Washington-Bellevue-Sunset North Corporate Campus Lease - WRC Sunset North LLC and drugstore.com inc.
SUNSET NORTH
BELLEVUE, WASHINGTON
OFFICE LEASE AGREEMENT
BETWEEN
WRC SUNSET NORTH LLC
("LANDLORD")
AND
DRUGSTORE.COM, INC., a Delaware corporation
("TENANT")
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TABLE OF CONTENTS
I. Basic Lease Information.......................... 1
II. Lease Grant...................................... 4
III. Adjustment of Commencement Date; Possession...... 4
IV. Rent............................................. 5
V. Compliance with Laws; Use........................ 10
VI. Security Deposit................................. 10
VII. Services to be Furnished by Landlord............. 12
VIII. Leasehold Improvements........................... 13
IX. Repairs and Alterations.......................... 14
X. Use of Electrical Services by Tenant............. 15
XI. Entry by Landlord................................ 16
XII. Assignment and Subletting........................ 16
XIII. Liens............................................ 18
XIV. Indemnity and Waiver of Claims................... 18
XV. Insurance........................................ 19
XVI. Subrogation...................................... 20
XVII. Casualty Damage.................................. 20
XVIII. Condemnation..................................... 21
XIX. Events of Default................................ 21
XX. Remedies......................................... 22
XXI. Limitation of Liability.......................... 23
XXII. No Waiver........................................ 23
XXIII. Quiet Enjoyment.................................. 24
XXIV. Relocation....................................... 24
XXV. Holding Over..................................... 24
XXVI. Subordination to Mortgages; Estoppel Certificate. 24
XXVII. Attorneys' Fees.................................. 25
XXVIII. Notice........................................... 25
XXIX. Excepted Rights.................................. 25
XXX. Surrender of Premises............................ 26
XXXI. Miscellaneous.................................... 26
XXXII. Entire Agreement................................. 28
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OFFICE LEASE AGREEMENT
This Office Lease Agreement (the "Lease") is made and entered into as
of the 22/nd/ day of November, 1999, by and between WRC SUNSET NORTH LLC, a
Washington limited liability company ("Landlord") and DRUGSTORE.COM, INC., a
Delaware corporation ("Tenant").
I. Basic Lease Information.
A. "Buildings" shall mean the office buildings commonly known as
Building 3, Building 4 and Building 5 of Sunset North Corporate Campus, located
at the Northeast corner of 139th Avenue Southeast and Southeast 32nd Street,
Bellevue, King County, Washington. "Building" means any one of the Buildings,
individually.
B. "Property" shall mean the Buildings and the parcel(s) of land on
which they are located, all other property in the Sunset North Corporate Campus,
the garages serving the Buildings, and all other improvements owned by Landlord
and serving the Buildings and the tenants thereof and the parcel(s) of land on
which they are located. The legal description of the Property is set forth on
Exhibit A-2, attached hereto and incorporated herein by this reference.
C. "Rentable Square Footage of the Property" is deemed to be 460,629
square feet.
D. "Premises" shall mean the areas shown on Exhibit A to this Lease.
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The Premises are located on the floors of the Buildings set forth below, and the
"Rentable Square Footage of the Premises" is approximately 57,436 square feet,
consisting of the areas set forth below.
Building Location Rentable Area Usable Area
3 2nd Floor 10,000 8,649
4 1st Floor 26,663 24,341
5 1st Floor 20,773 17,967
Total 57,436 50,957
The precise square footage of the Premises shall be determined by Landlord and
Tenant based upon Tenant's Final Plans, and once so determined shall not be
further adjusted except to reflect additions to or other modifications of the
Premises. Once the area of the Premises is so determined, the area of the
Premises, Base Rent, Tenant's Pro Rata Share and the Allowance shall be
appropriately adjusted and confirmed in writing by Landlord and Tenant. If the
Premises include one or more floors in their entirety, all corridors and
restroom facilities located on such full floor(s) shall be considered part of
the Premises. "Rentable Area," "rentable square feet" and similar terms shall
mean Rentable Area as determined in accordance with the American National
Standard Method of measuring floor space in office buildings as published by the
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Building Owners and Managers Association International dated June 7, 1996
("BOMA"). "Usable Area "and "usable square feet" shall mean Usable Area as
determined in accordance with BOMA.
E. "Base Rent":
Period Annual Rate Per Annual Base Rent Monthly Base Rent
Square Foot
Years 1 through 3 $22.50 $1,292,310.00 $107,692.50
F. "Tenant's Pro Rata Share": 12.4690%.
G. "Term": A period of approximately thirty six (36) months,
commencing on the later to occur of (i) March 1, 2000 (the "Target Commencement
Date") and (ii) the date on which the Landlord Work is Substantially Complete,
as determined by Section III.A. The Termination Date shall be the last day of
the calendar month in which the third anniversary of the Commencement Date
occurs. If Landlord fails to Substantially Complete the Landlord Work by the
Target Commencement Date, it shall not be a default by Landlord or otherwise
render Landlord liable for damages. Notwithstanding the foregoing, if there
have been no Tenant Delays and the Commencement Date does not occur by June 1,
2000 (the "Outside Completion Date"), Tenant, as its sole remedy, may terminate
this Lease by giving Landlord written notice of termination on or before the
earlier to occur of: (i) five (5) Business Days after the Outside Completion
Date; and (ii) the Commencement Date. In such event, this Lease shall be deemed
null and void and of no further force and effect and Landlord shall promptly
refund any prepaid Rent and Security Deposit previously advanced by Tenant under
this Lease and, so long as Tenant has not previously defaulted under any of its
obligations under the Work Letter, the parties hereto shall have no further
responsibilities or obligations to each other with respect to this Lease.
Landlord and Tenant acknowledge and agree that: (i) the determination of the
Commencement Date shall take into consideration the effect of any Tenant Delays
by Tenant; and (ii) the Outside Completion Date shall be postponed by the number
of days the Commencement Date is delayed due to events of Force Majeure.
Notwithstanding anything herein to the contrary, if Landlord determines that it
will be unable to cause the Commencement Date to occur by the Outside Completion
Date, Landlord shall have the right to immediately cease its performance of the
Landlord Work and provide Tenant with written notice (the "Outside Extension
Notice") of such inability, which Outside Extension Notice shall set forth the
date on which Landlord reasonably believes that the Commencement Date will
occur. Upon receipt of the Outside Extension Notice, Tenant shall have the
right to terminate this Lease by providing written notice of termination to
Landlord within five (5) Business Days after the date of the Outside Extension
Notice. In the event that Tenant does not terminate this Lease within such five
(5) Business Day period, the Outside Completion Date shall automatically be
amended to be the date set forth in Landlord's Outside Extension Notice.
Promptly after the determination of the Commencement Date, Landlord and Tenant
shall enter into a commencement letter agreement in the form attached as Exhibit
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C.
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H. Tenant allowance(s): $27.50 per square foot of usable area in
the Premises. See Exhibit D.
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I. "Security Deposit": $200,000
J. "Guarantor(s)": None.
K. "Broker(s)": Geoff Boguch of Colliers International representing
Tenant, and John Black of Broderick Group, Inc. representing Landlord.
L. "Permitted Use": General office uses, and any other legally
permitted use suitable for the Building, considering the business of the other
tenants in the Building and the Building's prestige.
M. "Notice Addresses":
Tenant: notices shall be sent to Tenant at the following
address:
drugstore.com, inc.
Attention: Office Manager
13920 SE Eastgate Way, Suite 300
Bellevue, WA 98005
Fax: (425) 372-3800
And to:
drugstore.com, inc.
Attention: Director of Finance
13920 SE Eastgate Way, Suite 300
Bellevue, WA 98005
Fax: (425) 372-3800
Landlord:
WRC Sunset North LLC
1191 Second Avenue, Suite 2000
Seattle, WA 98101
Attention: Building Manager
With a copy to:
Equity Office Properties Trust
Two North Riverside Plaza, Suite 2200
Chicago, IL 60606
Attention: Regional Counsel -- West Region
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Payments of Rent shall be made payable to the order of: WRC Sunset
North LLC at the address of the Landlord set forth above, or such other address
as may be specified in the Commencement Letter delivered to Tenant pursuant to
Section I.G.
N. "Business Day(s)" are Monday through Friday of each week,
exclusive of New Year's Day, Martin Luther King, Jr. Day, President's Day,
Memorial Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving Day and
Christmas Day ("Holidays"). Landlord may designate additional Holidays,
provided that the additional Holidays are commonly recognized by other office
buildings in the area where the Buildings are located.
O. "Landlord Work" means the work, if any, that Landlord is
obligated to perform in the Premises pursuant to a separate work letter
agreement (the "Work Letter"), if any, attached as Exhibit D.
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P. "Law(s)" means all applicable statutes, codes, ordinances,
orders, rules and regulations of any municipal or governmental entity.
Q. "Normal Business Hours" for the Buildings are 7:00 a.m. to 6:00
p.m. on Business Days and 8:00 a.m. to 1:00 p.m. on Saturdays.
II. Lease Grant.
Landlord leases the Premises to Tenant and Tenant leases the Premises
from Landlord, together with the right in common with others to use any portions
of the Property that are designated by Landlord for the common use of tenants
and others, such as sidewalks, driveways, parking structures, unreserved parking
areas, common corridors, elevator foyers, restrooms, vending areas and lobby
areas (the "Common Areas").
III. Adjustment of Commencement Date; Possession.
A. The Landlord Work shall be deemed to be "Substantially Complete"
on the date that all Landlord Work has been performed, other than any details of
construction, mechanical adjustment or any other similar matter, the
noncompletion of which does not materially interfere with Tenant's use of the
Premises. However, if Landlord is delayed in the performance of the Landlord
Work as a result of any Tenant Delay(s) (defined below), the Landlord Work shall
be deemed to be Substantially Complete on the date that Landlord could
reasonably have been expected to Substantially Complete the Landlord Work absent
any Tenant Delay. "Tenant Delay" means any act or omission of Tenant or its
agents, employees, vendors or contractors that actually delays the Substantial
Completion of the Landlord Work, including, without limitation: (1) Tenant's
failure to furnish information or approvals within any time period specified in
this Lease, including the failure to prepare or approve preliminary or final
plans by any applicable due date; (2) Tenant's selection of equipment or
materials that have long lead times after first being informed by Landlord that
the selection may result in a delay; (3) changes requested or made by Tenant to
previously approved plans and specifications; (4) performance of work in the
Premises by Tenant or Tenant's contractor(s) during the performance of the
Landlord Work; or (5) if the performance of any portion of the Landlord
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Work depends on the prior or simultaneous performance of work by Tenant, a delay
by Tenant or Tenant's contractor(s) in the completion of such work.
B. Subject to (i) Landlord's obligation to perform Landlord Work
(including punchlist items) and Landlord's obligations under Section IX.B., and
(ii) latent structural or systemic defects in the Buildings, the Premises are
accepted by Tenant in "as is" condition and configuration. By taking possession
of the Premises, Tenant agrees that the Premises are in good order and
satisfactory condition, except as may otherwise be noted by Tenant to Landlord
in writing within thirty (30) days after the Commencement Date, and that there
are no representations or warranties by Landlord regarding the condition of the
Premises or the Buildings. If Landlord is delayed delivering possession of the
Premises or any other space due to the holdover or unlawful possession of such
space by any party, Landlord shall use reasonable efforts to obtain possession
of the space. Any claim by Tenant with respect to Landlord Work or a latent or
structural defect must be made in writing and delivered to Landlord within one
(1) year after the Commencement Date; thereafter Tenant shall have no right to
make any such claim.
C. If Tenant takes possession of the Premises before the Commencement
Date, such possession shall be subject to the terms and conditions of this Lease
and Tenant shall pay Rent (defined in Section IV.A.) to Landlord for each day of
possession before the Commencement Date. Notwithstanding the foregoing, Tenant
shall have the right to enter the Premises at no cost for up to fifteen (15)
days prior to the Commencement Date for purposes of installing furniture,
fixtures, cabling, wiring and equipment (the "Installation Period"), provided
that the Installation Period shall not delay the Commencement Date. Tenant shall
coordinate its work with the Shell and Core Contractor and the Tenant
Improvements Contractor and shall not interfere with any such contractors or
their subcontractors. Tenant shall not be charged Rent during the Installation
Period unless Tenant has occupied the Premises during such period for normal
business operations.
IV. Rent.
A. Payments. As consideration for this Lease, Tenant shall pay
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Landlord, without any setoff or deduction, except as expressly permitted
hereunder, the total amount of Base Rent and Additional Rent due for the Term.
"Additional Rent" means all sums (exclusive of Base Rent) that Tenant is
required to pay Landlord. Additional Rent and Base Rent are sometimes
collectively referred to as "Rent". Tenant shall pay and be liable for all
rental, sales and use taxes (but excluding income taxes), if any, imposed upon
or measured by Rent under applicable Law. Base Rent and recurring monthly
charges of Additional Rent shall be due and payable in advance on the first day
of each calendar month without notice or demand, provided that the installment
of Base Rent for the first full calendar month of the Term shall be payable upon
the execution of this Lease by Tenant. All other items of Rent shall be due and
payable by Tenant on or before 30 days after billing by Landlord. All payments
of Rent shall be by good and sufficient check or by other means (such as
automatic debit or electronic transfer) acceptable to Landlord. If Tenant fails
to pay any item or installment of Rent when due, Tenant shall pay Landlord an
administration fee equal to 5% of the past due Rent, provided that Tenant shall
be entitled to a grace period of 5 days for the first 2 late payments of Rent in
a given calendar year. If the Term commences on a day other than the first day
of a calendar month or terminates on a
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day other than the last day of a calendar month, the monthly Base Rent and
Tenant's Pro Rata Share of Expenses (defined in Section IV.C.) and Taxes
(defined in Section IV.D.) for the month shall be prorated based on the number
of days in such calendar month. Landlord's acceptance of less than the correct
amount of Rent shall be considered a payment on account of the earliest Rent
due. No endorsement or statement on a check or letter accompanying a check or
payment shall be considered an accord and satisfaction, and either party may
accept the check or payment without prejudice to that party's right to recover
the balance or pursue other available remedies. Tenant's covenant to pay Rent is
independent of every other covenant in this Lease.
B. Payment of Tenant's Pro Rata Share of Expenses and Taxes. Tenant
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shall pay Tenant's Pro Rata Share of the total amount of Expenses (defined in
Section IV.C.) and Taxes (defined in Section IV.D.) for each calendar year
during the Term. Landlord shall endeavor to provide Tenant with a good faith
estimate of the total amount of Expenses and Taxes for each calendar year during
the Term no later than March 31 of each year. On or before the first day of
each month, Tenant shall pay to Landlord a monthly installment equal to one-
twelfth of Tenant's Pro Rata Share of Landlord's estimate of the total amount of
Expenses and Taxes. If Landlord determines that its good faith estimate was
incorrect by over five percent (5%), Landlord shall provide Tenant with a
revised estimate. After its receipt of the revised estimate, Tenant's monthly
payments shall be based upon the revised estimate. If Landlord does not provide
Tenant with an estimate of the total amount of Expenses and Taxes by January 1
of a calendar year, Tenant shall continue to pay monthly installments based on
the previous year's estimate until Landlord provides Tenant with the new
estimate. Upon delivery of the new estimate, an adjustment shall be made for
any month for which Tenant paid monthly installments based on the previous
year's estimate. Tenant shall pay Landlord the amount of any underpayment
within 30 days after receipt of the new estimate. Any overpayment shall be
refunded to Tenant within 30 days or credited against the next due future
installment(s) of Additional Rent.
As soon as is practical following the end of each calendar year,
Landlord shall furnish Tenant with a statement of the actual amount of Expenses
and Taxes for the prior calendar year and Tenant's Pro Rata Share of the actual
amount of Expenses and Taxes for the prior calendar year. If the estimated
amount of Expenses and Taxes for the prior calendar year is more than the actual
amount of Expenses and Taxes for the prior calendar year, Landlord shall apply
any overpayment by Tenant against Additional Rent due or next becoming due,
provided if the Term expires before the determination of the overpayment,
Landlord shall promptly refund any overpayment to Tenant after first deducting
the amount of Rent due. If the estimated amount of Expenses and Taxes for the
prior calendar year is less than the actual amount of Expenses and Taxes for
such prior year, Tenant shall pay Landlord, within 30 days after its receipt of
the statement of Expenses and Taxes, any underpayment for the prior calendar
year.
C. Expenses Defined. "Expenses" means all costs and expenses
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incurred in each calendar year in connection with operating, maintaining,
repairing, and managing the Property, including, but not limited to:
1. Labor costs, including, wages, salaries, social security and
employment taxes, medical and other types of insurance, uniforms, training,
and retirement and
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pension plans, but only to the extent the personnel representing such labor
costs devote their time to the Buildings and the Property.
2. Management fees (not to exceed market rates), the cost of
equipping and maintaining a management office, accounting and bookkeeping
services, legal fees not attributable to financing, sale, leasing or
collection activity or defense of Landlord's title, and other
administrative costs. Landlord, by itself or through an affiliate, shall
have the right to directly perform or provide any services under this Lease
(including management services), provided that the cost of any such
services shall not exceed the cost that would have been incurred had
Landlord entered into an arms-length contract for such services with an
unaffiliated entity of comparable skill and experience.
3. The cost of services, including amounts paid to service providers
and the rental and purchase cost of parts, supplies, tools and equipment,
but only to the extent that such services, parts, supplies, tools and
equipment were used in connection with the Property.
4. Premiums and deductibles paid by Landlord for insurance, including
workers' compensation, fire and extended coverage, earthquake, general
liability, rental loss, elevator, boiler and other insurance customarily
carried from time to time by owners of comparable office buildings.
5. Electrical Costs (defined below) and charges for water, gas, steam
and sewer, but excluding those charges for which Landlord is reimbursed by
tenants. "Electrical Costs" means: (a) charges paid by Landlord for
electricity; and (b) costs incurred in connection with an energy management
program for the Property. Electrical Costs shall be adjusted as follows:
(i) amounts received by Landlord as reimbursement for above standard
electrical consumption shall be deducted from Electrical Costs; (ii) the
cost of electricity incurred to provide overtime HVAC to specific tenants
(as reasonably estimated by Landlord) shall be deducted from Electrical
Costs; and (iii) if Tenant is billed directly for the cost of building
standard electricity to the Premises as a separate charge in addition to
Base Rent, the cost of electricity to individual tenant spaces in the
Property shall be deducted from Electrical Costs.
6. The amortized cost of capital improvements (as distinguished from
replacement parts or components installed in the ordinary course of
business) made to the Property which are: (a) performed primarily to
reduce operating expense costs or otherwise improve the operating
efficiency of the Property; or (b) required to comply with any Laws that
are enacted, or first interpreted to apply to the Property, after the date
of this Lease. The cost of capital improvements shall be amortized by
Landlord over the lesser of the Payback Period (defined below) or 5 years.
The amortized cost of capital improvements may, at Landlord's option,
include actual or imputed interest at the rate that Landlord would
reasonably be required to pay to finance the cost of the capital
improvement. "Payback Period" means the reasonably estimated period of
time that it takes for the cost savings resulting from a capital
improvement to equal the total cost of the capital improvement.
