Lease shall apply
to such additional space and Landlord shall make
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available to Tenant a tenant improvement allowance equal to Twenty-five Dollars
($25.00) per square foot of Rentable Area in such expansion space.
40. OPTION TO LEASE ADDITIONAL SPACE IN BUILDING I: Subject to the rights of
other tenants existing prior to the date of this Lease, Tenant shall have a one
time right to lease the entire fourth floor of Building I, which is comprised of
approximately 29,000 square feet of Usable Area if it becomes available at the
end of the existing lease of that space. This space is currently leased to
Starwave Corporation. The lease to Starwave Corporation expires on May 31, 2000.
Such expansion option shall be triggered by notice from Landlord of the terms
and conditions on which the subject space is to be leased, as determined solely
by Landlord. Tenant shall have until ten (10) business days after Landlord
notifies Tenant in which to exercise the right to lease such space by accepting
the terms and conditions in Landlord's notice. If Tenant rejects or does not
respond to Landlord that it will take the new space on the terms offered, then
Landlord may enter a lease for such space on such terms as Landlord determines,
except Landlord shall reoffer such space to Tenant and Tenant shall accept or
reject such offer by the means above described if the base rent of the new lease
is less than ninety percent (90%) of the base rent offered to Tenant for such
space. Tenant's rights under this Section shall apply only to a term commencing
on or about June 1, 2000.
41. EARLY TERMINATION RIGHT: Provided that Tenant is not in default under the
terms of this Lease, and upon prior written notice to Landlord at least twelve
(12) months before the end of the first sixty (60) full calendar months of the
Lease Term, Tenant shall have a one-time right to terminate the Lease effective
upon the last day of said sixtieth (60th) month. Upon termination of the Lease
pursuant to this termination right, Tenant shall pay to Landlord an amount equal
to six (6) months' Rent and Additional Rent (fully serviced) as calculated by
reference to the rental rate applicable to Tenant on the date the Lease
terminates.
42. OPTION TO RENEW: So long as Tenant is not then in default under the Lease
(and Tenant shall not be deemed to be in default unless Landlord has declared to
Tenant in writing that Tenant is in default under the Lease) and has not
received any notice of default from Landlord acting pursuant to the Lease during
the immediately preceding six (6) months, Tenant shall have a single right to
extend the term of the Lease for an additional, consecutive five (5) year period
(the "ADDITIONAL TERM"), on the terms and conditions stated in this Section.
42.1 TERMS AND CONDITIONS. If Tenant exercises its right under this
Section, then the Additional Term shall commence on the first day following the
initial seven (7) year (and initial partial month, if any) term and shall
terminate five (5) years thereafter. To exercise its right to extend the Lease
for the Additional Term, Tenant must deliver to Landlord a written notice
exercising its rights under this Section, at least twelve (12) months prior to
the date the initial Lease Term will expire. All of the terms and conditions of
the Lease shall apply during the Additional Term, except (a) the Base Rent shall
be an amount mutually agreed to by Landlord and Tenant or determined as set
forth below; (b) after the exercise of the extension option, there shall be no
further extension options; and (c) Landlord shall have
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no tenant improvement obligations with respect to the Premises except to provide
Tenant with a "REDECORATING ALLOWANCE" as provided in SECTION 47 below. When the
rental rate for the Additional Term is determined (either by agreement of the
parties or pursuant to arbitration as provided below), Landlord and Tenant shall
enter into a lease extension agreement setting forth the new Base Rent for the
Premises and such other terms as may be applicable. If at the time Tenant
delivers to Landlord its written notice electing to extend the term of the
Lease, or at any time between such date and the commencement date of the
Additional Term, Tenant defaults under the Lease and fails to cure the default
within the applicable cure period, if any, Landlord shall have the option to
declare Tenant's notice of exercise null and void by written notice to Tenant,
in which case the term of the Lease shall expire on the expiration of the then
current Lease term.
42.2 DETERMINATION OF RENT. If Tenant exercises an extension right under
this Section, then the monthly Base Rent for the Additional Term shall be
ninety-five percent (95%) of the monthly Fair Market Rent (defined below) for
comparable space in the Building or comparable Class A office buildings located
in the Interstate 90 corridor in the City of Bellevue, Washington, as of the
first day of the Additional Term; provided, however, in no event shall the sum
of the Base Rent and the Additional Rent for the Additional Term be less than
the sum of the Base Rent and the Additional Rent for the last month of the
initial Lease Term. For purposes of the Lease and this Addendum, the term "FAIR
MARKET RENT" shall mean the annual "fully serviced" rate per rentable square
foot that willing, non-equity, non-renewal tenants are then paying for
comparable space in the Building or comparable Class A office buildings located
in the Interstate 90 corridor in the City of Bellevue, Washington, in leases
having a five (5) year term. Landlord shall advise Tenant in writing of
Landlord's determination of Fair Market Rent not later than thirty (30) days
after Tenant exercises its extension right. Within thirty (30) days after
receiving Landlord's determination of Fair Market Rent, Tenant shall notify
Landlord in writing whether or not Tenant accepts Landlord's determination of
the Fair Market Rent. If Tenant disagrees with Landlord's determination of Fair
Market Rent and yet Tenant desires to preserve its extension option, then Tenant
shall advise Landlord of Tenant's determination of Fair Market Rent in the
notice required pursuant to the preceding sentence. If Tenant fails to so notify
Landlord prior to the expiration of its thirty (30) day period to respond to
Landlord's notice, then Tenant's notice exercising its extension rights under
this Section shall be deemed null and void unless otherwise agreed by Landlord
in writing. If Tenant does not accept Landlord's determination of Fair Market
Rent, and Tenant has given Landlord the notice required above of Tenant's
determination of Fair Market Rent, then the parties shall promptly meet and
attempt to resolve their differences. If the parties have not agreed on the Fair
Market Rent within ninety (90) days after Tenant has exercised its extension
right (the "ARBITRATION COMMENCEMENT DATE"), and Tenant's extension option is
still in effect in accordance with this Section, then unless otherwise agreed by
the parties, the parties shall submit the matter to binding arbitration in
accordance with the terms of this Section.
42.3 PROCEDURE FOR RENT ARBITRATION. The arbitration will be conducted by
three real estate appraisers who are members of M.A.I. or a similar nationally
recognized appraisal organization, and have been active over the five (5) year
period ending on the Arbitration Commencement Date in the appraisal of downtown
office properties in Bellevue,
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Washington. One appraiser will be selected by Tenant, one appraiser will be
selected by Landlord, and the third appraiser will be selected by the two
appraisers so chosen, If the two appraisers chosen by the parties cannot agree
on the third appraiser within fifteen (15) days after the date the second
appraiser has been appointed, the third appraiser will be selected by
application of either party to the then Seattle Regional Director of the
American Arbitration Association and neither party shall raise any question as
to such appointment. In such event, the parties shall indemnify and hold the
presiding judge fully and completely harmless from and against all claims
arising out of the presiding judge's appointment of the third appraiser. Each
party shall select its appraiser within fifteen (15) days after the Arbitration
Commencement Date. If either party fails to select its appraiser within such
fifteen (15) day period, then the appraiser selected by the other party shall be
the sole arbitrator for determining Fair Market Rent. Within thirty (30) days
after the selection of the third appraiser (or if only one appraiser is to
render the decision, within thirty (30) days after the last day of the above-
referenced fifteen (15) day period), the appraiser(s) shall determine the Fair
Market Rent. The decision of a majority of the appraisers shall control. If a
majority of the appraisers do not agree within the stipulated time period, then
each appraiser shall in a written reasoned report render his or her separate
determination as to the Fair Market Rent within five (5) days after the
expiration of the thirty (30) day period. In such case, the three determinations
shall be averaged to determine the Fair Market Rent; however, if the lowest Fair
Market Rent or the highest Fair Market Rent is ten percent (10%) lower or
higher, as applicable, than the middle Fair Market Rent, then such low Fair
Market Rent and/or the high Fair Market Rent, as applicable, shall be
disregarded and the remaining Fair Market Rent(s) will be averaged in order to
establish the Fair Market Rent. For example, if one of the determinations of
Fair Market Rent is more than ten percent (10%) lower or higher than the middle
determination of Fair Market Rent, the remaining two determinations of Fair
Market Rent will be averaged. By way of further example, if the lowest
determination of Fair Market Rent and the highest determination of Fair Market
Rent are both more than ten percent (10%) lower and higher, respectively, than
the middle determination of Fair Market Rent, both such determinations will be
disregarded, and the middle Fair Market Rent shall control. Both parties may
submit any information to the arbitrators for their consideration, with copies
to the other party. The arbitrators shall have the right to consult experts and
competent authorities for factual information or evidence pertaining to the
determination of Fair Market Rent. The arbitrators shall render their decision
and award in writing with counterpart copies to each party. The arbitrators
shall have no power to modify the provisions of the Lease. The determination of
the arbitrators will be final and binding upon Landlord and Tenant. The cost of
the arbitration will be paid by Landlord if the Fair Market Rent is ninety
percent (90%) or less than the Fair Market Rent specified in the notice given by
Landlord to Tenant; by Tenant if the Fair Market Rent is one hundred ten percent
(110%) or more than the Fair Market Rent specified in the notice given Tenant to
Landlord; and otherwise shall be shared equally by Landlord and Tenant.
43. RIGHT OF FIRST OFFER IN THE BUILDING: Subject to the rights of other
tenants existing prior to the date of this Lease, Tenant shall have a right of
first offer to lease additional space on the first (1st) and fifth (5th) floors
of the Building. Such right of first offer shall be triggered by notice from
Landlord of the terms and conditions on which the subject space is to be leased.
Tenant shall have ten (10) business after Landlord's notice is
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given in which to exercise the right to make the first offer on such space by
accepting the terms and conditions in Landlord's notice. If Tenant rejects or
does not respond to Landlord that it will take the new space on the terms
offered within the 10-day period, then Landlord may enter a lease for such space
on such terms as Landlord determines, except Landlord shall reoffer such space
to Tenant and Tenant shall accept or reject such offer by the means above
described if the base rent is less than ninety percent (90%) of the base rent
offered to Tenant in the notice from Landlord pursuant to this Section.
44. NO RELOCATION: Tenant is not subject to relocation by Landlord in the
Building.
45. RIGHT TO REDUCE AREA OF PREMISES: Tenant shall have a one-time right to
reduce the area of the Premises by vacating one half (1/2) of the lowest or
highest floor of the Building then subject to this Lease effective upon the last
day of the sixtieth (60th) full calendar month of the initial Lease Term.
Tenant's right to reduce the area of the Premises is conditioned on (a) Tenant's
prior written notice to Landlord at least twelve (12) months before such
reduction is to be effective, (b) Landlord's approval of the resulting floor
plans in writing, (c) Tenant's failure to exercise its right to terminate the
Lease under SECTION 41 above, (d) Tenant not being in default under the terms of
the Lease, and (e) payment by Tenant to Landlord of an amount equal to the
unamortized leasing commissions and tenant improvements allocable to the space
Tenant chooses to vacate, as calculated on a straight line basis over the
initial seven (7) year Lease Term (with any initial partial month disregarded).
Landlord shall provide to Tenant a detailed statement of such costs and an
amortization schedule for Tenant's review and approval no later than thirty (30)
days after such reduction in area becomes effective. Tenant shall approve such
costs and schedule or notify Landlord of its obligations thereto in writing
within fifteen (15) days after Tenant's receipt thereof. In the absence of
providing such response within that period Tenant shall be deemed to have given
its approval.
46. TENANT'S RIGHT TO EARLY ENTRY: Tenant shall have the right to enter the
Premises at no Rent for a period of eight (8) weeks prior to the projected
Commencement Date for the limited purposes of installing furniture, fixtures,
cabling, wiring and equipment and preparing the Premises for occupancy, provided
Tenant's exercise of this right does not (a) delay the Commencement Date, (b)
result in any additional cost to Landlord, or (c) create any conditions
dangerous to the health or safety of Landlord, Tenant, or their respective
employees, contractors, consultants or other agents. Tenant's ability to install
the items listed above during the eight (8) weeks before the Commencement Date
must be coordinated with and will be subject to the construction schedule for
the Building and the tenant improvements therein.
47. REDECORATING ALLOWANCE: Provided that Tenant does not terminate this Lease
as provided in SECTION 41, Landlord shall provide Tenant with a redecorating
allowance of $3.00 per square foot of Tenant's Rentable Area following the fifth
anniversary of the Commencement Date. In the event that Tenant exercises its
right to renew as provided in SECTION 42, Landlord shall provide Tenant with an
additional redecorating allowance of $3.00 per square foot of Tenant's Rentable
Area following the seventh anniversary of the Commencement Date.
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48. ADDITIONAL BUILDOUT ALLOWANCE: Landlord agrees to provided Tenant with an
additional allowance of up to $5.00 per square foot of Rentable Area of the
Premises to be used for payment of tenant improvements to the Premises over an
above the allowance provided in SECTION 2.2 of EXHIBIT B. Tenant shall repay
this additional allowance as Additional Rent in equal monthly payments
sufficient to completely amortized the principal with interest at the rate of
9.5% per annum over the first five (5) years of the Lease Term.