Notwithstanding the foregoing, the portion of the annual amortized costs to
be included in Expenses in any calendar year with respect to a capital
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improvement which is intended to reduce expenses or improve the operating
efficiency of the Property or Building shall equal the lesser of: a) such
annual amortized costs; and b) the projected annual amortized reduction in
expenses for that portion of the amortization period of the capital
improvement which falls within the Term (based on the total cost savings
for such period, as reasonably estimated by Landlord).
If Landlord incurs Expenses for the Property together with one or more
other buildings or properties, whether pursuant to a reciprocal easement
agreement, common area agreement or otherwise, the shared costs and expenses
shall be equitably prorated and apportioned between the Property and the other
buildings or properties. Expenses shall not include: the cost of capital
improvements (except as set forth above); depreciation; interest (except as
provided above for the amortization of capital improvements); principal payments
of mortgage and other non-operating debts of Landlord; the cost of repairs or
other work to the extent Landlord is reimbursed by insurance or condemnation
proceeds or to the extent made to correct or mitigate any defect in design,
materials or workmanship of the Buildings, or the Common Areas, or to the extent
necessitated by the negligence or misconduct of Landlord; costs in connection
with leasing space in the Property, including brokerage commissions and
advertising costs; lease concessions, including rental abatements and
construction allowances, granted to specific tenants; costs incurred in
connection with the sale, financing or refinancing of the Property; fines,
interest and penalties incurred due to the late payment of Taxes (defined in
Section IV.D.) or Expenses; organizational expenses associated with the creation
and operation of the entity which constitutes Landlord; any penalties or damages
that Landlord pays to Tenant under this Lease or to other tenants in the
Property under their respective leases; Landlord's general overhead expenses not
related to the Buildings; costs (including permit, license and inspection fees)
incurred in renovating or otherwise improving, decorating, painting or altering
(1) vacant space (excluding common areas) in the Buildings or (2) space for
tenants or other occupants in the Buildings; costs incurred due to a violation
by Landlord of the terms and conditions of a lease; expenses incurred as a
result of allowing any other tenant of a Building or any other person or entity
to use the roof of a Building for any purpose; any recalculation of or addition
of Expenses actually incurred more than two (2) years prior to the year in which
Landlord proposes that such costs be included; rentals and other related
expenses incurred in leasing air conditioning systems, elevators or other
equipment ordinarily considered to be of a capital nature, if purchased, except
equipment not affixed to a Building; costs arising from Landlord's political or
charitable contributions; or costs for acquisitions or sculpture, paintings or
other objects of art (but the expense of maintaining such items shall be
included). Landlord shall not collect in excess of one hundred percent (100%)
of Operating Expenses and shall not recover any item of cost more than once. If
the Property is not at least 95% occupied during any calendar year or if
Landlord is not supplying services to at least 95% of the total Rentable Square
Footage of the Property at any time during a calendar year, Expenses that vary
based on occupancy, such as utilities and janitorial services provided to areas
other than Common Areas (and at Landlord's option, Taxes) shall, at Landlord's
option, be determined as if the Property had been 95% occupied and Landlord had
been supplying services to 95% of the Rentable Square Footage of the Property
during that calendar year. The extrapolation of Expenses under this Section
shall be performed by appropriately adjusting the cost of those components of
Expenses that are impacted by changes in the occupancy of the Property.
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D. Taxes Defined. "Taxes" shall mean: (1) all real estate taxes
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and other assessments on the Property, including, but not limited to,
assessments for special improvement districts and building improvement
districts, taxes and assessments levied in substitution or supplementation in
whole or in part of any such taxes and assessments and the Property's share of
any real estate taxes and assessments under any reciprocal easement agreement,
common area agreement or similar agreement as to the Property; (2) all personal
property taxes for property that is owned by Landlord and used in connection
with the operation, maintenance and repair of the Property; and (3) all costs
and fees incurred in connection with seeking reductions in any tax liabilities
described in (1) and (2), including, without limitation, any costs incurred by
Landlord for compliance, review and appeal of tax liabilities. Without
limitation, Taxes shall not include any income, capital levy, franchise, capital
stock, gift, estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the installment and
any interest due and payable during that year. For all other real estate taxes,
Taxes for that year shall, at Landlord's election, include either the amount
accrued, assessed or otherwise imposed for the year or the amount due and
payable for that year, provided that Landlord's election shall be applied
consistently throughout the Term. If a change in Taxes is obtained for any year
of the Term, then Taxes for that year will be retroactively adjusted and
Landlord shall provide Tenant with a credit, if any, based on the adjustment.
E. Audit Rights. Tenant may, within 120 days after receiving
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Landlord's statement of Expenses, give Landlord written notice ("Review Notice")
that Tenant intends to review Landlord's records of the Expenses for that
calendar year. Within a reasonable time after receipt of the Review Notice,
Landlord shall make all pertinent records available for inspection that are
reasonably necessary for Tenant to conduct its review. If any records are
maintained at a location other than the office of the Building, Tenant may
either inspect the records at such other location or pay for the reasonable cost
of copying and shipping the records. If Tenant retains an agent to review
Landlord's records, the agent must be with a licensed CPA firm. Landlord agrees
that Tenant may retain a third party agent to review Landlord's books and
records which third party agent is not a CPA firm, so long as the third party
agent retained by Tenant shall have expertise in and familiarity with general
industry practice with respect to the operation of and accounting for a first
class office building and whose compensation shall in no way be contingent upon
or correspond to the financial impact on Tenant resulting from the review.
Tenant shall be solely responsible for all costs, expenses and fees incurred for
the audit. Within 60 days after the records are made available to Tenant,
Tenant shall have the right to give Landlord written notice (an "Objection
Notice") stating in reasonable detail any objection to Landlord's statement of
Expenses for that year. If Tenant fails to give Landlord an Objection Notice
within the 60 day period or fails to provide Landlord with a Review Notice
within the 90 day period described above, Tenant shall be deemed to have
approved Landlord's statement of Expenses and shall be barred from raising any
claims regarding the Expenses for that year. If Tenant provides Landlord with a
timely Objection Notice, Landlord and Tenant shall work together in good faith
to resolve any issues raised in Tenant's Objection Notice. If Landlord and
Tenant determine that Expenses for the calendar year are less than reported,
Landlord shall provide Tenant with a credit against the next installment of Rent
in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant
determine that Expenses for the calendar year are greater than reported, Tenant
shall pay Landlord the amount of any underpayment within 30 days. In addition,
if Landlord and Tenant determine that Basic Costs for the Building for the year
in question were less than stated by more than five percent (5%),
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Landlord, within thirty (30) days after its receipt of paid invoices therefor
from Tenant, shall reimburse Tenant for any reasonable amounts paid by Tenant to
third parties in connection with such review by Tenant. The records obtained by
Tenant shall be treated as confidential. In no event shall Tenant be permitted
to examine Landlord's records or to dispute any statement of Expenses unless
Tenant has paid and continues to pay all Rent when due.
V. Compliance with Laws; Use.
The Premises shall be used only for the Permitted Use and for no other
use whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other tenants of the
Buildings or interferes with the operation of the Buildings. Tenant shall
comply with all Laws, including the Americans with Disabilities Act, regarding
the operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises. Tenant, within 10 days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Tenant shall comply with the rules and regulations of
the Buildings attached as Exhibit B and such other reasonable rules and
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regulations adopted by Landlord from time to time after prior written notice to
Tenant. Tenant shall also cause its agents, contractors, subcontractors,
employees, customers, and subtenants to comply with all rules and regulations.
Landlord shall not knowingly discriminate against Tenant in Landlord's
enforcement of the rules and regulations.
VI. Security Deposit.
The Security Deposit shall be in the form of cash or a letter of
credit, as Tenant may elect. If Tenant elects to deposit a letter of credit,
the terms of Section VI.B. below shall apply.
A. Applicable Terms. The Security Deposit shall be delivered to
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Landlord upon the execution of this Lease by Tenant and shall be held by
Landlord without liability for interest (unless required by Law) as security for
the performance of Tenant's obligations. The Security Deposit may be in the
form of a letter of credit, in which case the terms of Section VI.B. below shall
apply. The Security Deposit is not an advance payment of Rent or a measure of
Tenant's liability for damages. Landlord may, from time to time following a
default and the expiration of any applicable notice and cure period, without
prejudice to any other remedy, use all or a portion of the Security Deposit to
satisfy past due Rent or to cure any uncured default by Tenant. If Landlord
uses the Security Deposit, Tenant shall on demand restore the Security Deposit
to its original amount. Landlord shall return any unapplied portion of the
Security Deposit to Tenant within 45 days after the later to occur of: (1) the
determination of Tenant's Pro Rata Share of Expenses and Taxes for the final
year of the Term; (2) the date Tenant surrenders possession of the Premises to
Landlord in accordance with this Lease; or (3) the Termination Date. If
Landlord transfers its interest in the Premises, Landlord may assign the
Security Deposit to the transferee and, following the assignment, Landlord shall
have no further liability for the return of the Security Deposit. Landlord
shall not be required to keep the Security Deposit separate from its other
accounts. Notwithstanding anything to the contrary contained in this Article
VI, and provided that Tenant has not been in default beyond any
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applicable cure period under the Lease as of the second (2nd) anniversary of the
Commencement Date, Landlord shall return the Security Deposit (whether in the
form of cash or letter of credit) to Tenant within five (5) business days
following such second (2nd) anniversary of the Commencement Date.
B. Letter of Credit.
----------------
1. Security Amounts. If Tenant elects to provide a letter of credit
----------------
for the Security Deposit, Tenant shall, concurrently with the execution of
this Lease, deposit with Landlord, and shall keep on deposit at all times
during the term hereof, as security for the faithful performance of all the
terms, conditions and covenants of this Lease, one or more unconditional
and irrevocable letters of credit in form satisfactory to Landlord in its
sole discretion (each, a "Letter of Credit" and collectively, the "Letters
of Credit"), in the principal amount of Two Hundred Thousand Dollars
($200,000).
2. Terms of Payment. The Letters of Credit shall be payable at
----------------
sight, upon draft of Landlord, accompanied by the Letter of Credit and a
certificate signed by a duly authorized officer of Landlord that "Tenant
has committed an 'event of default' as defined in this Lease, as Tenant,
beyond applicable notice and cure periods", and stating the amount then due
and owing to Landlord.
3. Term of Each Credit Facility. The first Letter of Credit may be
----------------------------
for a term less than the term of this Lease. The first Letter of Credit
shall be deposited with Landlord upon execution of this Lease, and any
subsequent Letter of Credit shall be deposited with Landlord no later than
forty-five (45) days prior to the expiration of the preceding Letter of
Credit.
4. Actions Upon Non-Renewal. Notwithstanding Subsection 3 above,
------------------------
upon Tenant's receipt of any notice from the issuing bank that it will not
renew or replace the Letter of Credit in the scheduled amount, as required
hereunder, for the succeeding period, Tenant shall promptly notify Landlord
of such notice and provide Landlord with a copy thereof. If such Letter of
Credit is not, in fact, renewed or replaced with a Letter of Credit from
another qualified issuer pursuant hereto, or replaced with a $200,000 cash
deposit, not later than thirty (30) days prior to expiration of such Letter
of Credit, such event shall also be an event of default hereunder, without
the necessity of further written notice or time to cure. If Tenant fails
to renew or replace the then existing Letter of Credit prior to such forty-
five (45) day period, Landlord may draw upon such existing Letter of Credit
and hold such funds as security until a new Letter of Credit in the amount
required under the corresponding period as outlined in the schedule set
forth in subsection 1 above has been provided to Landlord, at which time
Landlord shall return to Tenant without interest the amount previously
drawn against the prior Letter of Credit. Any draw upon a Letter of Credit
by Landlord pursuant to this Section shall not relieve Tenant from its
obligation to provide Landlord with a Letter of Credit in the appropriate
amount in future years.
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5. Issuer. The Letters of Credit shall be issued by a banking
------
association acceptable to Landlord. The Letters of Credit shall be
assignable and transferable by Landlord.
6. Purpose of Credit Facility. Tenant acknowledges that the Letters
--------------------------
of Credit are intended to provide Landlord with the same unconditional and
unhinderable access to such security as it would have if Tenant were to
deliver to Landlord cash funds as a Security Deposit.
7. Draws on Credit Facility. If, at any time during the Term, Tenant
------------------------
has committed an event of default in the payment or performance of any
provision of this Lease, beyond any applicable notice and cure periods,
Landlord shall have the right to draw on the then-current or any succeeding
Letter of Credit in whole or in part and use the proceeds, or so much as is
necessary, in payment of any rent or other sums due from Tenant and in
default hereunder, reimbursement of any expense incurred by Landlord, and
in payment of any damages incurred by Landlord by reason of Tenant's
default. The Letter of Credit shall provide that the issuing bank agrees
with the drawers, endorsers and bona fide holders of drafts drawn under and
in compliance with the terms of the Letter of Credit that such drafts will
be duly honored on presentation to the drawee. Drafts on the last Letter
of Credit deposited hereunder must be drawn and presented to the issuing
bank not later than sixty (60) days after the Termination Date.
8. Obligation to Restore. If Landlord draws an amount under a Letter
---------------------
of Credit, the issuing bank shall endorse the amount paid to Landlord on
the reverse side of the Letter of Credit, and Tenant and Tenant's issuing
bank shall promptly restore such Letter of Credit to the original amount
and shall immediately return the Letter of Credit so endorsed and re-funded
to Landlord.
9. Refunds. If the Letter of Credit is not used as aforesaid, the
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last Letter of Credit, or so much as has not been used, shall be refunded
to Tenant, without interest, upon full performance of this Lease by Tenant
(or after the second anniversary of the Commencement Date, as provided by,
and subject to the terms of, Section VI.A. above).
10. Claims in Excess of Proceeds. If claims of Landlord under the
----------------------------
terms of the Lease exceed the proceeds of the Letter of Credit, Tenant
shall remain liable for the balance of such claims, as provided for herein
and in the Lease.
VII. Services to be Furnished by Landlord.
A. Landlord agrees to furnish Tenant with the following services
seven (7) days per week, twenty four (24) hours per day, unless otherwise
specified: (1) Water service for use in the drinking fountains and lavatories
on each floor on which the Premises are located and in any lunchroom or kitchen
facility within the Premises; (2) Heat and air conditioning during Normal
Business Hours, at such temperatures and in such amounts as are standard for
comparable buildings or as required by governmental authority. Tenant, upon
such advance notice as is reasonably required by Landlord, shall have the right
to receive HVAC service during hours other than Normal Business Hours. Tenant
shall pay Landlord the actual cost for
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the additional service (including additional wear and tear on equipment) as
reasonably determined by Landlord from time to time, which charge is currently
$14.00 per hour; (3) Maintenance and repair of the Property as described in
Section IX.B.; (4) Janitor service on Business Days. If Tenant's use, floor
covering or other improvements require special services in excess of the
standard services for the Buildings, Tenant shall pay the additional cost
attributable to the special services; (5) Elevator service; (6) Electricity to
the Premises for general office use, in accordance with and subject to the terms
and conditions in Article X; and (7) such other services as Landlord reasonably
determines are necessary or appropriate for the operation of the Property as a
first class office facility.
B. Landlord's failure to furnish, or any interruption or
termination of, services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or alterations, or the
occurrence of any event or cause beyond the reasonable control of Landlord (a
"Service Failure") shall not render Landlord liable to Tenant, constitute a
constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve
Tenant from the obligation to fulfill any covenant or agreement. However, if the
Premises, or a portion of the Premises, is made untenantable for a period in
excess of three (3) consecutive days, or more than six (6) periods of at least
twenty four (24) hours each in any ninety (90) day period, as a result of the
Service Failure, then Tenant, as its sole remedy, shall be entitled to receive
an abatement of Rent payable hereunder during the period beginning on the 4th
consecutive day of the Service Failure, or the fourth (4th) day of such Service
Failure within such 90-day period, as the case may be, and ending on the day the
service has been restored. If the entire Premises has not been rendered
untenantable by the Service Failure, the amount of abatement that Tenant is
entitled to receive shall be prorated based upon the percentage of the Premises
rendered untenantable and not used by Tenant. In no event, however, shall
Landlord be liable to Tenant for any loss or damage, including the theft of
Tenant's Property (defined in Article XV), arising out of or in connection with
a Service Failure. In case of a Service Failure caused by Landlord's fault or
neglect, or which is otherwise within Landlord's reasonable control, Tenant may
abate Rent as provided above except that Tenant's abatement right shall begin
one (1) day after the Service Failure. Landlord shall use reasonable efforts to
restore any Service Failure as soon as reasonably possible in order to minimize
the disruption to Tenant caused by the Service Failure.
VIII. Leasehold Improvements.
All improvements to the Premises (collectively, "Leasehold
Improvements") shall be owned by Landlord and shall remain upon the Premises
without compensation to Tenant. However, Landlord, by written notice to Tenant
within 30 days prior to the Termination Date, may require Tenant to remove, at
Tenant's expense, any Leasehold Improvements that are performed by or for the
benefit of Tenant and, in Landlord's reasonable judgment, are of a nature that
would require removal and repair costs that are materially in excess of the
removal and repair costs associated with standard office improvements
(collectively referred to as "Required Removables"). Without limitation, it is
agreed that Required Removables include internal stairways, raised floors,
personal baths and showers, vaults, rolling file systems and structural
alterations and modifications of any type, but shall not include Cable (defined
in Section IX.A.). The Required Removables designated by Landlord shall be
removed by Tenant before the Termination Date, provided that upon prior written
notice to Landlord, Tenant may remain in the
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Premises for up to 5 days after the Termination Date for the sole purpose of
removing the Required Removables. Tenant's possession of the Premises shall be
subject to all of the terms and conditions of this Lease, including the
obligation to pay Rent on a per diem basis at the rate in effect for the last
month of the Term. Tenant shall repair damage caused by the installation or
removal of Required Removables. Upon Tenant's removal of the Required
Removables, Landlord and Tenant shall jointly inspect the Premises and agree in
writing upon the satisfactory completion of the Required Removables. If Tenant
fails to remove any Required Removables or perform related repairs in a timely
manner, Landlord, at Tenant's expense, may remove and dispose of the Required
Removables and perform the required repairs. Tenant, within 30 days after
receipt of an invoice, shall reimburse Landlord for the reasonable costs
incurred by Landlord. Notwithstanding the foregoing, Tenant, at the time it
requests approval for a proposed Alteration (defined in Section IX.C.), may
request in writing that Landlord advise Tenant whether the Alteration or any
portion of the Alteration will be designated as a Required Removable. Within 10
days after receipt of Tenant's request, Landlord shall advise Tenant in writing
as to which portions of the Alteration, if any, will be considered to be
Required Removables.
IX. Repairs and Alterations.
A. Tenant's Repair Obligations. Tenant shall, at its sole cost and
---------------------------
expense, promptly perform all maintenance and repairs to the Premises that are
not Landlord's express responsibility under this Lease, and shall keep the
Premises in good condition and repair, reasonable wear and tear and damage from
insured casualty excepted. Tenant's repair obligations include, without
limitation, repairs to: (1) floor covering; (2) interior partitions; (3) doors;
(4) the interior side of demising walls; (5) electronic, phone and data cabling
and related equipment (collectively, "Cable") that is installed by or for the
exclusive benefit of Tenant and located in the Premises or other portions of the
Buildings; (6) supplemental air conditioning units, private showers and
kitchens, including hot water heaters, plumbing, and similar facilities serving
Tenant exclusively; and (7) Alterations performed by contractors retained by
Tenant, including related HVAC balancing. All work shall be performed in
accordance with the rules and procedures described in Section IX.C. below. If
Tenant fails to make any repairs to the Premises for more than 15 days after
written notice from Landlord (although notice shall not be required if there is
an emergency), Landlord may make the repairs, and Tenant shall pay the
reasonable cost of the repairs to Landlord within 30 days after receipt of an
invoice.
B. Landlord's Repair Obligations. Landlord shall keep and maintain
-----------------------------
in good repair and working order and make repairs to and perform maintenance
upon: (1) structural elements of the Buildings; (2) mechanical (including
HVAC), electrical, plumbing and fire/life safety systems serving the Buildings
and Premises in general; (3) Common Areas; (4) the roofs of the Buildings; (5)
exterior windows of the Buildings; and (6) elevators serving the Buildings.
Landlord shall promptly make repairs (considering the nature and urgency of the
repair) for which Landlord is responsible.
C. Alterations. Tenant shall not make alterations, additions or
-----------
improvements to the Premises or install any Cable in the Premises or other
portions of the Buildings (collectively referred to as "Alterations") without
first obtaining the written consent of Landlord
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in each instance, which consent shall not be unreasonably withheld or delayed.
However, Landlord's consent shall not be required for any Alteration that
satisfies all of the following criteria (a "Cosmetic Alteration"): (1) is of a
cosmetic nature such as painting, wallpapering, hanging pictures and installing
carpeting; (2) is not visible from the exterior of the Premises or Buildings;
(3) will not affect the systems or structure of the Buildings; and (4) does not
require work to be performed inside the walls or above the ceiling of the
Premises. However, even though consent is not required, the performance of
Cosmetic Alterations shall be subject to all the other provisions of this
Section IX.C. Prior to starting work, Tenant shall furnish Landlord with plans
and specifications reasonably acceptable to Landlord; names of contractors
reasonably acceptable to Landlord (provided that Landlord may designate specific
contractors with respect to Building systems); copies of contracts; necessary
permits and approvals; evidence of contractor's and subcontractor's insurance in
amounts reasonably required by Landlord; and any security for performance that
is reasonably required by Landlord. Changes to the plans and specifications must
also be submitted to Landlord for its approval. Alterations shall be constructed
in a good and workmanlike manner using materials of a quality that is at least
equal to the quality designated by Landlord as the minimum standard for the
Buildings. Landlord may designate reasonable rules, regulations and procedures
for the performance of work in the Buildings and, to the extent reasonably
necessary to avoid disruption to the occupants of the Buildings, shall have the
right to designate the time when Alterations may be performed. Tenant shall
reimburse Landlord within 30 days after receipt of an invoice for sums paid by
Landlord for third party examination of Tenant's plans for non-Cosmetic
Alterations. In addition, within 30 days after receipt of an invoice from
Landlord, Tenant shall pay Landlord a fee for Landlord's oversight and
coordination of any non-Cosmetic Alterations equal to 10% of the cost of the
non-Cosmetic Alterations. Upon completion, Tenant shall furnish "as-built" plans
(except for Cosmetic Alterations), completion affidavits, full and final waivers
of lien and receipted bills covering all labor and materials. Tenant shall
assure that the Alterations comply with all insurance requirements and Laws.
Landlord's approval of an Alteration shall not be a representation by Landlord
that the Alteration complies with applicable Laws or will be adequate for
Tenant's use.
X. Use of Electrical Services by Tenant.
A. Electricity used by Tenant in the Premises shall, at Landlord's
option, be paid for by Tenant either: (1) through inclusion in Expenses (except
as provided in Section X.B. for excess usage); (2) by a separate charge payable
by Tenant to Landlord within 30 days after billing by Landlord; or (3) by
separate charge billed by the applicable utility company and payable directly by
Tenant. Electrical service to the Premises may be furnished by one or more
companies providing electrical generation, transmission and distribution
services, and the cost of electricity may consist of several different
components or separate charges for such services, such as generation,
distribution and stranded cost charges. Landlord shall have the exclusive right
to select any company providing electrical service to the Premises, to aggregate
the electrical service for the Property and Premises with other buildings, to
purchase electricity through a broker and/or buyers group and to change the
providers and manner of purchasing electricity. Landlord shall not charge any
other fees specifically related to providing electricity to the Property.
Landlord shall not charge Tenant for electricity at above-market rates.
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B. Tenant's use of electrical service shall not exceed, either in
voltage, rated capacity, use beyond Normal Business Hours or overall load, that
which Landlord deems to be standard for the Buildings. If Tenant requests
permission to consume excess electrical service, Landlord may condition consent
upon conditions that Landlord reasonably elects (including, without limitation,
the installation of utility service upgrades, meters, submeters, air handlers or
cooling units), and the additional usage (to the extent permitted by Law),
installation and maintenance costs shall be paid by Tenant. Landlord shall have
the right to separately meter electrical usage for the Premises and to measure
electrical usage by survey or other commonly accepted methods.
XI. Entry by Landlord.
Landlord, its agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Buildings, including other tenants' premises.
Entry to the Premises for purposes of showing the Premises to prospective
tenants shall be limited to the last twelve (12) months of the Lease term.
Except in emergencies or to provide janitorial and other Building services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises (except in case of emergency), which may be
given orally, but which also must be given in writing at least twenty four (24)
hours in advance, and if Tenant so requires, with a representative of Tenant
present. If reasonably necessary for the protection and safety of Tenant and
its employees, Landlord shall have the right to temporarily close all or a
portion of the Premises to perform repairs, alterations and additions. However,
except in emergencies, Landlord will not close the Premises if the work can
reasonably be completed on weekends and after Normal Business Hours. Entry by
Landlord shall not constitute constructive eviction or entitle Tenant to an
abatement or reduction of Rent. Notwithstanding the foregoing, if Landlord
temporarily closes the Premises as provided above for a period in excess of
three (3) consecutive days, Tenant, as its sole remedy, shall be entitled to
receive a per diem abatement of Base Rental during the period beginning on the
fourth (4th) consecutive day of closure and ending on the date on which the
Premises are returned to Tenant in a tenantable condition. Tenant, however,
shall not be entitled to an abatement if the repairs, alterations and/or
additions to be performed are required as a result of the acts or omissions of
Tenant, its agents, employees or contractors, including, without limitation, a
default by Tenant in its maintenance and repair obligations under the Lease.
XII. Assignment and Subletting.
A. Except in connection with a Permitted Transfer (defined in Section
XII.E. below), Tenant shall not assign, sublease, transfer or encumber any
interest in this Lease or allow any third party to use any portion of the
Premises (collectively or individually, a "Transfer") without the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed if Landlord does not elect to exercise its termination
rights under Section XII.B. below. Without limitation, it is agreed that
Landlord's consent shall not be considered unreasonably withheld if: (1) the
proposed transferee's financial condition does not meet the criteria Landlord
uses to select Building tenants having similar leasehold obligations; (2) the
proposed transferee's business is not suitable for the Building considering the
business of
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the other tenants and the Building's prestige, or would result in a violation of
another tenant's rights; (3) the proposed transferee is a governmental agency or
occupant of the Building; (4) Tenant is then in default after the expiration of
the notice and cure periods in this Lease; or (5) any portion of the Buildings
or Premises would likely become subject to additional or different Laws as a
consequence of the proposed Transfer. Any attempted Transfer in violation of
this Article shall, at Landlord's option, be void. Consent by Landlord to one or
more Transfer(s) shall not operate as a waiver of Landlord's rights to approve
any subsequent Transfers. In no event shall any Transfer or Permitted Transfer
release or relieve Tenant from any obligation under this Lease.
B. As part of its request for Landlord's consent to a Transfer,
Tenant shall provide Landlord with financial statements for the proposed
transferee, a complete copy of the proposed assignment, sublease and other
contractual documents and such other information as Landlord may reasonably
request. Landlord shall, by written notice to Tenant within thirty (30) days of
its receipt of the required information and documentation, either: (1) consent
to the Transfer by the execution of a consent agreement in a form reasonably
designated by Landlord or reasonably refuse to consent to the Transfer in
writing; or (2) notify Tenant of its intention to exercise its right to
terminate this Lease with respect to the portion of the Premises that Tenant is
proposing to assign or sublet. If Tenant does not withdraw its request for the
proposed transfer within ten (10) days after receiving Landlord's notice of its
election to terminate, then Landlord may terminate the Lease, and any such
termination shall be effective on the proposed effective date of the Transfer
for which Tenant requested consent. Tenant shall pay Landlord a review fee of
$750.00 for Landlord's review of any Permitted Transfer or requested Transfer,
provided if Landlord's actual reasonable costs and expenses (including
reasonable attorney's fees) exceed $750.00, Tenant shall reimburse Landlord for
its actual reasonable costs and expenses in lieu of a fixed review fee.
C. Tenant shall pay Landlord 100% of all rent and other consideration
which Tenant receives as a result of a Transfer that is in excess of the Rent
payable to Landlord for the portion of the Premises and Term covered by the
Transfer. Tenant shall pay Landlord for Landlord's share of any excess within 30
days after Tenant's receipt of such excess consideration. Tenant may deduct from
the excess all reasonable and customary expenses directly incurred by Tenant
attributable to the Transfer (other than Landlord's review fee), including
brokerage fees, legal fees, construction costs and, to the extent paid to the
new tenant as a lease concession, moving costs. If Tenant is in Monetary Default
(defined in Section XIX.A. below), Landlord may require that all sublease
payments be made directly to Landlord, in which case Tenant shall receive a
credit against Rent in the amount of any payments received (less Landlord's
share of any excess).
D. Except as provided below with respect to a Permitted Transfer, if
Tenant is a corporation, limited liability company, partnership, or similar
entity, and if the entity which owns or controls a majority of the voting
shares/rights at any time changes for any reason (including but not limited to a
merger, consolidation or reorganization), such change of ownership or control
shall constitute a Transfer. The foregoing shall not apply so long as Tenant is
an entity whose outstanding stock is listed on a recognized security exchange,
or if at least 80% of its voting stock is owned by another entity, the voting
stock of which is so listed.
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E. Notwithstanding anything herein to the contrary, Landlord hereby
consents to an assignment of this Lease, or a subletting of all or part of the
Premises (a "Permitted Transfer"), to (i) any entity that controls, is
controlled by, or is under common control with, Tenant (control meaning the
ability to direct the management policy of the entity in question), (ii) any
corporation in whom or with which Tenant may be merged or consolidated, or (iii)
any entity to whom Tenant sells all or substantially all of its assets, provided
that in each such instance such entity expressly assumes all of Tenant's
obligations hereunder, and provided further that in instance (ii) and (iii) such
entity has a net worth at least equal to the greater of (A) the net worth of
Tenant on the date hereof or (B) the net worth of Tenant immediately prior to
such assignment or transaction. With respect to the transactions described in
Subsections (ii) above, such net worth may be on a consolidated basis with
Tenant's affiliated entity, and every net worth determination hereunder shall be
made on a balance sheet (not on a market capitalization or other basis). An
initial public offering of Tenant's stock and any subsequent transfers shall not
be considered a Transfer hereunder.
XIII. Liens.
Tenant shall not permit mechanic's or other liens to be placed upon
the Property, Premises or Tenant's leasehold interest in connection with any
work or service done or purportedly done by or for benefit of Tenant. If a lien
is so placed, Tenant shall, within fifteen (15) days of notice from Landlord of
the filing of the lien, fully discharge the lien by settling the claim which
resulted in the lien or by bonding or insuring over the lien in the manner
prescribed by the applicable lien Law. If Tenant fails to discharge the lien,
then, in addition to any other right or remedy of Landlord, Landlord may bond or
insure over the lien or otherwise discharge the lien. Tenant shall reimburse
Landlord for any amount paid by Landlord to bond or insure over the lien or
discharge the lien, including, without limitation, reasonable attorneys' fees
(if and to the extent permitted by Law) within 30 days after receipt of an
invoice from Landlord.
XIV. Indemnity and Waiver of Claims.
A. Except to the extent caused by the negligence or willful
misconduct of Landlord or any Landlord Related Parties (defined below), Tenant
shall indemnify, defend and hold Landlord, its trustees, members, principals,
beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined
in Article XXVI) and agents ("Landlord Related Parties") harmless against and
from all liabilities, obligations, damages, penalties, claims, actions, costs,
charges and expenses, including, without limitation, reasonable attorneys' fees
and other professional fees (if and to the extent permitted by Law), which may
be imposed upon, incurred by or asserted against Landlord or any of the Landlord
Related Parties and arising out of or in connection with any damage or injury
occurring in the Premises or any acts or omissions (including violations of Law)
of Tenant, the Tenant Related Parties (defined below) or any of Tenant's
transferees, contractors or licensees.
B. Except to the extent caused by the negligence or willful
misconduct of Tenant or any Tenant Related Parties (defined below), Landlord
shall indemnify, defend and hold Tenant, its trustees, members, principals,
beneficiaries, partners, officers, directors, employees and agents ("Tenant
Related Parties") harmless against and from all liabilities,
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obligations, damages, penalties, claims, actions, costs, charges and expenses,
including, without limitation, reasonable attorneys' fees and other professional
fees (if and to the extent permitted by Law), which may be imposed upon,
incurred by or asserted against Tenant or any of the Tenant Related Parties and
arising out of or in connection with the acts or omissions (including violations
of Law) of Landlord, the Landlord Related Parties or any of Landlord's
contractors.
C. Landlord and the Landlord Related Parties shall not be liable for,
and Tenant waives, all claims for loss or damage to Tenant's business or loss,
theft or damage to Tenant's Property or the property of any person claiming by,
through or under Tenant resulting from: (1) wind or weather; (2) the failure of
any sprinkler, heating or air-conditioning equipment, any electric wiring or any
gas, water or steam pipes; (3) the backing up of any sewer pipe or downspout;
(4) the bursting, leaking or running of any tank, water closet, drain or other
pipe; (5) water, snow or ice upon or coming through the roof, skylight, stairs,
doorways, windows, walks or any other place upon or near the Buildings; (6) any
act or omission of any party other than Landlord or Landlord Related Parties;
and (7) any causes not reasonably within the control of Landlord. Tenant shall
insure itself against such losses under Article XV below.
XV. Insurance.
Tenant shall carry and maintain the following insurance ("Tenant's
Insurance"), at its sole cost and expense: (1) Commercial General Liability
Insurance applicable to the Premises and its appurtenances providing, on an
occurrence basis, a minimum combined single limit of $2,000,000.00; (2) All Risk
Property/Business Interruption Insurance, including flood and earthquake,
written at replacement cost value and with a replacement cost endorsement
covering all of Tenants trade fixtures, equipment furniture and other personal
property within the Premises ("Tenant's Property"); (3) Workers' Compensation
Insurance as required by the state in which the Premises is located and in
amounts as may be required by applicable statute; and (4) Employers Liability
Coverage of at least $1,000,000.00 per occurrence. Any company writing any of
Tenants Insurance shall have an A.M. Best rating of not less than A-VIII. All
Commercial General Liability Insurance policies shall name Tenant as a named
insured and Landlord (or any successor), Equity Office Properties Trust, a
Maryland real estate investment trust, EOP Operating Limited Partnership, a
Delaware limited partnership, Wright Runstad Associates Limited Partnership, a
Washington limited partnership, any Mortgagee(s), and their respective members,
principals, beneficiaries, partners, officers, directors, employees, and agents,
and other designees of Landlord as the interest of such designees shall appear,
as additional insureds. All policies of Tenant's Insurance shall contain
endorsements that the insurer(s) shall give Landlord and its designees at least
30 days' advance written notice of any change, cancellation, termination or
lapse of insurance. Tenant shall provide Landlord with a certificate of
insurance evidencing Tenant's Insurance prior to the earlier to occur of the
Commencement Date or the date Tenant is provided with possession of the Premises
for any reason, and upon renewals at least 15 days prior to the expiration of
the insurance coverage. So long as the same is available at commercially
reasonable rates, Landlord shall maintain so called All Risk property insurance
on the Buildings at replacement cost value, as reasonably estimated by Landlord.
Except as specifically provided to the contrary, the limits of either party's'
insurance shall not limit such party's liability under this Lease.
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<PAGE>
XVI. Subrogation.
Notwithstanding anything in this Lease to the contrary, Landlord and
Tenant shall cause their respective insurance carriers to waive any and all
rights of recovery, claim, action or causes of action against the other and
their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Buildings,
the Premises, any additions or improvements to the Buildings or Premises, or any
contents thereof, including all rights of recovery, claims, actions or causes of
action arising out of the negligence of Landlord or any Landlord Related Parties
or the negligence of Tenant or any Tenant Related Parties, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.
XVII. Casualty Damage.
A. If all or any part of the Premises is damaged by fire or other
casualty, Tenant shall immediately notify Landlord in writing. During any
period of time that all or a material portion of the Premises is rendered
untenantable as a result of a fire or other casualty, the Rent shall abate for
the portion of the Premises that is untenantable and not used by Tenant.
Landlord shall have the right to terminate this Lease if: (1) the Building
shall be damaged so that, in Landlord's reasonable judgment, substantial
alteration or reconstruction of the Building shall be required (whether or not
the Premises has been damaged); (2) Landlord is not permitted by Law to rebuild
the Building in substantially the same form as existed before the fire or
casualty; (3) the Premises have been materially damaged and there is less than
one (1) year of the Term remaining on the date of the casualty; (4) any
Mortgagee requires that the insurance proceeds be applied to the payment of the
mortgage debt; or (5) a material uninsured loss to the Building occurs.
Landlord may exercise its right to terminate this Lease by notifying Tenant in
writing within 90 days after the date of the casualty. In addition to
Landlord's rights to terminate as provided herein, Tenant shall have the right
to terminate this Lease if: (a) a substantial portion of the Premises has been
damaged by fire or other casualty and such damage cannot reasonably be repaired
within sixty (60) days after the date of such fire or other casualty; (b) there
is less than one (1) year of the Lease Term remaining on the date of such
casualty; (c) the casualty was not caused by the negligence or willful
misconduct of Tenant or its agents, employees or contractors; and (d) Tenant
provides Landlord with written notice of its intent to terminate within thirty
(30) days after the date of the fire or other casualty. If neither Landlord nor
Tenant elect to terminate this Lease, Landlord shall commence and proceed with
reasonable diligence to repair and restore the Building and the Leasehold
Improvements (excluding any Alterations that were performed by Tenant in
violation of this Lease). However, in no event shall Landlord be required to
spend more than the insurance proceeds received by Landlord. Landlord shall not
be liable for any loss or damage to Tenant's Property or to the business of
Tenant resulting in any way from the fire or other casualty or from the repair
and restoration of the damage. Landlord and Tenant hereby waive the provisions
of any Law relating to the matters addressed in this Article, and agree that
their respective rights for damage to or destruction of the Premises shall be
those specifically provided in this Lease.