49. TENANT'S ANTENNAE AND SATELLITE DISHES: Subject to Landlord's prior written
approval, Tenant shall have the non-exclusive right to install up to two
satellite dishes and up to two whip antennae on the roof of the Building at
Tenant's sole cost and expense. Tenant shall pay to Landlord, without notice,
rent in the amount of One Hundred Dollars ($100) per diameter foot per month for
each satellite dish and One Hundred Dollars ($100) per month for each antenna
Tenant installs. Tenant shall reimburse Landlord for all charges for electricity
or other utilities used in connection with Tenants operation of such satellite
dish or antenna. Tenant shall be liable for the installation, engineering and
maintenance of any antenna or satellite dish, and agrees to indemnify and hold
Landlord harmless from any and all loss, costs (including attorneys' fees),
damages, expenses and liabilities arising in connection with claims or damages
relating to the injury or death of any person or to property damage due to any
acts or omissions of Tenant, Tenant's agents, employees, customers, invitees,
contractors or subcontractors in connection with Tenant's antenna or satellite
dish. Landlord retains the right to allow others to install antennae or
satellite dishes on the roof of the Building. Upon reasonable prior notice to
Landlord; Tenant and/or its contractors, agents and subcontractors shall have
the right of access to the antenna or satellite dish at all reasonable times,
provided that Tenant shall afford Landlord the opportunity to have Landlord's
representatives accompany Tenant while exercising such access rights. Tenant
agrees to comply with any and all security regulations of the Building and any
and all codes, regulations or laws applicable to the installation, operation or
maintenance of any satellite dish or antenna. Upon termination or expiration of
the Lease, Tenant agrees to remove any antenna or satellite dish and all
equipment related thereto, and to repair any damage to the Building caused by
such removal.
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EXHIBIT D
TO
SUNSET CORPORATE CAMPUS II
OFFICE LEASE AGREEMENT
CERTIFICATE OF LEASE INFORMATION
Landlord and Tenant acknowledge and certify to one another the following as
of the Commencement Date of the Lease between them dated September __, 1997 for
Premises located at Sunset Corporate Campus Building II, with an address of
13920 Southeast Eastgate Way, Bellevue, Washington 98005:
Commencement Date: ________________________
Termination Date: ________________________
Usable Area of the Premises: ________________________
Rentable Area of the Premises: ________________________
Rent per year for the Premises:
Years 1 - 3: ________________________
Years 4 & 5: ________________________
Years 6 & 7: ________________________
Tenant's pro rata share: ________________________
[insert other variables that will be known at the Commencement Date]
The Premises are accepted by Tenant in their present condition.
DATED: _______________, 1998.
LANDLORD: OBAYASHI CORPORATION,
a Japan corporation
By:_________________________
Its:________________________
TENANT: THE BOEING COMPANY,
a Delaware corporation
By:_________________________
Its:________________________
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EXHIBIT E
Addendum to Lease Between
OBAYASHI CORPORATION
and
JANITORIAL SPECIFICATIONS
Services shall include, but not be limited to, the following:
I. Office & Common Areas
---------------------
A. Nightly:
1. Empty and clean (if necessary) all waste receptacles, and remove
waste paper and rubbish from the Premises.
2. Vacuum all traffic lanes, reception areas (include underneath
reception desks), and common areas completely. Spot vacuum
offices and work areas as needed.
3. Dust and damp wipe all desks, credenzas, and work and reception
counters (do not move papers).
4. Dust and damp wipe all sills and coffee and side tables.
5. Remove all finger marks and smudges from all vertical surfaces,
including doors, door frames, around light switches, private
entrance glass, relites, partitions, pictures and wall
decorations.
6. Sweep all wood/tile floors employing dust control techniques and
damp mop for any spillage.
7. Clean all lunchroom/eating areas:
a. Wash and wipe tables and counter tops.
b. Clean sinks.
c. Sweep and damp mop floors.
8. Spot/report carpet spots.
9. Spot clean relite glass.
10. Remove black heel/scuff marks from tile floors.
11. Arrange chairs at desks and conference tables neatly, turn off
lights, lock and deadbolt doors.
12. Police stairways for trash and cigarette butts.
13. Clean equipment and empty vacuum bags, noting any repairs needed.
14. Clean slop sinks and maintain break room in a clean, neat and
orderly condition.
15. Maintain neat and orderly janitor supply closet.
16. Leave notice advising property management of any irregularities.
---
17. Restrooms - follow contractors restroom schedule.
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B. Weekly:
1. Dust bookshelves (push books back).
2. Dust file cabinets - high and low.
3. Sweep/dust chair pads.
4. Dust partition tops
5. Dust elevator doors.
6. Dust mini-blinds.
7. Vacuum complete - under desks, between desks and file cabinets,
under chairs (do 1/5 of run each night).
8. Damp wipe all telephones.
9. Wash and polish all drinking fountains.
10. Dust picture frames.
11. Dust chair bases and arms.
C. Monthly:
1. Edge all carpeted areas.
2. Dust all baseboards.
3. Dust all wood panel surfaces.
D. Quarterly:
1. Dust all lights, diffusers and vents.
2. Vacuum/brush upholstered furniture.
3. Strip and reseal tile floors.
4. Wax and buff tile floors.
II. Restrooms
---------
A. Nightly:
1. Clean all mirrors, bright work and enameled surfaces.
2. Clean all counter surfaces.
3. Wash and disinfect all basins, urinals and bowls using
nonabrasive cleaners to remove stains and clean undersides of rim
on urinals and bowls .
4. Wash and disinfect toilet seats.
5. Scrub floor beneath urinals with hand brush
6. Wet mop and disinfect floor.
7. Damp wipe all partitions and tile walls for smudges and outside
surfaces of all dispensers and receptacles.
8. Empty and sanitize all trash receptacles and sanitary disposals.
9. Fill toilet tissue, seat cover, soap, towel and sanitary napkin
dispensers.
10. Clean flushometers, piping, toilet seat hinges and other metal.
11. Report leaking fixtures, lights out, damage to partitions or
fixtures, etc. to property management.
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B. Weekly:
1. Dust mirror light.
2. Dust door, door frame and closure.
3. Dust partitions and ledges.
4. Spot wash partitions and wall tile.
5. Dust baseboards.
C. Monthly:
1. Thoroughly wash all partitions, tile walls, dispensers and
receptacles from trim to floor.
2. Vacuum all ventilating grills and dust light fixtures.
3. Wash trash liner.
D. Quarterly:
1. Machine scrub floors.
III. Main Lobby and Public Areas
---------------------------
A. Nightly:
1. Sweep and damp mop all floors.
2. Vacuum all carpeted areas.
3. Vacuum elevator carpets.
4. Edge all elevators.
5. Spot carpeted areas.
6. Wipe elevator doors, horizontal surfaces, wood paneling,
directories, and benches.
7. Spot clean entry door glass.
8. Clean and polish elevator call buttons.
9. Clean elevator door tracks.
10. Spot clean glass relites.
11. Empty and polish all trash receptacles and ash urns.
12. Spot mirrors.
13. Sweep or vacuum all stairways and landings.
14. Wash, disinfect & polish drinking fountains.
15. Report burned out lights.
16. Dust and polish bright work.
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B. Weekly:
1. Damp clean paper boxes.
2. Clean all thresholds.
3. Vacuum revolving door mats.
4. Thoroughly wash transoms high and low.
5. Clean lobby runners & elevator carpets.
6. Thoroughly clean all wails, handrails, and doors.
7. Dust and vacuum all closet areas.
8. Machine scrub main lobby floor.
9. Thoroughly wash interior of trash receptacles.
10. Dust fire extinguishers and cabinets.
C. Quarterly:
1. Damp dust all ceiling air conditioning diffusers, wall grills,
registers and other ventilation louvers.
IV. Other
-----
A. Nightly:
1. Police and spot sweep garage for trash and cigarette butts.
2. Continuing survey of public areas to ensure security.
B. Weekly:
1. Pressure wash sidewalk areas (1/2 each week).
2. Gas vacuum garage (one level per week).
3. Wash and/or shampoo mats and/or blotters as necessary.
V. Dayperson
---------
Dayperson will report to the property's Chief Engineer, and will provide
cleaning and miscellaneous services as directed by the property management
office.
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EXHIBIT F
SUNSET CORPORATE CAMPUS
BUILDING-MOUNTED EXTERIOR SIGNAGE POLICY
General
The components of all signs including size, design, and color and materials
shall be approved by Landlord and shall conform to the specific requirements
identified below. Tenant shall submit to the Landlord a preliminary drawing
showing the sign located on the building's entire elevation and a dimensioned
drawing of the entire sign describing the size and character of the proposed
letters together with samples of all colors and materials prior to entering into
a final contract with a sign company. In no case shall a sign be fabricated or
installed without Tenant receiving the Landlord's approval and obtaining
Landlord's signature on a shop drawing(s) prior to fabrication.
Building Signage Criteria
1. Shop drawings shall be fully dimensioned and indicate location, type of
lettering, illumination (if applicable), all colors and materials, and
specifications for the entire assembly, including details describing how
the sign will be mounted to the building.
2. The sign shall consist of the Tenant's trade name and/or logo, if logo is a
part of Tenant's common trademark. The wording shall not include the
product or service sold except as part of the trade name.
3. The letter style and color may be proposed by the individual tenants.
4. Signs shall be internally illuminated and constructed of individual
letters/numerals with a translucent face and opaque back.
5. Maximum height shall be 24" for letters and logos.
6. Signage is limited to a maximum length of 16 lineal feet of signage,
including letter characters and symbols.
F-1
<PAGE>
7. All portions of any sign must be within the 2'0" x 16'0" area centered
horizontally between specified columns. The lower edge of the letters shall
all align 3" above the lower edge of the panel. See Schedule 1.
8. No moving, flashing, or audible signs will be permitted.
9. The sign, including its raceway and letters, shall not project more than
13" from the face of the panel to which it is mounted (8" for the raceway
and 5" for the letter).
10. There shall be no over hanging signs or signage perpendicular to the
building.
11. No signs shall be attached to the building in other than the designated
area.
12. There will be no exposed labels bearing the name of the sign contractor,
fabricator, or underwriter's approval.
13. All costs associated with the design, fabrication, installation, and
maintenance shall be paid by the Tenant.
14. Signs shall comply with all governing building and electrical codes and
regulations and shall bear the UL label. Cost of obtaining all permits,
approvals, etc. required for installation shall be the responsibility of
the Tenant.
15. Electrical service to approved illuminated sign shall originate from the
Tenant's electrical panel.
16. Tenant shall pay the additional electrical cost.
17. Tenant's sign shall be subject to the prior selection of one of the
locations shown on Schedule 1 by US West Dex, Inc.
F-2
<PAGE>
SCHEDULE 1
EXTERIOR SIGN
[PLAN APPEARS HERE]
S-1
<PAGE>
EXHIBIT G
OPERATIONS POLICIES
1. Washington State Law now prohibits smoking in office buildings. Please
refrain from smoking within the building and parking garage. Individuals
who do smoke may do so in the designated area north of the east surface
parking lot or at the loading dock. Please report violators to Labor and
Industries, phone 206/281-5470.
2. Individuals other than Sunset Corporate Campus staff are not permitted to
make adjustments to temperature control thermostats within the building.
The Property Management Office is glad to assist should you find your
offices require adjustment. Any damage occurring as a result of tampering
will be repaired at the tenant's expense.
3. Do not obstruct sidewalks, doorways, corridors, elevators, lobbies or
stairways with furniture, trash or deliveries of any type. These areas
require a full, free traffic flow at all times.
4. Corridor doors, when not in use, must be kept closed, per Bellevue Fire
Code.
5. Nails, screws or other attachments to the doors must be installed by the
Property Management staff.
6. All signs, advertisements, graphics or notices visible in or from public
corridors, lobby areas or the building exterior are subject to prior
written approval from the Property Management Office.
7. Please lock all doors leading to corridors and turn out all lights at the
close of the work day.
8. No pets or animals of any kind are permitted on or in the premises.
9. Improper or excessive noise which interferes with tenants or other persons
conducting business within the building is not permitted.
10. Canvassing, peddling, soliciting and distribution of handbills of any kind
in the building is not permitted.
11. Installation of food, soft drink or other vendor machines within a suite
must be approved by and coordinated with the Property Management Office.
12. The Property Management Office reserves the right to prescribe the weight
and position of safes and other heavy equipment. Damage occurring as a
result of such items will be repaired at the tenant's expense.
G-1
<PAGE>
13. Heavy machinery of any kind may not be operated within the building without
prior written consent from the Property Management Office. Gasoline,
kerosene and other flammable liquids are not permitted to be used or stored
in the building. Noxious gas or other substances may not be used or kept on
the premises.
14. All contractors and technicians rendering installation or service work of
any kind must be referred to the Property Management Office prior to
performing such services. We will review with them our building policies
and standards for performing work at Sunset Corporate Campus and provide
necessary access to service areas, telephone closets, etc. We require all
service persons to check in and out with the Property Management Office any
time they are performing work in the building.
15. Installation and/or placement of items or fixtures which affect the outside
appearance of the building such as non-standard window signage, drapes or
lighting is not permitted, except with written approval from Building
Management.