B. If all or any portion of the Premises shall be made untenantable
by fire or other casualty, Landlord shall, with reasonable promptness, cause an
architect or general
20
<PAGE>
contractor selected by Landlord to provide Landlord and Tenant with a written
estimate of the amount of time required to substantially complete the repair and
restoration of the Premises and make the Premises tenantable again, using
standard working methods ("Completion Estimate"). If the Completion Estimate
indicates that the Premises cannot be made tenantable within 210 days from the
date the repair and restoration is started, then regardless of anything in
Section XVII.A. above to the contrary, either party shall have the right to
terminate this Lease by giving written notice to the other of such election
within 30 days after receipt of the Completion Estimate. Tenant, however, shall
not have the right to terminate this Lease if the fire or casualty was caused by
the negligence or intentional misconduct of Tenant, Tenant Related Parties or
any of Tenant's transferees, contractors or licensees.
XVIII. Condemnation.
Either party may terminate this Lease if the whole or any material
part of the Premises shall be taken or condemned for any public or quasi-public
use under Law, by eminent domain or private purchase in lieu thereof (a
"Taking"). Landlord shall also have the right to terminate this Lease if there
is a Taking of any portion of the Building or Property which would leave the
remainder of the Building unsuitable for use as an office building in a manner
comparable to the Building's use prior to the Taking. In order to exercise its
right to terminate the Lease, Landlord or Tenant, as the case may be, must
provide written notice of termination to the other within 45 days after the
terminating party first receives notice of the Taking. Any such termination
shall be effective as of the date the physical taking of the Premises or the
portion of the Building or Property occurs. If this Lease is not terminated,
the Rentable Square Footage of the Building, the Rentable Square Footage of the
Premises and Tenant's Pro Rata Share shall, if applicable, be appropriately
adjusted. In addition, Rent for any portion of the Premises taken or condemned
shall be abated during the unexpired Term of this Lease effective when the
physical taking of the portion of the Premises occurs. All compensation awarded
for a Taking, or sale proceeds, shall be the property of Landlord, any right to
receive compensation or proceeds being expressly waived by Tenant. However,
Tenant may file a separate claim at its sole cost and expense for Tenant's
Property and Tenant's reasonable relocation expenses, provided the filing of the
claim does not diminish the award which would otherwise be receivable by
Landlord.
XIX. Events of Default.
Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:
A. Tenant's failure to pay when due all or any portion of the
Rent, if the failure continues for 3 days after written notice to Tenant
("Monetary Default").
B. Tenant's failure (other than a Monetary Default) to comply with
any term, provision or covenant of this Lease, if the failure is not cured
within 30 days after written notice to Tenant. However, if Tenant's failure to
comply cannot reasonably be cured within 30 days, Tenant shall be allowed
additional time (not to exceed 60 days) as is reasonably necessary to cure the
failure so long as: (1) Tenant commences to cure the failure within 30 days,
and (2) Tenant diligently pursues a course of action that will cure the failure
and bring Tenant back
21
<PAGE>
into compliance with the Lease. However, if Tenant's failure to comply creates a
hazardous condition, the failure must be cured immediately upon notice to
Tenant. In addition, if Landlord provides Tenant with notice of Tenant's failure
to comply with any particular term, provision or covenant of the Lease on 3
occasions during any 12 month period, Tenant's subsequent violation of such
term, provision or covenant shall, at Landlord's option, not require a thirty
(30) day cure period.
C. Tenant or any Guarantor becomes insolvent, makes a transfer in
fraud of creditors or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts when due.
D. The leasehold estate is taken by process or operation of Law.
XX. Remedies.
A. Upon any default, Landlord shall have the right without notice or
demand (except as provided in Article XIX) to pursue any of its rights and
remedies at Law or in equity, including any one or more of the following
remedies:
1. Terminate this Lease, in which case Tenant shall immediately
surrender the Premises to Landlord. If Tenant fails to surrender the
Premises, Landlord may, in compliance with applicable Law and without
prejudice to any other right or remedy, enter upon and take possession of
the Premises and expel and remove Tenant, Tenant's Property and any party
occupying all or any part of the Premises. Tenant shall pay Landlord on
demand the amount of all past due Rent and other losses and damages which
Landlord may suffer as a result of Tenant's default, whether by Landlord's
inability to relet the Premises on satisfactory terms or otherwise,
including, without limitation, all Costs of Reletting (defined below) and
any deficiency that may arise from reletting or the failure to relet the
Premises. "Costs of Reletting" shall include all costs and expenses
incurred by Landlord in reletting or attempting to relet the Premises,
including, without limitation, reasonable legal fees, brokerage
commissions, the cost of alterations and the value of other concessions or
allowances granted to a new tenant.
2. Terminate Tenant's right to possession of the Premises and, in
compliance with applicable Law, expel and remove Tenant, Tenant's Property
and any parties occupying all or any part of the Premises. Landlord may
relet all or any part of the Premises, without notice to Tenant, for a term
that may be greater or less than the balance of the Term and on such
conditions (which may include concessions, free rent and alterations of the
Premises) and for such uses as Landlord in its reasonable business judgment
shall determine. Landlord may collect and receive all rents and other
income from the reletting. Tenant shall pay Landlord on demand all past
due Rent, all Costs of Reletting and any deficiency arising from the
reletting or failure to relet the Premises. The re-entry or taking of
possession of the Premises shall not be construed as an election by
Landlord to terminate this Lease unless a written notice of termination is
given to Tenant. Landlord shall make reasonable efforts to mitigate its
damages as required by law or equity following a default by Tenant.
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<PAGE>
3. In lieu of calculating damages under Sections XX.A.1. or XX.A.2.
above, Landlord may elect to receive as damages the sum of (a) all Rent
accrued through the date of termination of this Lease or Tenant's right to
possession, and (b) an amount equal to the total Rent that Tenant would
have been required to pay for the remainder of the Term discounted to
present value at the Prime Rate (defined in Section XX.B. below) then in
effect, minus the then present fair rental value of the Premises for the
remainder of the Term, similarly discounted, after deducting the
proportionate share of the anticipated Costs of Reletting attributable to
the period between the Lease termination date and the last day of the Lease
term.
B. Unless expressly provided in this Lease, the repossession or re-
entering of all or any part of the Premises shall not relieve Tenant of its
liabilities and obligations under the Lease. No right or remedy of Landlord
shall be exclusive of any other right or remedy. Each right and remedy shall be
cumulative and in addition to any other right and remedy now or subsequently
available to Landlord at Law or in equity. If Landlord declares Tenant to be in
default, Landlord shall be entitled to receive interest on any unpaid item of
Rent at a rate equal to the Prime Rate plus 4%. For purposes hereof, the "Prime
Rate" shall be the per annum interest rate publicly announced as its prime or
base rate in the "Money Rates" column of the Wall Street Journal. Forbearance
by Landlord to enforce one or more remedies shall not constitute a waiver of any
default.
XXI. Limitation of Liability.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED
TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO
LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE
PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S)
(DEFINED IN ARTICLE XXVI BELOW) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN ARTICLE XXVI BELOW) ON THE PROPERTY, BUILDING OR PREMISES, NOTICE
AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. IN ADDITION, TENANT
ACKNOWLEDGES THAT ANY ENTITY MANAGING THE BUILDING ON BEHALF OF LANDLORD, OR
WHICH EXECUTES THIS LEASE AS AGENT FOR LANDLORD, IS ACTING SOLELY IN ITS
CAPACITY AS AGENT FOR LANDLORD AND SHALL NOT BE LIABLE FOR ANY OBLIGATIONS,
LIABILITIES, LOSSES OR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
LANDLORD'S OBLIGATIONS UNDER THIS LEASE, ALL OF WHICH ARE EXPRESSLY WAIVED BY
TENANT.
XXII. No Waiver.
Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it
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constitute an estoppel. Either party's failure to enforce its rights for a
default shall not constitute a waiver of its rights regarding any subsequent
default. Receipt by Landlord of Tenant's keys to the Premises shall not
constitute an acceptance or surrender of the Premises.
XXIII. Quiet Enjoyment.
Tenant shall, and may peacefully have, hold and enjoy the Premises,
subject to the terms of this Lease, provided Tenant pays the Rent and fully
performs all of its covenants and agreements. This covenant and all other
covenants of Landlord shall be binding upon Landlord and its successors only
during its or their respective periods of ownership of the Buildings, and shall
not be a personal covenant of Landlord or the Landlord Related Parties.
XXIV. Relocation.
[Intentionally omitted.]
XXV. Holding Over.
Except for any permitted occupancy by Tenant under Article VIII, if
Tenant fails to surrender the Premises at the expiration or earlier termination
of this Lease, occupancy of the Premises after the termination or expiration
shall be that of a tenancy at sufferance. Tenant's occupancy of the Premises
during the holdover shall be subject to all the terms and provisions of this
Lease and Tenant shall pay an amount (on a per month basis without reduction for
partial months during the holdover) equal to 150% of the greater of: (1) the
sum of the Base Rent and Additional Rent due for the period immediately
preceding the holdover; or (2) the fair market gross rental for the Premises as
reasonably determined by Landlord. No holdover by Tenant or payment by Tenant
after the expiration or early termination of this Lease shall be construed to
extend the Term or prevent Landlord from immediate recovery of possession of the
Premises by summary proceedings or otherwise. In addition to the payment of the
amounts provided above, if Landlord is unable to deliver possession of the
Premises to a new tenant, or to perform improvements for a new tenant, as a
result of Tenant's holdover and Tenant fails to vacate the Premises within 30
days after Landlord notifies Tenant of Landlord's inability to deliver
possession, or perform improvements, Tenant shall be liable to Landlord for all
damages, including, without limitation, consequential damages, that Landlord
suffers from the holdover.
XXVI. Subordination to Mortgages; Estoppel Certificate.
Tenant accepts this Lease subject and subordinate to any
mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or
subsequently arising upon the Premises, the Buildings or the Property, and to
renewals, modifications, refinancings and extensions thereof (collectively
referred to as a "Mortgage"). The party having the benefit of a Mortgage shall
be referred to as a "Mortgagee". This clause shall be self-operative, but upon
request from a Mortgagee, Tenant shall execute a subordination agreement in the
form of Exhibit F attached hereto or in other commercially reasonable form
---------
containing a nondisturbance clause. In lieu of having the Mortgage be superior
to this Lease, a Mortgagee shall have the right at any time to subordinate its
Mortgage to this Lease. If requested by a successor-in-interest to all or a part
of
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Landlord's interest in the Lease, Tenant shall, without charge, attorn to the
successor-in-interest. Landlord and Tenant shall each, within 10 days after
receipt of a written request from the other, execute and deliver an estoppel
certificate to those parties as are reasonably requested by the other (including
a Mortgagee or prospective purchaser). The estoppel certificate shall include a
statement certifying that this Lease is unmodified (except as identified in the
estoppel certificate) and in full force and effect, describing the dates to
which Rent and other charges have been paid, representing that, to such party's
actual knowledge, there is no default (or stating the nature of the alleged
default) and indicating other matters with respect to the Lease that may
reasonably be requested. Tenant approves the form of Estoppel Certificate
attached hereto as Exhibit G. Landlord shall use commercially reasonable efforts
---------
to furnish Tenant with an executed Subordination Agreement in the form of
Exhibit F within thirty (30) days after mutual execution of this Lease.
---------
XXVII. Attorneys' Fees.
If either party institutes a suit against the other for violation
of or to enforce any covenant or condition of this Lease, or if either party
intervenes in any suit in which the other is a party to enforce or protect its
interest or rights, the prevailing party shall be entitled to all of its costs
and expenses, including, without limitation, reasonable attorneys' fees.
XXVIII. Notice.
If a demand, request, approval, consent or notice (collectively
referred to as a "notice") shall or may be given to either party by the other,
the notice shall be in writing and delivered by hand or sent by registered or
certified mail with return receipt requested, or sent by overnight or same day
courier service or sent by facsimile (with electric confirmation of receipt) at
the party's respective Notice Address(es) set forth in Article I, except that if
Tenant has vacated the Premises (or if the Notice Address for Tenant is other
than the Premises, and Tenant has vacated such address) without providing
Landlord a new Notice Address, Landlord may serve notice in any manner described
in this Article or in any other manner permitted by Law. Each notice shall be
deemed to have been received or given on the earlier to occur of actual delivery
or the date on which delivery is refused, or, if Tenant has vacated the Premises
or the other Notice Address of Tenant without providing a new Notice Address,
three (3) days after notice is deposited in the U.S. mail or with a courier
service in the manner described above. Either party may, at any time, change its
Notice Address by giving the other party written notice of the new address in
the manner described in this Article.
XXIX. Excepted Rights.
This Lease does not grant any rights to light or air over or about
the Buildings. Landlord excepts and reserves exclusively to itself the use of:
(1) roofs, (2) telephone, electrical and janitorial closets, (3) equipment
rooms, Building risers or similar areas that are used by Landlord for the
provision of Building services, (4) rights to the land and improvements below
the floor of the Premises, (5) the improvements and air rights above the
Premises, (6) the improvements and air rights outside the demising walls of the
Premises, and (7) the areas within the Premises used for the installation of
utility lines and other installations serving occupants of
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<PAGE>
the Buildings. Landlord has the right to change the Building's name or address.
Landlord also has the right to make such other changes to the Property and
Buildings as Landlord deems appropriate, provided the changes do not materially
affect Tenant's ability to use the Premises for the Permitted Use. Landlord
shall also have the right (but not the obligation) to temporarily close the
Buildings if Landlord reasonably determines that there is an imminent danger of
significant damage to the Buildings or of personal injury to Landlord's
employees or the occupants of the Buildings. The circumstances under which
Landlord may temporarily close the Buildings shall include, without limitation,
electrical interruptions, hurricanes and civil disturbances. A closure of the
Buildings under such circumstances shall not constitute a constructive eviction
nor entitle Tenant to an abatement or reduction of Rent.
XXX. Surrender of Premises.
At the expiration or earlier termination of this Lease or Tenant's
right of possession, Tenant shall remove Tenant's Property (defined in Article
XV) from the Premises, and quit and surrender the Premises to Landlord, broom
clean, and in good order, condition and repair, ordinary wear and tear and
damage from casualty excepted. Tenant shall also be required to remove the
Required Removables in accordance with Article VIII. If Tenant fails to remove
any of Tenant's Property within 2 days after the termination of this Lease or of
Tenant's right to possession, Landlord, at Tenant's sole cost and expense, shall
be entitled (but not obligated) to remove and store Tenant's Property. Landlord
shall not be responsible for the value, preservation or safekeeping of Tenant's
Property. Tenant shall pay Landlord, upon demand, the expenses and storage
charges incurred for Tenant's Property. In addition, if Tenant fails to remove
Tenant's Property from the Premises or storage, as the case may be, within 30
days after written notice, Landlord may deem all or any part of Tenant's
Property to be abandoned, and title to Tenant's Property shall be deemed to be
immediately vested in Landlord.
XXXI. Miscellaneous.
A. This Lease and the rights and obligations of the parties shall
be interpreted, construed and enforced in accordance with the Laws of the state
of Washington and Landlord and Tenant hereby irrevocably consent to the
jurisdiction and proper venue of such state. If any term or provision of this
Lease shall to any extent be invalid or unenforceable, the remainder of this
Lease shall not be affected, and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by Law. The headings and titles to the
Articles and Sections of this Lease are for convenience only and shall have no
effect on the interpretation of any part of the Lease.
B. Tenant shall not record this Lease or any memorandum without
Landlord's prior written consent.
C. Whenever a period of time is prescribed for the taking of an
action by Landlord or Tenant, the period of time for the performance of such
action shall be extended by the number of days that the performance is actually
delayed due to strikes, acts of God, shortages of labor or materials, war, civil
disturbances and other causes beyond the reasonable control of the performing
party ("Force Majeure"). However, events of Force Majeure shall not extend any
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<PAGE>
period of time for the payment of Rent or other sums payable by either party or
any period of time for the written exercise of an option or right by either
party.
D. Landlord shall have the right to transfer and assign, in whole
or in part, all of its rights and obligations under this Lease and in the
Buildings and/or Property referred to herein, and upon such transfer Landlord
shall be released from any future, unaccrued obligations hereunder, and Tenant
agrees to look solely to the successor in interest of Landlord for the
performance of such obligations.
E. 1. Tenant represents that it has dealt directly with and only
with the Broker as a broker in connection with this Lease. Tenant shall
indemnify and hold Landlord and the Landlord Related Parties harmless from all
claims of any other brokers claiming to have represented Tenant in connection
with this Lease. Landlord agrees to indemnify and hold Tenant and the Tenant
Related Parties harmless from all claims of any brokers claiming to have
represented Landlord in connection with this Lease. Landlord agrees to pay a
brokerage commission to Broker in accordance with the terms of a written
commission agreement between Landlord and Broker.
2. Agency Disclosure. At the signing of this Lease, Landlord's
-----------------
leasing agent John Black, of Broderick Group, Inc., represented Landlord. At
the signing of this Lease, Tenant's agent, Geoff Boguch of Colliers
International, represented Tenant. Each party signing this document confirms
that the prior oral and/or written disclosure of agency was provided to such
party in this transaction, as required by RCW 18.86.030(l)(g).
3. Landlord and Tenant, by their execution of this Lease, each
acknowledge and agree that they have timely received a pamphlet on the law of
real estate agency as required under RCW 18.86.030(1)(f).
F. Tenant covenants, warrants and represents that: (1) each
individual executing, attesting and/or delivering this Lease on behalf of Tenant
is authorized to do so on behalf of Tenant; (2) this Lease is binding upon
Tenant; and (3) Tenant is duly organized and legally existing in the state of
its organization and is qualified to do business in the state in which the
Premises are located. If there is more than one Tenant, or if Tenant is
comprised of more than one party or entity, the obligations imposed upon Tenant
shall be joint and several obligations of all the parties and entities.
Notices, payments and agreements given or made by, with or to any one person or
entity shall be deemed to have been given or made by, with and to all of them.
G. Time is of the essence with respect to Tenant's exercise of any
expansion, renewal or extension rights granted to Tenant. This Lease shall
create only the relationship of landlord and tenant between the parties, and not
a partnership, joint venture or any other relationship. This Lease and the
covenants and conditions in this Lease shall inure only to the benefit of and be
binding only upon Landlord and Tenant and their permitted successors and
assigns.
H. The expiration of the Term, whether by lapse of time or
otherwise, shall not relieve either party of any obligations which accrued prior
to or which may continue to
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accrue after the expiration or early termination of this Lease. Without limiting
the scope of the prior sentence, it is agreed that Tenant's obligations under
Sections IV.A., IV.B., VIII, XIV, XX, XXV and XXX shall survive the expiration
or early termination of this Lease.
I. Landlord has delivered a copy of this Lease to Tenant for
Tenant's review only, and the delivery of it does not constitute an offer to
Tenant or an option. This Lease shall not be effective against any party hereto
until an original copy of this Lease has been signed by such party.
J. All understandings and agreements previously made between the
parties are superseded by this Lease, and neither party is relying upon any
warranty, statement or representation not contained in this Lease. This Lease
may be modified only by a written agreement signed by Landlord and Tenant.
K. Tenant, within 15 days after request, shall provide Landlord
with a current financial statement and such other information as Landlord may
reasonably request in order to create a "business profile" of Tenant and
determine Tenant's ability to fulfill its obligations under this Lease.
Landlord, however, shall not require Tenant to provide such information unless
Landlord is requested to produce the information in connection with a proposed
financing or sale of the Buildings. Upon written request by Tenant, Landlord
shall enter into a commercially reasonable confidentiality agreement covering
any confidential information that is disclosed by Tenant.
XXXII. Entire Agreement.
This Lease and the following exhibits and attachments constitute
the entire agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: Exhibit A (Outline and Location of Premises),
---------
Exhibit A-2 (Legal Description of Property), Exhibit B (Rules and Regulations),
----------- ---------
Exhibit C (Commencement Letter), Exhibit D (Work Letter Agreement, if required),
--------- ---------
Exhibit E (Additional Provisions, if required), Exhibit F (Subordination
--------- ---------
Agreement; Acknowledgment of Lease Assignment, Estoppel, Attornment and Non-
Disturbance Agreement); and Exhibit G (Tenant Estoppel Certificate).
---------
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Landlord and Tenant have executed this Lease as of the day and year
first above written.
LANDLORD:
WRC SUNSET NORTH LLC, a Washington limited liability
company
By: WRIGHT RUNSTAD
ASSOCIATES LIMITED
PARTNERSHIP, a Washington
limited partnership, its Manager
By: WRIGHT RUNSTAD &
COMPANY, a Washington
corporation, its general partner
By:
--------------------------------
Its:
--------------------------------
EOP SUNSET NORTH, L.L.C., a
Delaware limited liability company, its
manager
By: EOP OPERATING LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: EQUITY OFFICE
PROPERTIES TRUST, a
Maryland real estate investment
trust, its managing general
partner
By:
--------------------------------
Its:
--------------------------------
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<PAGE>
TENANT:
drugstore.com, inc.,
a Delaware corporation
By:
--------------------------------
Its:
--------------------------------
LANDLORD ACKNOWLEDGMENTS
STATE OF WASHINGTON )
) ss:
COUNTY OF KING )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Wright Runstad & Company, the general partner of Wright
Runstad Associates Limited Partnership, a Member of WRC SUNSET NORTH LLC, a
Washington limited liability company, the Landlord in the foregoing instrument,
and acknowledged that as such officer, being authorized so to do, (s)he executed
the foregoing instrument on behalf of said corporation by subscribing the name
of such corporation by himself/herself as such officer and caused the corporate
seal of said corporation to be affixed thereto, as a free and voluntary act, and
as the free and voluntary act of said corporation, for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
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STATE OF _______________ )
) ss:
COUNTY OF ______________ )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Equity Office Properties Trust, the general partner of EOP
Operating Limited Partnership, the sole member of EOP Sunset North, L.L.C., a
Member of WRC SUNSET NORTH LLC, a Washington limited liability company, the
Landlord in the foregoing instrument, and acknowledged that as such officer,
being authorized so to do, (s)he executed the foregoing instrument on behalf of
said corporation by subscribing the name of such corporation by himself/herself
as such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
31
<PAGE>
TENANT ACKNOWLEDGMENT
STATE OF WASHINGTON )
) ss:
COUNTY OF KING )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of drugstore.com, inc., a Delaware corporation, the Tenant in
the foregoing instrument, and acknowledged that as such officer, being
authorized so to do, (s)he executed the foregoing instrument on behalf of said
corporation by subscribing the name of such corporation by himself/herself as
such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
32
<PAGE>
EXHIBIT A-1
PREMISES
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space in the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
Exhibit A-1, Page 1
<PAGE>
EXHIBIT A-2
LEGAL DESCRIPTION OF PROPERTY
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space in the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
LOTS 6 THROUGH 10 OF SUNSET RIDGE I-90 CORPORATE CAMPUS, A BINDING SITE PLAN, AS
PER PLAT RECORDED IN VOLUME 154 OF PLATS, PAGES 77 THROUGH 80, RECORDS OF KING
COUNTY;
EXCEPT ANY PORTION CONVEYED FOR 139TH AVE. S.E., BY DEED RECORDED UNDER
RECORDING NO. 9101280422;
TOGETHER WITH AN UNDIVIDED 60% INTEREST IN LOT 11 AND TRACT C OF SAID PLAT;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9601091040;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9107260572;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9309292404;
SITUATE IN THE CITY OF BELLEVUE, COUNTY OF KING, STATE OF WASHINGTON.
Exhibit A-2, Page 1
<PAGE>
EXHIBIT B
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to
the Premises, the Buildings, the parking garage (if any), the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the Lease.
1. Sidewalks, doorways, vestibules, halls, stairways and other
similar areas shall not be obstructed by Tenant or used by Tenant for any
purpose other than ingress and egress to and from the Premises. No rubbish,
litter, trash, or material shall he placed, emptied, or thrown in those areas.
At no time shall Tenant permit Tenant's employees to loiter in Common Areas or
elsewhere about the Buildings or Property.
2. Plumbing fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed in the fixtures or appliances. Damage
resulting to fixtures or appliances by Tenant, its agents, employees or
invitees, shall be paid for by Tenant, and Landlord shall not be responsible for
the damage.
3. No signs, advertisements or notices shall be painted or affixed to
windows, doors or other parts of the Buildings, except those of such color,
size, style and in such places as are first approved in writing by Landlord and
except those that are within the interior of the Premises and not visible from
outside the Premises. All tenant identification and suite numbers at the
entrance to the Premises shall be installed by Landlord, at Tenant's cost and
expense, using the standard graphics for the Buildings. Except in connection
with the hanging of lightweight pictures and wall decorations, no nails, hooks
or screws shall be inserted into any part of the Premises or Buildings except by
the Building maintenance personnel.
4. Landlord shall provide and maintain in the first floor (main
lobby) of the Building an alphabetical directory board or other directory device
listing tenants, and no other directory shall be permitted unless previously
consented to by Landlord in writing.
5. Tenant shall not place any lock(s) on any door in the Premises or
Buildings without Landlord's prior written consent and Landlord shall have the
right to retain at all times and to use keys to all locks within and into the
Premises. A reasonable number of keys to the locks on the entry doors in the
Premises shall be furnished by Landlord to Tenant at Tenant's cost, and Tenant
shall not make any duplicate keys. All keys shall be returned to Landlord at the
expiration or early termination of this Lease.
6. All contractors, contractors representatives and installation
technicians performing work in the Buildings shall be subject to Landlord's
prior approval (which shall not be unreasonably withheld) and shall be required
to comply with Landlord's standard rules, regulations, policies and procedures,
which may be revised from time to time following prior written notice to Tenant.
Exhibit B, Page 1
<PAGE>
7. Movement in or out of the Buildings of furniture or office
equipment, or dispatch or receipt by Tenant of merchandise or materials
requiring the use of elevators, stairways, lobby areas or loading dock areas,
shall be restricted to hours designated by Landlord. Tenant shall obtain
Landlord's prior approval by providing a detailed listing of the activity. If
approved by Landlord, the activity shall be under the supervision of Landlord
and performed in the manner required by Landlord. Tenant shall assume all risk
for damage to articles moved and injury to any persons resulting from the
activity. If equipment, property, or personnel of Landlord or of any other party
is damaged or injured as a result of or in connection with the activity, Tenant
shall be solely liable for any resulting damage or loss.
8. Landlord shall have the right to approve the weight, size, or
location of heavy equipment or articles in and about the Premises. Damage to the
Buildings by the installation, maintenance, operation, existence or removal of
property of Tenant shall be repaired at Tenant's sole expense.
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall not: (1) make or permit any improper, objectionable
or unpleasant noises or odors in the Buildings, or otherwise interfere in any
way with other tenants or persons having business with them; (2) solicit
business or distribute, or cause to be distributed, in any portion of the
Buildings, handbills, promotional materials or other advertising; or (3) conduct
or permit other activities in the Buildings that might, in Landlord's sole
opinion, constitute a nuisance.
11. No animals, except those assisting handicapped persons, shall be
brought into the Buildings or kept in or about the Premises.
12. No inflammable, explosive or dangerous fluids or substances shall
be used or kept by Tenant in the Premises, Buildings or about the Property
except for those properly stored and typically associated with office use,
including cleaning supplies, and except for samples of pharmaceuticals, and
other products stored and disposed of in compliance with all applicable laws and
regulations. Tenant shall not, without Landlord's prior written consent, use,
store, install, spill, remove, release or dispose of, within or about the
Premises or any other portion of the Property, any asbestos-containing materials
or any solid, liquid or gaseous material now or subsequently considered toxic or
hazardous under the provisions of 42 U.S.C. Section 9601 et seq. or any other
applicable environmental Law which may now or later be in effect. Tenant shall
comply with all Laws pertaining to and governing the use of these materials by
Tenant, and shall remain solely liable for the costs of abatement and removal.
13. Tenant shall not use or occupy the Premises in any manner or for
any purpose which might injure the reputation or impair the present or future
value of the Premises or the Buildings. Tenant shall not use, or permit any part
of the Premises to be used, for lodging, sleeping or for any illegal purpose.
14. Tenant shall not take any action which would violate Landlord's
labor contracts or which would cause a work stoppage, picketing, labor
disruption or dispute, or interfere with Landlord's or any other tenant's or
occupant's business or with the rights and
Exhibit B, Page 2
<PAGE>
privileges of any person lawfully in the Buildings ("Labor Disruption"). Tenant
shall take the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord, immediately terminate any work
in the Premises that gave rise to the Labor Disruption, until Landlord gives its
written consent for the work to resume. Tenant shall have no claim for damages
against Landlord or any of the Landlord Related Parties, nor shall the date of
the commencement of the Term be extended as a result of the above actions.
15. Tenant shall not install, operate or maintain in the Premises or
in any other area of the Buildings, electrical equipment that would overload the
electrical system beyond its capacity for proper, efficient and safe operation
as determined solely by Landlord. Tenant shall not furnish cooling or heating to
the Premises, including, without limitation, the use of electronic or gas
heating devices, without Landlord's prior written consent, or as provided in
Exhibit D. Tenant shall not use more than its proportionate share of telephone
lines and other telecommunication facilities available to service the Buildings.
Current base Building design for telephone capacity is 300 lines per floor, as
provided by U.S. West, although Tenant may arrange with that service provider to
increase that capacity at Tenant's expense.
16. Tenant shall not operate or permit to be operated a coin or token
operated vending machine or similar device (including, without limitation,
telephones, lockers, toilets, scales, amusement devices and machines for sale of
beverages, foods, candy, cigarettes and other goods), except for machines for
the exclusive use of Tenant's employees, and then only if the operation does not
violate the lease of any other tenant in the Buildings.
17. Bicycles and other vehicles are not permitted inside the
Buildings or on the walkways outside the Buildings, except in areas designated
by Landlord.
18. Landlord may from time to time adopt systems and procedures for
the security and safety of the Buildings, its occupants, entry, use and
contents. Tenant, its agents, employees, contractors, guests and invitees shall
comply with Landlord's systems and procedures.
19. Landlord shall have the right to prohibit the use of the name of
the Buildings or any other publicity by Tenant that in Landlord's sole opinion
may impair the reputation of the Buildings or their desirability. Upon written
notice from Landlord, Tenant shall refrain from and discontinue such publicity
immediately.
20. Tenant shall not canvass, solicit or peddle in or about the
Buildings or the Property.
21. Neither Tenant nor its agents, employees, contractors, guests or
invitees shall smoke or permit smoking in the Common Areas, unless the Common
Areas have been declared a designated smoking area by Landlord, nor shall the
above parties allow smoke from the Premises to emanate into the Common Areas or
any other part of the Buildings. Landlord shall have the right to designate the
Buildings (including the Premises) as a non-smoking building.
22. Landlord shall have the right to designate and approve standard
window coverings for the Premises and to establish rules to assure that the
Buildings present a uniform
Exhibit B, Page 3
<PAGE>
exterior appearance. Tenant shall ensure, to the extent reasonably practicable,
that window coverings are closed on windows in the Premises while they are
exposed to the direct rays of the sun.
23. Deliveries to and from the Premises shall be made only at the
times, in the areas and through the entrances and exits reasonably designated by
Landlord. Tenant shall not make deliveries to or from the Premises in a manner
that might interfere with the use by any other tenant of its premises or of the
Common Areas, any pedestrian use, or any use which is inconsistent with good
business practice.
24. The work of cleaning personnel shall not be hindered by Tenant
after 6:00 p.m., and cleaning work may be done at any time when the offices are
vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall
provide adequate waste and rubbish receptacles to prevent unreasonable hardship
to the cleaning service.
Exhibit B, Page 4
<PAGE>
EXHIBIT C
COMMENCEMENT LETTER
Date
------------------------
Tenant
Address
Re: Commencement Letter with respect to that certain Lease dated
____________________ by and between WRC SUNSET NORTH LLC, a Washington
limited liability company, as Landlord, drugstore.com, inc., a Delaware
corporation, as Tenant for 57,436 square feet of Rentable Area in the
Buildings located at Northeast comer of 139th Avenue Southeast and
Southeast 32nd Street, Bellevue, King County, Washington.
Dear _______________:
In accordance with the terms and conditions of the above referenced Lease,
Tenant hereby accepts possession of the Premises and agrees as follows:
1. The Commencement Date of the Lease is __________________;
2. The Termination Date of the Lease is ___________________.
Please acknowledge your acceptance of possession and agreement to the terms
set forth above by signing all three (3) copies of this Commencement Letter in
the space provided and returning two (2) fully executed copies of the same to my
attention.
Sincerely,
Property Manager
Agreed and Accepted:
Tenant:__________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
Exhibit C, Page 1
<PAGE>
EXHIBIT D
WORK LETTER
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space on the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
Defined terms used in this Exhibit D shall have the same meanings
given them in the attached Lease.
I. IMPROVEMENTS PROVIDED BY LANDLORD: Landlord agrees to provide
improvements to the Buildings and the Premises pursuant to the attached Exhibit
D-1, Base Building Condition (together with the Tenant Improvements, as defined
below, the "Landlord Work"), on or before the date the Tenant Improvement
Contractor commences construction of the Tenant Improvements.
II. IMPROVEMENTS BY TENANT/REIMBURSEMENT BY LANDLORD: Design and
construction of all improvements in the Premises beyond those listed on Exhibit
D-1 (the "Tenant Improvements") shall be provided at Tenant's expense. Landlord
shall pay the cost of such additional improvements up to an amount equal to
$27.50 per square foot of "Tenant's Usable Area" as outlined on the floor
plan(s) in Exhibit A, for a total payment by Landlord, based on a usable area of
50,957 square feet, of $1,401,317.50 (the "Allowance"). The Allowance shall be
applied only to the cost of design and construction of such improvements,
including but not be limited to: architectural and engineering design,
partitions (including one-half (1/2) the cost of any public corridor or demising
partitions enclosing the Tenant's Usable 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, floor coverings, and all applicable permit fees and sales tax.
Notwithstanding anything to the contrary contained herein, the Allowance may
only be applied to Building Standard tenant improvements unless otherwise
approved in writing by Landlord.
Landlord shall obtain all permits and government approvals and assume
specific responsibility for delivery of the Premises as defined in the Lease and
this Exhibit D, provided Tenant shall have met the drawing delivery dates
herein. If Tenant does not initially select a contractor, then Landlord shall
manage the bidding of tenant improvements to at least three (3) firms acceptable
to Landlord, one of which shall be Landlord's Contractor. The contractor
selected by Tenant to construct the Tenant Improvements, Turner Construction,
Inc., shall be hereinafter known as the "Tenant Improvement Contractor.
III. BUILDING STANDARD IMPROVEMENTS: As used herein, "Building
Standard" shall mean the type, grade, brand, quality and/or quantity of
materials Landlord designates from time to time to be the minimum quality and/or
quantity to be used in
Exhibit D, Page 1
<PAGE>
the Building. Tenant shall use Building Standard lighting, window coverings,
doors, relites, hardware, ceiling treatment and heating, ventilating and air
conditioning distribution equipment and controls, except that Tenant may install
a Liebert or similar dedicated cooling system in the technical rooms in the
Premises. If such system will connect to the Building system, its compatibility
must be approved by Landlord.
IV. DESIGN OF TENANT IMPROVEMENTS: Tenant, at Tenant's initial cost
and with the approval of Landlord, has retained Marvin Stein, Inc. ("Tenant's
Office Planner") 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 IV(B) of this Exhibit D for construction of the
tenant improvements in Tenant's area. All of Tenant's plans described below
("Tenant's Plans") shall be delivered to Landlord on the dates stated (the "Plan
Delivery Dates"), and shall be subject to approval of Landlord, such approval
not to be unreasonably withheld or delayed. Landlord agrees to respond in
writing with approval or comments within five (5) business days after initial
receipt of each component of Tenant's Plans or other initial requests for review
or approval under this Exhibit D, and two (2) business days after receipt of any
changes or additions to an initial submittal.
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 Landlord approval. If such approved basic Building modifications
are made subsequent to completion of the shell and core documents or Landlord's
architect reasonably charges Landlord for such changes, then such modifications
shall be subject to Landlord's approval and the cost of the changes to the
documents as well as any increased shell and core construction costs shall be
paid by Tenant.
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's Plans with respect to the Tenant Improvements in the Premises:
A. Basic Plans Delivery Date: October 20, 1999
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 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.
B. Working Drawings Delivery Date: November 5, 1999
On this date and at Tenant's expense, Tenant's Office Planner shall
produce four (4) sets of Full Working Drawings for construction from the Basic
Plans using the Pin Bar or CADD System, 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 IV(A) above plus the
following additional information:
Exhibit D, Page 2
<PAGE>
(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 which require dedicated circuits and/or which
require greater than 120 volts, identify the type of equipment, the
manufacturer's name and the manufacturers model number, and submit a brochure
for each piece of equipment. Also identify the manufacturer's name of the phone
system to be used and the power requirements, size, and location of its
processing equipment.
(2) Reflected Ceiling Plan: Lighting layout showing location and type
of all Building Standard and special lighting fixtures.
(3) Furniture Layout: Layout showing furniture location so that
Landlord's engineer can review the location of all light fixtures.
The Allowance shall be applied to the cost of the engineers retained
by Tenant's Office Planner. The Allowance shall also be applied to any
necessary review of the Engineering Drawings by Landlord's shell and core
engineers: electrical (Holmes Electric), mechanical (McDonald Miller) and
structural plans (KPFF) (Engineering Drawings) for Tenant's Improvements based
on the signed Working Drawings, unless Tenant engages those engineers directly
to work on the Tenant Improvements. If Tenant does not engage one or more of
those engineers, such review costs shall not exceed $.10 per usable square foot
for review by each of the mechanical and electrical engineers.