16. Proposed plans for alterations affecting any physical portion of your suite
require prior written consent from the Property Management Office. All such
alterations must be coordinated through the Property Management Office.
This includes all installations affecting floors, walls, woodwork, windows
and ceiling.
17. The Property Management Office reserves the right to reasonably rescind any
of these Rules and Regulations and to make future rules and regulations, as
required for the safety, protection and maintenance of the building, the
operation thereof and the protection and comfort of the tenants and their
employees and visitors.
G-2
<PAGE>
EXHIBIT B
TO
SUBLEASE AGREEMENT
FLOOR PLANS SHOWING SUBLEASED PREMISES
Page 23 of 38
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT C-1
TO
SUBLEASE AGREEMENT
Sublessor agrees to provide the following improvements in the Subleased Premises
at its sole cost and expense:
1. Completed Public and/or Core Areas as outlined in Exhibit A (including any
telephone closets), finished in accordance with all applicable codes, including
the Americans with Disabilities Act, and the plans and specifications for the
Building.
1.1 Plumbing and Fixtures: Men's restrooms, women's restrooms and
---------------------
drinking fountains installed in accordance with the plans and specifications for
the Building.
1.2 Electrical: Total electrical service for each floor shall include
----------
two electrical closets, each with 38, 20-ampere, single-pole, 120 volt circuits.
1.3 Security System: A card key access system with control points at the
---------------
garage parking entrance, the Building's front entry and in the three elevator
cabs, with an ability for Sublessee to monitor after-hours use and which is
expandable to include monitoring of Tenant's entry and interior doors.
2. Tenant's Unimproved Area as outlined in Exhibit A to be completed as
outlined below:
2.1 Walls: Core walls pre-taped to be finished under tenant improvements.
-----
Columns and perimeter walls covered with gypsum wallboard ready for tape and
paint.
2.2 Floor: Prepared to receive carpet. Sublessor and Sublessee agree
-----
that the poured concrete floor is prepared to receive carpet as of the date of
this Sublease Agreement. Notwithstanding the foregoing, Sublessor shall provide
to Sublessee an allowance of up to $10,000 to be applied to the cost of
additional work that Sublessee may elect to do to prepare the poured concrete
floor to receive carpet. Floor loading capacities: 80 pounds per square foot
miscellaneous live load; 20 pounds per square foot movable partition load, for a
total of 100 pounds per square foot live load.
2.3 Mechanical: Primary System - includes cooling duct distribution loop
----------
installed through terminal VAV boxes and thermostats in ceiling plenum for
building standard layout and quantities. In addition to those installed as of
January 1, 1999, Sublessor shall provide four VAV boxes on the floor (but to be
installed by Sublessee as
Page 24 of 38
<PAGE>
a part of Sublease's Improvements). The building standard mechanical system is
designed to accommodate heating loads generated by lights (1.2 watts per square
foot) and electrical equipment (4.9 watts per square foot) up to 6.1 watts per
square foot. if Sublessee's design or use of the Premises results in
concentrated electrical loads in excess of 6.1 watts per square foot (e.g., data
processing areas, conference rooms and machine rooms) and/or Sublessee's design
or use of the premises extends beyond Normal Business Hours, then the cost of
any additional engineering design and installation of mechanical equipment
and/or controls required to handle such excess shall be part of the cost borne
by Sublessee.
2.4 Mechanical: Secondary System - Supplemental cooling capacity is
----------
available in the main VAV units and can be assessed by Sublessee for a fee. The
system is sized at 20 tons per floor.
2.5 Plumbing: Three waste and vent risers to accommodate waste from
--------
sinks and dishwashers.
2.6 Fire Sprinklers: Primary distribution loop with turned-down
---------------
finished heads per code, minimum number required to get shell and core signoff.
2.7 Electrical: Electrical conduit and junction boxes distributed
----------
throughout using building standard layout and quantities.
2.8 Ceiling: Building standard suspended ceiling grid system installed
-------
in a 4' x 4' pattern.
2.9 Window Coverings: Levelor blinds installed at all exterior windows.
----------------
The items to be completed in Sublessee Unimproved Area do not include
light fixtures.
Page 25 of 38
<PAGE>
EXHIBIT C-2
TO
SUBLEASE AGREEMENT
SUBLESSEE IMPROVEMENTS
1. SUBLESSEE IMPROVEMENTS AND SUBLESSOR'S ALLOWANCE
1.1 Design and construction of all tenant improvements in the Subleased
Premises shall be provided at Sublessee's cost and shall include, but not be
limited to: the common corridor on the Building's fourth floor, architectural
and engineering design, partitions, doors, door frames, hardware, paint, wall
coverings, base, ceilings, lights, mechanical distribution, diffusers,
thermostats, sprinkler distribution, sprinkler heads, emergency speakers, fire
extinguishers and cabinets, telephone and electrical outlets, light switches,
floor coverings, and all applicable permit fees and sales tax; provided,
however, that with respect to the multi-tenant corridor on the fourth floor of
the Building shown on Exhibit B, Sublessee shall be responsible only for its pro
rata share of the cost of the corridor. For purposes of this paragraph 1.1 of
this Exhibit C-2, Sublease's pro rata share shall be a fraction, the numerator
of which is the rentable square footage of the Subleased Premises that is
located on the fourth floor, and the denominator of which is the total rentable
square footage of the fourth floor of the Building.
1.2 Sublessor shall provide Sublessee an allowance of up to the sum of
Twenty-Three Dollars ($23.00) per rentable square foot of the Subleased Premises
("SUBLESSOR'S ALLOWANCE") to be credited against the cost of improvements
provided pursuant to this EXHIBIT C-2. Sublessor's Allowance will be provided by
crediting the amount of the Allowance against the payments due from Sublessee in
accordance with SECTION 3.2 of this EXHIBIT C-2.
2. DESIGN OF SUBLESSEE IMPROVEMENTS
Sublessee shall retain the services of a qualified office planner, approved
by Sublessor, to prepare the necessary drawings for Basic Plans and to supply
the information necessary to complete the Working Drawings and Engineering
Drawings referred to in SECTION 2.2 of this EXHIBIT C-2. Upon completion of
Sublesee improvements, Sublessor shall reimburse to Sublessee the fees of
Sublease's space planner up to a maximum amount of $3,000, which is in addition
to the allowances described above. All of Sublessee's plans shall be subject to
approval by Landlord in accordance with SECTION 2.3 of this EXHIBIT C-2.
Sublessor approves the plans attached to this Exhibit C-2. Notwithstanding that
any Working Drawings are reviewed by Landlord or Sublessor or their respective
construction professionals, and notwithstanding any advice or assistance that
may be rendered to Sublessee by Landlord or by Sublessor
Page 26 of 38
<PAGE>
or any of their respective construction professionals, neither Landlord nor
Sublessor shall have any liability or be responsible for any omissions or errors
contained in the Working Drawings.
Sublessee's office planner shall ensure that the work shown on Sublessee's
plans is compatible with the basic Building plans. Subject to Sublessor's
obligations under Exhibit C-1, all spaces are leased "as is" and Sublessor shall
not have responsibility to verify existing conditions.
On or before the indicated dates, Sublessee shall supply Sublessor with one
(1) reproducible copy and five (5) black line prints of the following Sublessee
Plans:
2.1 BASIC PLANS DELIVERY DATE: _______________
The Basic Plans due on this date shall be signed by Sublessee and shall
include:
Architectural Floor Plans: These shall be fully dimensioned floor plans
showing partition layout and identifying each room with a number and each door
with a number. The Basic Plans must clearly identify and locate equipment
requiring plumbing or other special mechanical systems, area(s) subject to
above-normal floor loads, special openings in the floor, and other major or
special features.
2.2 WORKING DRAWINGS DELIVERY DATE: _______________
On this date, Sublessee's office planner shall produce four (4) sets of
Full Working Drawings for construction from the Basic Plans using the Pin Bar
System. The four (4) sets of Working Drawings due on this date shall be signed
by the Sublessee and include all items in the Basic Plans referenced in Section
2.1 above plus the following additional information:
2.2.1 Electrical and Telephone Outlets: Locate all power and
telephone requirements. Dimension the position from a corner and give height
above concrete slab for all critically located outlets. Identify all dedicated
circuits and identify all power outlets greater than 120 volts. For the
equipment used in these outlets that require dedicated circuits and/or that
require greater than 120 volts, identify the type of equipment, the
manufacturer's name and the manufacturer's model number, and submit a brochure
for each piece of equipment. Also identify the manufacturer's name of the
telephone system to be used and the power requirements, size, and location of
its processing equipment.
2.2.2 Reflected Ceiling Plan: Lighting layout showing location and
type of all Building Standard and special lighting fixtures.
Page 27 of 38
<PAGE>
2.2.3 Furniture Layout: Layout showing furniture location so that
Sublessor's engineer can review the location of all light fixtures.
Landlord's HVAC engineers, Holaday Parks, shall prepare air conditioning
plans ("ENGINEERING DRAWINGS") for Sublessee's improvements, and at Sublease's
expense, based on the signed Working Drawings. Landlord's electrical engineer,
Coffman Engineers, shall review the electrical design after the general
contractor and electrical subcontractor are selected at Sublease's expense.
Sublessor's Allowance may be applied against this expense at Sublessee's
election.
2.3 FINAL PLANS REVIEW DATE: _______________
On this date, Sublessee's office planner shall deliver to Sublessor and
Sublessee for review and approval four (4) complete sets of Final Plans, which
will incorporate the Working Drawings referenced in SECTION 2.2 above, plus the
following additional information:
2.3.1 Millwork Details: These drawings shall be in final form with
Sublessee's office planner's title block in the lower right-hand corner of the
drawing, and shall include construction details of all cabinets, paneling, trim,
bookcases, and door and jamb details for non-building Standard doors and jambs.
2.3.2 Keying Schedules and Hardware Information: This information
shall be in final form and include a Keying Schedule indicating which doors are
locked and which key(s) open each lock, plus an "X" on the side of the door
where the key will be inserted if a keyed door. Complete specifications for all
non-Building Standard hardware will also be provided.
2.3.3 Room Finish and Color Schedule: This information shall be in
final form and include locations and specifications for all wall finishes, floor
covering and base for each room.
2.3.4 Construction Notes and Specifications: Complete
specifications for every item included except those specified by the Successor.
2.4 FINAL PLANS DELIVERY DATE: _______________
The four (4) sets of Final Plans approved by Sublessor and Sublessee and
due on this date shall include all the Final Plans referenced in SECTION 2.3
above. Final Plans are to be signed by Sublessee and delivered to Sublessor by
the Final Plans Delivery Date. Sublessor shall return one (1) signed set to
Sublessee for Sublessee's records. Sublessor will incorporate Engineering
Drawings with Sublessee's Final Plans for transmittal to the general contractor.
Page 28 of 38
<PAGE>
Sublessee shall be responsible for delays and additional costs in
completion of Sublessee's work caused by changes made to any of Sublessee's
Plans after the specified Plan Delivery Date or by delays in delivery of special
materials requiring long lead times; provided that Sublessor, exercising
reasonable discretion, shall have notified Sublessee prior to placing an order
for such special materials that Sublessor anticipates that delivery will require
a long lead time, and shall have offered to Sublessee the reasonable opportunity
to substitute other materials in their place.
2.5 BID PERIOD DELIVER DATE: _______________ (4 weeks)
2.5.1 Sublessor shall be responsible for conducting competitive
bidding amongst pre-qualified general contractors. Sublessor shall present bid
results to Sublessee and coordinate with Sublessee to select successful
contractor subject, however, to Landlord's approval.
2.5.2 In the event Sublessee has a preferred contractor that is
not on the Sublessor's pre-selected list, Sublessor shall use all best efforts
to qualify the contractor to work in the building. Sublessor reserves the right
to reject any contractor it deems inappropriate.
2.5.3 Sublessor shall enter into construction contract, or cause
the Landlord to enter into a construction contract, with the selected contractor
for construction of Sublessee improvements.
2.6 BUILDING PERMIT DELIVERY DATE: _______________
Sublessor shall apply for building and mechanical permits upon receipt of
Final Plans. Building permit issuance is at the governing jurisdiction's
discretion. Sublessor cannot warrant issuance within anticipated time frame but
will employ all commercially reasonable efforts to secure a building and
mechanical permit in a timely fashion. The electrical subcontractor will be
responsible for securing the electrical permit.
3. CONSTRUCTION OF SUBLESSEE IMPROVEMENTS
3.1 AUTHORIZATION TO PROCEED: Upon completion of Sublessee's Final Plans
and at the request of Sublessee, Sublessor shall provide to Sublessee written
notice of the price for Sublease's improvements. Within five (5) business days
of receipt of that notice, Sublessee shall give Sublessor written authorization
to complete the Subleased Premises in accordance with the Final Plans. Sublessee
may in its authorization delete any or all items of extra costs; however, if
Sublessor deems these changes to be extensive, at its option, Sublessor may
refuse to accept the authorization to proceed until all changes have been
incorporated in the Final Plans signed by Sublessee and written acceptance of
the revised price has been received by Sublessor from Sublessee. In the absence
of written authorization to proceed that Sublessor has accepted, Sublessor shall
not be
Page 29 of 38
<PAGE>
obligated to commence work on the Subleased Premises and Sublessee shall be
responsible for any costs due to any resulting delay in completion of the
Subleased Premises.