C. Permit Submittal Package: November 5, 1999
On this date, Tenant shall deliver to Landlord all materials necessary
to submit a full building permit application to the appropriate municipality.
D. Final Plans Review Date: November 23, 1999
On this date, Tenant's Office Planner shall deliver to Landlord and
Tenant for review and approval four (4) complete sets of Final Plans, and shall
deliver a set to the Tenant Improvement Contractor. The Final Plans will
incorporate the Working Drawings referenced in Section IV(B) above, plus the
following additional information:
(1) Millwork Details: These drawings shall be in final form with
Tenant's Office Planner's title block along the right border 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) Keying Schedules and Hardware Information: This information shall
be in final form and include a preliminary keying schedule indicating which
doors are locked, 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. The final keying schedule will be completed by
October 25, 1999.
Exhibit D, Page 3
<PAGE>
(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.
(4) Construction Notes and Specifications: Complete specifications
for every item included except those specified by the Landlord.
E. Final Plans Delivery Date: November 30, 1999
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 IV(D)
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 or submit Engineering Drawings
with Tenant's Final Plans for transmittal to Landlord's Contractor.
F. Anticipated Construction Commencement Date: December 6, 1999
On this date Landlord anticipates that construction of the Tenant
Improvements shall commence.
Tenant shall be responsible for delays and additional costs in
completion of the Tenant Improvements incurred as a result of changes requested
by Tenant or Tenant's Office Planner and made to any of Tenant's Plans after the
specified Plan Delivery Date (assuming timely response by Landlord), delays
caused by Tenant's failure to comply with the Plan Delivery Dates, Tenant's
failure to provide adequate specifications or information for the completion of
Tenant's Plans, or by delays caused by Tenant's specification of special
materials; but only to the extent any of the foregoing delays or prevents
critical path work or adversely affects completion.
V. CONSTRUCTION OF TENANT IMPROVEMENTS
A. Authorization to Proceed. Upon submission of Tenant's Final
Plans to the Tenant Improvement Contractor on the Final Plans Review Date, the
Tenant Improvement Contractor shall have five (5) days to provide to Tenant
written notice of the price for such improvements. Within five (5) days of
receipt of such price, Tenant shall give Landlord written authorization to
complete the Premises in accordance with such Final Plans, or identify those
pricing issues that do not meet Tenant's approval. 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 costs due to any resulting delay in
completion of the Premises and as provided in Section III.A of the Lease.
B. Payments. Prior to commencement of tenant improvements and if
the price for such improvements is greater than the Allowance, Tenant shall
deposit with Landlord any additional cost above the Allowance (the "Additional
Cost Deposit"). The Tenant
Exhibit D, Page 4
<PAGE>
Improvement Contractor shall complete Tenant's improvements in accordance with
Tenant's approved Final Plans. Payments shall be made: first, by applying
Tenant's Additional Cost Deposit, secondly, by applying the entire Allowance
provided by Landlord against the monthly progress payments due, and then third,
Tenant shall pay within ten (10) days after receipt of monthly progress
statements from Landlord, the full amount of such progress billings in cash. The
progress billings may include a retainage amount up to ten percent (10%) of the
work ("Retainage"). Final billing shall be rendered and payable within ten (10)
days after acceptance of the Premises by Tenant in accordance with the terms of
the Lease. Retainage pursuant to the terms of this paragraph shall be payable
with such final billing. In the event acceptance of the Premises is subject to
punchlist items as provided in the Lease, a portion of the retainage equal to
the cost to complete each outstanding punchlist item may be retained until such
punchlist item is complete. If the cost of the Tenant Improvements is increased
by change order approved by Tenant, Tenant shall deposit the corresponding
increase in the Additional Cost Deposit. If the cost of the Tenant Improvements
decreases due to a deductive change order approved by Tenant, a corresponding
portion of the Additional Cost Deposit shall be released to Tenant.
C. Final Plans and Modifications. If Tenant shall request any
change after the Final Plans are submitted, 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 within five
(5) business days a written price for the cost of engineering design services
and an estimate of construction costs to incorporate the change in Tenant's
Final Plans and any anticipated change to the completion schedule that the
change would cause. If Tenant approves such price in writing within five (5)
business days, Tenant shall within five (5) business days have such Final Plans
changes made to engineering drawings and Tenant shall have changes made to other
Final Plan design documents. Within three (3) business days after completion of
such changes in the Final Plans, Landlord shall provide Tenant a written
breakdown of the final costs, if any, which shall be chargeable or credited to
Tenant for such change, addition or deletion and any impact such changes shall
have on the schedule. Landlord shall not charge for its services in relation to
any such modifications and Landlord shall not charge Tenant a construction
management fee for Landlord's work on the Tenant Improvements. If Tenant wishes
to proceed with such changes, Tenant shall within five (5) business days so
notify Landlord in writing. 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.A 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.
D. Improvements Constructed by Tenant. If any work is to be
performed in connection with the Tenant Improvements on the Premises by Tenant
or Tenant's contractor:
(1) Such work shall proceed upon Landlord's written approval (not to
be unreasonably withheld) of (i) Tenant's contractor, (ii) general liability and
property damage insurance satisfactory to Landlord carried by Tenant's
contractor, which insurance shall not be required to exceed levels carried by
the contractor engaged by Landlord to complete Landlord's Work ("Landlord's
Contractor"), and (iii) detailed plans and specifications for such work.
Exhibit D, Page 5
<PAGE>
(2) All work shall be done in conformity with a valid building permit
when required, a copy of which shall be furnished for 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.
(3) All work by Tenant or Tenant's contractor shall be done with union
labor in accordance with all union labor agreements applicable to the trades
being employed, unless otherwise agreed to in writing by Landlord.
(4) All work by Tenant or Tenant's contractor shall be scheduled
through Landlord or, with Landlord's approval, directly with Landlord's
Contractor or Tenant Improvement Contractor. Landlord shall make best efforts
to accommodate work by Tenant or Tenant's contractor during times requested.
(5) Tenant or Tenant's contractor shall arrange for necessary utility,
hoisting and elevator service with the Landlord's Contractor or the Tenant
Improvement Contractor. Elevator service shall be provided without additional
charge, but Tenant shall be responsible for any damage done by Tenant or its
contractors or representatives to the elevator cabs. If Tenant requires
hoisting beyond the capacity of the Building's freight elevator, such hoisting
shall be provided at Tenant's expense.
(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. Tenant
shall receive notice from Landlord and a reasonable opportunity to cure damages
prior to Landlord undertaking corrective action.
(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 Contractor or the Tenant
Improvement Contractor for any liability, losses or damages directly or
indirectly from lien claims affecting the land, the Buildings or the Premises
arising out of Tenant's or Tenant's contractor's work or that of subcontractor
or suppliers, and subordinating any such liens to the liens of construction and
permanent financing for the Buildings.
(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.
E. 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.A 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 and Additional Rent. Tenant's entry shall mean entry by Tenant, its
officers, contractors, Tenant's Office Planner, licensees, agents, servants,
employees, guests, invitees, or visitors. Landlord will make reasonable efforts
to accommodate Tenant's
Exhibit D, Page 6
<PAGE>
request for access to the Premises at all times. Tenant will supply Landlord
with a pre-approved list of a limited number of individuals who will be allowed
to have access to the Premises during normal business hours prior to the
Commencement Date, provided such access does not interfere with the work being
performed in the Premises.
F. Tenant's Telephone and Computer/Data Service. Tenant is
responsible for Tenant's telephone service, computer and data service, obtaining
any applicable permits, and related cabling. Tenant shall select and coordinate
installation of such communication and information systems with the Landlord
pursuant to item V(D)(4) of this Exhibit D.
G. Meetings and Representatives. A representative of Landlord shall
attend all of Tenant's design and construction meetings, provided Landlord is
given adequate prior notice of such meetings. Michel Hebrant, Pat Daleo or Gary
Nickell shall serve as Landlord's representatives with respect to the Tenant
Improvements and shall be entitled to bind Landlord. Gwen Anderson and Bob
Barton shall serve as Tenant's representatives with respect to the Tenant
Improvements and shall be entitled to bind Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this exhibit as
of the day and year first above written.
LANDLORD:
WRC SUNSET NORTH LLC, a Washington limited liability
company
By: WRIGHT RUNSTAD
ASSOCIATES LIMITED
PARTNERSHIP, a Washington
limited partnership, its Manager
By: WRIGHT RUNSTAD &
COMPANY, a Washington
corporation, its general partner
By: ________________________________
Its:________________________________
Exhibit D, Page 7
<PAGE>
EOP SUNSET NORTH, L.L.C., a
Delaware limited liability company, its
manager
By: EOP OPERATING LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: EQUITY OFFICE
PROPERTIES TRUST, a
Maryland real estate investment
trust, its managing general
partner
By: ________________________________
Its:________________________________
TENANT:
drugstore.com, inc.,
a Delaware corporation
By: __________________________________________
Its:__________________________________________
Exhibit D, Page 8
<PAGE>
EXHIBIT D-1
SUNSET NORTH
Shell and Core and Landlord Provided
Tenant Improvements
Landlord shall provide bare shell and core floor ready for tenant
improvements as follows:
Building Standard restrooms completed.
Building Standard drinking fountains installed.
Drywall. Drywall installed around the core areas only and firetaped
(excludes drywall at the perimeter of the building and columns).
Main Lobby. The main lobby serving the building is completed.
Elevator Lobby. All finishes are part of tenant improvements (except
Building Standard elevator doors, frames, and buttons).
Life Safety. Life safety includes fire sprinkler riser, code minimum
tenant distribution, central life safety system with conduit, and wire to floor.
Dropping of heads, detectors, strobe lights, and speakers are part of tenant
improvements.
Mechanical. Mechanical includes the main system with medium pressure
duct (the main loop) serving the floor and return air systems. VAV boxes and
low pressure ductwork from main loop is a part of tenant improvements.
Electrical. Electrical includes panels in the electrical closets
based on a design load of 4.5 watts per square foot. The main system includes
expansion capabilities for additional panels installed during tenant
improvements. The capacity for the electrical system is: 1.2 watts per square
foot for lighting (this is the code maximum); 4.0 watts per square foot for HVAC
loads, and 6.0 watts per square foot (un-diversified) for tenant equipment load.
Perimeter Finishes. Perimeter finishes include the exterior of the
building, support structure, and insulation.
Ceiling Grid. Ceiling grid and panels are excluded and considered
tenant improvements.
Elevators and Stairwells. Elevators and stairwells (with Building
Standard finishes) serving the floor are completed.
Exhibit D-1, Page 1
<PAGE>
EXHIBIT E
ADDITIONAL PROVISIONS
This Exhibit is attached to and made a part of the Lease dated
November ___, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and DRUGSTORE.COM, INC., a Delaware corporation
("Tenant') for space in the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
I. Parking.
A. During the initial Lease Term, Landlord shall lease to Tenant, or
cause the operator (the "Operator") of the garage serving the Buildings (the
"Garage") to lease to Tenant, and Tenant shall lease from Landlord or such
Operator, up to four (4) unreserved parking spaces in the Garage for each one
thousand (1,000) usable square feet of area in the Premises (the "Spaces") for
the use of Tenant and its employees. The Spaces shall be leased at the rate of
$45.00 per Space, per month, plus applicable tax thereon, as such rate may be
adjusted from time-to-time to reflect the then current rate for parking in the
Garage. A designated executive parking area will be located directly below the
Buildings on the top garage level and, to the extent available, a portion of the
Spaces may be located in such executive parking area, but only if requested by
Tenant, and not to exceed the number of spaces requested by Tenant. These
executive Spaces shall be leased at the rate of $65.00 per Space, per month,
plus applicable tax thereon, as such rate may be adjusted from time-to-time to
reflect the then current rate for parking in the Garage. If requested by
Landlord, Tenant shall execute and deliver to Landlord the standard parking
agreement used by Landlord or the Operator (the "Parking Agreement") in the
Garage for such Spaces.
B. No deductions or allowances shall be made for days when Tenant or
any of its employees does not utilize the parking facilities or for Tenant
utilizing less than all of the Spaces.
C. Except for particular spaces and areas designated by Landlord or
the Operator for reserved parking, all parking in the Garage shall be on an
unreserved, first-come, first-served basis. Tenant acknowledges that Landlord
may implement a valet parking system in the Garage.
D. Neither Landlord nor the Operator shall be responsible for money,
jewelry, automobiles or other personal property lost in or stolen from the
Garage or the surface parking areas regardless of whether such loss or theft
occurs when the Garage or other areas therein are locked or otherwise secured.
Except as caused by the negligence or willful misconduct of Landlord and without
limiting the terms of the preceding sentence, Landlord shall not be liable for
any loss, injury or damage to persons using the Garage or the surface parking
areas or automobiles or other property therein, it being agreed that, to the
fullest extent permitted by law, the use of the Spaces shall be at the sole risk
of Tenant and its employees.
Exhibit E, Page 1
<PAGE>
E. Landlord or its Operator shall have the right from time to time
to designate the location of the Spaces and (after written notice to Tenant) to
promulgate reasonable rules and regulations regarding the Garage, the surface
parking areas, if any, the Spaces and the use thereof, including, but not
limited to, rules and regulations controlling the flow of traffic to and from
various parking areas, the angle and direction of parking and the like. Tenant
shall comply with and cause its employees to comply with all such rules and
regulations, all reasonable additions and amendments thereto, and the terms and
provisions of the Parking Agreement.
F. Tenant shall not store or permit its employees to store any
automobiles in the Garage or on the surface parking areas without the prior
written consent of Landlord. Except for emergency repairs, Tenant and its
employees shall not perform any work on any automobiles while located in the
Garage or on the Property.
G. Landlord or the Operator shall have the right to temporarily
close the Garage or certain areas therein in order to perform necessary repairs,
maintenance and improvements to the Garage or the surface parking areas, if any.
H. Tenant shall not assign or sublease any of the Spaces without the
consent of Landlord or in connection with an assignment or sublease of this
Lease approved by Landlord in accordance with Section 11 of the Lease. Landlord
shall have the right to terminate the agreement contained in this Section I or
in the Parking Agreement with respect to any Spaces that Tenant desires to
sublet or assign.
I. Landlord may elect to provide parking cards or keys to control
access to the Garage or surface parking areas, if any. In such event, Landlord
shall provide Tenant with one card or key for each Space that Tenant is leasing
hereunder, provided that Landlord shall have the right to require Tenant or its
employees to place a deposit on such access cards or keys and to pay a fee for
any lost or damaged cards or keys.
II. Renewal Option.
A. Tenant shall have the right to extend the Lease Term (the
"Renewal Option") with respect to the portion of the Premises located on the
first floor of Building 4 only (consisting of approximately 26,663 square feet
of rentable area), but not with respect to the remainder of the Premises, for
the period running from the expiration of the initial three-year Term until July
30, 2005 (the "Renewal Term"), if:
1. Landlord receives notice of exercise of the Renewal Option
("Initial Renewal Notice") not less than twelve (12) full calendar months
prior to the expiration of the initial Lease Term and not more than fifteen
(15) full calendar months prior to the expiration of the initial Term; and
2. Tenant is not in default under the Lease beyond any
applicable cure periods at the time that Tenant delivers its Initial
Renewal Notice or at the time Tenant delivers its Binding Notice; and
Exhibit E, Page 2
<PAGE>
3. Not more than twenty five percent (25%) of the area of the
Premises is sublet at the time that Tenant delivers its Initial Renewal
Notice or at the time Tenant delivers its Binding Notice (except for a
Permitted Transfer); and
4. The Lease has not been assigned prior to the date that Tenant
delivers its Initial Renewal Notice or prior to the date Tenant delivers
its Binding Notice (except for a Permitted Transfer); and
5. Tenant executes and returns the Renewal Amendment
(hereinafter defined) within thirty (30) days after its submission to
Tenant.
B. The initial Base Rent rate per rentable square foot for the
Premises during the Renewal Term shall equal the Prevailing Market Renewal Rate
(hereinafter defined) per rentable square foot for the Premises.
C. Tenant shall pay Additional Base Rent (i.e. Basic Costs) for the
Premises during the Renewal Term in accordance with Article 4 of the Lease.
D. Within sixty (60) days after receipt of Tenant's Initial Renewal
Notice, Landlord shall advise Tenant of the applicable Base Rent rate for the
Premises for the Renewal Term. Tenant, within thirty (30) days after the date
on which Landlord advises Tenant of the applicable Base Rent rate for the
Renewal Term, shall either (i) give Landlord final binding written notice
("Binding Notice") of Tenant's exercise of its option, or (ii) if Tenant
disagrees with Landlord's determination, provide Landlord with written notice of
rejection (the "Rejection Notice"). If Tenant fails to provide Landlord with
either a Binding Notice or Rejection Notice within such thirty (30) day period,
Tenant's Renewal Option shall be null and void and of no further force and
effect. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant
shall enter into the Renewal Amendment upon the terms and conditions set forth
herein. If Tenant provides Landlord with a Rejection Notice, Landlord and
Tenant shall work together in good faith to agree upon the Prevailing Market
Renewal Rent rate for the Premises during the Renewal Term. Upon agreement
Tenant shall provide Landlord with Binding Notice and Landlord and Tenant shall
enter into the Renewal Amendment in accordance with the terms and conditions
hereof. If Landlord and Tenant fail to agree upon the Prevailing Market Renewal
Rate within thirty (30) days after the date of the Rejection Notice, either
party, by written notice (the "Arbitration Notice") to the other within ten (10)
days after the expiration of such thirty (30) day period, shall have the right
to have the Prevailing Market Renewal Rate determined by binding arbitration in
accordance with the procedures set forth below. If Landlord and Tenant cannot
agree upon the Prevailing Market Renewal Rate and neither party elects to invoke
its right of arbitration, Tenant's Renewal Option shall be deemed to be null and
void and of no further force and effect. If the right of arbitration is
invoked, Landlord and Tenant, at their sole cost and expense, shall each employ
an appraiser within fifteen (15) days after the date the Arbitration Notice is
given. Each such appraiser shall be a member of the Master Appraisers Institute
or similar reputable organization, with ten (10) years of experience appraising
office buildings comparable to the location and type of that of the Buildings.
If either party fails to appoint an appraiser then the appointed appraiser shall
be the sole appraiser and his or her determination shall be binding. Each
appraiser shall render an appraisal of the Prevailing Market Renewal Rate for
the Premises within fifteen (15) calendar days. The two appraisers, within ten
Exhibit E, Page 3
<PAGE>
(10) days after the exchange of appraisals, shall mutually agree upon the
Prevailing Market Renewal Rate and notify Landlord and Tenant in writing of
their determination. Such determination shall be binding upon both Landlord and
Tenant. If the appraisers cannot agree on a determination of the Prevailing
Market Renewal Rate within ten (10) days of the exchange of appraisals, then
Landlord and Tenant shall select an independent third appraiser acceptable to
both with ten (10) days. If Landlord and Tenant are unable to select an
independent third appraiser acceptable to both with ten (10) days, either party
may request that the American Arbitration Association in the county in which the
Buildings are located appoint an independent third appraiser that meets the
qualifications described above. Within ten (10) days following appointment
(whether by mutual agreement or arbitration), the third appraiser shall choose
the appraisal of either Landlord's appraiser or Tenant's appraiser and the
chosen appraisal shall be deemed to represent the Prevailing Market Renewal Rate
for the Premises. Such determination shall be binding upon both Landlord and
Tenant. The parties shall share equally in the cost of any such third appraiser.