3.2 PAYMENTS: Sublessor's contractor shall complete Sublessee's
improvements in accordance with Sublessee's approved Final Plans. Within ten
(10) days after receipt of monthly progress statements from Sublessor, Sublessee
shall pay the full amount of the progress billings for all improvement costs
which in the aggregate exceed Sublessor's Allowance In addition to all other
costs and charges payable by Sublessee, Sublessee shall pay, within ten (10)
days after invoice, for project management services, a sum equal to 4% of the
amount by which the cost of Sublease's Improvements exceeds $30 per rentable
square foot of the Subleased Premises. Sublessee shall pay the cost of all
change orders which result in construction costs exceeding Sublessor's
Allowance.
3.3 FINAL PLANS AND MODIFICATIONS: if Sublessee shall request any change
(including without limitation any additions or deletions) ("CHANGES"), its
request shall be given in writing to Sublessor and shall be accompanied by all
plans and specifications necessary to show and explain Changes from the approved
Final Plans. After receiving this information, Sublessor shall give Sublessee a
written price for the cost of engineering and design services to incorporate the
Changes in Sublessee's Final Plans. if Sublessee approves the price in writing,
Sublessor shall have the Changes made and Sublessee shall pay Sublessor for this
cost within ten (10) days of receipt of Sublessor's invoice. Promptly upon
completion of the Changes in the Final Plans, Sublessor shall notify Sublessee
in writing of the costs, if any, that shall be chargeable or credited to
Sublessee for the Changes. The cost for the Changes, whether chargeable or
credited to Sublessee, shall include a Sublessor coordination fee equal to
fifteen percent (15%) of the amount of the Changes. In the absence of Sublease's
written notice to proceed with the Changes, Sublessor shall proceed in
accordance with the previously approved Final Plans before the Changes, were
requested. Sublessee shall be responsible for any delay in completion of the
Subleased Premises resulting from a request for Changes. Sublessee shall also be
responsible for any demolition work required as a result of any Changes.
3.4 IMPROVEMENTS CONSTRUCTED BY SUBLESSEE: if any work is to be performed
in connection with Sublessee improvements or alterations on the Subleased
Premises by Sublessee or Sublessee's contractor:
3.4.1 Such work shall proceed upon Sublessor's written approval of
(i) Sublessee's contractor, (ii) public liability and property damage insurance
carried by Sublessee's contractor (such insurance shall be in combined single
limits not less than Three Million Dollars ($3,000,000) per occurrence and shall
name Landlord, Sublessor, Landlord's property manager, and Landlord's project
manager as additional insureds), (iii) detailed plans and specifications for
such work, and (iv) amount of general
Page 30 of 38
<PAGE>
conditions to be paid by Sublessee to Sublessor for the services still to be
provided by Sublessor's contractor.
3.4.2 All work shall be done in conformity with a valid building
permit when required, a copy of which shall be furnished for Sublessor before
such work is commenced, and in any case, all such work shall be performed in
accordance with all applicable governmental regulations. Notwithstanding any
failure by Sublessor to object to any such work, Sublessor shall have no
responsibility for Sublessee's failure to meet all applicable regulations.
3.4.3 if required by Landlord, all work by Sublessee or
Sublessee's contractor shall be done with union labor in accordance with all
union labor agreements applicable to the trades being employed. Sublessor shall
promptly notify Sublessee if Sublessor receives notice from Landlord concerning
Landlord's requirements under this subparagraph 3.4.3.
3.4.4 All work by Sublessee or Sublessee's contractor shall be
scheduled through Sublessor and Sublessee shall have reasonable access to the
Building and the Subleased Premises in order to perform its work.
3.4.5 Sublessee or Sublessee's contractor shall arrange for
necessary utility, hoisting and elevator service with Sublessor's contractor and
shall pay such reasonable charges for such services as may be charged by
Sublessor's contractor.
3.4.6 Sublessee shall promptly reimburse Sublessor for costs
incurred by Sublessor due to faulty work done by Sublessee or its contractors,
or by reason of any delays caused by such work, or by reason of inadequate
clean-up.
3.4.7 Prior to commencement of any work on the Subleased Premises
by Sublessee or Sublessee's contractor, Sublessee or Sublessee's contractor
shall enter into an indemnity agreement and a lien priority agreement
satisfactory to Landlord and to Sublessor indemnifying and holding harmless
Landlord, Sublessor and Landlord's and Sublessor's contractors for any
liability, losses or damages directly or indirectly from lien claims affecting
the land, the Building or the Subleased Premises arising out of Sublessee's or
Sublessee's contractor's work or that of subcontractors or suppliers, and
subordinating any such liens to the liens of construction and permanent
financing for the Building.
3.4.8 Landlord and Sublessor shall each have the right to post a
notice or notices in conspicuous places in or about the Subleased Premises
announcing its non-responsibility for the work being performed.
3.4.9 Such work shall be performed in accordance with EXHIBIT C-3.
Page 31 of 38
<PAGE>
3.5 SUBLESSEE'S ENTRY TO SUBLEASED PREMISES: Sublessee's entry to the
Subleased Premises for any purpose, including without limitation, inspection or
performance of construction by Sublessee's agents, prior to the Commencement
Date specified in the Sublease Agreement shall be scheduled in advance with
Sublessor and shall be subject to all the terms and conditions of the Lease,
except the payment of Rent. Sublessee's entry shall mean entry by Sublessee, its
officers, contractors, office planner, licensees, agents, servants, employees,
guests, invitees, or visitors.
3.6 SUBLESSEE'S TELEPHONE: Sublessee is responsible for Sublessee's
telephone service. Sublessee shall select Sublease's telephone system and shall
coordinate its installation with Sublessor.
Page 32 of 38
<PAGE>
EXHIBIT C-3
TO
SUBLEASE AGREEMENT
Indemnity and Insurance Terms Applicable to Contractors, Subcontractors &
Suppliers
1. RESPONSIBILITY FOR DAMAGES
a. Indemnification, Negligence of Contractor or Subcontractor.
----------------------------------------------------------
Contractor shall defend, indemnify, and hold harmless The Boeing
Company, its subsidiaries, the Landlord and their respective directors,
officers, employees, agents, and assigns (hereinafter referred to as
"Indemnitees") from and against all actions, causes of action, liabilities,
claims, suits, judgments, liens, awards, and damages, of any kind and nature
whatsoever, for property damage, personal injury, or death (including without
limitation injury to, or death of, employees of Contractor or any Subcontractor)
and expenses, costs of litigation and counsel fees related thereto, or incident
to establishing the right to indemnification, arising out of or in any way
related to the construction contract, the performance thereof by Contractor,
Subcontractor, or other third parties, including without limitation the
provision of services, personnel, facilities, equipment, support, supervision,
or review. The foregoing indemnity shall apply only to the extent of the
Contractor's or any Subcontractor's negligence. In no event shall Contractor's
obligations hereunder be limited to the extent of any insurance available to or
provided by the Contractor or any Subcontractor.
Contractor expressly waives any immunity under industrial insurance, whether
arising from Title 51.04.010 et seq. of the Revised Code of Washington or any
other statute or source, to the extent of the indemnity set forth in this
Paragraph 1.a.
b. Indemnification, Performance of Contractor or Subcontractor.
-----------------------------------------------------------
Contractor shall defend, indemnify, and hold harmless the Indemnitees
from and against all actions, causes of action, liabilities, claims, liens,
suits, judgments, awards, fines, penalties, and damages, of any kind and nature
whatsoever, brought or claimed by Boeing or any other party, and expenses and
costs of litigation and counsel fees related thereto or incident to establishing
the right to indemnification, arising out of or in any way related to
Contractor's faulty performance of or failure to perform any of its obligations
under the construction contract, or any Subcontractor's faulty performance of or
failure to perform any requirement under the Contract or its subcontract.
Page 33 of 38
<PAGE>
c. Subcontractor Indemnification.
-----------------------------
Contractor shall require each Subcontractor to provide an indemnity,
enforceable by and for the benefit of the Indemnitees, to the same extent
required of Contractor under paragraph a, "Indemnification, Negligence of
Contractor, or Subcontractor".
2. INSURANCE.
a. Commercial General Liability.
----------------------------
Throughout the period when Work is performed and until final
acceptance by Sublessee, Contractor shall carry and maintain Commercial General
Liability insurance with available limits of not less than Three Million Dollars
($3,000,000) per occurrence for bodily injury, including death, and property
damage combined. Contractor shall ensure that all Subcontractors carry and
maintain Commercial General Liability insurance with available limits of not
less than One Million Dollars ($1,000,000) per occurrence for bodily injury,
including death, and property damage combined. Such per occurrence limits of
insurance may be satisfied through a combination of "primary" and "umbrella" or
"excess" policies. Such insurance shall be in an occurrence form, with insurers
reasonably acceptable to Boeing, and contain coverage for all premises and
operations, broad form property damage, contractual liability (including without
limitation, that specifically assumed under Paragraph 1.a herein), and products
and completed operations coverage with limits of not less than One Million
Dollars ($1,000,000) per occurrence. Such insurance shall not exclude explosion,
collapse, or underground excavation (XCU). Such insurance shall not be
maintained on a per project basis unless the respective Contractor or
Subcontractor does not otherwise maintain blanket coverage. Any policy which
provides the insurance required under this Paragraph a shall (i) be endorsed to
name "The Boeing Company, its subsidiaries, Bellevue Goldwell Associates LLC and
their respective directors, officers, agents, and employees" as additional
insured (hereinafter "ADDITIONAL INSURED") with respect to liability arising out
of work performed by Contractor, or Subcontractor, as applicable (ISO 20 10 Form
B, or equivalent, without limitation, reservation, or qualification); (ii) be
endorsed to be primary to and noncontributory with any insurance maintained by
The Boeing Company or Bellevue Goldwell Associates LLC; (iii) provide a waiver
of any rights of subrogation against the Additional Insured; and (iv) contain a
severability of interest provision in favor of the Additional Insured.
b. Automobile Liability.
--------------------
If licensed vehicles will be used in connection with the performance
of the Work, Contractor shall carry and maintain, and ensure that any
Subcontractor who uses a licensed vehicle in connection with the performance of
the Work carries and maintains,
Page 34 of 38
<PAGE>
throughout the period when Work is performed and until final acceptance by
Boeing, Business Automobile Liability insurance covering all vehicles, whether
owned, hired, rented, borrowed, or otherwise, with limits of liability of not
less than One Million Dollars ($1,000,000) per occurrence combined single limit
for bodily injury, death, and property damage. Any policy which provides such
insurance shall contain a waiver of rights of subrogation against The Boeing
Company, its subsidiaries and their directors, officers, and employees.
c. Workers' Compensation.
---------------------
Throughout the period when Work is performed and until final
acceptance by Boeing, Contractor shall, and ensure that all Subcontractors
shall, cover or maintain insurance in accordance with the applicable laws
relating to workers' compensation with respect to all of their respective
employees working on or about the Site, regardless of whether such coverage or
insurance is mandatory or merely elective under the law. Throughout the period
when Work is performed and until final acceptance by Sublessee, Contractor shall
carry and maintain, and ensure that all Subcontractors carry and maintain,
Employers Liability coverage with limits of not less that One Million Dollars
($1,000,000) per accident. To the extent permitted by law, any policy which
provides the insurance required by this Paragraph c shall contain a waiver of
rights of subrogation against The Boeing Company, its subsidiaries, and their
respective directors, officers, and employees. If the construction contract
involves maritime work, Contractor shall provide, and ensure that all
Subcontractors provide, if required by law, insurance to meet the requirements
of the Federal Longshoreman and Harborworkers Act or Federal Maritime Employers
Liability Law (Jones Act). If Sublessor or Landlord is required by any
applicable law to pay any workers' compensation premiums with respect to an
employee of Contractor or any Subcontractor, Contractor shall reimburse the
payor for such payment.
d. Certificates of Insurance.
-------------------------
(1) Within ten (10) days after notice of award but not later than
five (5) days prior to the commencement of the Work, Contractor shall provide
for Boeing's review and approval Certificates of Insurance reflecting full
compliance with the requirements set forth in Paragraphs a (Commercial General
Liability); b (Automobile Liability); and c (Workers' Compensation). Such
certificates shall be kept current and in compliance throughout the period when
Work is being performed and until final acceptance of the Work by Boeing, and
shall provide for thirty (30) days advance written notice to Boeing in the event
of cancellation or material change adversely affecting compliance with the
foregoing requirements. Any policy or policies providing any of the insurance
required under this Exhibit D may be inspected by Boeing upon request. Conformed
copies of specific policy endorsements required under this Exhibit D shall be
provided to Boeing upon request. Failure of Contractor or any Subcontractor
thereof to furnish Certificates of Insurance, or to procure and maintain the
insurance required
Page 35 of 38
<PAGE>
herein, or failure of Boeing to request such certificates, endorsements, or
other proof of coverage, shall not constitute a waiver of the respective
Contractor's or Subcontractor's obligations hereunder.
(2) In jurisdictions requiring mandatory participation in a
monopolistic state workers' compensation fund, or if Contractor or Subcontractor
self insures, the insurance certificate requirements for the coverage required
under Paragraph C (Workers' Compensation) will be satisfied by a letter from the
appropriate state agency confirming participation in accordance with statutory
requirements.
e. Self-Assumption.
---------------
Any self insured retention, deductibles, and exclusions in coverage in
the policies required under this Exhibit D shall be assumed by, for the account
of, and at the sole risk of Contractor or the Subcontractor which provides the
insurance and, to the extent applicable, shall be paid by such Contractor or
Subcontractor. In no event shall the liability of Contractor or any
Subcontractor be limited to the extent of any of the minimum limits of insurance
required under this Contract.
Page 36 of 38
<PAGE>
EXHIBIT D
TO
SUBLEASE AGREEMENT
LANDLORD CONSENT
----------------
The undersigned Landlord under the Lease Agreement dated as of September 30,
1997, hereby consents, as contemplated in paragraph 18 of such Lease Agreement,
to the foregoing Sublease Agreement (all of the defined terms of which are used
herein with the same meaning as they are given there) and all of the terms and
conditions contained therein on the express condition that The Boeing Company
remains fully liable under the Lease Agreement to perform all of the obligations
of the Lessee. Landlord expressly acknowledges that the Lease Agreement is in
full force and effect and that Landlord is not aware of any default by the
Tenant or the Landlord thereunder. This Consent shall apply only to this
Sublease Agreement and shall not be deemed to be either (a) a consent to any
other sublease or assignment or (b) a release from or waiver of the obligation
to obtain Landlord's consent in the event of any future sublease or assignment.
Subject to Landlord's review of Sublessee's plans and specifications pursuant to
Exhibits C-l and C-2 of the foregoing Sublease Agreement, Landlord hereby
consents to the performance of Sublessee's Work and agrees that Sublessee shall
not be required to remove Sublessee's Work upon termination of the Lease
Agreement and/or Sublease Agreement, except that Landlord expressly reserves the
right to require removal of improvements that are unique to Sublessee's use or
are not likely to be usable by any future office tenant.
Landlord further agrees to the following:
1. Landlord shall not exercise any termination or partial termination
rights it may have under Article 18.1 of the Lease Agreement as a result of a
Permitted Transfer (as that term is defined in Paragraph 12 of the foregoing
Sublease Agreement), and
2. If Landlord elects to require Sublessor or Sublessee to remove any
improvements from the Subleased Premises, it shall give notice of its election
to Sublessor at the time its approval of the improvements is granted.
3. At the time Landlord approves any work to be performed by Sublessee or
Sublessee's contractor, Landlord will notify Sublessor in writing whether it
will require that work performed by Sublessee or Sublessee's contractor be done
with union labor.
BELLEVUE GOLDWELL ASSOCIATES LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: /s/ W.A. Cunningham
-------------------
Title: OC Real Estate Management, LLC, Member, Sr. V.P.
-----------------------------------------------
Date: February 1, 1999
----------------
Page 37 of 38
<PAGE>
EXHIBIT E
TO
SUBLEASE AGREEMENT
___________________________
LOGO drugstore.com.
HEALTH . BEAUTY. WELLNESS
LOGO
Page 38 of 38
<PAGE>
SUBLEASE AGREEMENT
This Sublease Agreement is entered as of January 29, 1999 between The Boeing
Company, a Delaware corporation ("Sublessor") and Drugstore.com, a Delaware
corporation ("Sublessee").
RECITALS
A. Sublessor and Bellevue Goldwell Associates LLC ("Landlord"), successor
in interest to Obayashi Corporation, a Japan corporation, are parties to a Lease
Agreement dated as of September 30, 1997 (the "Lease Agreement"). Pursuant to
the Lease Agreement, Sublessor leases 93,539 rentable square feet of office
space (the "Leased Premises") from Landlord at Sunset Corporate Campus Building
II, 13920 Southeast Eastgate Way, Bellevue, Washington 98005 (the "Building").
The Leased Premises and the Building are more fully described in the Lease
Agreement attached as Exhibit A to this Sublease Agreement and incorporated into
it by this reference.
B. Sublessee wishes to acquire from Sublessor the right to occupy
approximately 53,349 rentable square feet of office space of the Leased Premises
located on the 3rd and 4th floors of the Building. The premises so subleased to
Sublessee are referred to in this Agreement as the "Subleased Premises." An
illustration of the Subleased Premises is attached as Exhibit B to this Sublease
Agreement.
AGREEMENTS
In consideration of the mutual promises of the parties and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Sublease of Subleased Premises. Sublessor subleases to Sublessee, and
------------------------------
Sublessee subleases from Sublessor, the Subleased Premises, subject and pursuant
to the terms and conditions of this Sublease Agreement. Sublessor shall confirm
the measurement of the rentable area of the Subleased Premises in writing after
the commencement of the Sublease Term using the services of a licensed architect
and applying the standard known as ANSI/BOMA Z65.1.1996. Tenant shall be
permitted to have its architect present at the measuring of the physical
Subleased Premises and/or to review the measurements and calculations of
Sublessor's architect. Any dispute about measurement or calculation of the
rentable area of the Subleased Premises shall be submitted to an independent,
disinterested architect for resolution.
Page 1 of 38
<PAGE>
Sublessee shall have the right to use four (4) automobile parking
stalls per 1,000 usable square feet in the Subleased Premises in the manner and
on the allocation and payment terms described in the Lease Agreement.
Sublessee's right shall be subject to all rules and regulations imposed by
Landlord under the Lease Agreement, and all rights of Landlord with respect to
parking, including but not limited to Landlord's right to impose and adjust
charges for parking. Parking shall be allocated and charged as described in the
Lease Agreement. Without limiting the generality of the foregoing, parking
charges shall be applicable on the date Landlord is entitled to impose parking
charges under the Lease Agreement .
In addition to the foregoing, to the extent, if any, that Sublessor
has any right under the Lease Agreement to use common areas and facilities
within the project in which the Building is located, such as, for example,
conference rooms, child care facilities and health and fitness/workout rooms,
Sublessee shall have a non-exclusive right to use those facilities in common
with other tenants and subtenants in the project.
2. Term of Sublease.
----------------
2.1 Sublease Term. The term of the Sublease ("Sublease Term") shall
-------------
commence on substantial completion of Sublessee's initial tenant improvements
("Sublessee Improvements") pursuant to Exhibit C-2, but no later than March 12,
1999, and shall terminate at 5 p.m. on July 30, 2005.
2.2 Request for Landlord's Agreement. Upon commencement of
--------------------------------
Sublessee's obligation to pay Base Rent under this Sublease Agreement and final
determination of the actual rentable square footage of the Subleased Premises,
Sublessor shall request Landlord's agreement to the following:
a. A right of Sublessee to lease the Subleased Premises
directly from Landlord for one or more extension terms after expiration of the
Term of this Sublease Agreement upon the terms and conditions set forth in this
Sublease Agreement except for Rent; and
b. A right of Sublessee to receive from Landlord a redecorating
allowance at the end of the fifth year of the Term of this Sublease Agreement,
provided Sublessee is not then in default, and has not previously been in
default, of any of its obligations under this Sublease Agreement.
Sublessor makes no representations whatsoever concerning whether Landlord
will grant either or both of such rights, or on what terms any of those rights
may be granted. Sublessor and Sublessee acknowledge and agree that this
Sublease Agreement shall be binding upon them and shall remain in full force and
effect whether or not Landlord shall agree to either or both of the foregoing
rights, and regardless of the terms that Landlord might impose as a condition of
granting either or both of them.
Page 2 of 38
<PAGE>
2.3 Substantial Completion of Sublessee's Improvements.
--------------------------------------------------
Notwithstanding anything in this Sublease to the contrary, provided this
Sublease Agreement is fully executed, acknowledged and delivered by Sublessee no
later than February 1, 1999, then: (A) if construction of Sublessee's
Improvements is not complete, as determined by Landlord's architect, except for
minor punchlist items ("Substantially Complete") by April 30, 1999 (as that date
is extended as a result of Sublessee change orders or other Sublessee delay),
and if Sublessee is not then occupying the Subleased Premises for their intended
use, then Base Rent and Additional Rent shall abate until Sublessee's
Improvements are Substantially Complete; and (B) if construction of Sublessee's
Improvements is not Substantially Complete by June 5, 1999, (as that date is
extended as a result of events beyond the control of Landlord or Sublessor,
including, but not limited to, acts of God, war, civil commotion, labor
disputes, strikes, fire, flood or other casualty, shortage of material,
government regulation or restriction and weather conditions, and including any
delay attributable to Sublessee) and Sublessee is not then occupying the
Subleased Premises for their intended use, then Sublessee may terminate this
Sublease Agreement upon written notice to Sublessor given within three (3)
business days thereafter; and (C) if construction of Sublessee's Improvements is
not Substantially Complete by August 31, 1999 for any reason whatsoever and
Sublessee is not then occupying the Subleased Premises for their intended use,
then either Sublessor or Sublessee may terminate this Sublease Agreement upon
written notice to the other given within three (3) business days thereafter,
except that if the fact that Sublessee's Improvements are not Substantially
Complete is directly attributable to the act(s) or omission(s) of one of the
parties to this Sublease Agreement, then that party may not exercise its
termination right under this subparagraph (C); and (D) if construction of
Sublessee's Improvements is not Substantially Complete by December 31, 1999 for
any reason whatsoever and Sublessee is not then occupying the Subleased Premises
for their intended use, then this Sublease Agreement shall terminate without
notice and shall have no further force or effect. Notwithstanding the
foregoing, if Landlord's consent to this Sublease Agreement is not received by
February 1, 1999, then each of the dates mentioned in (A), (B), (C) and (D)
above shall be extended one day for each day after February 1 that Landlord's
consent is not received, up to a maximum of fifteen (15) days; and if the
building permit for construction of Sublessee's Improvements is not issued by
February 1, 1999, then each of the dates mentioned in (A), (B), (C) and (D)
above shall be extended one day for each day after February 1 that the building
permit is not issued, up to a maximum of fifteen (15) days.
The determination of Landlord's architect that Sublessee's Improvements are
Substantially Complete may be reviewed at Sublessee's discretion by Sublessee's
architect. Any dispute concerning whether Sublessee's Improvements are
Substantially Complete shall be submitted to a neutral and independent architect
who is mutually agreeable to Sublessor and Sublessee, and the decision of the
architect so chosen shall be binding.
Page 3 of 38
<PAGE>
2.4 Issuance of Building Permit. In addition, if the building permit
---------------------------
for construction of Sublessee's Improvements is not issued by February 15, 1999,
then either Sublessor or Sublessee may terminate this Sublease Agreement upon
written notice to the other given within three (3) business days thereafter,
except that if the fact that the building permit for construction of Sublessee's
Improvements is not issued is directly attributable to the act(s) or omission(s)
of one of the parties to this Sublease Agreement, then that party may not
exercise its termination right under this subparagraph 2.4.
2.5 Termination. If this Sublease Agreement is terminated pursuant to
-----------
this paragraph, then any Base Rent or Security Deposit previously delivered to
Sublessor shall be promptly refunded by Sublessor to Sublessee, but Sublessee
shall be responsible for all costs incurred for Sublessee's Improvements to the
extent those costs exceed Sublessor's Allowance.
3. Base Rent and Additional Rent. Rent to be paid under this Sublease
-----------------------------
Agreement shall include Base Rent and Additional Rent as described in this
paragraph 3, and all other sums that may be owing from Sublessee to Sublessor
under the terms of this Sublease Agreement.
3.1 Base Rent. Base Rent during the Sublease Term shall be as
---------
follows:
BASE RENT
(DOLLARS PER RENTABLE
DATES S.F. PER YEAR)
-------------------------------------------- ---------------------
Term Commencement through November 30, 2000 $24.00
December 1, 2000 through November 30, 2002 $24.50
December 1, 2002 through July 30, 2005 $26.50
Each installment of Base Rent shall be due and payable in advance on the
first day of each month during the Sublease Term.
3.2 Additional Rent. Commencing January 1, 2000, Sublessee shall pay
---------------
as Additional Rent Sublessee's Share of the amounts owed by Sublessor under the
terms of the Lease Agreement for increases in Operating Costs and Taxes over
actual Operating Costs and Taxes (as those terms are defined in the Lease
Agreement) for the calendar year 1999. Sublessee's Share shall be a fraction,
the numerator of which is the number of rentable square feet in the Subleased
Premises as determined pursuant to paragraph 1 above, and the denominator of
which is 93,539. Sublessee shall pay Sublessee's Share of estimated Operating
Costs, as determined pursuant to Article 11.3 of the Lease, together with Base
Rent, on the first day of each month during the Sublease Term. Sublessee shall
be responsible for payment of Sublessee's Share of any additional amounts
payable by Sublessor under Articles 11.3 or 11.4 of
Page 4 of 38
<PAGE>
the Lease Agreement and shall be entitled to receive Sublessee's Share of any
amounts payable to Sublessor pursuant to Articles 11.3 and 11.4 of the Lease
Agreement.