E. If Tenant is entitled to and properly exercises its Renewal
Option, Landlord shall prepare an amendment (the "Renewal Amendment") to reflect
changes in the Base Rent, Lease Term, Termination Date and other appropriate
terms. The Renewal Amendment shall be:
1. sent to Tenant within a reasonable time after receipt of the
Binding Notice; and
2. executed by Tenant and returned to Landlord in accordance
with paragraph A.5. above.
An otherwise valid exercise of the Renewal Option shall, at Landlord's option,
be fully effective whether or not the Renewal Amendment is executed.
F. For purpose of this Section II, "Prevailing Market Renewal Rate"
shall mean the arms length fair market annual rental rate per rentable square
foot under renewal leases and amendments entered into on or about the date on
which the Prevailing Market Renewal Rate is being determined hereunder for space
comparable to the Premises in the Buildings and office buildings comparable to
the Buildings in Bellevue, Washington. The determination of Prevailing Market
Renewal Rate shall take into account any material economic differences between
the terms of this Lease and any comparison lease, such as rent abatements,
construction costs and other concessions and the manner, if any, in which the
Landlord under any such lease is reimbursed for operating expenses and taxes.
The determination of Prevailing Market Renewal Rate shall also take into
consideration any reasonably anticipated changes in the Prevailing Market
Renewal Rate from the time such Prevailing Market Renewal Rate is being
determined and the time such Prevailing Market Renewal Rate will become
effective under this Lease. In no event shall the Prevailing Market rate be
less than the rate payable under this Lease immediately prior to the
commencement of the Renewal Term.
Exhibit E, Page 4
<PAGE>
III. Satellite Dish.
1. Tenant shall have the right to lease space on the roofs of the
Buildings for the purpose of installing (in accordance with Section X.B of the
Lease), operating and maintaining one or more dish, antenna or other
communication device approved by the Landlord (collectively the "Dish/Antenna").
Tenant shall pay, in addition to all other amounts required to be paid under
this Lease, Landlord's scheduled rates for all roof space so leased, provided
such rates shall not exceed rates then being charged for leases of roofs of
comparable buildings in the Bellevue, Washington area. The exact location of
the space on the roof to be leased by Tenant shall be designated by Landlord
(the "Roof Space"). Landlord reserves the right to relocate the Roof Space and
the Dish/Antenna at Landlord's expense and at a time and to a location approved
by Tenant as reasonably necessary during the Lease Term. Landlord's designation
shall take into account Tenant's use of the Dish/Antenna. Notwithstanding the
foregoing, Tenant's right to install the Dish/Antenna shall be subject to the
approval rights of Landlord and Landlord's architect and/or engineer with
respect to the plans and specifications of the Dish/Antenna, the manner in which
the Dish/Antenna is attached to the roof of the Building and the manner in which
any cables are run to and from the Dish/Antenna. The precise specifications and
a general description of the Dish/Antenna along with all documents Landlord
reasonably requires to review the installation of the Dish/Antenna (the "Plans
and Specifications") shall be submitted to Landlord for Landlord's written
approval no later than twenty (20) days before Tenant commences to install the
Dish/Antenna. Tenant shall be solely responsible for obtaining all necessary
governmental and regulatory approvals and for the cost of installing, operating,
maintaining and removing the Dish/Antenna. Tenant shall notify Landlord upon
completion of the installation of the Dish/Antenna. If Landlord determines that
the Dish/Antenna equipment does not comply with the approved Plans and
Specifications, that the Building has been damaged during installation of the
Dish/Antenna or that the installation was defective, Landlord shall notify
Tenant of any noncompliance or detected problems and Tenant immediately shall
cure the defects. If the Tenant fails to immediately cure the defects, Tenant
shall pay to Landlord upon demand the cost, as reasonably determined by
Landlord, of correcting any defects and repairing any damage to the Building
caused by such installation. If at any time Landlord, in its sole discretion,
deems it necessary, Tenant shall provide and install, at Tenant's sole cost and
expense, appropriate aesthetic screening, reasonably satisfactory to Landlord,
for the Dish/Antenna (the "Aesthetic Screening").
2. Landlord agrees that Tenant, upon reasonable prior written notice
to Landlord, shall have access to the roof of the Building and the Roof Space
for the purpose of installing, maintaining, repairing and removing the
Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, all of
which shall be performed by Tenant or Tenant's authorized representative or
contractors, which shall be approved by Landlord, at Tenant's sole cost and
risk. It is agreed, however, that only authorized engineers, employees or
properly authorized contractors of Tenant, FCC inspectors, or persons under
their direct supervision will be permitted to have access to the roof of the
Building and the Roof Space. Tenant further agrees to exercise firm control
over the people requiring access to the roof of the Building and the Roof Space
in order to keep to a minimum the number of people having access to the roof of
the Building and the Roof Space and the frequency of their visits.
Exhibit E, Page 5
<PAGE>
3. It is further understood and agreed that the installation,
maintenance, operation and removal of the Dish/Antenna, the appurtenances and
the Aesthetic Screening, if any, will in no way damage the Building or the roof
thereof, or interfere with the use of the Building and roof by Landlord. Tenant
agrees to be responsible for any damage caused to the roof or any other part of
the Building, which may be caused by Tenant or any of its agents or
representatives.
4. Tenant agrees to install only equipment of types and frequencies
which will not cause unreasonable interference to Landlord or existing tenants
of the Building. In the event Tenant's equipment causes such interference,
Tenant will change the frequency on which it transmits and/or receives and take
any other steps necessary to eliminate the interference. If said interference
cannot be eliminated within a reasonable period of time, in the judgment of
Landlord, then Tenant agrees to remove the Dish/Antenna from the Roof Space.
5. Tenant shall, at its sole cost and expense, and at its sole risk,
install, operate and maintain the Dish/Antenna in a good and workmanlike manner,
and in compliance with all Building, electric, communication, and safety codes,
ordinances, standards, regulations and requirements, now in effect or hereafter
promulgated, of the Federal Government, including, without limitation, the
Federal Communications Commission (the "FCC"), the Federal Aviation
Administration ("FAA") or any successor agency of either the FCC or FAA having
jurisdiction over radio or telecommunications, and of the state, city and county
in which the Building is located. Under this Lease, the Landlord and its agents
assume no responsibility for the licensing, operation and/or maintenance of
Tenant's equipment. Tenant has the responsibility of carrying out the terms of
its FCC license in all respects. The Dish/Antenna shall be connected to
Landlord's power supply in strict compliance with all applicable Building,
electrical, fire and safety codes. Neither Landlord nor its agents shall be
liable to Tenant for any stoppages or shortages of electrical power furnished to
the Dish/Antenna or the Roof Space because of any act, omission or requirement
of the public utility serving the Building, or the act or omission of any other
tenant, invitee or licensee or their respective agents, employees or
contractors, or for any other cause beyond the reasonable control of Landlord,
and Tenant shall not be entitled to any rental abatement for any such stoppage
or shortage of electrical power. Neither Landlord nor its agents shall have any
responsibility or liability for the conduct or safety of any of Tenant's
representatives, repair, maintenance and engineering personnel while in or on
any part of the Building or the Roof Space.
6. The Dish/Antenna, the appurtenances and the Aesthetic Screening,
if any, shall remain the personal property of Tenant, and shall be removed by
Tenant at its own expense at the expiration or earlier termination of this Lease
or Tenant's right to possession hereunder. Tenant shall repair any damage
caused by such removal, including the patching of any holes to match, as closely
as possible, the color surrounding the area where the equipment and
appurtenances were attached. Tenant agrees to maintain all of the Tenant's
Dish/Antenna equipment placed on or about the roof or in any other part of the
Building in proper operating condition and maintain same in satisfactory
condition as to appearance, in Landlord's sole discretion, and satisfactory
condition as to safety, in Landlord's reasonable discretion. Such maintenance
and operation shall be performed in a manner to avoid any interference with any
other tenants or Landlord. Tenant agrees that at all times during the Lease
Term, it will keep the
Exhibit E, Page 6
<PAGE>
roof of the Building and the Roof Space free of all trash or waste materials
produced by Tenant or Tenant's agents, employees or contractors.
7. In light of the specialized nature of the Dish/Antenna, Tenant
shall be permitted to utilize the services of its choice for installation,
operation, removal and repair of the Dish/Antenna, the appurtenances and the
Aesthetic Screening, if any, subject to the reasonable approval of Landlord.
Notwithstanding the foregoing, Tenant must provide Landlord with prior written
notice of any such installation, removal or repair and coordinate such work with
Landlord in order to avoid voiding or otherwise adversely affecting any
warranties granted to Landlord with respect to the roof. If necessary, Tenant,
at its sole cost and expense, shall retain any contractor having a then existing
warranty in effect on the roof to perform such work (to the extent that it
involves the roof), or, at Tenant's option, to perform such work in conjunction
with Tenant's contractor. In the event the Landlord contemplates roof repairs
that could affect Tenant's Dish/Antenna, or which may result in an interruption
of the Tenant's telecommunication service, Landlord shall formally notify Tenant
at least thirty (30) days in advance (except in cases of an emergency) prior to
the commencement of such contemplated work in order to allow Tenant to make
other arrangements for such service.
8. Tenant shall not allow any provider of telecommunication, video,
data or related services ("Communication Services") to locate any equipment on
the roof of the Building or in the Roof Space for any purpose whatsoever, nor
may Tenant use the Roof Space and/or Dish/Antenna to provide Communication
Services to an unaffiliated tenant, occupant or licensee of another building, or
to facilitate the provision of Communication Services on behalf of another
Communication Services provider to an unaffiliated tenant, occupant or licensee
of the Building or any other building.
9. Tenant acknowledges that Landlord may at some time establish a
standard license agreement (the "License Agreement") with respect to the use of
roof space by tenants of the Building. Tenant, upon request of Landlord, shall
enter into such License Agreement with Landlord provided that such agreement is
reasonably acceptable to Tenant and does not materially alter the rights of
Tenant hereunder with respect to the Roof Space.
10. Tenant specifically acknowledges and agrees that the terms and
conditions of Article 13 of the Lease (Indemnity and Waiver of Claims) shall
apply with full force and effect to the Roof Space and any other portions of the
roof accessed or utilized by Tenant, its representatives, agents, employees or
contractors.
11. If Tenant defaults under any of the terms and conditions of this
Section or the Lease, and Tenant fails to cure said default within the time
allowed by Article 19 of the Lease, Landlord shall be permitted to exercise all
remedies provided under the terms of the Lease, including removing the
Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and
restoring the Building and the Roof Space to the condition that existed prior to
the installation of the Dish/Antenna, the appurtenances and the Aesthetic
Screening, if any. If Landlord removes the Dish/Antenna, the appurtenances and
the Aesthetic Screening, if any, as a result of an uncured default, Tenant shall
be liable for all costs and expenses Landlord incurs in removing the
Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and
repairing any damage to the Building, the roof of the Building and the Roof
Space caused by the
Exhibit E, Page 7
<PAGE>
installation, operation or maintenance of the Dish/Antenna, the appurtenances,
and the Aesthetic Screening, if any.
12. Tenant shall be allowed to install fiber optics and related
equipment in the Building for Tenant's personal use, the design, location, and
operating characteristics of which shall be subject to Landlord's reasonable
approval.
IV. Storage Space.
A. Subject to availability and the rights of existing tenants of the
Buildings, if any, and after written request from Tenant, Landlord shall lease
to Tenant up to 300 square feet of storage space (the "Storage Space"). The
Storage Space rental rate per square foot of the Storage Space ("Storage Space
Rental") initially shall be Fourteen Dollars ($14.00) per usable square foot per
month for the Lease Term, and shall thereafter be adjusted from time to time by
Landlord to reflect market rates. Storage Space Rental shall be payable in
advance on or before the first day of each month of the Storage Term. Any
initial or final month shall be prorated. The Lease Term for the Storage Space
shall be coterminous with the Term of the Premises. The Storage Space shall be
used by Tenant for the storage of furniture, equipment, inventory or other non-
perishable items normally used in Tenant's business (exclusive of any items or
materials which may be deemed to be hazardous to the environment or hazardous to
human life or safety), and for no other purpose whatsoever. Tenant agrees to
keep the Storage Space in a neat and orderly fashion and to keep all stored
items in cartons, file cabinets or other suitable containers. Landlord shall
have the right to designate the location within the Storage Space of any items
to be placed therein. All items stored in the Storage Space shall be elevated
at least six inches above the floor on wooden pallets, and shall be at least
eighteen inches below the bottom of all sprinklers located in the ceiling of the
Storage Space, if any. Tenant shall not store anything in the Storage Space
which is unsafe or which otherwise may create a hazardous condition, or which
may increase Landlord's insurance rates, or cause a cancellation or modification
of Landlord's insurance coverage. Without limitation, Tenant shall not store
any flammable, combustible or explosive fluid, chemical or substance nor any
perishable food or beverage products, except with Landlord's prior written
approval. Landlord reserves the right to adopt and enforce reasonable rules and
regulations governing the use of the Storage Space from time to time.
B. All terms and provisions of this Lease shall be applicable to the
Storage Space, including, without limitation, Article 13 (Indemnity and Waiver
of Claims) and Article 14 (Tenant's Insurance), except that Landlord need not
supply air-cooling, heat, water, janitorial service, cleaning, window washing or
electricity to the Storage Space and Tenant shall not be entitled to any work
allowances, rent credits, expansion rights or renewal rights with respect to the
Storage Space unless such concessions or rights are specifically provided for in
the Lease with respect to the Storage Space.
C. Tenant agrees to accept the Storage Space in its condition and
"as-built" configuration existing on the earlier of the date Tenant takes
possession of the Storage Space or the Storage Commencement Date.
Exhibit E, Page 8
<PAGE>
D. At any time and from time to time, Landlord shall have the right
to relocate the Storage Space to a new location which shall be no smaller than
the square footage of the Storage Space. Landlord shall pay the direct, out-of-
pocket, reasonable expenses of such relocation.
E. Storage Space Rental is deemed Rent under the Lease.
F. Notwithstanding anything set forth in Article 11 of the Lease,
Tenant shall not, without the prior written consent of Landlord, which consent
may be withheld in Landlord's sole discretion, assign, sublease, transfer or
encumber the Storage Space or grant any license, concession or other right of
occupancy or permit the use of the Storage Space by any party other than Tenant.
V. Hazardous Materials.
Tenant shall not (either with or without negligence) cause or permit
the escape, disposal or release of any biologically or chemically active or
other hazardous substances, or materials except those used for general office
purposes in the ordinary course of Tenant's business and in compliance with all
applicable laws, and except for samples of pharmaceuticals and other products
stored and disposed of in compliance with all applicable laws and regulations.
Tenant shall not allow the storage or use of such substances or materials in any
manner not sanctioned by law or by the highest standards prevailing in the
industry for the storage and use of such substances of materials, nor allow to
be brought into the Project any such materials or substances except to use for
general office purposes in the ordinary course of Tenant's business, and except
for samples of pharmaceuticals and other products stored and disposed of in
compliance with all applicable laws and regulations. Without limitation,
hazardous substances and materials shall include those described in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq., any applicable state or local laws and
the regulations adopted under these acts. If any governmental agency or lender
(in its reasonable judgment) shall ever require testing to ascertain whether or
not there has been any release of hazardous materials and such testing indicates
that Tenant has violated any of the terms and conditions of this section, then,
in addition to any other rights and remedies available hereunder or at law or in
equity, the reasonable costs of such testing shall be reimbursed by Tenant to
Landlord upon demand as additional charges. In addition, Tenant shall execute
affidavits, representations and the like from time to time at Landlord's request
concerning Tenant's best knowledge and belief regarding the presence of
hazardous substances or materials on the premises. In all events, except to the
extent due to the negligence or willful misconduct of Landlord or its
contractors or agents, Tenant shall indemnify Landlord in the manner elsewhere
provided in this Lease from any release of hazardous materials on the premises
occurring while Tenant is in possession, or elsewhere if caused by Tenant or
persons acting under Tenant. The within covenants shall survive the expiration
or earlier termination of the Lease Term.
Exhibit E, Page 9
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this exhibit as
of the day and year first above written.
WITNESS/ATTEST:
LANDLORD:
WRC SUNSET NORTH LLC, a
Washington limited liability company
By: WRIGHT RUNSTAD
ASSOCIATES LIMITED
PARTNERSHIP, a Washington
limited partnership, its Manager
By: WRIGHT RUNSTAD &
COMPANY, a Washington
corporation, its general partner
By:________________________________
Its:_______________________________
EOP SUNSET NORTH, L.L.C., a
Delaware limited liability company, its
manager
By: EOP OPERATING LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: EQUITY OFFICE
PROPERTIES TRUST, a
Maryland real estate investment
trust, its managing general
partner
By:________________________________
Its:_______________________________
Exhibit E, Page 10
<PAGE>
TENANT:
drugstore.com, inc.,
a Delaware corporation
By:________________________________
Its:_______________________________
Exhibit E, Page 11
<PAGE>
EXHIBIT F
SUBORDINATION AGREEMENT
(TENANT)
RETURN NAME AND ADDRESS:
WELLS FARGO BANK, NATIONAL ASSOCIATION
Real Estate Group, MAC 6101-121
1300 S.W. 5th Avenue, 12th Floor
Portland, OR 97201
Attn: Mary Kathryn Long
SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT
GRANTORS: (1) WRC SUNSET NORTH LLC; (2) DRUGSTORE.COM, INC.,
a Delaware corporation
GRANTEE: WELLS FARGO BANK, NATIONAL ASSOCIATION
LEGAL DESCRIPTION: LOTS 6 THROUGH 10 AND AN UNDIVIDED INTEREST IN LOT
11 AND TRACT C OF SUNSET RIDGE I-90 CORPORATE
CAMPUS, VOLUME 154 OF PLATS, PAGES 77-80, KING
COUNTY, WASHINGTON
Additional legal description is on Exhibit A of
this document.
ASSESSOR'S PROPERTY TAX 813530-0060-02
PARCEL ACCOUNT NUMBER(S): 813530-0070-00
813530-0080-08
813530-0090-06
813530-0100-04
813530-0110-02
502880-0050-09
Exhibit F
<PAGE>
SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE
ASSIGNMENT, ESTOPPEL, ATTORNMENT AND
NON-DISTURBANCE AGREEMENT
(Lease To Deed of Trust)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO
AND OF LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST (DEFINED
BELOW).
THIS SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE ASSIGNMENT,
ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT ("Agreement") is made
_______________, 19___, by and between WRC SUNSET NORTH LLC, a Washington
limited liability company ("Landlord"), DRUGSTORE.COM, INC., a Delaware
corporation ("Tenant") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender").
R E C I T A L S
A. Pursuant to the terms and provisions of a lease dated
_______________, 19___ ("Lease"), Landlord, as "Landlord", granted to Tenant a
leasehold estate in and to a portion of the property described on Exhibit A
attached hereto and incorporated herein by this reference (which property,
together with all improvements now or hereafter located on the property, is
defined as the "Property").