3.3 Manner and Method of Payment. All rental payments shall be made
----------------------------
in United States Dollars, without deduction or offset, and delivered to
Sublessor at the address set forth in paragraph 14 of this Sublease Agreement.
Base Rent and Additional Rent for any partial month shall be prorated in
proportion to the number of days in that month.
3.4 Security Deposit. Prior to commencement of the Sublease Term,
----------------
Sublessee shall deposit with Sublessor a security deposit in the amount of
$640,188 (the "Deposit Amount"). The security deposit may be applied, at
Sublessor's discretion, against any obligation incurred by Sublessee in
connection with this Sublease Agreement that is not timely paid or performed (as
the case may be), including the payment of Base Rent and Additional Rent, the
repair of any damage that is Sublessee's responsibility, and all other
obligations of Sublessee under this Sublease Agreement. If Sublessor debits the
security deposit, Sublessor shall notify Sublessee of the occurrence and amount
of the debit, and Sublessee shall promptly pay to Sublessor the amount necessary
to restore the security deposit to the full Deposit Amount.
Sublessor shall accept, in lieu of the security deposit, an unconditional
and irrevocable letter of credit in the amount of the Deposit Amount issued by a
commercial bank acceptable to Sublessor and having a teller window for the
transaction of business in King County, Washington. The letter of credit shall
provide for the unconditional right of Sublessor to withdraw up to the Deposit
Amount without prior notice to Sublessee upon presentation of Sublesssor's
certificate stating that it is entitled to do so, and shall be otherwise in form
and content acceptable to Sublessor. From time to time throughout the term of
this Sublease, Sublessee may replace and/or renew the Letter of Credit then
acting as the Security Deposit pursuant to this section, provided that: (i)
such replacement Letter of Credit or renewal shall be delivered to Sublessor on
or before the thirtieth (30th) day prior to the expiration of the Letter of
Credit then held by Sublessor as the Security Deposit under this Section; and
(ii) such replacement Letter of Credit or renewal shall otherwise comply with
all terms and conditions of this paragraph pertaining to the original Letter of
Credit. Failure to deliver such a replacement Letter of Credit and/or renewal
within thirty (30) days prior to the expiration of the Letter of Credit then
held as the Security Deposit (except where the term of this Sublease shall
expire prior to or simultaneously with the expiration of the Letter of Credit)
shall constitute a Default under this Sublease (as that term is defined in
paragraph 21 below).
Sublessor shall have the right, but not the obligation, to accept another
form of security for Sublessee's obligations under this Sublease Agreement.
Provided Sublessee has not been in Default (as that term is defined in paragraph
21 below) beyond the applicable cure period at any time during the first twenty-
four full calendar months of the Sublease Term, and that Sublessor has not given
more than four
Page 5 of 38
<PAGE>
(4) notices of Default to Sublessee during that period, and provided further
that no Default occurs during the second twenty-four full calendar months of the
Sublease Term, then commencing on the first day of the twenty-seventh (27th)
full calendar month of the Sublease Term and on the first day of each fourth
month thereafter the Deposit Amount shall be reduced by the sum of $106,698,
except that the Deposit Amount shall not be less than $106,698 until the first
day of the forty-ninth (49th) full calendar month of the Sublease Term.
If any event of Default occurs during the second twenty-four full calendar
months of the Sublease Term, then the Deposit Amount shall be restored to the
sum of $640,188 and shall remain that amount for the balance of the Sublease
Term.
4. Return of Subleased Premises. At the expiration or earlier termination
----------------------------
of the Sublease Term, Sublessee shall return the Subleased Premises to the
Sublessor in the same condition as at the commencement of the Sublease Term,
except for normal wear and tear. At Sublessor's option, Sublessor may require
Sublessee to remove any fixtures or alterations installed by Sublessee after
completion of Sublessee Improvements, and to repair any damage occasioned by
that removal.
5. Additional Obligations of Sublessee.
-----------------------------------
5.1 In addition to the payment of rent, Sublessee agrees, for the
benefit of the Sublessor and Landlord, that during the term of this Sublease
Sublessee shall perform each and every one of the obligations of the tenant
under the Lease Agreement that is expressly incorporated herein. The following
terms, covenants, and conditions of the Lease Agreement shall be incorporated
into this Sublease Agreement with the same force and effect as if the Sublessor
were the landlord under the Lease Agreement and the Sublessee were the tenant
under the Lease Agreement, except that each reference in such incorporated
provisions to "Lease" shall be deemed a reference to this "Sublease Agreement"
and each reference to "Premises" shall be deemed a reference to the "Subleased
Premises," and, except as is otherwise expressly provided in this Sublease
Agreement, each party shall be expressly bound to perform its obligations
thereunder for the benefit of the other: Articles 9, 10.1, 10.2, 10.3, 12
(except the second-to-last sentence thereof, provided that Sublessee shall pay
Sublessor any amount owed to Landlord in connection with Alterations and Changes
undertaken by Sublessee), the last two sentences of 14.1, 14.2, 20.2, 22, 24,
25, 27, 33, 34 (provided that the reference to Landlord's title to Buildings I
and II shall be deemed a reference to Sublessor's interest in the Leased
Premises and the reference to other tenants in the Building shall be deemed a
reference to other subtenants in the Leased Premises), 37, 38.1, 38.2, 38.4-
38.9, and 38.13. Notwithstanding the foregoing, Sublessee shall obtain the
insurance required by Article 17 of the Lease Agreement and shall name
Sublessor, its officers, directors, employees, agents, attorneys and assigns as
additional insureds thereunder (in addition to
Page 6 of 38
<PAGE>
the parties required to be named as additional insured pursuant to Article 17 of
the Lease Agreement).
5.2 This Sublease Agreement is subject and subordinate to the Lease
Agreement. Sublessee has no authority, and shall not attempt, to exercise any
of Sublessor's options (if any exist) to extend or terminate the Lease Agreement
or to add or remove space from the Leased Premises. Provided that Sublessee has
not been in Default beyond the applicable cure period at any time during the
Sublease Term and that Sublessor has not given more than four (4) notices of
Default to Sublessee, and provided further that Sublessee is not then in Default
of any of its obligations under this Sublease Agreement, Sublessor shall not
exercise its right to terminate the Lease Agreement under Article 41 of the
Lease Agreement without the prior written consent of Sublessee.
5.3 Sublessee acknowledges that Sublessor does not have control
of the Building or the Building systems, and that Sublessor will not provide
utilities, maintenance or other Building services. Subject to the terms of this
paragraph 5.3, Sublessee will look solely to Landlord for performance of the
services to which Sublessor is entitled under Articles 9, 10 and 12 of the Lease
Agreement. The nature of such services, the hours during which they will be
provided, the charges for services in addition to those deemed building
standard, and the remedy with respect to interruption of services shall be as
set forth in Article 10 of the Lease Agreement.
Sublessor, upon receipt of written notice from Sublessee, shall
make demand upon Landlord to take all appropriate action for the correction of
any defect, inadequacy or insufficiency in Landlord's performance under the
Lease Agreement. If, after receipt of written request from Sublessor, Landlord
shall fill or refuse to perform its obligations under the Lease Agreement,
Sublessee shall have the right to take such action in its own name, and for that
purpose and only to such extent, all the rights of Sublessor under the Lease
Agreement shall be conferred upon and assigned to Sublessee, and Sublessee shall
be subrogated to such rights to the extent that the same shall apply to the
Subleased Premises. In addition, if Sublessee is unable to use the Premises
because of Landlord's failure or refusal to perform its obligations under the
Lease Agreement, then Base Rent shall be abated under this Sublease Agreement to
the extent, but only to the extent, that Sublessor's obligation to pay Rent with
respect to the Subleased Premises has abated under the Lease Agreement.
Notwithstanding the foregoing, Sublessee shall obtain the insurance required by
Article 17 of the Lease Agreement and shall name Sublessor, its officers,
directors, employees, agents, attorneys and assigns, and the parties required to
be named as additional insureds pursuant to Article 17 of the Lease Agreement,
as additional insureds thereunder.
5.4 Sublessee shall neither do nor permit anything to be done which
would cause the Lease Agreement to be terminated or forfeited by reason of any
right of termination or forfeiture or default reserved or vested in the Landlord
under the Lease Agreement, and
Page 7 of 38
<PAGE>
Sublessee shall indemnify and hold Sublessor harmless from and against all
claims of any kind whatsoever arising out of Sublessee's non-monetary breach of
the foregoing covenant by reason of which the Lease Agreement may be terminated
or forfeited.
Except to the extent of any breach or default caused by Sublessee,
Sublessor shall comply with each and every one of its obligations under the
Lease Agreement during the term of this Sublease.
5.5 Sublessee shall use the Subleased Premises for office purposes in
connection with its business, including, but not limited to, operation and
maintenance of high capacity computer servers and workstations, on-line and
telephone sales, temporary storage and incidental shipping and receiving, and
for no other purpose. Sublessee shall not use the Subleased Premises for any
unlawful purpose.
5.6 Sublessee agrees to forward to Sublessor, immediately upon
receipt thereof, copies of any notices relating to Sublessee's occupancy or use
of the Subleased Premises received by Sublessee from Landlord or from any
governmental authority.
6. Indemnity and Insurance.
-----------------------
6.1 Sublessee shall indemnify and hold Sublessor, its officers,
directors, agents, employees, attorneys, and assigns (the "Indemnified Parties")
harmless from and against any and all claims or liability for bodily injury to
or death of any person or loss of or damage to any property arising out of
Sublessee's use of the Subleased Premises or property of which it is a part, or
from the conduct of Sublessee's business, or from any activity, work, or thing
done, permitted, or suffered by Sublessee, its employees, agents, contractors,
or invitees in or about the Subleased Premises except:
(1) claims and liabilities to the extent caused by any negligence
on the part of the Sublessor, its agents, employees, contractors, or invitees,
or
(2) claims and liabilities for property damage addressed in
paragraph 6.3.
In the absence of any negligence on the part of the Indemnified Parties,
such indemnity shall include all reasonable costs, attorneys' fees, and expenses
incurred in the defense of any such claim or any action or proceeding brought
thereon. In the event any action or proceeding is brought against Sublessor by
reason of any claim falling within the scope of the foregoing indemnity, and in
the absence of any claim by the plaintiff in such action of any negligence on
the part of the Sublessor, Sublessee shall defend the same at Sublessee's
expense by counsel reasonably satisfactory to Sublessor.
Page 8 of 38
<PAGE>
The foregoing indemnity is conditioned upon Sublessor providing notice
to Sublessee within sixty days after Sublessor receives notice of any claim or
occurrence that is likely to give rise to a claim that will fall within the
scope of the foregoing indemnity and cooperating with Sublessee in any defense
or settlement of such claim or liability.
6.2 Sublessee, at Sublessee's own cost and expense, will provide and
keep in full force and effect during the term of this Sublease Agreement, public
liability insurance with limits of not less than Three Million Dollars
($3,000,000.00) covering bodily injury to any person, including death, and loss
of or damage to real and personal property. Such insurance may be provided
under Sublessee's blanket comprehensive liability insurance policy. During the
Sublease Term, Sublessor and each of the Indemnified Parties shall be named as
an additional insured under such insurance to the extent of Sublessee's
undertaking set forth in paragraph 6.1. Sublessee shall cause the insurer
issuing such insurance policy to waive all rights of subrogation against the
Indemnified Parties to the extent of Sublessee's undertaking set forth in
paragraph 6.1. A certificate evidencing such insurance coverage and the
coverage required by this paragraph 6.2 shall be delivered to Sublessor prior to
the commencement date of the Sublease Term. Such certificate of insurance will
provide for not less than fifteen days advance notice in the event of
cancellation or material alteration of such insurance.
6.3 Sublessor and Sublessee each herewith and hereby release and
relieve the other, and waive their entire claim of recovery for loss or damage
to property arising out of or incident to fire, lightning, or any other perils
normally included in a standard "All Risk" physical damage insurance policy
containing an extended coverage and special extended coverage endorsement, when
such property constitutes the Subleased Premises, whether or not such loss or
damage is due to the negligence of Sublessor, Sublessee, or their respective
agents, employees, guests, licensees, invitees, or contractors.
6.4 Each of Sublessor and Sublessee shall cause its insurance
carriers to waive all rights of subrogation against the other party hereto to
the extent of Sublessor's and Sublessee's respective undertakings set forth in
paragraph 6.3.
7. Obligations of the Sublessor. Sublessor covenants, so long as
----------------------------
Sublessee is not in default of its obligations under this Sublease Agreement,
that Sublessee shall have the right to quietly enjoy the Subleased Premises
without hindrance by any person claiming by or through Sublessor. Sublessor
shall make all payments required to be made to Landlord pursuant to the Lease
Agreement and shall forward to Sublessee, promptly upon receipt, copies of any
notices relating to the Subleased Premises or this Sublease Agreement from
Landlord or from any governmental authority. Sublessor warrants that the copy
of the Lease Agreement set forth in Exhibit A is a true and correct copy of the
Lease Agreement as amended, that the Lease Agreement is in full force and effect
in accordance with its terms, and that Sublessor is not aware of any event of
default thereunder.
Page 9 of 38
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8. Walk Through and Inventory. Prior to the commencement of the Sublease
--------------------------
Term, representatives of Sublessor and Sublessee shall conduct a walk-through of
the Subleased Premises and shall note, in writing, any damage or defects in the
Subleased Premises. At the termination of the Sublease Term, representatives of
Sublessor and Sublessee shall conduct a similar walk-through and shall note, in
writing, any damage to the Subleased Premises occurring during the Sublease
Term.
9. Acceptance of Premises; Alterations.
-----------------------------------
9.1 Sublessee hereby confirms that it has examined and inspected the
Subleased Premises, and subject to paragraph 9.2 below, accepts them in their
"AS IS" condition; provided, however, that Sublessor warrants that the Building
systems shall be in good working order on the Commencement Date. Except as
expressly provided in the foregoing sentence, Sublessor makes no warranty of any
kind concerning the Subleased Premises, the Building or the corporate park of
which they are a part, including any warranty concerning latent defects, any
warranty of fitness for use, and any other express or implied warranty
(including any warranty of MERCHANTIBILITY).
9.2 Sublessor shall cause to be constructed in accordance with the
requirements of the Lease Agreement, and subject to approval by Sublessor,
Sublessee's Improvements as described on, and subject to the terms of, Exhibit C
(including Exhibits C-1, C-2 and C-3) to this Sublease Agreement and the plans
attached to Exhibit C-2. Sublessee acknowledges that Sublessor is obligated to
surrender the Subleased Premises to Landlord on July 31, 2005.
10. Holding Over. If Sublessee remains in possession of the Subleased
------------
Premises after July 30, 2005, Sublessor may be treated by Landlord as being in
breach of the Lease Agreement. Sublessor may be obligated to pay damages to
Landlord, including consequential damages which are presently difficult or
impossible to calculate. Sublessee agrees to indemnify, defend and hold
harmless Sublessor from any and all losses, costs, and damages which may arise
out of or be in any way connected with any holding over by Sublessee following
the termination of the Sublease Term.
11.Environmental Matters.
---------------------
11.1.Compliance with Laws and Requirements. Sublessee shall comply
-------------------------------------
with Article 35 of the Lease Agreement, and with any and all Environmental Laws
and Requirements, and shall not cause, permit or allow the presence of and shall
not generate, release, store, or deposit any Hazardous Substances on or about
the Subleased Premises (and shall not cause the presence of and shall not
generate, release, store, or deposit any Hazardous Substances on or about the
Leased Premises) in violation of any Environmental Laws and Requirements, or in
a
Page 10 of 38
<PAGE>
manner which may give rise to liability for environmental cleanup, damage to
property, or personal injury to Landlord, Sublessor, or any other person.
Sublessee shall not release any Hazardous Substances into the soil, water
(including groundwater) or air of the Leased Premises or onto any other
adjoining property in violation of Environmental Laws and Requirements, or in a
manner which may give rise to liability for environmental cleanup, damage to
property, or personal injury to Landlord, Sublessor, or any other person.
11.2 Definitions:
-----------
11.2.1 As used herein, the term "Hazardous Substance" means any
hazardous, toxic, chemical, or dangerous substance, pollutant, contaminant,
waste or material which is regulated under any and all federal, state, or local
statute, ordinance, rule, regulation, or common law relating to environmental
protection, contamination, or cleanup including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 as
amended (42 U.S.C. (S) 9601 et seq.), the Resource Conservation and Recovery Act
as amended (42 U.S.C. (S) 6901 et seq.) or any other Federal, state, county, or
city law, or any other ordinance or regulation existing or which may exist.
11.2.2 As used herein the term "Environmental Laws and
Requirements" means any and all federal, state, local laws, statutes (including
without limitation the statutes referred to in paragraph 11.2.1, above),
ordinances, rules, regulations and/or common law relating to environmental
protection, contamination, the release, generation, production, transport,
treatment, processing, use, disposal, or storage of Hazardous Substances, and
the regulations promulgated by regulatory agencies pursuant to these laws, and
any federal, state, and/or local regulatory agency-initiated orders,
requirements, obligations, directives, notices, approvals, licenses, or permits
for the reporting, investigation, cleaning, or remediation of any Hazardous
Substances on the Leased Premises.
11.3 Remediation. Should Sublessee fail to perform any of its
-----------
obligations pursuant to this agreement or to any and all Environmental Laws and
Requirements, Sublessee shall at its own expense remove or remediate any unsafe
condition and clean up or remediate any Hazardous Substance which Sublessee has
caused to occur on the Leased Premises, and hold Sublessor harmless from any
losses, including claims of third parties, resulting from such condition or such
Hazardous Substances. Should Sublessee fail so to do, Sublessor shall have the
right, but not the duty, to enter the property personally or through its agents,
consultants, or contractors to perform the same.
11.4 Right to Inspect. If Sublessor at any time should have any
----------------
cause to believe that any Hazardous Substances are or at any time during the
term of this Lease have been released on the Leased Premises without strict
compliance with all Environmental Laws and Requirements or in a manner which may
give rise to liability for environmental cleanup, damage to property, or
personal injury to Landlord, Sublessor, or any other person, Sublessor shall
have
Page 11 of 38
<PAGE>
the right at its discretion, but not the duty, to enter, at any reasonable
time, and conduct an inspection of the Subleased Premises including invasive
tests to determine whether Sublessee is complying with the terms of this
Agreement, including compliance with any and all Environmental Laws and
Requirements. Sublessee hereby grants to Sublessor, and its employees, agents,
employees, consultants, and contractors the right to enter the property upon
reasonable notice to Sublessee and to perform such tests on the property as are
reasonably necessary in the opinion of Sublessor to conduct such investigations.
Sublessor may retain any independent qualified professional consultant to enter
the property to conduct such an inspection and such consultant's reasonable fee
shall be payable by Sublessee if such consultant determines that Sublessee's
activities constitute a material violation of Environmental Laws and
Requirements or have resulted in the release of Hazardous Substances into the
environment which may give rise to liability for environmental cleanup, damage
to property, or personal injury to Landlord, Sublessor, or any other person, and
otherwise such fee shall be payable by Sublessor.
11.5 Indemnification. Sublessee shall indemnify, hold harmless, and
---------------
defend Sublessor, and its directors, officers, employees, agents, assigns, and
attorneys from any and all claims, losses, damages, response costs, and expenses
arising out of or in any way relating to the generation, release, storage,
deposit or disposal of Hazardous Substances to the extent caused by Sublessee,
its agents, employees and invitees at any time during the term of the Lease,
including but not limited to: (1) claims of third parties, including
governmental agencies, for damages (including personal injury and/or property
damage), response costs, injunctive or other relief; (2) the cost, expense, or
loss to Sublessor of any injunctive relief, including preliminary or temporary
injunctive relief, applicable to the Sublessor or the Leased Premises; and (3)
the expense of reporting the existence of Hazardous Substances to any agency of
any state government or the United States as required by applicable laws or
regulations, before and after any trial or appeal therefrom whether or not
taxable as costs; all of which shall be paid by Sublessee when accrued.
12. No Assignment or Sublease. Sublessee shall not assign its interest in
-------------------------
this Sublease Agreement or sub-sublease all or any portion of the Subleased
Premises without the prior written consent of Sublessor (which shall not be
unreasonably withheld) and of Landlord, subject to all of Landlord's rights
under the Lease Agreement. Sublessor shall have the absolute right to withhold
its consent to any assignment for collateral purposes, and to any assignment or
sub-sublease if Landlord proposes to terminate the Lease Agreement with respect
to all or any part of the Leased Premises as a result of Sublessee's request.
Notwithstanding anything to the contrary contained herein, Sublessee may assign
its interest under this Sublease or sublet all or any portion of the Subleased
Premises to a corporation, partnership, limited liability company, or other
legal entity that controls, is controlled by or is under common control with
Sublessee, or to any successor to Sublessee by purchase, merger, consolidation
or reorganization (hereinafter, collectively, referred to as "Permitted
Transfer") without the consent of Sublessor or Landlord, provided: (i)
Sublessee is not in default under this Sublease beyond applicable cure periods;
(ii) if such proposed transferee is a successor to Sublessee by purchase,
merger, consolidation or reorganization, the continuing or surviving entity
shall own all or substantially all of the assets of
Page 12 of 38
<PAGE>
Sublessee and shall have a net worth which is at least equal to the greater of
Sublessee's net worth at the date of this Sublessee or Sublessee's net worth at
the date of the Transfer; (iii) such proposed transferee assumes in writing all
of Sublessee's obligations under this Sublease Agreement with respect to the
portion of the Subleased Premises that are the subject of the assignment or
sublease and uses the Subleased Premises for the purposes permitted under this
Sublease and no other purpose; and (iv) in no event shall any transfer release
or relieve Sublessee from any of its obligations under this Sublease Agreement.
Sublessee shall give Sublessor written notice of any such Permitted Transfer. As
used herein the term "control" shall mean ownership of at least fifty-one
percent (51%) of the voting equity of an entity.
In the event of any assignment or sub-sublease, Sublessee shall remain
fully liable to perform the obligations of Sublessee under this Sublease
Agreement. Consent to any assignment or sub-sublease shall not operate as a
waiver of the necessity for consent to any subsequent assignment or sub-
sublease. Whenever consent is granted, Sublessee shall promptly provide to
Sublessor a copy of the executed assignment or sub-sublease document, as the
case may be. Any sub-sublease or assignment made in violation of this paragraph
12 shall be void.
In connection with each request made by Sublessee for consent to an
assignment or sub-sublease, Sublessee shall pay $1000 upon demand of Sublessor
for the cost of processing its request. Except with respect to an assignment or
sublease that is a Permitted Transfer to an entity that files consolidated tax
returns with Sublessee, Sublessor shall be entitled to receive as Additional
Rent under this Sublease Agreement, as and when the same are paid to Sublessee,
and without affecting or reducing any other obligations of Sublessee hereunder,
one hundred percent (100%) of any sums or other economic consideration received
by Sublessee as a result of an assignment or sub-sublease, however denominated
under the assignment or sub-sublease, which exceed, in the aggregate, (i) the
Base Rent and Additional Rent that Sublessee is obligated to pay to Sublessor
under this Sublease over the same period (prorated to reflect obligations
allocable to any portion of the Subleased Premises that are sub-subleased), plus
(ii) any customary real estate brokerage commissions or fees paid by Sublessee
to an unrelated licensed broker or agent to procure such assignment or sub-
sublease, plus (iii) if Sublessee has previously entered into a sub-sublease
that is not a Permitted Transfer in accordance with this paragraph 12 at a base
rent rate that is lower than the Base Rent due under this Sublease Agreement,
the difference between the base rent received by Sublessee under that sub-
sublease and the Base Rent due hereunder, but only to the extent such difference
has not been previously applied as an offset under this provision.
As a condition to Sublessor's consent to any assignment, any potential
assignee shall assume in writing all obligations of Sublessee under this
Sublease Agreement and shall be jointly and severally liable with Sublessee for
the payment of rental and other payments, and performance of all terms,
covenants and conditions of this Sublease Agreement. As a condition to
Sublessee's consent to any sub-sublease, the sub-sublessee shall assume all
obligations of Sublessee as to that portion of the Subleased Premises that is
sub-subleased, and shall be jointly and severally liable with Sublessee for
rental and
Page 13 of 38
<PAGE>
other payments, and performance of all terms, covenants and
conditions of this Sublease Agreement, except that with respect to payment of
rents and other amounts, the sub-sublessee's obligation shall not exceed its
obligations under the sub-sublease.
13. Condition Precedent. Sublessee acknowledges that the Sublessor's
-------------------
right to sublease the Subleased Premises is subject to obtaining the prior
written consent of the Lessor. If such consent is not obtained in the form
attached as Exhibit D within fifteen (15) days of the date of this Sublease
Agreement, then either party may, at its option, terminate this Sublease
Agreement by written notice given within three (3) business days of the
expiration of the fifteen-day period. If this Sublease is terminated in
accordance with the foregoing sentence, and if Sublessee shall have paid any
Base Rent or Security Deposit to Sublessor, the Sublessor shall promptly refund
to Sublessee any Base Rent and/or Security Deposit so paid.
14. Notices. Any notice or demand which either party may or must give
-------
pursuant to or in connection with this Sublease Agreement shall be in writing,
delivered personally, sent by prepaid courier, by first class mail, postage
prepaid, or by facsimile transmission as follows:
To Sublessor:
Boeing Realty Corporation
P.O. Box 3707, MC 7A-PE
Seattle, Washington 98124-2207
Attn: Corporate Real Estate Manager
(For overnight delivery:
15600 N.E. 8th Street, Suite B1177
Bellevue, WA 8008-3917
Attn: Corporate Real Estate Manager)
If to Sublessee:
Drugstore.com
(At the Subleased Premises)
Attn: Chief Financial Officer
Either party may, by notice in writing, direct that future notices or demands be
sent to a different address. Notices will be deemed delivered when received.
Sublessee shall provide a copy of any notice it may give to Sublessor of a
default by Sublessor under this Sublease Agreement to Landlord c/o the Voit
Companies, 13810 S.E. Eastgate Way, Suite 180, Bellevue, WA 98005.