B. Landlord has executed, or proposes to execute, a deed of trust
with absolute assignment of leases and rents, security agreement and fixture
filing ("Deed of Trust") securing, among other things, a promissory note
("Note") in the principal sum of SIXTY EIGHT MILLION DOLLARS ($68,000,000),
dated September 1, 1998, in favor of Lender, which Note is payable with interest
and upon the terms and conditions described therein ("Loan").
C. As a condition to making the Loan secured by the Deed of Trust,
Lender requires that the Deed of Trust be unconditionally and at all times
remain a lien on the Property, prior and superior to all the rights of Tenant
under the Lease and that the Tenant specifically and unconditionally subordinate
the Lease to the lien of the Deed of Trust.
D. Landlord and Tenant have agreed to the subordination, attornment
and other agreements herein in favor of Lender.
NOW THEREFORE, for valuable consideration and to induce Lender to make
the Loan, Landlord and Tenant hereby agree for the benefit of Lender as follows:
1. SUBORDINATION. Landlord and Tenant hereby agree that:
-------------
Exhibit F, Page 1
<PAGE>
1.1 Prior Lien. The Deed of Trust securing the Note in favor of
----------
Lender, and any modifications, renewals or extensions thereof, shall
unconditionally be and at all times remain a lien on the Property prior and
superior to the Lease;
1.2 Subordination. Lender would not make the Loan without this
-------------
agreement to subordinate; and
1.3 Whole Agreement. This Agreement shall be the whole agreement and
---------------
only agreement with regard to the subordination of the Lease to the lien of the
Deed of Trust and shall supersede and cancel, but only insofar as would affect
the priority between the Deed of Trust and the Lease, any prior agreements as to
such subordination, including, without limitation, those provisions, if any,
contained in the Lease which provide for the subordination of the Lease to a
deed or deeds of trust or to a mortgage or mortgages,
AND FURTHER, Tenant individually declares, agrees and acknowledges for
the benefit of Lender, that:
1.4 Use of Proceeds. Lender, in making disbursements pursuant to the
---------------
Note, the Deed of Trust or any loan agreements with respect to the Property, is
under no obligation or duty to, nor has Lender represented that it will, see to
the application of such proceeds by the person or persons to whom Lender
disburses such proceeds, and any application or use of such proceeds for
purposes other than those provided for in such agreement or agreements shall not
defeat this agreement to subordinate in whole or in part;
1.5 Waiver, Relinquishment and Subordination. Tenant intentionally
----------------------------------------
and unconditionally waives, relinquishes and subordinates all of Tenant's right,
title and interest in and to the Property to the lien of the Deed of Trust and
understands that in reliance upon, and in consideration of, this waiver,
relinquishment and subordination, specific loans and advances are being and will
be made by Lender and, as part and parcel thereof, specific monetary and other
obligations are being and will be entered into which would not be made or
entered into but for said reliance upon this waiver, relinquishment and
subordination.
2. ASSIGNMENT. Tenant acknowledges and consents to the assignment
----------
of the Lease by Landlord in favor of Lender.
3. ESTOPPEL. Tenant acknowledges and represents that:
--------
3.1 Lease Effective. The Lease has been duly executed and delivered
---------------
by Tenant and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Tenant thereunder are valid and binding and
there have been no modifications or additions to the Lease, written or oral;
3.2 No Default. To the best of Tenant's knowledge, as of the date
----------
hereof: (i) there exists no breach, default, or event or condition which, with
the giving of notice or the passage of time or both, would constitute a breach
or default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
Exhibit F, Page 2
<PAGE>
3.3 Entire Agreement. The Lease constitutes the entire agreement
----------------
between Landlord and Tenant with respect to the Property and Tenant claims no
rights with respect to the Property other than as set forth in the Lease; and
3.4 No Prepaid Rent. No deposits or prepayments of rent have been
---------------
made in connection with the Lease, except as follows: (if none, state "None")
_____________________.
4. ADDITIONAL AGREEMENTS. Tenant covenants and agrees that, during
---------------------
all such times as Lender is the Beneficiary under the Deed of Trust:
4.1 Modification, Termination and Cancellation. Tenant will not
------------------------------------------
consent to any modification, amendment, termination or cancellation of the Lease
(in whole or in part) without Lender's prior written consent and will not make
any payment to Landlord in consideration of any modification, termination or
cancellation of the Lease (in whole or in part) without Lender's prior written
consent;
4.2 Notice of Default. Tenant will notify Lender in writing
-----------------
concurrently with any notice given to Landlord of any default by Landlord under
the Lease, and Tenant agrees that Lender has the right (but not the obligation)
to cure any breach or default specified in such notice within the time periods
set forth below and Tenant will not declare a default of the Lease, as to
Lender, if Lender cures such default within fifteen (15) days from and after the
expiration of the time period provided in the Lease for the cure thereof by
Landlord; provided, however, that if such default cannot with diligence be cured
by Lender within such fifteen (15) day period, the commencement of action by
Lender within such fifteen (15) day period to remedy the same shall be deemed
sufficient so long as Lender pursues such cure with diligence;
4.3 No Advance Rents. Tenant will make no payments or prepayments of
----------------
rent more than one (1) month in advance of the time when the same become due
under the Lease; and
4.4 Assignment of Rents. Upon receipt by Tenant of written notice
-------------------
from Lender that Lender has elected to terminate the license granted to Landlord
to collect rents, as provided in the Deed of Trust, and directing the payment of
rents by Tenant to Lender, Tenant shall comply with such direction to pay and
shall not be required to determine whether Landlord is in default under the Loan
and/or the Deed of Trust.
5. ATTORNMENT. Tenant agrees for the benefit of Lender (including
----------
for this purpose any transferee of Lender or any transferee of Landlord's title
in and to the Property by Lender's exercise of the remedy of sale by foreclosure
under the Deed of Trust) as follows:
5.1 Payment of Rent. Tenant shall pay to Lender all rental payments
---------------
required to be made by Tenant pursuant to the terms of the Lease for the
duration of the term of the Lease;
5.2 Continuation of Performance. Tenant shall be bound to Lender in
---------------------------
accordance with all of the provisions of the Lease for the balance of the term
thereof, and Tenant hereby attorns to Lender as its landlord, such attornment to
be effective and self-operative without the execution of any further instrument
immediately upon Lender succeeding to Landlord's interest in the Lease and
giving written notice thereof to Tenant;
Exhibit F, Page 3
<PAGE>
5.3 No Offset. Lender shall not be liable for, nor subject to, any
---------
offsets or defenses which Tenant may have by reason of any act or omission of
Landlord under the Lease, nor for the return of any sums which Tenant may have
paid to Landlord under the Lease as and for security deposits, advance rentals
or otherwise, except to the extent that such sums are actually delivered by
Landlord to Lender; and
5.4 Subsequent Transfer. If Lender, by succeeding to the interest of
-------------------
Landlord under the Lease, should become obligated to perform the covenants of
Landlord thereunder, then, upon any further transfer of Landlord's interest by
Lender, all of such obligations shall terminate as to Lender.
6. NON-DISTURBANCE. In the event of a foreclosure under the Deed of
---------------
Trust, so long as there shall then exist no breach, default, or event of default
on the part of Tenant under the Lease beyond any applicable notice and cure
periods, Lender agrees for itself and its successors and assigns that the
leasehold interest of Tenant under the Lease shall not be extinguished or
terminated by reason of such foreclosure, but rather the Lease shall continue in
full force and effect and Lender shall recognize and accept Tenant as tenant
under the Lease subject to the terms and provisions of the Lease except as
modified by this Agreement; provided, however, that Tenant and Lender agree that
the following provisions of the Lease (if any) shall not be binding on Lender:
any right of first refusal with respect to the Property; any provision regarding
the use of insurance proceeds or condemnation proceeds with respect to the
Property which is inconsistent with the terms of the Deed of Trust.
7. MISCELLANEOUS.
-------------
7.1 Heirs, Successors, Assigns and Transferees. The covenants herein
------------------------------------------
shall be binding upon, and inure to the benefit of, the heirs, successors and
assigns of the parties hereto; and
7.2 Notices. All notices or other communications required or
-------
permitted to be given pursuant to the provisions hereof shall be deemed served
upon delivery or, if mailed, upon the first to occur of receipt or the
expiration of three (3) days after deposit in United States Postal Service,
certified mail, postage prepaid and addressed to the address of Landlord, Tenant
or Lender appearing below:
"LANDLORD"
WRC SUNSET NORTH LLC
c/o Wright Runstad & Company
1191 Second Avenue, Suite 2000
Seattle, Washington 98101
Attn: Jon F. Nordby
Exhibit F, Page 4
<PAGE>
With a copy to:
EQUITY OFFICE PROPERTIES TRUST
Two North Riverside Plaza, Suite 2200
Chicago, Illinois 60606
Attention: Regional Counsel -- Western Region
"LENDER"
WELLS FARGO BANK, NATIONAL ASSOCIATION
Real Estate Group, MAC 6101-121
1300 S.W. 5th Avenue, 12th Floor
Portland, OR 97201
Attn: Mary Kathryn Long
Loan No: 2554
"TENANT"
ADDRESS
provided, however, any party shall have the right to change its address for
notice hereunder by the giving of written notice thereof to the other party in
the manner set forth in this Agreement;
7.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute and be construed as one and the same instrument;
7.4 Remedies Cumulative. All rights of Lender herein to collect
-------------------
rents on behalf of Landlord under the Lease are cumulative and shall be in
addition to any and all other rights and remedies provided by law and by other
agreements between Lender and Landlord or others;
7.5 Paragraph Headings. Paragraph headings in this Agreement are for
------------------
convenience only and are not to be construed as part of this Agreement or in any
way limiting or applying the provisions hereof; and
7.6 INCORPORATION. Exhibit A is attached hereto and incorporated
-------------
herein by this reference.
Exhibit F, Page 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH
ALLOWS THE LANDLORD TO OBTAIN A LOAN, THE PROCEEDS OF WHICH MAY BE EXPENDED FOR
PURPOSES OTHER THAN THE IMPROVEMENT OF THE PROPERTY.
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE
PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.
"LANDLORD"
WRC SUNSET NORTH LLC, a
Washington limited liability company
By: WRIGHT RUNSTAD
ASSOCIATES LIMITED
PARTNERSHIP, a Washington
limited partnership, its Manager
By: WRIGHT RUNSTAD &
COMPANY, a Washington
corporation, its general partner
By:________________________
Its:_______________________
Exhibit F, Page 6
<PAGE>
By: EOP SUNSET NORTH, L.L.C., a
Delaware limited liability company, its
manager
By: EOP OPERATING LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: EQUITY OFFICE
PROPERTIES TRUST, a
Maryland real estate investment
trust, its managing general
partner
By:____________________________
Its:___________________________
"LENDER"
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:______________________________________
Its:_____________________________________
"TENANT"
DRUGSTORE.COM, INC.,
a Delaware corporation
By:______________________________________
Its:_____________________________________
Exhibit F, Page 7
<PAGE>
LANDLORD ACKNOWLEDGMENTS
STATE OF ___________ )
) ss.
COUNTY OF __________ )
On this the ______ day of _______________, 19___, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Wright Runstad & Company, the general partner of Wright
Runstad Associates Limited Partnership, a Member of WRC SUNSET NORTH LLC, a
Washington limited liability company, the Landlord in the foregoing instrument,
and acknowledged that as such officer, being authorized so to do, (s)he executed
the foregoing instrument on behalf of said corporation by subscribing the name
of such corporation by himself/herself as such officer and caused the corporate
seal of said corporation to be affixed thereto, as a free and voluntary act, and
as the free and voluntary act of said corporation, for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:______________________________
Printed Name:_______________________________
Residing at:________________________________
My Commission expires:______________________
Exhibit F, Page 8
<PAGE>
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Equity Office Properties Trust, the general partner of EOP
Operating Limited Partnership, the sole member of EOP Sunset North, L.L.C., a
Member of WRC SUNSET NORTH LLC, a Washington limited liability company, the
Landlord in the foregoing instrument, and acknowledged that as such officer,
being authorized so to do, (s)he executed the foregoing instrument on behalf of
said corporation by subscribing the name of such corporation by himself/herself
as such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:______________________________
Printed Name:_______________________________
Residing at:________________________________
My Commission expires:______________________
Exhibit F, Page 9
<PAGE>
LENDER ACKNOWLEDGMENT
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of WELLS FARGO BANK, NATIONAL ASSOCIATION, the Lender in the
foregoing instrument, and acknowledged that as such officer, being authorized so
to do, (s)he executed the foregoing instrument on behalf of said corporation by
subscribing the name of such corporation by himself/herself as such officer and
caused the corporate seal of said corporation to be affixed thereto, as a free
and voluntary act, and as the free and voluntary act of said corporation, for
the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:______________________________
Printed Name:_______________________________
Residing at:________________________________
My Commission expires:______________________
Exhibit F, Page 10
<PAGE>
TENANT ACKNOWLEDGMENT
STATE OF ___________ )
) ss:
COUNTY OF __________ )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of DRUGSTORE.COM, INC., a Delaware corporation, the Tenant in
the foregoing instrument, and acknowledged that as such officer, being
authorized so to do, (s)he executed the foregoing instrument on behalf of said
corporation by subscribing the name of such corporation by himself/herself as
such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:______________________________
Printed Name:_______________________________
Residing at:________________________________
My Commission expires:______________________
Exhibit F, Page 11
<PAGE>
EXHIBIT A
Loan No. 2554
DESCRIPTION OF PROPERTY
EXHIBIT A to Subordination Agreement; Acknowledgment of Lease Assignment,
Estoppel, Attornment and Non-Disturbance Agreement dated as of _______________,
19___, executed by WRC SUNSET NORTH LLC, a Washington limited liability company
as "Landlord", DRUGSTORE.COM, INC., a Delaware corporation, as "Tenant", and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender".
All that certain real property located in the County of King, State of
Washington, described as follows:
LOTS 6 THROUGH 10 OF SUNSET RIDGE I-90 CORPORATE CAMPUS, A BINDING SITE PLAN, AS
PER PLAT RECORDED IN VOLUME 154 OF PLATS, PAGES 77 THROUGH 80, RECORDS OF KING
COUNTY;
EXCEPT ANY PORTION CONVEYED FOR 139TH AVE. S.E., BY DEED RECORDED UNDER
RECORDING NO. 9101280422;
TOGETHER WITH AN UNDIVIDED 60% INTEREST IN LOT 11 AND TRACT C OF SAID PLAT;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9601091040;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9107260572;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9309292404;
SITUATE IN THE CITY OF BELLEVUE, COUNTY OF KING, STATE OF WASHINGTON.
Exhibit A, Page 1
<PAGE>
EXHIBIT G
TENANT ESTOPPEL CERTIFICATE
Loan No. 2554
_______________, 19___
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender")
Real Estate Group, MAC 6101-121
1300 S.W. 5th Avenue, 12th Floor
Portland, OR 97201
Attn: Mary Kathryn Long
RE: Lease dated _______________, 1999, and amended on _______________, 1999
(the "Lease") by and between WRC SUNSET NORTH LLC, as Landlord
("Landlord") and DRUGSTORE.COM, as Tenant ("Tenant") with respect to
certain premises (the "Leased Premises") located at the Northeast corner
of 139th Avenue Southeast and Southeast 32nd Street, Bellevue, King
County, Washington (the "Property"). The Leased Premises are comprised of
____________ square feet.
Gentlemen:
The undersigned hereby acknowledges that Landlord intends to encumber the
Property with a deed of trust in favor of Lender. The undersigned further
acknowledges the right of Landlord, Lender and any and all of Landlord's present
and future lenders to rely upon the statements and representations of the
undersigned contained in this Certificate and further acknowledges that any loan
secured by any such deed of trust or further deeds of trust will be made and
entered into in material reliance on this Certificate.
Given the foregoing, the undersigned Tenant hereby certifies and represents unto
Lender, its successors and assigns, with respect to the above described Lease, a
true and correct copy of which is attached as Exhibit A hereto, as follows:
All space and improvements covered by the Lease have been completed and
furnished to the satisfaction of Tenant, all conditions required under the Lease
have been met, and Tenant has accepted and taken possession of and presently
occupies the Leased Premises, consisting of approximately ____________ square
feet.
Exhibit G, Page 1
<PAGE>
The Lease is for a total term of ________ years, ________ months commencing
_______________, 19___, and ending _______________, 19___, and has not been
modified, altered or amended in any respect and contains the entire agreement
between Landlord and Tenant, except as follows:
______________________________________________________ (list amendments and
modifications other than those, if any, attached to and forming a part of the
Lease as well as any verbal agreements, or write "None").
As of the date hereof, the annual minimum rent under the Lease is
$_______________, subject to any escalation and/or percentage rent and/or common
area maintenance charges, in accordance with the terms and provisions of the
Lease.
No rent has been paid by Tenant in advance under the Lease except for
$_______________, which amount represents rent for the period beginning
_______________, 19___, and ending _______________, 19___, and Tenant has no
current charge or claim of offset under said Lease or otherwise, against rents
or other amounts due or to become due thereunder. No "discounts", "free rent"
or "discounted rent" have been agreed to or are in effect except for
___________________________________________________________________________.
A Security Deposit of $_______________ has been made and is currently being held
by Landlord.
Tenant has no claim against Landlord for any deposit or prepaid rent except as
provided in Paragraphs 4 and 5 above.
The Landlord has satisfied all commitments, arrangements or understandings made
to induce Tenant to enter into the Lease, and to Tenant's knowledge, after due
inquiry, the Landlord is not in any respect in default in the performance of the
terms and provisions of the Lease, nor is there now any fact or condition which,
with notice or lapse of time or both, would become such a default.
Tenant is not in any respect in default under the terms and provisions of the
Lease (nor is there now any fact or condition which, with notice or lapse of
time or both, would become such a default) and has not assigned, transferred or
hypothecated its interest under the Lease, except as follows:
__________________________________________________________________.
Except as expressly provided in the Lease or in any amendment or supplement to
the Lease, Tenant (i) does not have any right to renew or extend the term of the
Lease; (ii) does not have any option or preferential right to purchase all or
any part of the Leased Premises or all or any part of the building or premises
of which the Leased Premises are a part; and (iii) does not have right, title,
or interest with respect to the Leased Premises other than as Tenant under the
Lease. There are no understandings, contracts, agreements, subleases,
assignments, or commitments of any kind whatsoever with respect to the Lease or
the Leased Premises except as expressly provided in the Lease or in any
amendment or supplement to the Lease set forth in Paragraph 2 above, copies of
which are attached hereto.
Exhibit G, Page 2
<PAGE>
To Tenant's knowledge, after due inquiry, the Lease is in full force and effect
and Tenant has no defenses, setoffs, or counterclaims against Landlord arising
out of the Lease or in any way relating thereto or arising out of any other
transactions between Tenant and Landlord.
The current address to which all notices to Tenant as required under the Lease
should be sent is:
_____________________________________________________________________________.
Dated: _______________, 19___.
________________________________________
"TENANT"
Exhibit G, Page 3