Page 14 of 38
<PAGE>
15. Entire Agreement. This Sublease Agreement represents the entire
----------------
agreement of the Sublessor and Sublessee with respect to this subject matter and
supersedes all prior oral and written understandings and agreements of the
parties, all of which are merged within this Sublease Agreement. The Exhibits
attached hereto are part of this Sublease Agreement. This Sublease Agreement
may not be amended, modified, or supplemented in any manner other than by the
written agreement of the parties signed by the authorized representatives of the
parties.
16. No Recording. Neither party shall record this Sublease Agreement.
------------
17. Successors and Assigns; Survival of Obligations. The covenants and
-----------------------------------------------
agreements in this Sublease Agreement shall bind and inure to the benefit of
Sublessor, Sublessee and their respective successors and permitted assigns. The
obligations of Sublessee under paragraph 6 (Indemnity and Insurance) and
paragraph 11 (Environmental Matters) shall survive the end of the Sublease Term
with respect to events occurring during the Sublease Term or while Sublessee is
in possession of the Subleased Premises.
18. Confidentiality. Sublessee agrees that neither it nor its employees
---------------
will disclose to any third party or to anyone not directly involved in the
negotiation of this transaction any of the terms and conditions of this Sublease
Agreement, including without limitation the rent payable by Sublessee hereunder;
provided, however, that nothing in this paragraph shall limit or impair
Sublessee's right to make such disclosures of the terms of this Sublease as may
be required by law and for purposes of preparation and distribution of its
financial statements.
19. Access/Inspection. Sublessee will allow and does hereby grant to
-----------------
Sublessor and its agents the right to enter into and upon the Subleased Premises
at all reasonable times and upon twenty-four (24) hours' prior notice for the
purpose of inspecting or of making repairs, additions, or alterations to the
Subleased Premises, the Leased Premises, and any property owned by or under the
control of Landlord that is subject to the provisions of the Lease Agreement;
provided, however, that Sublessor may enter onto the Subleased Premises without
notice in the event of an emergency. Upon twenty-four (24) hours' prior notice
Sublessor shall have the right to enter upon the Subleased Premises for the
purposes of showing the Subleased Premises to prospective tenants within nine
(9) months prior to the expiration or earlier termination of the term of this
Sublease Agreement. Sublessee further acknowledges and agrees to Landlord's
access rights reserved under the Lease Agreement and acknowledges and agrees
that those rights apply to the Subleased Premises and that Landlord has no
obligation to give notice to Sublessee of its intent to enter. Sublessor shall
make commercially reasonable efforts to advise Sublessee promptly if and when
Sublessor receives notice that Landlord intends to enter upon the Subleased
Premises.
Page 15 of 38
<PAGE>
20. Attorneys' Fees. In the event suit is brought for the recovery of
---------------
rent due under the provisions of this Sublease Agreement, or for breach by
either party of any other conditions or covenants contained in this Sublease
Agreement, the prevailing party shall be paid by the nonprevailing party the
reasonable fees and disbursements of the prevailing party's attorneys.
21. Sublessee's Default. If Sublessee fails to perform any obligation of
-------------------
Sublessee under this Sublease Agreement ("Default"), and if after written notice
from Sublessor specifying such Default and permitting Sublessee five (5) days to
cure a monetary default or thirty (30) days to remedy a nonmonetary Default,
Sublessee shall have failed to remedy such Default, then Sublessor may at its
option cancel this Sublease Agreement, upon giving any notice required by law,
and may (whether or not Sublessor has terminated this Sublease Agreement) re-
enter the Subleased Premises. No reentry by Sublessor shall constitute a
termination of this Sublease Agreement unless Sublessor has given written notice
to Sublessee of such a termination. Notwithstanding such re-entry by Sublessor,
the liability of Sublessee for the rent provided in this Sublease Agreement
shall not be extinguished but shall continue for the balance of the Sublease
Term. Sublessee covenants and agrees to make good to Sublessor (a) any costs
incurred by Sublessor in re-entering the Subleased Premises and in reletting the
Subleased Premises; (b) during each month throughout the Sublease Term the
amount by which the rent payable by the Sublessee hereunder during each month
following Sublessor's re-entry exceeds the amount of rent received by the
Sublessor during such month; (c) the costs of any necessary repairs incurred by
Sublessor; and (d) the fees and disbursements of Sublessor's attorneys as
provided in paragraph 20. The amounts payable by Sublessee pursuant to clause
(b) shall be paid on the first day of each month throughout the Sublease Term;
the amounts payable by Sublessee pursuant to clauses (a), (c), and (d) shall be
payable on demand as they are incurred.
22. Liens. Sublessee shall not cause or allow the Subleased Premises to
-----
become subject to any liens, claims, charges, or encumbrances (each a "Lien").
If the Subleased Premises become subject to one or more Liens as the result of
Sublessee's acts or omissions or sufferance, Sublessee shall promptly, and in
any event within five (5) days, remove such Liens or obtain a release of such
Lien from the lienor. If the Sublessee fails to take timely action in this
regard, Sublessor shall have the right, but not the obligation, to take any
action reasonably necessary to remove and/or release such Liens. Such action
shall be taken at Sublessee's sole risk and expense.
23. Agents and Brokers. At the signing of this Agreement, Pacific Real
------------------
Estate Partners, Inc. represented solely the Sublessor and Colliers
International represented solely the Sublessee. Each party signing this
document confirms that prior oral and/or written disclosure of agency was
provided to him or her in this transaction. Sublessor shall be responsible for
payment of any commissions or fees due to the brokers pursuant to agreements
that are not a part of this Sublease Agreement. Each party represents to the
other that it has engaged no other agent broker or agent in connection with the
negotiation leading to this agreement, and shall hold the
Page 16 of 38
<PAGE>
other harmless from any claim or demand from any other agent or broker claiming
to have acted on behalf of the indemnifying party in connection with this
agreement or the purchase and sale transaction.
24. Estoppel Certificates. If requested by Sublessor or Landlord,
---------------------
Sublessee shall have the same obligation to execute an estoppel certificate with
respect to this Sublease Agreement as Sublessor has to execute an estoppel
certificate with respect to the Lease Agreement. Upon reasonable request made
from time to time by Sublessee, Sublessor shall execute and deliver to Sublessee
a written statement certifying the date this Sublease was executed; the date the
Sublease Term commenced and the date it expires; the amount of Base Rent and the
date to which it has been paid; and stating, to the extent it is true, that
Sublessee is not under default under this Sublease Agreement and that it is in
full force and effect.
25. Option to Expand. Provided that Sublessee has not been in Default of
----------------
any its obligations under this Sublease Agreement beyond the applicable cure
period and that Sublessor has not given more than four (4) notices of Default to
Sublessee prior to the date of the exercise of the option, and provided further
that Sublessee does not thereafter default under any of its obligations under
this Sublease Agreement, Sublessee shall have the option to sublease from
Sublessor the remaining portion of Sublessor's space on the 4th floor of the
Building, comprising approximately 10,000 rentable square feet of space ("Option
Space") effective January 31, 2002 ("Option Space Date") for the remainder of
the Sublease Term. This option shall be exercised by written notice given by
Sublessee to Sublessor no less than 180 days prior to the Option Space Date. If
Sublessee fails to exercise the option in that manner and by that date, the
option shall expire and have no further force or effect. If Sublessee timely
exercises the option in the manner just described, then the Option Space shall
become a part of the Subleased Premises on the Option Space Date, the monthly
installment of Base Rent due under this Sublease shall be increased on that date
by the number of rentable square feet of the Option Space multiplied by the
annual Base Rent then in effect (and shall be increased as and to the extent
that Base Rent is increased for the remaining Subleased Space from time to
time), and Sublessee's Share for purposes of calculating Additional Rent shall
be adjusted according to the formula set forth in paragraph 3.2.
Sublessee shall accept the Option Space "AS IS," in its then-existing
condition, and subject to the provisions of paragraph 9.1 of this Sublease
Agreement. If Sublessor has not previously constructed or caused to be
constructed tenant improvements in the Option Space, then Sublessor shall
provide to Sublessee an allowance for construction of tenant improvements equal
to $23.00 per rentable square foot of the Option Space on the same terms and
conditions as Sublessor's Allowance as described in Exhibit C concerning
Sublessee Improvements.
Sublessor agrees that if it subleases the Option Space to any other person
or entity ("Other Option Space Subtenant") for any period prior to the Option
Space Date, then
Page 17 of 38
<PAGE>
Sublessee shall have the right, at its election, to review the proposed space
plan for construction of tenant improvements to the Option Space for the benefit
of the Other Option Space Subtenant (collectively, "Space Plan"). Within ten
(10) days after receipt of a copy of the Space Plan, Sublessee shall have the
right to give written notice to Sublessor that it exercises its option to take
the Option Space early, in which case the Option Space shall become a part of
the Subleased Premises on the thirtieth day following its receipt of the Space
Plan. If Sublessee does not timely exercise its option to take the Option Space
early in the manner just described, then Sublessor shall have the right to
proceed with construction of tenant improvements to benefit the Other Option
Space Subtenant substantially in accordance with the Space Plan; provided,
however, that if Sublessor expends less than $23.00 per rentable square foot of
the Option Space for the construction of tenant improvements to the Option
Space, and if Sublessee properly exercises its option to lease the Option Space
thereafter, then upon exercise of its option Sublessee shall be entitled to have
the difference between $23.00 per rentable square foot of the Option Space and
the amount actually spent by Sublessor for construction of tenant improvements
to the Option Space as an allowance for construction of its improvements to the
Option Space on the same terms and conditions as Sublessor's Allowance described
in Exhibit C.
26. Sign. At Sublessee's sole cost and expense, and for so long as the
----
Sublessee named in this Sublease occupies at least 53,349 rentable square feet
of the Leased Premises (as that number may be adjusted by measurement pursuant
to paragraph 1 above), Sublessee may install and maintain a single sign on the
exterior of the Building facing Interstate 90 as described in, and subject to
the terms and conditions of, the Lease Agreement. The location, size and nature
of the sign shall be subject to the prior written approval of Landlord and
Sublessor, and to the terms of the Lease Agreement. Sublessor shall not
unreasonably withhold its approval, and shall not object to use of Sublessee's
logo shown on Exhibit E to this Sublease Agreement. For so long as the
Sublessee named in this Sublease occupies at least 53,349 rentable square feet
of the Leased Premises, Sublessor shall not grant its approval to any other
sublessee of the Leased Premises to install an exterior building monument sign
on or about the Building without Sublessee's prior consent. Sublessee shall
remove its sign at the expiration or earlier termination of the Sublease Term
and shall repair any damage to the Subleased Premises or to the Building caused
by that removal, all at Sublessee's sole cost and expense.
Page 18 of 38
<PAGE>
EXECUTED IN TRIPLICATE as of the date first written above.
THE BOEING COMPANY DRUGSTORE.COM
By: /s/ Philip W. Cyburt By: /s/ Peter M. Neupert
-------------------- --------------------
Its: Vice President Its: President and CEO
-------------- -------------------
Page 19 of 38
<PAGE>
State of California
County of Los Angeles
On January 29, 1999 before me, Dely De Leon, Notary Public, personally appeared
Philip W. Cyburt personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal
[STAMP APPEARS HERE]
/s/ Dely De Leon
----------------
Document: Sublease Agreement - Drugstore.com
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ___________)
On this _____ day of ____________________, 1998, before me, the undersigned, a
Notary Public in and for the State of California, duly commissioned and sworn,
personally appeared ____________________________________________, to me known to
be the person who signed as ______________________________ of The Boeing
Company, the corporation that executed the within and foregoing instrument, and
acknowledged said instrument to be the free and voluntary act and deed of said
corporation for the uses and purposes therein mentioned, and on oath stated that
_______ was duly elected, qualified and acting as said officer of the
corporation, that _______ was authorized to execute said instrument and that the
seal affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the day and
year first above written.
--------------------------------------------
(Signature of Notary)
--------------------------------------------
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the State
of California, residing at__________________.
My appointment expires:_____________________.
Page 20 of 38
<PAGE>
STATE OF WASHINGTON)
) ss.
COUNTY OF KING )
On this 28th day of January 1999, before me, the undersigned, a Notary Public in
and for the State of Washington, duly commissioned and sworn, personally
appeared Peter Neupert, to me known to be the person who signed as President and
CEO of Drugstore.com, the corporation that executed the within and foregoing
instrument, and acknowledged said instrument to be the free and voluntary act
and deed of said corporation for the uses and purposes therein mentioned, and on
oath stated that he was duly elected, qualified and acting as said officer of
the corporation, that he was authorized to execute said instrument and that the
seal affixed, if any, is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the day and
year first above written.
/s/ Nancy J. Thygesen
---------------------
(Signature of Notary)
[STAMP APPEARS HERE]
NOTARY PUBLIC in and for the State
of Washington, residing at King County
-----------
My appointment expires:March 30, 2001
--------------
Page 21 of 38
<PAGE>
EXHIBIT A
TO
SUBLEASE AGREEMENT
TRUE COPY OF LEASE AGREEMENT
Page 22 of 38